Generating more US$ income post COVID-19 than it was before

Despite the economic fallout in Jamaica as a result of the COVID-19 pandemic, Sterling Investments Limited (SIL) was able to withstand its onslaught, posting strong financial returns for 2020.

Net profit for the year grew by 31 per cent from $101.2 million in 2019 to $134.3 million in 2020.

This growth was driven by the increases in interest income, a decline in interest expense and an increase in foreign exchange gains.

MORE US-DOLLAR INCOME POST COVID-19

Sterling Investments is generating more US dollar income post COVID-19 than it was before. As such, the investment company, formed in 2012 by businessman Charles Ross, was able to increase the US dollar dividends it pays to its shareholders during a time of great uncertainty.

In its 2020 audited financial highlights released today, total assets grew by over 17 per cent from $1.634 billion in 2019 to $1.923 billion in 2020. At the depths of the market decline, Sterling Investments was able to strategically purchase undervalued securities which have subsequently risen in value.

BIG JUMP IN FX GAINS

There was a big jump in foreign exchange gains, which increased by 80 per cent from $43.9 million in 2019 to $79.2 million in 2020. The Jamaican dollar depreciated against the US$ by 7.6 per cent for the 12-month period ended December 2020.

The company reports that investors will continue to benefit from the US dollar income SIL’s portfolio generates through dividend payments.

“SIL’s exposure to the developed countries suggests that it will be among the first companies on the local stock exchange to benefit from a global economic recovery,” the company stated in its 2020 audited financial highlights.

The company’s prudent use of leverage further enhanced shareholder returns and helped to drive the income and gains enjoyed by the portfolio. The larger asset base resulted in higher income levels.

Total interest income increased by 22 per cent from $98.3 million in 2019 to $120.3 million in 2020. Further driving profitability was a reduction in interest expense.

Total interest expense declined by 11 per cent from $12.9 million in 2019 to $11.4 million in 2020. The decline in interest expense was the result of a reduction in interest rates by the Federal Reserve.

Enhanced diligence amid COVID-19

As the fallout from the COVID-19 pandemic continues, Sterling Investments continues to perform enhanced due diligence, as it monitors the credits held by the portfolio and hunts for undervalued securities to enhance shareholder value. Sterling Investments is an investment holding company that invests primarily in fixed income investments across the globe.

The company was formed in 2012 when the JM-US exchange rate was J$92/US$1 and prior to the National Debt Exchange. Sterling Investments continues to preserve and grow the capital of its shareholders, which include pension funds and long-term investors.