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Victoria Mutual Investments Limited (VMIL) is reporting that it delivered a solid and creditable performance for 2020 even though net profits went down 27 per cent to $433.49 million.

In its just released audited financial results for 2020, the listed company reported that it didn’t manage to grow its 2019 net profits of $598.05 million because of “the increase in the provision for impairment losses on financial assets of $215.36 million.”  Tax charges for the year amounted to $165.28 million, a 12% decrease when compared with the $188.18 million incurred for 2019.

As a result, the net profit for the year amounted to $433.59 million relative to a profit of $598.05 million. Net profit for the December quarter amounted to $71.76 million compared to a $100.66 million for 2019.

The board of VMIL blamed the moderate 2020 performance on the novel coronavirus (COVID-19) pandemic, which severely disrupted all sectors of the economy. This was manifested in volatile asset prices in the investment markets impacted players in the financial services sector.

However, despite this impact, the investment and equity management company delivered a solid and creditable performance for 2020.

Consolidated financial performance

Consolidated revenue for the year was $1.88 billion, reflecting an increase of $192.63 million or 11.4 per cent over the $1.68 billion recorded for 2019. This growth in revenue was primarily driven by gains from investment activities, which increased by $108.09 million.

Operating expenses, excluding the provision for credit losses on financial assets, totalled $1.12 billion, representing an increase of 14.7% when compared to the prior year. This is mainly due to VMIL investment in human resources as well as information technology and process improvements, which will allow the company to seamlessly and efficiently launch various asset management products.

The company’s efficiency ratio ended the year at 59.8 per cent, up from 58.1 per cent for 2019.

Many milestones achieved in 2020

In managing the challenges of 2020, the business achieved many milestones such as the launch of an innovative Client Management Portal, which is its first digitalisation project. This project allows clients to conveniently access their statements and make transaction requests online.

In addition the company accelerated the expansion of VMIL local footprint with the establishment of four additional branches, taking the number of touch points to ten. Also during the year, VMIL launched its Premium Wealth Service catering to the ultra-high net worth clients.

The company in 2020 executed its regional expansion of Carilend, its peer-to-peer lending platform with the Jamaican launch of Carilend Jamaica and successfully launched two additional products based on feedback from clients. The two new products are VM Unit Trust Goal Maximizer Portfolio and its US Equity Trading platform.

VMIL also managed during 2020 to grow its market share in its Asset Management business despite the turbulent investment markets, while launching a new and upgraded system in the areas of investment management, risk management, complaints management, anti-money laundering and customer experience.

The company experienced  stellar performance of its Key Risk Indicators (KRIs) as measured in its Enterprise Risk Management framework, indicating the continued strengthening of risk management practices. There were significant improvements in Net Promoter Score (NPS), attributable to efforts at improving customer experience, aided by the upward trajectory in VMIL’s human resource engagement index, surpassing global and local benchmarks as the company continues to drive towards its strategic goal of Employer of Choice.

Consolidated financial position assets

Total assets increased year over year by 17.4 per cent to $29.72 billion as at December 31, 2020, primarily attributable to an increase in resale agreement balances. At the same time, total liabilities were $25.34 billion as at December 31, 2020, an increase of $4.34 billion or 20.7 per cent over the prior year, driven mainly by the increase in borrowings and repurchase agreements.

VMIL capital base continues to be strong with total shareholders’ equity standing at $4.38 billion, up from $4.33 billion, which resulted in a book value per share of $2.92 (2019: $2.88). The growth in total equity is mainly attributable to the net increase of $388.59 million in retained earnings, representing the undistributed portion of its 2020 retained earnings.

Victoria Mutual Wealth Management Limited, the licensed securities dealer, continues to be well-capitalised, with a risk-weighted capital adequacy ratio of 15.56 per cent, above the regulatory requirement of 10 per cent. The capital to total assets ratio of 14.24 per cent exceeds the regulatory minimum of six per cent.

Assets managed on behalf of clients, on a non-recourse basis, grew by an impressive $3.35 billion or 11.4 per cent, from $29.48 billion as at December 31, 2019 to $32.82 billion as at the end of the current period.

The year-over-year growth was fuelled by strong net inflows of $2.18 billion from its Portfolio Management Clients while the had net inflows of $1.17 billion into the Unit Trust portfolios.