Higher expenses in the last nine months was a drag on Jamaican micro-financer ISP Finance Services Limited (ISP), as the company was unable to contain costs.

In spite of the difficulties in containing expenses, ISP Finance Services was able to eke out a small five per cent increase in net profit for the period. This net profit amounted to $53.29 million relative to the $50.75 million profit in 2020.

ISP Finance, which is listed on the Jamaica Stock Exchange (JSE), booked total operating expenses of $230.58 million, a jump of 24 per cent from $186.33 million in 2020. For the September quarter, operating expenses rose even further by 41 per cent to amount to $80.10 million coming from $56.92 million in 2020.

The management has explained that this rise in operating expenses is due to “the company’s conservative policy of loan loss provisioning for loans in arrears”.

The expenses for the nine months are broken down as follows:

• Staff Costs amounted to $87.40 million (2020: $79.70 million).
• Allowance for Credit Loss totalled $58.30 million (2020: $30.83 million).
• Depreciation was $5.77 million (2020: $4.02 million).
• Other Operating Expenses amounted to $79.11 million (2020: $71.78 million).

Carving out a profit

As such, profit before taxes totalled $59.08 million, up from the 2020 booking of $50.75 million. Following tax incurred for the period under review of $5.79 million, net profit for the period amounted to $53.29 million relative to the $50.75 million posted in 2020. 

Net profit for the September quarter amounted to $21.02 million, slightly up from the $20.56 million recorded for the same period last year. Total interest income amounted to $318.36 million compared to $263.62 million in 2020, an increase of 21 per cent. 

For the September quarter, total interest income amounted to $114.13 million, up from the $85.84 million recorded last year. Interest expense totalled $23.11 million relative to $22.22 million in 2020, which is a four per cent climb year over year.

As a result, net interest income rose by 22 per cent to total $295.25 million, coming from the 2020 posting of $241.39 million. Net interest income for the quarter amounted to $106.41 million, up from $78.49 million in 2020.

The management noted that, “the performance to date reflects a targeted approach to sales and customer service.”

Commission expenses on loans went up 17%

Commission expense on loans rose by 17 per cent to $5.40 million, up from $4.62 million in 2020. In addition, Foreign Exchange Loss totalled $87,095 in 2021 compared to a loss of $79,404 the prior year.

As at September 30, 2021, ISP Finance reported total assets of $799.38 million, a 14 per cent increase when compared to $698.48 million in the prior year. Notably, the increase was attributed to an 11 per cent increase in ‘Loans, net of provisions for credit losses’ to $698.09 million and a 128 per cent increase in ‘Cash & Cash Equivalent’ to $50.98 million.

Shareholders’ Equity as at September 30, 2021 was $462.02 million, compared to a $394.09 million in 2020. This resulted in a book value per share of $4.40 compared to $3.75 the prior year.