For the first six months of the financial year 2023, Barita cites its alternative investments as offsetting the turmoil in the sector caused by banks having a bad time of it both in the U.S. and Europe.

Closer to home, inflation, rising interest rates, and mark-to-market fair value losses continue to have a deleterious effect on the local financial sector.

Nevertheless, Barita put in a commendable performance, seeing its net operating revenue increase by 22 per cent year-on-year to J$5.5 billion generating a net profit for the period under review of J$2.6 billion, a 13 per cent increase on the prior year.

Earnings Per Share (EPS) increased by 14 per cent to $2.16, good news for shareholders considering some big finance houses are not paying dividends at this time.

For the first half of the financial year, Barita’s total assets increased by $10.4 billion to $120.1 billion mainly due to repurchase agreements, retained earnings and growth in its securities portfolio. It has managed to rein in its loan portfolio which declined by a notable 40 per cent or $4.3 billion and now stands at just $6.3 billion.

Barita’s expenses for the six-month period rose by 25 per cent to $2.2 billion driven by a 15 per increase in staff costs which came to $111 million. Administrative costs rose significantly by 55 per cent to $518 million.

Real estate and alternative investments have been a big play for Barita as it looks to navigate these unsettling times. It has made a conscious effort to expand and diversify its business lines thus broadening its revenue base.

Addressing its investment strategy, Chairman Mark Myers explained: “Our investment strategy and capital management remain largely unchanged from the FY 2023 first quarter, as our performance results demonstrate, with our alternative investments contributing a significant proportion to the revenue outturn. Gains related to our real estate holdings are expected to remain a material component of the net operating revenue of the company over the medium to long term.

“As we progress our local and international partnerships, the nature of the economies emanating from the real estate holdings will evolve from current revaluation gains towards realised cash-based revenues following the financing, development and sale of the various real estate development projects over the next three to seven years.”

One notable figure is Barita’s total shareholder’s equity which now stands at $36.1 billion, 20 per cent of the entire market in Jamaica. This undoubtedly makes it a significant player and one looking at the long game.

 Given the current environment, Net Interest Income (NII) is unlikely to bear bountiful fruit any time soon hence the focus on real estate which is undervalued in Jamaica.

Barita is expected to complete its first real estate project in three years’ time which will be its new headquarters on Lady Musgrave Road in Kingston. 

The indicators point to the United States entering a recession next year. Bloomberg says there is a 65 per cent chance of this taking place. Already U.S. home prices have taken their biggest dive in 11 years and the Census Bureau’s latest survey shows more Americans struggling to make ends meet now than just after the COVID pandemic. The downturn may be deeper than anticipated and will have a contagion effect on Jamaica,  Economic growth in Jamaica is expected to be just above 1 per cent next year.  All the more reason why Barita must balance its portfolio and has positioned 25 per cent of it in real estate and the rest in high-quality liquid investments.