Business
JM | Nov 17, 2022

Barita posts profits of J$4.1 billion for 2022

Al Edwards

Al Edwards / Our Today

administrator

Pays out dividend

With rising interest rates, inflation in double digits and a slowing down of the global economy, Barita Investments was able to post operating revenue of J$9 billion for financial year 2022, a nine per cent increase on the prior’s year’s figure.

Unaudited results for the 12 months ended September 30, 2022, saw Barita generating a net profit of $4.1 billion, a marginal increase on 2021’s profit figure of $4 billion.

“During most of last year, market liquidity conditions tightened as a result of Bank of Jamaica’s policy actions which in turn led to higher interest rates on funding liabilities across the securities sector. However, our continued focus on growing the Group’s alternative investments, credit and fixed income portfolios provided a bulwark for net interest income.”

Barita Chairman Mark Myers

Barita was able to increase its net interest income by eight per cent to $1.7 billion. Net interest income is linked to both local and global monetary policy and given the current prevailing environment, net interest income would be expected to be impacted. Hence Barita’s strategy of pursuing alternative investments in order to broaden its portfolio of earnings.

Barita Chairman Mark Myers explained: “During most of last year, market liquidity conditions tightened as a result of Bank of Jamaica’s policy actions which in turn led to higher interest rates on funding liabilities across the securities sector. However, our continued focus on growing the Group’s alternative investments, credit and fixed income portfolios provided a bulwark for net interest income.”

For the period under review, Barita’s total assets under management came to $337 billion while its  total assets climbed to $110 billion, representing a $20 billion or 22 per cent increase over 2021’s figure.

Total shareholder’s equity for the year stood at $32.3 billion while earnings per share was $3.44.

Mark Myers, chairman of Barita.

Non-interest income year-over-year saw an increase of 10 per cent to $7.2 billion, up from the $6.6 billion posted for financial year 2021. This performance was driven by a 111 per cent increase in gain on investment activities, offsetting a decline in foreign exchange gains.

Fees and Commission Income declined by three per cent to $3 billion. This marginal decline was due to lower performance-based fees in the asset management business.

Barita will now look to grow its assets-under-management and capital market activity.

There was a significant jump in expenses due in the main to staff costs. Expenses for financial year 2022 rose by 25 per cent to $3.8 billion. Staff costs came in at $1.7 billion as opposed to $1.2 billion in 2021. Administration costs also increased, coming in at  $2 billion, a 29 per cent increase.

LOANS LARGELY COMPRISED OF SECURED CREDIT FACILITIES

As Barita looks to grow its footprint, it has to take on more personnel to both manage and operate a diversified portfolio. It has also, at considerable expense, overhauled its IT department, completely updating its capabilities.

“The increase in operating expenses reflects investment in the capabilities required to execute the strategic growth initiatives that we have previously communicated,” the company said on this issue.

Barita’s exposures to loans increased by $4.6 billion or 77 per cent to $10.5 billion. It’s loans are largely comprised of secured credit facilities, including margin loans which are extended to its clients.

Giving an overview of Barita’s performance for the year, Myers said: “Our results were achieved in an operating environment characterised by rising inflation and corresponding rising interest rates consistent with global policy resources including those by the Bank of Jamaica. As a result, net interest margins and liquidity tightened and asset prices generally fell causing a difficult securities trading environment.

“Despite the current headwinds, which was preceded by the effects of COVID, our profits increased for a fourth straight year. Our success was largely attributable to investments made in real estate and private equity which enhanced returns and provided much needed diversification as values of traditional assets weakened.”

Barita Investments has declared an interim dividend of $2.48 per stock unit to be paid tomorrow (November 18) to shareholders on record at the close of business on October 18, 2022.

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