Durrant Pate/Contributor

In spite of the challenging economic environment in which it was operating last year, VM Investments exhibited an improved financial performance.

Net profits registered a 57.23 per cent increase to close the record year at J$691.86 million in comparison to performance in the previous year of 2021. Most major revenue lines improved, including gains from investment activities and net fees and commissions, which increased 48.74 per cent and 27.75 per cent, respectively.

This improved performance comes in spite of the fallout in the equities and bonds markets as well as the increasing interest rate environment, which challenged VM Investments’ Net Interest Income (NII), which ultimately fell by 31.47 per cent to J$253.04 million. However, on the positive side total consolidated revenue surged by 28.61 per cent. 

Prudent management of the balance sheet

VM Investments net profits of J$691.86 million, positively contributed to the 28.85 per cent improvement in retained earnings. Nevertheless, shareholder’s equity declined 16.11 per cent due, in part to the negative investment revaluation reserve, which was due to fair value losses on some of its investment securities.

Total assets as at December 31, 2022 closed at J$29.15 billion, which is a 5.71 per cent or J$1.77 billion decline over December 2021. This arise from the financial intermediary’s continued move to de-risk its balance sheet, as shown by its consolidated financial statements for the year ended December 31, 2023.

Even more good news comes from the fact that the company registered a whopping 74.29 per cent increase in cash resources and a 57.01 per cent increase in loans receivables, supported by the expansion of the Corporate Lending Solutions and Margin Loan businesses, which were accompanied by declines in Investment Securities and Resale agreements of 13.92 per cent and 81.43 per cent, respectively.

At the end of 2022, VMIL’s total liabilities declined by 4.31 per cent or $1.17 billion, mainly due to lower employee benefit obligations and repurchase agreements of 40.98 per cent and 20.66 per cent, respectively. The de-risking of its balance sheet was also evident in the J$4.06 billion decrease in repurchase agreements. 

Positive outlook for Carilend investment

During 2022, VM Investments took the decision to write down the value of its investment in Carilend Caribbean Holdings against the backdrop of operating losses incurred by the associated company.

However, the management team led by Chief Executive Officer, Rezworth Burchenson and company Chairman, Michael McMorris reports, “our outlook for this investment however remains positive, bolstered by progressive and meaningful changes that were made at the company during 2022.”

These included the expansion of Carilend into the Trinidad and Tobago market through a partnership with Massy Finance, the introduction of a co-branded loan offering in July 2022 and a change of management at the Jamaica location. Carilend now has in excess of 58,000 registered users and has received more than 33,000 completed loan applications across its three countries of operation – Barbados, Jamaica and Trinidad and Tobago.

In total, Carilend has approved over US$60,000,000 in loans since inception, a clear indication of its future growth prospects. VMIL also in 2022 increased its stake in Kingston Properties Limited by disposing of two of its properties in an asset swap arrangement with the VM Unit Trust Property Fund.

Management to benefit from dividend income

The non-cash transaction, which involved the commercial properties at 1-10 Oxford Road and 2-5 Haining Road, saw VM Investments receiving 135,483,871 units of Kingston Properties (KPREIT) shares for a combined consideration of J$1.05 billion, resulting in an increase of VMIL’s stake in KPREIT to 23 per cent, making it an associate company of VM Investments.

The management is expecting to benefit from dividend income as well as participation in the strategic direction on KPREIT going forward. The company’s interests are represented by two members on the Board in Phillip Silvera and Burchenson, who are familiar with the business and the growth imperatives. KPREIT has demonstrated strong financial performance and maintained a strong balance sheet.