Interest income falls 49%

Shareholders in Proven Investments have seen a sharp decline in their profits, which went down by 77 per cent for the nine months ended December 31, 2020.

Net profit attributable to shareholders for the nine months amounted to US$6.31 million relative to US$27.60 million posted for the same period in 2019. Profit attributable to shareholders for the quarter totalled US$1.51 million versus $2.65 million booked in 2019.

At the same time PROVEN, which is in the business of investment, equities and pension management, reported a 49 per cent decrease in interest income of US$8.80 million when compared with the US$17.29 million reported for the same period in 2019. Interest expense for the period amounted to US$6.57 million, a 12 per cent decrease when compared to the US$7.42 million booked for the comparable period in the prior year.

As such, net interest income witnessed a 77 per cent fall to US$2.24 million relative to the US$9.86 million in the corresponding period of the previous year. Net interest income for the quarter amounted to US$694,823, reflecting a decrease of 45 per cent relative to the US$1.27 million achieved in the corresponding quarter of the previous year.

Net profit amounted to US$7.79 million, registering a 74 per cent decrease when compared to the US$29.78 million in 2019. Proven booked profit for the third quarter of US$1.65 million compared to US$2.96 million recorded for the comparable period in 2019.

Gains made on securities trading

PROVEN booked a gain on securities trading of US$4.27 million relative to the gain of US$3.72 million recorded for the comparable period for the previous year. Dividend income amounted to US$28,789, a 49 per cent decrease from the US$54,108 recorded in 2019, while Fees & Commission income notably increased by 46 per cent to US$5.08 million relative to US$9.46 million in 2019.

Other income moved from US$2.92 million in 2019 to total US$4.06 million for nine months ended December 31, 2020, an increase of 39 per cent. Proven recorded a decline in pension management income to US$2.36 million coming from US$2.51 million reported for the same time period in 2019.

Consequently, net revenue decreased by 37 per cent to total US$19.02 million compared to US$30.24 million recorded for the corresponding period in 2019. For the quarter, net revenue fell 29 per cent to US$4.98 million relative to US$6.97 million in 2019.

On the positive side, operating expenses for the nine month period fell 32 per cent  to total US$14.58 million relative to US$21.50 million in 2019. Of this, administrative and general expenses recorded a 35 per cent decrease to close at US$13.46 million relative to US$20.69 million documented for the prior year.

Depreciation and amortization fell four per cent to $1.34 million (2019: $1.39 million), while IFRS 9 provisioning was $215,624 (2019: $582,992). Operating expenses for the quarter fell 11 per cent to US$4.96 million versus US$5.55 million booked for the comparable quarter in 2019.

Big fall in operating profit

Consequently, operating profit for the period and the quarter fell 49 per cent and 99 per cent respectively to $4.43 million (2019: $8.74 million) and $19,628 (2019: $1.42 million) respectively. Payment of preference share dividend decreased 83 per cent to US$1.25 million (2019: US$7.42 million).

Share of results of associates amounted to US$5.50 million (2019: US$5.74 million). There was no gain on disposal of associate during the period (2019: US$24.45 million). The management of PROVEN reported that, “the performance of its Treasury segment of the group was predominantly driven by the decline in net interest income due to both the impact of lower rates as well as the deliberate shift in strategy away from the carry trade”.

Profit before tax amounted to US$8.69 million versus the US$31.52 million booked in 2019. Taxation decreased year over year by approximately 48 per cent from US$1.73 million for the nine months ended December 2019 to US$897,169 in 2020. 

Earnings per share (EPS) for the nine months amounted to $0.0101 (2019: $0.0441), while the EPS for the quarter amounted to $0.0024 (2019: $0.0042). The 12-month trailing EPS amounted to $0.0139. Notably, the stock price for PROVEN and ProvenJA closed the trading period on February 15, 2021 at US$0.26 and $37.99, respectively.

In its report to shareholders the management reported that, “Proven Investment is well positioned to benefit from the expected business cycle recovery over the next year and beyond; driven by COVID-19 vaccine distribution, continued easy monetary policy in the US, and easing of mobility restrictions all things being equal.”

Total assets as at December 31, 2020 amounted to US$649.73 million (2019: US$685.34 million), a five per cent decrease. The contraction resulted from the company booking US$259.06 million in ‘Investment securities’ relative to $327.05 million in 2019. Additionally, PROVEN recorded US$10.95 million in ‘Investment property’ versus the US$16.16 million recorded in 2019.