Victoria Mutual Investments Limited (VMIL) has returned to profitability wiping out last year’s losses to posts a big $126.49 million increase in profits.

In its just released March first quarter results, VMIL reported a consolidated net profit of $89.59 million, an increase of $126.49 million over the corresponding period in 2020. Consolidated revenue for the three-month period was $482.45 million, reflecting an increase of $214.08 million when compared with the corresponding period of 2020.

Consolidated profit before tax for the period was $99.28 million, an increase of $187.84 million when compared with the previous year. As VMIL continues to execute its strategic plan to become the leading Caribbean-based provider of financial services, its operating expenses for the period totalled $374.61 million, an increase of $26.79 million or 7.7 per cent when compared to the prior year period.

With the exception of the asset tax, the expenses are growth-focused and relate to the development of team members and other support services required to position VMIL for future growth.

Improved investment climate

“The first quarter of 2021 saw an improved investment climate when compared to 2020 with rising bonds and equity prices coupled with an increasing appetite for capital market transactions,” explained Rezworth Burchenson, VMIL’s Chief Executive Officer.

Burchenson further stated, “various initiatives at regional market penetration, sales productivity improvement, digitalisation, investment management performance and timely capital allocation, are yielding varying degrees of success.”

VMIL’s performance revealed encouraging results and comes as the local economy continues to experience significant blows from the COVID-19 pandemic. Burchenson outlined the main drivers of the positive performance during the quarter under review:

1. Its Bond Trading Unit generated exceptional performance in revenue when compared to 2020. We are keenly monitoring the interest rate outlook for the developed markets to mitigate any challenges to this business line.

2. The company’s Asset Management Unit continues to be resilient with growth in fee income and assets under management despite investors’ appetite for fixed income securities. Our Real Estate Portfolio continues to add value for long term investors and is poised to execute transactions in the near term which will provide both geographic and market segment diversification.

3. VM Investment’s Treasury Unit provided a modest performance despite a challenging environment of compressing spreads due to a very competitive environment. Our capital allocation strategies will provide further strengthening of this business line during the year.

4. Its Capital Markets Unit continues its aggressive business development activities with our advisory and arrangement services providing capital raising strategies for corporates.

Consolidated financial position

Total assets increased year over year by $2.79 billion or 11.29 per cent to $27.53 billion as at March 31, 2021. This was primarily attributable to an increase of $2.91 billion in investment securities. Total liabilities were $23.42 billion as at March 31, 2021, an increase of $1.98 billion or 9.24 per cent from last year, driven mainly by an increase in repurchase agreements.

The company’s capital base continues to be strong with total shareholders’ equity standing at $4.11 billion as at March 31, 2021, increasing by $813.67 million or 24.68 per cent from $3.30 billion at the end of March 2020. This resulted in a book value per share of $2.74 (2020: $2.20).

The increase in total equity is mainly attributable to the year over year increase of $255.05 million in the investment revaluation reserve, representing revaluation gains on investment securities and equity instruments. This is in addition to the net increase of $560.08 million in retained earnings, representing the undistributed portion of its 2020 earnings.

Its wholly-owned subsidiary, Victoria Mutual Wealth Management Limited (VM Wealth), a licensed securities dealer, continues to be well-capitalised, with a risk-weighted capital adequacy ratio of 14.63 per cent, above the regulatory requirement of 10 per cent. VM Wealth’s capital to total assets ratio of 14.18 per cent as at March 31, 2021, exceeded the regulatory minimum of six per cent.