AFS reports 78% decline in six months net profits

November 02, 2020

Access Financial Services Limited (AFS) for the six months ended September 30, 2020 reported $747.42 million in total interest income, a 10% decrease relative to the $830.75 million recorded in 2019. Of this, interest income from loans amounted to $742.99 million (2019: $830.07 million), while interest income from securities amounted to $4.43 million (2019: $686,000). Total interest income for the quarter amounted to $370.71 million, a 12% decrease on the $422.82 million reported for 2019. AFS noted, “Loan disbursements have shown improvement during the second quarter, as we executed successful “Back to School” campaigns in both Jamaica and Florida to digitally equip our customers’ children for the new learning environment. The month of September 2020 also marks our 20th Anniversary, and we are prouto play our part in providing financial services to microentrepreneurs and individuals across Jamaica. To mark this milestone, we have launched the Access Yes! Education Scholarship Program which will make educational grants totaling $800,000.00 available to our customers.

Interest expense charged for the period totalled $135.58 million, a 31% increase compared with the $103.20 million booked in 2019. This resulted in AFS booking a net interest income of $611.83 million for the period, 16% less than the $727.55 million reported for the same period in 2019.

Net fees and commission income for the period under review amounted to $212.42 million, a 38% decrease from the $342.77 million in 2019.

AFS booked a total of $824.25 million for Net Trading Income, which decreased by 23% relative to the $1.07 billion in 2019.

AFS reported income from Money Services and Other Income of $340,000 (2019: $980,000) and $75.22 million (2019: $2.32 million) respectively. Foreign exchange posted a loss of $12.36 million (2019 gain: $37.49 million). As such, other operating income for the period totalled $63.21 million compared with $40.79 million in 2019.

Net Operating Income for the six-month period ended September 30, 2020 amounted to $887.46 million, a decrease of 20% relative to the $1.11 billion posted last year. Management stated that, “customers increased their level of borrowings and we were successful in executing a number of delinquency management strategies to collect on outstanding bad debts. Net interest income and Net fee & commission income was lower year over year based on the reduction in disbursements for the period, however stable quarter over quarter.”

AFS reported operating expenses for the period amounted to $805.11 million (2019: $824.89 million), while for the quarter, $423.93 million (2019: $447.24 million) was booked. Of this:

  1.  Staff Costs totalled $347.64 million (2019: $339.72 million)
  2. Allowance for Credit Losses amounted to $178.32 million (2019: $184.72 million)
  3. Depreciation & Amortization amounted to $59.38 million (2019: $16.23 million)
  4. Marketing Expenses totalled $22.10 million (2019: $34.38 million)
  5. Other Operating Expenses booked for the period totalled $197.67 million (2019: $249.84 million)

According to AFS the decrease in operating expense was, “due to the implementation of measures to increase operational efficiency. Allowance for credit losses increased over the last quarter due to higher delinquency levels stemming from the impact of COVID-19, albeit slightly improved when compared to the prior year.”

AFS reported profit before taxation of $82.36 million for the period relative to $286.22 million recorded in 2019. Following a taxation amount of $20.81 million (2019: $6.59 million), AFS booked a profit for the period of $61.55 million, a 78% decline relative to the $279.63 million recorded for the comparable period in 2019. Profit for the quarter totalled $28.54 million, 75% lower than the $114.60 million reported in 2019. The Company noted, “The performance of the Group reflects the impact of COVID-19 over the past six months, however we continue to manage the effect as we work with our customers to resume economic activity.”

Total comprehensive income was $125.69 million for the six months ended September 30, 2020 (2019: $321.43 million). For the quarter, total comprehensive income amounted to $46.63 million (2019: $143.41 million).

Consequently, earnings per share for the period amounted to $0.22 (2019: $1.02) while EPS for the quarter $0.10 (2019: $0.42). The trailing twelve months earnings per share amounted to $0.41. The total number of shares used in the calculations amounted to 274,509,840 units. Additionally, AFS’s stock price closed at $22.02 as at the end of trading on October 30, 2020.


Balance Sheet Highlights:

As at September 30, 2020, the company’s assets totalled $5.47 billion, up 3% from $5.31 billion in 2019. This increase was largely attributable to ‘Cash and Cash Equivalents’ which amounted to approximately $683.10 million, $524.43 million more than $158.67 billion as at September 30, 2019.

Shareholder’s equity as at September 30, 2020 stood at $2.27 billion (2019: $2.14 billion) resulting in book value per share of approximately $8.28 (2019: $7.79).

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