January 30, 2020
For the first quarter ended December 31, 2019, Barita Investments Limited (BIL) net interest income rose by 69% amounting to $208.62 million relative to $123.61 million for the comparable quarter in 2018. “This increase was driven by continued increase in our balance sheet assets due to the continued deployment of the capital raised and rebalancing of our on-book portfolio,” as per Barita.
Dividend Income fell 21% to total $3.22 million compared to the $4.06 million earned for the first three months ended December 31, 2018. Gains on sale of investment fell by 4% to $252.14 million (2018: $262.76 million), while Fees & Commissions Income rose significantly by 265% to close at $578.73 million (2018: $158.55 million). Fees and commission income according to management, “was driven by the Group’s continued activity in the fairly new Investment banking business line and the continued growth of the asset management business.” BIL further noted, “we expect this business line to continue to be an area of consistent and above trend growth for Barita, through support of both the product and deal pipeline in the asset management and investment business lines respectively.”
Foreign exchange trading and translation amounted to a gain of $87.48 million compared to a loss of $156.03 million recorded in the previous year. BIL noted that the growth in gain on sale of investment and Foreign Exchange Trading, “relates to the management of our cambio and proprietary trading portfolio mainly driven by realized securities trading gains of $138.8 million and foreign exchange income of $57.5 million.” Other income totalled $1.38 million versus $810,000 in a similar period in 2018. As such, net operating revenue amounted to $1.13 billion relative to $393.74 million recorded for the comparable period in 2018.
Administrative Expenses for the period amounted to $247.41 million, increasing 198% from $83.16 million in 2018. Staff costs for the quarter rose 62% from $125.37 million booked in 2018 to $202.54 million in 2019. Management noted the increase in operating expenses was as a result of, “continued investment in the resources necessary to achieve the Group’s strategic initiatives.” Furthermore, staff costs rose, “due to talent retention and acquisition initiatives,” and the increase in administrative costs was associated with, “increased Marketing and Branding efforts as well as facility improvements” as per Management.
BIL for the quarter reported $40.96 million for expected credit loss (ECL).
Profit before tax amounted to $640.66 million relative to a profit before taxation of $191.43 million in 2018.
Following taxation of $137.69 million (2018: $83 million), the company reported net profit of $502.97 million, relative to net profit of $108.43 million booked in 2018.
Earnings per Share for the first quarter ended December 31, 2019 totalled $0.61 relative to an earnings per share of $0.13 in 2018. The trailing earnings per share amounted to $2.55. The number of shares used in our calculations amounted to 825,003,263 units. BIL stock price closed the trading period on January 29, 2020 at $70.55.
Barita noted that, as the Company enters the second quarter, “ increased focus will be placed on Talent Management and Succession Planning. We recruited a Senior Human Resource Executive to spearhead this important initiative. Developing our talent and creating a culture of agile leadership will be critical in facilitating the expansion of the business.”
Notably, Management highlighted that, “We will continue throughput the next several quarters to prudently manage the Company’s asset base in the context of the emerging risks in our operating environment.”
Balance Sheet at a glance:
As at December 31, 2019, total assets amounted $45.23 billion (2018: $18.91 billion), a $26.32 billion improvement as a result of the growth in “Marketable Securities” which increased by 215% to a total of $16.57 billion (2018: $5.26 billion) and “Securities Purchase Under Resale Agreements” which rose 126% to $8.93 billion (2018: $3.95 billion). This increase in assets was “largely funded by the material growth year over year in the Company’s capital base and repurchase agreement liabilities,” according to Management.
Shareholders’ Equity amounted to $14.10 billion relative to $3.05 billion in 2018 resulting in a book value per share of $17.09 relative to $3.70 in 2018. This increase, noted by Management” was fuelled by:
“ The injection of $4 billion in additional equity in the group, arising from the non-renounceable rights issue which was successfully closed in March 2019.”
“The issuance of $1 billion in non-cumulative, non-redeemable preference shares during the third quarter of FY 2019. This qualifies as tier 1 capital for the Group;”
“The injection of $5.2 billion in additional equity in the Group, arising from the renounceable rights issue which was successfully closed in September 2019.”
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