November 16, 2020
Sterling Investments Limited (SIL) reported a 21% growth in total revenue to $170.31 million compared to $140.94 million recorded for the corresponding period in 2019. SIL noted, “this was driven by higher interest income and unrealised FX gains.” Also, “the net interest margin increased to 90.74%. The net interest margin continues to improve as interest rates remain low,” as per the Company. Revenue for the second quarter fell 39% to $38.99 million compared to $64.16 million reported for the third quarter of 2019. Of total revenue:
Interest income for the nine months closed the period at $88.82 million, up 24% from the $71.44 million for the comparable period in 2019.
Loss on disposal of available for sale securities for the period amounted to $730,486 relative to a gain of $3.32 million twelve months earlier.
Unrealised gain on quoted equities for the period amounted to $1.94 million relative to an unrealised gain of $1.87 million in 2019.
Foreign exchange gain amounted to $80.28 million, an increase of 25% compared to the gain of $64.31 million booked the prior year’s period. SIL stated that the increase in unrealized foreign exchange gains was due to the fact that, “the Jamaican dollar depreciated against the US dollar by J$9.54 or 7.19% for the nine-month period ended September 30, 2020, relative to the same period in 2019 when it depreciated by J$7.44 or 5.83%.”
The company experienced a 70% increase in total expenses for the period to close at $59.20 million (2019: $34.90 million) for the nine months ended September 30, 2020 and a 42% increase for the second quarter to $22.28 million (2019: $15.68 million). The breakdown of total expenses is as followed:
- Interest expense totalled $8.22 million, 16% below last year’s corresponding period’s total of $9.83 million.
- Other expenses totalled $27.94 million, a decrease of 3% (2019: $28.87 million).
- SIL booked a loss of $1.35 million for impairment on available for sale securities relative to a loss of $5 million recorded twelve months earlier.
- The Company booked unrealised fair value loss on equity investments securities at FVTPL of $21.69 million relative to a gain of $8.79 million the prior year.
Operating profit recorded for the period closed at $111.11 million relative to $106.03 million booked for the prior year’s corresponding period, a 5% increase year over year. Operating profit for the third quarter amounted to $16.71 million compared to $48.48 million reported for the same quarter of 2019.
Other loss for the nine months period amounted to $2.88 million relative to other gains of $324,790 booked in 2019.
Preference dividend expense for the nine months amounted to $12.80 million compared to $5.34 million recorded in 2019.
Pre-tax profit totalled $95.43 million, 6% below the $101.02 million reported for the nine months ended September 30, 2019. Tax charges of $1.04 million (2019: $812,293) was booked for the period, and as such, net profit amounted to $94.39 million (2019: $100.21 million), a 6% decrease. Profit for the third quarter amounted to $19.98 million relative to $43.08 million booked in 2019.
Total comprehensive income for the nine months amounted to $11.95 million compared to $199.29 million booked for the similar period of 2019. For the quarter, total comprehensive income amounted to $62.64 million (2019: $68.16 million).
Earnings per share for the nine months period and third quarter amounted to $0.25 (2019: $0.27) and $0.05 (2019: $0.11) respectively. The trailing twelve months earnings per share amounted to $0.254. The total number of shares used in the calculations amounted to 374,792,612 units. Additionally, SIL’s stock price closed at $3.70 as at the end of trading on November 13, 2020.
Balance Sheet Highlights:
As at September 30, 2020, the company’s assets totalled $1.70 billion, 7% more than $1.59 billion a year ago. This resulted mainly from an increase in ‘Investment Securities’ which closed at $1.69 billion, 9% higher than the $1.53 billion booked as at September 30, 2019.
Shareholder’s equity as at September 30, 2020, stood at $1.21 billion compared to $1.22 billion in 2019. The book value per share amounted to $3.23 (2019: $3.24).
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