VMIL reports 12% decline in nine months net profits

Date: November 14, 2018 

Victoria Mutual Investments (VMIL) reported total interest income of $523.24 million, a decline of 6% relative to the $557.90 million recorded for the corresponding period in 2017.

Interest expense for the period amounted to $340.97 million, a 7% decline relative to the $366.38 million recorded in 2017.

As such, net interest income closed the period at $182.28 million, a 5% or $9.24 million decline relative to the $191.52 million recorded for the corresponding period in 2017. Net interest income for the quarter totaled $62.61 million, a 32% increase on the $47.40 million booked in 2017’s corresponding quarter.

VMIL recorded gains from investment activities for the period of $160.14 million, a 7% or $11.31 million decline relative to the gain of $171.44 recorded in 2017.

Net fees and commissions closed the period at $579.93 million, a gross increase of 57% compared with the $369.70 million recorded for the comparable period in 2017. The Company noted, “The growth in our corporate finance business is consistent with the Company’s strategic objective of financing the growth of the nation’s productive sector.”

Other income for the period reflected a total of $690,000 million, a decline of $3.56 million or 84% compared to $4.25 million recorded for last year.

Staff cost and other operating expenses increased 16% and 51% respectively, to close the period at $246.55 million (2017: $213.27 million) and $231.22 million (2017: $153.24 million) respectively. The Company noted, “This was due mainly to our investment in human resources as well as systems enhancements to meet the changing needs of our business. Notably, the implementation of a new, robust investment management system has been completed, and is already resulting in improved operational efficiency, productivity, and service delivery to our clients.”

Notably, VMIL also booked ‘Provision for credit losses on financial assets’ of $118.74 million relative to nil for 2017. Management however noted, “The profit when compared to 2017 reflects the Group’s provision for expected credit losses in the second quarter that was primarily comprised of $109.56 million arising from a default event in respect of Government of Barbados global bonds (GoB bonds) held by our wholly-owned subsidiary, Victoria Mutual Wealth Management Limited.”

Profit before taxation amounted to $326.53 million for the period, a 12% or $11.42 million decline relative to $370.40 million recorded for the prior period. Taxation amounted to $85.54 million (2017: $96.96 million).

Consequently, net profit for the nine months amounted to $241.00 million, a 12% or $32.44 million decline relative to the $273.44 million booked for the same period in 2017. Net profit for the quarter totaled $144.74 million, a 10% increase on the $131.37 million recorded for 2017’s prior quarter. The Company noted, “Net profit for the quarter and nine months ended September 30, 2018 would have been $149.51 million and $318.81 million, respectively, had it not been for the credit loss provision on the GoB bonds. This would have been 13.84% and 16.59% over the respective comparative 2017 periods. We continue to hold these securities and monitor the discussions between the Government of Barbados and the IMF and its external creditors, the outcome of which we believe will provide a platform for a recovery of the Barbadian economy. Additionally, the GoB bonds have recovered some value since the default event.”

Earnings per share for the period totaled $0.16 (2017: $0.18), while earnings per share for the quarter amounted to $0.10 (2017: $0.09). The twelve month trailing earnings per share is $0.21.The number of shares used in our calculations 1,500,025,000 units. Notably, VMILs stock price closed the trading period on November 14, 2018 at a price of $4.03.

Balance Sheet:

As at September 30, 2018, The Company’s asset base totaled $19.69 billion, up from $16.83 billion at September 30, 2018. The main contributor to the increase in total assets was ‘Investment Securities’ which amounted to $13.15 billion relative to $11.08 million and ‘Account Receivables for Customer’ which totaled $1.87 million (2017: $462.15 million) for the 2017 period.

Total Stockholders’ Equity as at September 30, 2018 was $2.67 billion (2017: $2.07 billion); resulting in a book value per share of $1.78 (2017: $1.38).

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