VMIL reports 27% decrease in nine months net profit

November 13, 2020

Victoria Mutual Investments (VMIL) reported total interest income of $733.45 million, an increase of 19% relative to the $615.37 million recorded for the corresponding period in 2019. Interest income for the quarter improved 26% to $271.71 million relative to $216.96 million in 2019.

Interest expense for the nine months amounted to $481.33 million, a 20% increase relative to the $402.31 million recorded in 2019.
As such, net interest income closed the period at $252.12 million, an 18% increase relative to the $213.06 million recorded for the corresponding period in 2019. Net interest income for the quarter totaled $112.50 million, a 55% increase on the $72.71 million booked in 2019’s corresponding quarter.

VMIL recorded gains from investment activities for the period of $192.11 million, a 54% decrease relative to the gain of $421.29 recorded in 2019.
Net fees and commissions closed the period at $734.87 million, an increase of 9% compared with the $673.60 million recorded for the comparable period in 2019.
Other income for the period reflected a total of $154.44 million, a 175% surge compared to $56.25 million recorded for last year.
Consolidated revenues amounted to $1.33 billion (2019: $1.36 billion) for the nine months ended September 30, 2020.

Staff cost and other operating expenses both increased 23%, to close the period at $447.34 million (2019: $362.39 million) and $400.13 million (2019: $326.28 million) respectively. Notably, “The increase in other expenses is mainly related to impairment losses on financial assets arising from the pandemic related downturn in the financial market, asset tax and support services required to grow our business,” as per VMIL.

Notably, VMIL also booked ‘Provision for credit losses on financial assets’ of $54.14 million relative to $20.31 million for 2019.

Total operating expenses for the nine months amounted to $901.61 million (2019: $708.98 million). Management noted that, “the increase in cost is primarily attributable to the expansion of our branch network which is aligned with our strategic goal of increasing our Asset Management business in the medium term.”
Operating profit amounted to $431.93 million for the nine months, a 34% decrease relative to $655.23 million recorded for the prior corresponding period. Operating profit for the quarter totalled $325.34 million (2019: $330.71 million).

Share of loss in associate amounted to $23.42 million (2019: nil).

Profit before taxation amounted to $408.52 million for the period, a 38% decrease relative to $655.23 million recorded for the prior period. Taxation amounted to $46.69 million (2019: $157.84 million).
Consequently, net profit for the nine months amounted to $361.83 million, a 27% decrease relative to the $497.39 million booked for the same period in 2019. Net profit for the quarter totaled $190.94 million, a 22% decrease on the $244.61 million recorded for 2019’s corresponding quarter.

Total comprehensive loss, for the nine months ended September 30, 2020, amounted to $385.01 million relative to an income of $1.68 billion for the similar period in 2019. For the third quarter of 2020, total comprehensive loss amounted to $310.83 million compared to an income of $321.31 million reported for the similar quarter in 2019.

Earnings per share for the period totalled $0.24 (2019: $0.33), while earnings per share for the quarter amounted to $0.13 (2019: $0.16). The twelve month trailing earnings per share is $0.31. The number of shares used in our calculations 1,500,025,000 units. Notably, VMILs stock price closed the trading period on November 12, 2020 at a price of $5.68.

VMIL noted, “In the month of October, we launched our newest location in Savanna La Mar, Westmoreland, taking to eight the number of locations island-wide. The Branch expansion is a part of our strategy to expand our client reach and improve accessibility and convenience for our clients. The number of VMWM branch locations will be increased from four to ten during 2020. Our branches already in operation are located within VMBS Branches at the University of Technology (Utech), Liguanea and Ocho Rios along with our already established locations in New Kingston (Head Office), and Branches in Portmore, Mandeville and Montego Bay. We will continue to work towards rolling out our 2 additional locations, Half Way Tree and Duke Street by the end of the fourth quarter in 2020.”

Balance Sheet at a Glance:

As at September 30, 2020, The Company’s asset base totaled $26.69 billion, up from $24.39 billion at September 30, 2019. The main contributor to the increase in total assets was ‘Cash and cash equivalents’ which amounted to $2.65 billion relative to $1.42 billion in 2019 and ‘Loans receivable’ which totaled $2.33 billion (2019: $1.06 billion).

Total Stockholders’ Equity as at September 30, 2020 was $3.85 billion (2019: $4.36 billion); resulting in a book value per share of $2.56 (2019: $2.91).


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