VMIL reports 27% decrease in year end net profit

March 08, 2021

Interest income increased by 15% to $939.26 million relative to 2019’s $817.57 million. Interest income for the quarter amounted to $205.81 million, 2% above the $202.20 million booked for the similar quarter of 2019. Additionally, other interest income for the year was realized at $3.36 million (2019: $8.22 million).

Interest expense for the year increased by 15% to $652.99 million (2019: $565.40 million). As a result, net interest income increased by 11% to $289.62 million compared to $260.38 million in 2019. Net interest income for the quarter amounted to $37.50 million (2019: $47.33 million).

Gain from investment activities totalled $593.99 million for the twelve months relative to the previous year’s $485.90 million.

Dividend income amounted to $2.42 million (2019: $813,000) for the year.

Other income increased to close at $19.01 million relative to 2019’s $2.74 million.

Net fees and commissions decreased by 1% to $925.32 million (2019: $933.13 million), resulting in other operating revenue of $1.59 billion (2019: $1.42 billion).

As a result, net interest income and other operating income increased by 11% to $1.88 billion compared to $1.68 million in 2019. VMIL noted, “This growth in revenue was primarily driven by gains from investment activities, which increased by $108.09 million.”

Staff costs amounted to $587.49 million in contrast to $518.02 recorded in 2019. The impairment loss booked for the year was $119.32 million, compared to a gain of $96.04 million in 2019.

Other operating expenses for the year amounted to $533.91 million compared to $459.42 million booked in the previous year. Management indicated that, “this is mainly due to our investment in human resources as well as information technology and process improvements, which will allow us to seamlessly and efficiently launch various asset management products. Our efficiency ratio ended the year at 59.8%, up from 58.1% for 2019.”

Total operating expenses for the year under review amounted to $1.24 billion (2019: $881.40 million).

Total operating profit for the year under review amounted to $634.88 million (2019: $801.56 million).

Share of loss in associate closed at $36 million relative to $15.34 million in 2019.

Consequently, profit before taxation amounted to $598.87 million relative to a profit of $786.23 million in 2019.

Tax charges for the year amounted to $165.28 million, a 12% decrease when compared with the $188.18 million incurred by VMIL for 2019. As a result, the net profit for the year amounted to $433.59 million relative to a profit of $598.05 million, a 27% decrease. Net profit for the quarter amounted to $71.76 million compared to a $100.66 million for 2019.

Earnings per share (EPS) amounted to $0.29 for the period, relative to earnings per share of $0.40 in 2019. EPS for the quarter amounted to $0.05 versus a EPS of $0.07 for the corresponding quarter of 2019. The number of shares used in our calculations is 1,500,025,000. Notably, VMIL stock price close the trading period on March 08, 2021 at $5.32 with a corresponding P/E of 18.40 times.

Management noted that in 2020, VMIL:

“Launched an innovative Client Management Portal, our first digitalisation project, which allows our clients to conveniently access their statements and make transaction requests online.

Accelerated the expansion of our local footprint, with the establishment of four additional branches, taking the number of touchpoints to ten. Additionally, we launched our Premium Wealth Service catering to our ultra-high net worth clients.

Executed on the regional expansion of Carilend, our peer-to-peer lending platform with the launch of Carilend Jamaica.

Successfully launched two additional products based on feedback from clients: VM Unit Trust Goal Maximizer Portfolio and our US Equity Trading platform.

Grew market share in our Asset Management business despite the turbulent investment markets.

Launched new and upgraded systems in the areas of investment management, risk management, complaints management, anti-money laundering and customer experience.

Reported stellar performance of our Key Risk Indicators (KRIs) as measured in our Enterprise Risk Management framework, indicating the continued strengthening of our risk management practices.

Achieved significant improvement in our Net Promoter Score (NPS), attributable to our efforts at improving customer experience.

Continued the upward trajectory in our human resource engagement index, surpassing global and local benchmarks as we continue to drive towards our strategic goal of Employer of Choice.”

Balance Sheet Highlights:

The company, as at December 31, 2020, recorded total assets of $29.72 billion, an increase of 17% when compared to $25.33 billion recorded last year. The increase was mainly attributed to Resale Agreements which closed at $7.38 billion relative to $3.94 billion in 2019.

Total Stockholders’ Equity as at December 31, 2020, closed at $4.33 billion (2019: $4.28 billion), resulting in a book value per share of $2.89 per share compared to $2.85 in 2019.