Friday, October 31, 2008

Capital & Credit records big jump in profits

Published: Friday October 31, 2008

The Capital & Credit Financial Group, headed by Ryland Campbell has, recorded un-audited after-tax profits of J$72 million for the quarter ended September 30, 2008 (third quarter), as opposed to J$33 million for the same period last year, thus representing a 118 per cent increase. This profit figure was generated from gross operating revenue of J$1.449 billion.

Its flagship subsidiary, Capital & Credit Merchant Bank also posted stellar net profits which came to J$72 million, a 191 per cent increase on the J$25 million recorded for the same period in 2007.

These results come against the background of a turbulent financial crisis gripping both the US and Europe which will have far-reaching consequences for the Jamaican financial landscape. Capital & Credit took steps to realign its revenue-generating activities and it seems to have paid off.

For the nine-month period the Group's profits increased to J$341.39 million compared to J$291.25 million for the same period last year. Executive chairman Ryland Campbell attributes the improvement in the group's bottom line to an increase in net interest income.

For the third quarter, the group's net interest income grew by 66 per cent to J$339 million contributing 79 per cent of total revenue. For the same period last year, net interest income contributed J$204 million. Commission and fee income jumped from J$28 million last year to J$40 million for the period under review . Capital & Credit staged a turnaround as far as foreign exchange trading was concerned, coming from a loss of J$19 million last year to generating J$25 million for the period under review. Year to date net income grew by 76 per cent to J$997.47 million, a significant increase on the J$567.41 million recorded for the same period in 2007.

Capital& Credit's total assets as at September 30, 2008 fell to J$49.83 billion from the J$57.83 billion recorded for the same period last year. It has made a concerted effort to expand its corporate and retail lines while acquiring higher-yield assets.

The merchant bank under the stewardship of CEO and president Curtis Martin also fared well, with year to date profits coming in at J$261 million, an increase of 20 per cent compared to the J$218 million for the corresponding period in 2007. The bank recorded gross operating revenue of J$625 million, a slight improvement on the J$616 million recorded for the same period last year.

For the nine-month period the merchant bank benefited from improved margins resulting in a 141 per cent growth in net interest income to J$628.40 million compared to J$260.98 million in 2007. Commissions and fees doubled this quarter to J$12.4 million from the J$6.8 million registered for the same quarter last year. Foreign exchange trading moved to J$19.8 million, a notable increase on the J$7.7 million bagged for the corresponding quarter of 2007.

With inflation on the rise it came as no surprise that staff costs at Capital & Credit Merchant Bank continue to trend upwards. For the period under review staff costs came in at J$83.4 million, a significant increase on the J$58.8 million posted for the three-month period last year. The bank's total assets as at September 30, 2008 stand at J$25.65 billion compared to J$32.28 billion in 2007. The bank's senior management puts this down to a focus away from low-yielding treasury activities and placing greater emphasis on corporate business lines.

Martin has chosen to look more to the bank's loan book portfolio and for the nine-month period under review, loan interest income registered a 29 per cent increase moving to J$757 million from the J$588 million posted for the same period last year.

For the third quarter of this year, the loan book portfolio saw a 19 per cent increase netting J$260 million compared with J$217 million for the same quarter last year.

Capital & Credit have turned things around and it is a far different story from a year ago. Speaking with The Business Observer last night, Capital& Credit Merchant Bank CEO and President, Curtis Martin said: "For more than a year now we have been shifting our business model from securities trading to net interest income and placing greater emphasis on core business. For the last two years 50 per cent of our revenue stream has been from securities trading. Recently there have been fewer opportunities in trading as prices continue to fall.

"Our foreign exchange trading department is now much better trained with greater focus and this has paid off for us. Our unit trust continues to do well bringing in about J$30 million a year."

Deputy Group President Andrew Cocking added: "Our remittance operation is running a little behind but we expect to break even or make a slight loss. You must remember we don't work with the likes of a Western Union although we have partnered with two Caribbean companies, namely ABI and Laparkan.

Capital & Credit International Inc, the Group's international broker, which handles US treasuries and such, is expected at the very minimum, to break even or should make a profit this year.

We have been focused on integrating the entire group and we have good momentum going into next year."

Source: Jamaica Observer

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