Rezworth Burchenson Chief Executive Officer at VM Investments Limited (VMIL) has released the following Consolidated Financial Performance Report Results for the 3 Months Ended March 31, 2022.
For the first quarter of 2022, market volatility due to the prolonged effects of the pandemic, as well as the military invasion of the Ukraine, adversely impacted VMIL’s operations.
Our investment portfolio was particularly impacted by the volatility in the global and local markets and suffered unanticipated losses, even as we positioned for a rebound in the real economy locally with the relaxation of containment measures and the resumption of tourism activities.
VMIL’s 90.78% year-over-year decline in Net Profit, resulted mainly from a reduction in Gains from Investment Activities, which declined 63.56% from $199.39M to $72.66M. The bond market saw a general decline as several monetary authorities, including Jamaica’s began tightening monetary policy through increased interest rates. Concurrently, the equity market also came under significant pressure as geopolitical tensions led to rises in commodity prices and increased uncertainty.
The Group’s performance was also adversely impacted by foreign exchange losses and valuation losses on bonds due to the global instability.
Improvements in Interest Income and Net Fees and Commissions of 30.34% and 34.08%, respectively were insufficient to compensate. In particular, income from our Capital Markets fees performed well, as the strategies devised by our team generated strong gains in the Group’s Loan portfolio when compared to the activities in the prior period.
These factors combined saw our Total Revenues fall 20.57% during the quarter, while Operating Expenses grew 5.52% compared to the prior year.
Notably, the Group was able to offset its before tax losses by way of deferred tax credits. This resulted in a net credit of $29.16 million for the period.
In the midst of the challenging market environment, we remain confident that a focus on our strategic pillars of Extending Distribution, Sales & Service Excellence and Regional Expansion will allow us to navigate the turbulent environment and position VMIL as a nimble and strong financial institution that is able to respond to and capitalize on opportunities as they present themselves in the new and evolving world.
To that end, during the quarter, we achieved the following milestones:
Diaspora Engagement
To bridge the gap between members of the investing public residing in the Diaspora, we have embarked on an aggressive push into key Jamaican markets overseas to build financial literacy and provide an avenue for these persons to invest locally. To that end, we executed 2 roadshows in the US during the quarter and expect to execute at least 8 more for the remainder of 2022. This resulted in a 288% increase in the number of clients in the Diaspora and a resultant increase in revenue earned from these clients.
VM Wealth Management Capital Injection
In an effort to support expansion activities of its subsidiary, VM Wealth Management, VM Investments Ltd approved a capital injection of $600 million to be executed in two (2) tranches, the first of which took place on March 31, 2022. This additional capital will be used to drive income generating strategies, that will exploit
investment opportunities that are expected to manifest based on the current investment environment.
Carilend Update
In August 2019, VMIL acquired a 30% interest in Carilend Caribbean Holdings Company Limited, Carilend.
Carilend is a FinTech company that was founded in 2015 and has revolutionized borrowing and lending in the Caribbean by offering entirely online lending services.
Barbados’ economy has expanded for the last 3 consecutive quarters, which has had a favourable impact on Carilend’s activities, coupled with the continuous recovery of the Jamaican economy. Carilend is expected to continue outperforming its projections towards becoming profitable and is planning to expand its footprint within the next 12 months into Trinidad and Tobago.
RFI Update
Republic Funds (Barbados) Inc (RFI) is licensed as a Mutual Fund company pursuant to the Mutual Fund Act (Barbados) and is subject to regulatory oversight by the FSC (Barbados). RFI is one of five mutual fund companies operating in Barbados and operates three investment funds available to investors. The three funds are: the Capital Growth Fund, the Income Fund; and the Property Fund. In November 2021, we signed an agreement to purchase 100% of RFI, subject to regulatory approval. This acquisition aligns with the organization’s overseas expansion thrust.
Assets
Total assets of $30.22 billion as at March 31, 2022 represented an increase of 9.77% or $2.69 billion over the same period in 2021. The increase was driven primarily by growth in our loan portfolio which climbed by 157.16% or $2.67 billion year-over-year. Other areas of asset growth came from an increase in our Property, plant and equipment (+$717.85 million), as well as an increase in our Deferred tax asset (+$408.68 million) year-over-year.
The Group also saw declines in resale agreement balances which were strategically reinvested in higher yielding investment securities.
Liabilities & Shareholders’ Equity
For the first quarter of 2022, VMIL’s funding base expanded considerably. Specifically, total liabilities increased year-over-year by 13.23% or $3.1 billion, primarily due to additional borrowing (+$3.21 billion) year-over-year accessed through the issuance of bonds by the company. Shareholders’ equity declined year-over-year by 9.94% or $408.43 million ending at $3.70 billion as at March 31, 2022.
Off-Balance Sheet Assets Under Management Highlights
The Group acts as agent and earns fees for managing clients’ funds on a non-recourse basis under management agreements. As at March 31, 2022, these funds amounted to $34.34 billion (December 31, 2021: $34.71 billion).
Additionally, at March 31, 2022, there were custodial arrangements for assets totalling $9.15 billion (December 31, 2021: $12.74 billion).
Growth in our off-balance sheet business will continue to have focused attention in the financial year as we seek innovative channels and products geared towards creating value for our clients.
To view the full report, CLICK HERE