Rezworth Burchenson Chief Executive Officer at VM Investments Limited (VMIL) has released the following Consolidated Financial Performance and Report Results for the 6 Months Ended June 30, 2022
The second quarter of 2022 came with many obstacles and uncertainties, but VMIL remained robust and posted a 3-month Net Profit of $242.45 million, 38.56% above the quarter ended June 2021.
The uptick in Net Profit was a result of a 47.88% increase in Other Operating Revenue, when compared to the comparable quarter in 2021, which was sufficient to offset the 62.80% increase in expenses. Net fees and commissions were the primary drivers of the increase in revenue of 157.28%, attributable to our strong execution of both debt and equity related transactions in the review period.
Total year-to-date revenue increased 9.84% compared to the same 6-month period in 2021, particularly due to the exceptional performances of Corporate Finance Advisory Service income. This uptick in revenue was sufficient to offset the 19.99% rise in total expenses. The global inflationary environment increased the costs of operating domestically, as VMIL remained committed to improving the lives of members and promoting the VMIL brand. The growth in revenue enhanced the year-to-date efficiency ratio by 5.76%.
During the quarter, we achieved the following milestones:
Dolla Financial Services Limited (DOLLA) IPO
The DOLLA IPO was the largest in the JSE Junior Market history, raising close to $5 billion. The offer was 10 times oversubscribed and welcomed thousands of new investors and new VM Wealth Management clients. These new investors accounted for 12.75% of the total investors that sought to benefit from the new listing. Dolla became the 45th company to list on the JSE Junior Market and the 145th company to successfully list on the JSE overall, when it listed on June 15, 2022.
Kingston Properties Limited (KPREIT) APO
VMIL was once again selected as the financial partner of choice for the company’s capital raise which brought in over $1.50 billion and raised brand awareness.
Assets
Total assets of $29.12 billion as at June 30, 2022 represented an increase of 1.51% or $0.43 billion over June 30, 2021. The increase was driven primarily by growth in our loan portfolio which climbed by 170.72% or $2.91 billion year-over-year. This was driven by the strategic thrust to grow our Corporate Lending and Margin Loan business and assets including cash and cash equivalents and resale agreements were deployed to this area of the business.
The reduction in assets of $2.12 billion (6.79%) since December 31, 2021 reflects the ongoing strategy to de-risk the balance sheet of our broker-dealer subsidiary, VM Wealth Management in light of the volatile nature of the market during this time.
Liabilities & Shareholders’ Equity
For the second quarter of 2022, VMIL’s funding base expanded with VMIL’s debt raise of $1,153.89M, while derisking the balance sheet and reducing repurchase agreements by $3.74B or 18.25%. Profitable performance resulted in an increase in Retained earnings of $317.78M or 11.76% but, this was countered by a reduction in Investment revaluation reserve from $756M as at June 30, 2021 to -$574.53M as at June 30, 2022. This was as a result of a reduction in prices of securities held, due to the increase in interest rates.
Off-Balance Sheet Assets Under Management Highlights
VMIL continues to act as an agent and earns fees for managing clients’ funds on a non-recourse basis under management agreements. As at June 30, 2022, these funds amounted to $33.88 billion (March 31, 2022: $34.34billion). Additionally, at June 30, 2022, there were custodial arrangements for assets totalling $9.32 billion (March 31, 2022: $9.15 billion).
Growth in our off-balance sheet business will continue to have focused attention in the financial year as we seek innovative channels and new products geared towards creating value for our clients.
VMIL Is Expanding
CARILEND
Carilend Caribbean Holdings Company Limited, (Carilend), a leading Caribbean fintech in which VMIL acquired a 30% stake in 2019, has partnered with Massy Finance to offer 100% web-based personal loans in Trinidad and Tobago. The new online loan, dubbed InstaLoan, is an unsecured personal loan that promises a one-day turnaround on approvals, and doesn’t require borrowers to provide collateral. With operations already in Barbados and Jamaica, customers in Trinidad & Tobago can now qualify for loans between TT$5,000 and TT$50,000 with repayment terms from one to five years. This partnership is expected to boost the performance of Carilend and allow the entity to begin yielding a profit ahead of the projected period.
Home Choice
VMIL, on May 31, 2022, announced its private equity investment in Home Choice Enterprise Limited, a Portmore based enterprise that distributes products that are co-manufactured under its own brand, with a range of soup mixes and ‘Halaal’ products, including its popular ‘Halaal’ Vienna sausages. Home Choice has been in operation for over twenty-two (22) years and is a staple in the local, regional and international market, with a customer base spanning Jamaica and a strong Jamaican Diaspora presence.
Actus Partners
During the quarter also, VMIL partnered with London-based Actus Partners (Actus) to successfully close a new Caribbean private equity fund focused on Small and Medium Enterprises (SMEs). The fund, named the Jamaica Actus Small & Medium Enterprises Fund I (JASMEF) is supported by the Development Bank of Jamaica (DBJ) and is targeting a final fund size of US$100M, of which VMIL has committed US$10M.
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