Sat | Aug 18, 2018

Allowance for credit losses up 92% at Access Financial

Published:Wednesday | August 13, 2014 | 12:00 AM
The head office of Access Financial Services. - File

For loans serviced from payrolls, the untimely submission of salary deductions from Government and other employers has resulted in a 92 per cent increase in allowances for credit losses at Access Financial Services Limited for the second quarter ending June, according to its financial statements.

The practice was particularly acute among customers who are government employers, said Access, but added that corrective action has been taken and it is anticipating a reduction in allowances for credit loss in the upcoming quarters.

Credit loss allowances for the quarter stood at $75 million, and at $114 million for the half-year ending June.

Access Financial offers business loans to micro-, small- and medium-size entrepreneurs involved in agriculture, manufacturing, trading and the service sectors, to be used for working capital support or to facilitate the purchase of fixed assets. Loan amounts range from $10,000 to $1 million.

The microfinancing company also offers personal loans to both private- and public-sector employees for school expenses, home improvement, medical expenses, payment of utility bills and motor vehicle repairs. Those loans range between $10,000 and $500,000.

Access also has a facility under which it grants public- sector workers loans up to a maximum of $200,000, and another up to $1.5 million.

Otherwise, the company's financial performance continued to improve, despite an ongoing court fight between founder and CEO Marcus James and the company's board. Access has declared a dividend of 36.5 cents per share - totalling $100 million - payable on September 1.

According to the financial statements, total revenue for the quarter increased by $69 million or 35 per cent when compared with the same period last year, and for the six months totalled $521 million, an increase of 40 per cent.

Loan disbursements for the quarter increased by $87 million or 20 per cent, while for the six months it grew by $221 million or 28 per cent compared with the same period last year.

Interest income from loans increased by $55 million or 30 per cent during the quarter and for the six months grew by $126 million or 36 per cent to $473 million. Other operating income was up $2.5 million, an increase of 22 per cent when compared with the second quarter of 2013.

Net profit for the second quarter was $65.6 million, a 13 per cent increase over the comparative period last year, and for the six months it increased by 22 per cent to approximately $146 million. Access said this has resulted in a year to date earning per share of $0.53, compared to $0.44 during the comparative period last year.

During the quarter under review, other operating expenses, which include rent, utilities and marketing increased by $3.7 million.

As at June 30, the net loan portfolio stood at $1.13 billion, representing an increase of 46 per cent from $776 million at June 2013. This resulted in an increase in total assets to $1.34 billion, an increase of 49 per cent over the corresponding period in 2013.

Total liabilities increased by 64 per cent or $231 million. The movement was attributed to the issuing of a $102 million corporate bond in the fourth quarter of 2013.

Access said loan disburse-ments increased by 28 per cent and that growth has been deliberately stronger in the business category, having improved its product offerings to the micro- and small-business sector in keeping with its desire to play an increasingly important role in the development of entrepreneurship in Jamaica.