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Sagicor profits big in all divisions as banking arm transforms

Published:Friday | March 18, 2016 | 3:00 AM
Richard Byles, president and CEO of Sagicor Group Jamaica.

Sagicor profits big in all divisions as banking arm transforms

Steven Jackson

Senior Business Reporter

Financial conglomerate Sagicor Group Jamaica (SGJ) transformed the heavy loss-making RBC Jamaica - now Sagicor Bank Jamaica - acquired two years ago into a billion-dollar earner which helped to push group profit to a new record of $9.8 billion at year end December 2015.

Profit in 2014 topped $8.5 billion.

In 2015, all business segments performed better than the previous year, according to leadership duo Chairman R. Danny Williams and President and Chief Executive Officer Richard Byles in a statement accompanying the results.

Group revenues climbed to $55 billion, up 21 per cent higher year-on-year, "driven by the RBC portfolio being included for the full year in 2015 but for only six months in 2014" according to both directors. Sagicor Group acquired RBC Jamaica in 2014 for US$84 million and merged it with its existing commercial banking operations.

The insurance segments, led by flagship Sagicor Life Jamaica, continued to generate the bulk of group profits, earning $4.9 billion and $3.3 billion for life and employee benefits segments, respectively. The investment banking arm generated $1.4 billion in profit, and the commercial bank generated $1.3 billion in profits. Comparatively, a year earlier the commercial banking division recorded a $498-million net loss.

"Sagicor Bank showed good growth in its loans portfolio and credit cards portfolio and improvement in non-performing loans. Sagicor Investments earned increased fees from stockbrokerage and corporate financing activities and growth of the Sigma Funds," said the directors.

"Results of the individual life division were buoyed by high new business, improved conservation and a significant release of actuarial reserves with the change in the tax regime to a net profit tax; previously, life companies were taxed on premium income and investment income. The employee benefits division enjoyed good new business and generally favourable claims experience. The division also benefited from the release in actuarial reserves for taxation."

Fees and other revenues for the group totalling $6.21 billion were much higher than the prior year with the inclusion of the expanded Sagicor Bank portfolio.

Due to unrealised losses of $7.1 billion on investments available for sale, Sagicor Group's comprehensive income statement showed a dramatic decline to $3.4 billion compared to $10.8 billion a year earlier. This was due to its holding of global bonds and securities, which declined in value resulting from the economic performance of global powers, including Europe and China, as well as the dip in oil prices.

Sagicor Group closed FY2015 with a $46.6-billion capital base, up one per cent. Return on equity remains stable but high at 21 per cent.

In the year ahead, the group has a favourable outlook, in part due to stable macroeconomic indicators.

"The Jamaican economy is performing well in respect of key macro indicators, but GDP growth remains low. All of the quarterly International Monetary Fund (IMF) tests were passed during 2015. We look forward to continued positive and focused fiscal management," said Sagicor, whose CEO co-chairs a committee - EPOC - that acts as a watchdog over Jamaica's IMF programme.

"Our group results for 2015 were very pleasing and reflect our strategies for business growth, excellent client service, team members' engagement and a heavy reliance on the use of technology. We are confident and optimistic about the future."

Sagicor's 2015 performance puts it in striking distance of long-standing profit kings, banking groups NCB and Scotia Group.

steven.jackson@gleaenerjm.com