Barita recovers from 2013 dip in profit
Boutique investment house Barita seems to have shaken off its 2013 dip in profit when it earned $70.28 million, reporting September 2015 year end after-tax profits of $242 million, a 264 per cent increase above the figure reported in 2014.
The last time Barita posted above $200 million in profit was in 2012 when it raked in $254.96 million. The $242 million in profits translated to earnings of $0.55 per share. This resulted in a threefold increase in return on equity to 13.1 per cent.
In her report to shareholders, Chairman Rita Humphries-Lewin said that despite numerous changes in the market, the company retained its enviable record of never posting a loss, as she addressed last Thursday's annual general meeting in New Kingston.
Total revenues increased from $1,335 million in 2014 to $1,531 million. This was largely due to the increased performance of Barita Unit Trusts, aided by the mandated shift from the repo business model to that of collective investment schemes.
Barita earnings were made from trading gains, which comprises fixed income and equities, improving by almost 256 per cent to $346 million. This resulted in a 38 per cent contribution to net operating revenues, up from 16 per cent for 2014. Net interest income declined 13 per cent, but the total of $265 million was the second-largest contributor to Barita's improved performance at 29 per cent.
'STRATEGY' THE WATCHWORD
Barita responded to regulatory changes by adding two additional portfolios to Barita Unit Trusts Multiple Portfolio Fund. There was the Barita FX Growth Portfolio denominated in US dollars and the Barita Real Estate Portfolio denominated in Jamaican dollars. Lewin said a key watchword will be 'strategy' as the investment house responds to market needs and conform to regulatory requirements.
"This year we will continue to expand our product lines as a means of increasing our market reach and enhance our customer service and improve returns to our shareholders.," she said. "We will continue to find ways to be more efficient in our operations to decrease costs, and we will employ tighter risk-management practices to mitigate these threats," she added.
Barita also invested in software upgrades. While other players decided to exit the repo market, Barita stayed so that it would remain "an option for our clients who want to operate on this platform", according to the company's annual report.
Total operating expenses was up three per cent to $521 million. This was largely due to increases in staff and administrative expenses of 13.8 per cent and 11 per cent, respectively. Administrative expenses include, among other things, marketing expenses, asset tax, utilities and security costs. General Manager Ian McNaughton said the increase was also a reflection of the changes in the remuneration structure for the Barita staff.
"What we have is a reflection in the growth of our revenue base for last year. As a result of that growth our staff, especially our front office staff, and sales staff increased their own personal earnings," McNaughton said.