Access still in expansion mode
Microlending firm Access Financial Services Limited is still in growth mode and open to snapping up new prospects, even beyond Jamaica's borders.
Chairman Rex James said at the company's annual general meeting on Thursday evening that the outlook for the company "includes plans to expand elsewhere".
"You will hear more about that later on. We had a successful financial year and you will hear about bigger things to come," he said.
Pressed for details by shareholders, the board described the expansion plan as a broad strategy rather than a precursor to any definitive acquisition.
"What the chairman meant to say is that we are always looking for opportunities to expand and grow our portfolio; we always are looking for opportunities," said CEO Marcus James.
Access Financial operates from 25 branch locations, which includes its subsidiaries. James said, when quizzed whether the company would consider as a strategy acquiring overseas entities, that "anywhere where there is an opportunity to make money and increase shareholder value".
Access made two acquisitions last year - the assets of rival Damark Limited for $180 million and Micro Credit Limited for $80.7 million. The acquisitions resulted in the loan book net of provisions growing to $2.9 billion from $2.6 billion a year earlier.
At the same time, the company acknowledged that its non-performing loans at some 13 per cent of its gross loans remains about five percentage points higher than the eight per cent ceiling it would want. The NPLs or impaired loans above 30 days grew 46 per cent year on year to $400 million or $128 million higher than a year earlier. The rise in NPLs was due to the acquisition of outside loan businesses with different risk profiles, Marcus James explained.
In its first quarter ending June, Access made net profit of $217 million, up 16 per cent compared to $188 million for the corresponding June 2017 period.
Total assets rose 21 per cent year on year to $3.86 billion.
The company continues to post high levels of return on equity at 40 per cent for the June quarter, compared to 47 per cent a year earlier. Despite the decline the current ROE is above the 30 per cent that some companies strive for.