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Sagicor CEO Richard Byles is upbeat - Expects growth from banking acquisition

Published:Wednesday | March 12, 2014 | 12:00 AM

 Avia Collinder, Business Reporter

President and CEO of Sagicor Group Jamaica Limited Richard Byles says the main constraint on the performance of the financial conglomerate in the current year will be the economy, which could impact its efforts to sell new products.

But, given that there is no expectation of another extraordinary event equivalent to the National Debt Exchange (NDX), he is upbeat.

"For the new year, we do not have an NDX which cost us $1 billion. Given this - this alone - all of the sections of our business will do a little better," Byles told Wednesday Business on Tuesday.

Sagicor Group ended 2013 with revenues up 19 per cent to $42 billion. Net profit grew at a less robust six per cent to $6.45 billion.

Net investment income fell from $9.5 billion to $8.78 billion, but net premiums surged from $23 billion to $29 billion, while fees and other revenue also climbed from $3 billion to $4.3 billion.

The companies in the group swapped out a total of $60.65 billion of GOJ bonds for longer tenures but lower coupons under NDX and the corresponding Private Debt Exchange, leading to National Debt Exchange, leading to capital losses of $1 billion, the company said in its abridged year-end earnings report. Sagicor's 2013 results were also restrained by the debt swap, and a more than 14 per cent depreciation of the Jamaican dollar, the company said.

The Jamaican authorities are predicting an uptick in economic activity this year, but Sagicor's optimism about 2014 also rests on its acquisition of RBC Jamaica, which will reposition its small bank as the third largest by assets. The $9.5 billion deal is subject to regulatory approval and closure.

Profits for commercial banking subsidiary Sagicor Bank fell by 20 per cent to $1.16 billion last year, also due principally, the group states, to NDX losses, as well as higher group administrative expenses, higher compensation costs, and bigger loan loss provisions.

For Sagicor Life Jamaica, employee benefits drove profit, contributing $2.5 billion to group results and $20 billion to revenue.

Higher benefits paid to clients in the life segment were attributed to portfolio growth.

Byles said that for the coming year he expects that constraints on consumer spending will have an impact on the group.

"Purchasing power is really tight; it's hard to sell new business. But, we will try to be as efficient as possible so the customer can benefit," said the CEO.

"We are good at selling. I expect that we will sell as much new business as we did last year. If we can eke out between five to seven per cent improvement, that will be great, given the economy and how tight it is," he adds.

The CEO said that significant improvement was expected in banking once the current deal with RBC Canada is concluded.

"Once approved, we will try our best to manage the merger to make it smooth and seamless. We expect growth there," he said.

Sagicor Group Jamaica is a financial services conglomerate with subsidiaries in Jamaica, The Cayman Islands and Costa Rica. Its businesses in Jamaica are insurance company Sagicor Life, investment firm, Sagicor Investments Jamaica Limited, and Sagicor Bank. The group is owned by Barbados-based Sagicor Financial Corporation.