Tue | Oct 19, 2021

Eppley earnings inoculated amid pandemic

Bet on asset management pays off during COVID crisis

Published:Wednesday | April 14, 2021 | 5:35 AM
Nicholas Scott, CEO of Eppley Limited.
Nicholas Scott, CEO of Eppley Limited.

Having shifted more aggressively into asset management through the acquisition of a property fund two years ago, Jamaican investment company Eppley Limited has ridden the COVID downturn to bigger profits. Asset management fees jumped 87 per cent...

Having shifted more aggressively into asset management through the acquisition of a property fund two years ago, Jamaican investment company Eppley Limited has ridden the COVID downturn to bigger profits.

Asset management fees jumped 87 per cent for the company to $194 million, easily offsetting the 18 per cent dip in net investment income, which fell to $125 million.

“While our net interest income decreased as a result of being selective in lending in an uncertain environment, our asset management income grew. This was a function of fees earned managing the Eppley Caribbean Property Fund, the Caribbean Mezzanine Fund and other assets. These fees are stable, recurring, permanent sources of income that are not exposed to market risks,” Eppley General Manager Justin Nam told the Financial Gleaner.

Profit climbed 38 per cent to $225 at year ending December 2020, a new record for the company. Its cash holdings rose nearly 47 per cent to $680 million.

Prior to the pandemic and during the health crisis, Eppley Caribbean Property Fund Limited SCC–Value Fund closed the acquisition of various properties in and outside Jamaica, with two of the local purchases in the past year being The Mall Plaza in uptown Kingston last December and the Industrial Sales complex at 105-107 Marcus Garvey Drive near the Kingston waterfront in September.

Eppley’s core business is credit products, such as insurance premium financing, loan and lease financing, but the company has been reshaping its revenue streams over the past three years to grow earnings through fees.

“We fundamentally believe that we need to move to improving not only the quantity of our profits but also the quality,” said CEO Nicholas Scott, explaining that the onset of the COVID-19 pandemic also caused Eppley to be more selective in how it grew its loan book.

“Eppley’s performance in 2020 has shown the resilience of our business. While we continue to monitor our risks carefully, we are proud that we have not had any material delinquencies or restructurings. The combination of our proprietary investment portfolio and asset management business has allowed us to grow our earnings during this period,” Scott said.

The company grew earnings while growing expenses – taking a different approach to many companies that dramatically cut costs and jobs during the pandemic in order to weather the economic lockdown that COVID-19 sparked.

Among the $190 million spent by Eppley on its operations, $26.21 million was used to beef up staffing, said Nam. It pushed the company’s wage bill to $118 million.

“Our business has grown considerably in size and scope. To ensure that we continue to have the resources in place to manage our platforms we have invested to attract and retain the best people and built out our investment and accounting teams,” the GM said.

“As a specialised financial services firm, we believe this investment is justified provided that our teams continue to perform at the highest levels,” he added.

neville.graham@gleanerjm.com