Banking profit fell to a loss of $16 million this year so far, from a profit of $271.8 million for the nine-month period to September last year, helping to pressure Sagicor Group’s profit for the third quarter and year to date.
The financial group saw a sharp fall in profit in the quarter, from $1.56 billion to $1.1 billion. “Post-acquisition losses relating to the RBC Jamaica acquisition that was completed effective June 2014 amounted to $231 million, including rebranding and restructuring costs” the Sagicor management said in a release with the result.
The Group produced net profits of $3.84 billion, with $3.79 billion available to stockholders, for the nine months to September. This outcome was better than last year by a mere 2.5 percent. Earnings per stock unit came out at $0.99. Profit for third quarter amounted to $1.08 billion compared with $1.52 billion for 2013 after minority interest. The current period results and the nine months profits were impacted by costs for rebranding and rationalizing operations, following the RBC Jamaica acquisition, higher taxes and lower unrealised FX gains in 2014 compared to 2013. The 2013 results included the negative impact of the Government of Jamaica NDX debt swap.
Segments| The group’s performance for the nine months disguises what has taken place in the segments. Individual insurance generated 20.5 percent more profit than it did in 2013, to reach $1.3 billion, employees’ benefit jumped 26.3 percent to $2.3 billion and investment banking climbed 83 percent to $569 million, this segment would have had the negative impact of the NDX in 2013. The category, All Other fell sharply, from $272 million to $79 million.
Revenues and Expenses| Revenue grew 9.6 percent above prior year, to hit $34.2 billion. The 2013 revenue included the realised capital losses as a result of the debt exchange. “2014 Net Premium Income, in aggregate, was slightly below that for 2013. Net Investment income was higher than in the prior year, reflecting business growth and units’ appreciation in the Segregated Funds. The 2013 Net investment Income number also includes capital losses from the NDX and PDX,” the manager’s statement said.
“Group administration expenses of $7.52 billion were 35 percent more than in 2013. The significant increase includes post acquisition expenses for the RBC portfolio and one-time costs for re-branding the RBC portfolio and rationalization of operations. The Banking Group also had operating costs associated with the new flagship Hope Road branch which was opened in December 2013,” management explained in their report to shareholders.
The increased administration cost which was $3.4 billion in the third quarter was $1.6 billion more than the amount incurred in 2013 due to the added ongoing cost associated with running the RBC banking operation. The results for the December quarter should see a sharp reduction in this category of expense and therefore help improve the profit to what would normally be expected.
Assets| With the acquisition of RBC Jamaica operations the total group assets now sits at $262 billion up from $189 billion at September 2013 and equity stands at $42 billion.