Sagicor Group Q2 profit up 40%
For the six months to June net profit of $6.39 billion attributable to stockholders rose 21 percent over the similar period in 2018. Earnings per share come out at $1.64 per share for the half-year and 95 cents for the quarter.
According to the report accompanying the results, “the current year-to-date results benefited mainly from overall good new business and portfolio growth which were both better than the prior year. The 2018 numbers included large impairment charges on Government of Barbados and other bonds. There were other factors that influenced the outcome for the period, these include, The fluctuating rate of the Jamaican dollar to the US dollar which reached a decline of 5.5 percent in April compared to the rate at December 2018 and by June bounced back to a 2.9 percent decline. The Group picked-up both realized trading gains and unrealized revaluation gains for higher US dollar positions. Appreciation of the Jamaica Stock Exchange main index which grew by 23 percent during the six months period. The Group picked-up good trading gains and increased bond prices on USA stock markets.”
Sagicor Bank enjoyed an excellent period contributing net profits of $1.04 billion for the current period, versus $772 million recorded in 2018, from revenues of $6.36 billion, 18 percent more than the prior year.
The stock traded on the Jamaica Stock Exchange on Tuesday at $58.
Jamaican dollar makes more gains
The rate of exchange for the United States and Jamaican dollar inched further in favour of the local currency on Friday as dealers sold US$42.2 million at an average rate of $127.99 on Friday, down from an average of 128.126 with the sale of $67 million on Thursday.
On Friday, dealers bought US$37.38 million at an average of $126.74, a decline from $127.38 with the buying of US$61 million on Thursday.
Dealers bought $45,56 million in all currencies on Friday and sold US$50.28 million compared to purchases of US$77.6 million and sale of US$82.5 million on Thursday. Thursday’s trading includes the buying of Can$19.7 million and sale of Can$19.4 million.
Major net sellers of US dollars on Thursday are, Citibank with the purchase of US$160,000 and sale of US$1.65 million, First Global Bank buying US$271,000 and selling US$1.96 million. JMMB Bank ended with the buying of US$839,000 and selling $3.6 million, JN Bank purchased $868,000 and sold $2.48 million, Victoria Mutual Building Society bought $720,000 and sold of $2.45 million but First Caribbean purchased $5.6 million and sold just $1.38 million.
On Friday, Bank of Nova Scotia purchased $9.2 million and sold just $5 million, First Caribbean Bank bought US$813,000 and sold US$1.3 million, JMMB Bank ended buying US$1.87 million and sold $4.8 million, JN Bank purchased $1.16 million with sales of $1.87 million. National Commercial bought US$3.56 million and sold $8.5 million, Sagicor Bank bought $852,000 while selling US$1.99, Victoria Mutual Building Society purchased $693,000 and sold $1.3 million but Citibank purchased US$1.7 million and sold just US$587,000.
Sagicor messes up interest charge?
Sagicor Bank suffered a computer glitch in February, leading to statements for a number of some customers having no interest reflected on them, on balances on which interest was due.
There are no indications that the bank advised their clients about the error, and when it would have been corrected. in March the bank adjusted for the error but made customers no wiser. not only did they correct for the omission for February they compounded it by included the charge with that of March, without any indication for the larger than usual interest charge on the statement.
Interest on US dollar credit cards are 18 percent per annum, or 1.5 percent per month, the March statements show that they in fact charged around 3 percent. Based on the amount outstanding on a specific card the interest rate of 1.5 percent should have resulted in a charge of roughly $52, instead the bank charged $97.46 or what appears on the surface of overcharging of $45.
IC Insider spoke with a Mr. Erwin Lyons a supervisor at the bank who indicated that there was a computer glitch which was not resolved before the February statements, flowing from that the March statements now show the charges for February and March as one sum. Lyons indicates, that the problem affected both local and US dollar based cards. Lyons could not say why no notification was sent to customers about the matter nor why the amounts were not shown separately on the statement, but he did indicate that customers should have been advised about it.
More insider buying at Sagicor
Sagicor Group have been enjoying trades by insider on several occasions this year. The group recently advised that a director purchased 249,648 shares between November 27 & December 1, this year.
The last time before this that an insider traded in the company’s stock was in October, when the company advised that an executive Purchased 417,016 shares under the SGJ Executive Long Term Inventive Scheme on October 24, 2014.
The financial group saw a sharp fall in profit in the quarter, from $1.56 billion to $1.1 billion and net profit of $3.84 billion, with $3.79 billion available to stockholders, for the nine months to September, which was 2.5 percent better than in 2013. the decline in profit in the September quarter is due primarily to cost associated with the acquisition of RBC Royal Bank local operation at the end of June this year. With staff reduction, branch closures and amalgamations, the losses in the acquired banking operation should be sharply reduced from that in the September quarter.
Sagicor Group concludes RBC purchase this month
Regulatory approval has been granted for the Sagicor Group Jamaica to acquire full control of RBC Royal Bank (Jamaica) and its subsidiary – Securities Jamaica Ltd. Sagicor In a release stated that “ we expect to complete the process of acquisition and transfer of business by the end of June. We will be taking steps to combine the operations of both banks to operate under the Sagicor Bank branch, which will involve rebranding all RBC Jamaica branches to Sagicor Bank branches. Our Teams at Sagicor Bank and RBC Jamaica will be working to ensure a smooth transition for all our new and existing customers. Over the next 12 months, we will be working to integrate our technology platforms so that customers will be able to bank at any of our branch locations”.
RBC Royal Bank (Jamaica) has been incurring large annual losses which led to its parent taking the decision to divest themselves of the local operation making it the second time that the company has exited the local market. In the 1990s Royal Bank of Canada sold out its remaining local interest to Jamaica Mutual life who subsequently sold it to National Commercial Bank.
Sagicor Group earlier in the year confirmed the acquisition of RBC Royal Bank Jamaica’s operations for a price of $9.5 billion with the book value at $9 billion at the end of March.
Pooling Sagicor Bank with that of RBC will create a combined banking group with assets of nearly $76 billion with loans of $38 billion with $28 billion coming from RBC and revenues around $12 billion
This will not be the first time that Sagicor Bank would have entered in merger arrangements having absorbed Manufacturers Merchant bank and Trafalgar Development Bank some years ago.
The RBC operation was been bleeding around $500 million per quarter the book value. For the twelve months to September last year the RBC lost $1.7 billion and $456 million between July and September according to central bank’s data. For the year ending October 2012, RBC reported a loss of $2 billion before tax which was down from $3 billion in 2011. In 2012 loan losses contributed $650 million to the loss and income was inadequate to cover housekeeping expenses. Most likely the NDX in 2013 that cut interest rates would have negatively affected them thus reducing the net interest margin. Royal Bank’s problem apart from heavy loan losses is the fixed operating cost that the income generated cannot match. The Group will embark on cost cutting some of which is expected to flow from branch closure where branches overlap.