Following on the performance of a record-setting year for Barita ending September 30, 2019, the company is reporting strong results for Q1 FY 2020 (ending December 31, 2019) reflecting robust growth across most core business lines.
Net Profits surged 382 per cent year-over-year to $503 million for the quarter up from $108.4 million a year earlier, producing earnings per share (EPS) of $0.61 up from a restated $0.17 per share in Q1 FY 2019.
“We continue to remain optimistic about the opportunities before us to drive growth, diversification and sustainability in our revenue base.”— Myers
Barita continues to focus on diversifying revenue from Net Interest Income to Non-Interest Income. The results of this focus show up clearly in overall revenue composition. Non-Interest Income grew to 81.6 per cent of Net Revenues up from 68.6 per cent a year earlier. Non-Interest Income grew by 241.7 per cent to $922.9 million (out of $1.13 billion in Net Revenue for the quarter) up from $270.1 million (out of $393.7 million in revenue for the quarter) in Q1 FY 2019.
The largest driver of this Non-Interest Income growth is the ‘Fees & Commission Income’ business line, which grew 265 per cent to $578.7 million up from $158.6 million a year earlier. The sharp rise in fee income was primarily driven by the fairly new Investment Banking business line and continued growth of the asset management business.
“We expect this business line to continue to be an area of consistent and above-trend growth for Barita, through support of both the product and deal pipeline in the asset management and investment business lines respectively,” said Mark Myers, Barita’s chairman.
To support such rapid increases across the business, operating expenses also increased 142.6 per cent to $490.9 million for Q1 FY 2020 up from $202.3 million a year earlier. Despite such a large increase in operating expenses, Barita’s efficiency ratio improved by falling to 43.38 per cent from 51.38 per cent a year earlier reflecting the company’s ability to improve operational efficiency throughout the organisation while driving stellar growth across most business lines.
Most, if not all, of the strong performance outlined above can be credited to a significantly strengthened balance sheet with on-book assets growing 139.2 per cent to $45.2 billion as at December 2019 from $18.9 billion a year earlier. This balance sheet expansion was financed primarily by the $10.2 billion in equity capital raised in 2019 and $14.2 billion in repo liabilities taken on as at December 31, 2019.
Despite potential global headwinds forecast by the IMF in October 2019 resulting in slowing global growth, Myers ended the quarterly results report on an upbeat note.
“We continue to remain optimistic about the opportunities before us to drive growth, diversification and sustainability in our revenue base. We will continue throughout the next several quarters to prudently manage the company’s asset base in the context of the emerging risks in our operating environment,” he said.