In the penultimate quarter of 2021 facing continued global volatility, uncertainty continued to impact investor sentiment. Yet Sterling Investments Limited (SIL), posted an impressive 27.5% Year-On-Year (YOY) increase in the value of investment securities.
Charles Ross, Director, Sterling Investments Ltd stated, “Throughout 2020, Sterling Investments Limited (SIL) was able to generate significant increases in its income, US$ dividends and capital gains. During the first nine months of 2021, SIL took advantage of spikes in volatility, took profits on strategic positions, and positioned itself for a shift in monetary policy by the U.S. Federal Reserve. The company continues to earn steady interest income and maintains attractive capital gains on its investment portfolio.”
Adding to the Q3 highlights, the company also posted a 27.7% rise in total assets to J$2.2billion as at September 30, 2021. A 10.87% YOY increase in profit resulted from a 20.7% YOY rise in interest income, reflecting the year on year growth in the size of the portfolio. In addition, SIL benefited from a substantial increase in the realised gains on sale of debt instruments.
Giving his analytical overview on the continued unprecedented trading conditions, Mr Ross, added, “As the battle against COVID-19 continues, the company continues to exercise caution and diligence in its activities. SIL performs enhanced due diligence on the credits within the portfolio and hunts for undervalued securities to enhance shareholder value.”
In terms of the Income Statement, revenue totaled J$184.9 million for the first nine months of 2021, or 8.6% higher than revenue of J$170.3 million for the same period in 2020. This was driven primarily by increases in interest income and gains on sale of debt investment securities, the latter a result of increased profit taking in the portfolio. Total foreign exchange gains declined year-on-year, from J$80.3 million for the nine month period ended September 30, 2020 to J$54.6 million for the same nine month period ended September 30, 2021.
The Jamaican dollar depreciated by 3.2% in the first nine months of 2021 moving from J$142.65 per US$1 as at December 31, 2020 to J$147.24 as at September 30, 2021. Net income totaled J$104.6 million for the first nine months of 2021, 10.9% higher than the J$94.4 million for the same period in 2020. Total expenses for this period increased from J$59.2 million to J$70.5 million due to higher management fees and interest expense, a result of the larger size of the investment portfolio.
“SIL’s investment portfolio is exposed to higher growth economies and 100% of the company’s revenue is denominated in US dollars,” continued Ross, concluding, “By focusing on the global capital markets, SIL is able to achieve higher returns at lower risk levels than its locally focused competitors.”
Sterling Investments Limited was established in 2012, when the JMD/USD exchange rate was J$92 to US$1 and prior to the National Debt Exchange. The company has provided growth and income to its shareholders which include pension funds and other institutional and long- term investors. SIL generates income through interest income generated by the securities in the portfolio, as well as through capital gains that are realised as a result of increases in the price of the securities.