Embassy loans portfolio drives revenue for Access Financial

Access Financial Services Limited recorded lower net profit after tax of J$330 million for the year ended March 31, 2020, compared to the restated amount of J$446 million for the same period last year.

Increased revenue flowing from new subsidiary Embassy loans was tempered towards year end by the spread of COVID-19.

The Board of Directors said the 26 per cent decline in net profit was attributable to lower net interest margins and an increase in operating costs, particularly in relation to higher allowance for credit losses and loans written off, according to statements accompanying the results.

The financial year represented the first year of the full consolidation of Embassy Loans Inc. a new, wholly-owned subsidiary in Florida, USA, which was acquired in December 2018.

Loans and advances for the Group increased by $1.06 billion or 31 per cent year over year, and stood at year end at $4.47 billion.

Directors said the growth in the portfolio is as a result of strong disbursements during the year for both Access and Embassy Loans, of 22 per cent and 20 per cent respectively.

Net operating income for the year ended March 31, 2020 amounted to $2.15 billion, an increase of $506 million or 31 per cent with the consolidation of Embassy Loans.

Directors noted, “The increase in net fee & commission income of $306 million year over year is due to Embassy Loan’s business model which generates a significant amount of its revenue in fees.”

Total assets as at March 31, 2020 was $5.96 billion, compared to the restated amount of $4.50 billion as at March 31, 2019.

Total liabilities increased by $1.18 billion year over year to $3.79 billion as at March 31, 2020.

The increase is primarily attributable to increased debt financing required to support the growth in the loan portfolios.

The onset of the global pandemic Coronavirus (COVID-19) resulted in a decline in economic activity. Directors of Access note that in Jamaica the tourism sector and the entertainment industry were more severely impacted, due to the closure of hotels and local bars.

Across both companies within the Group, management said they managed the impact of coronavirus (COVID-19) by providing temporary relief assistance to customers; increased the use of technology to submit loan applications via the websites; and direct to bank disbursements.

The company recognised $47 million in its financial statements as at March 31, 2020 from the anticipated increase in expected credit losses.

Management said they have been proactive in managing liquidity positions and taking steps to reduce operating costs.

Allowance for credit losses increased with the growth in loan portfolios, and changes to the expected credit loss model due to the impact of  COVID-19.