Trustco’s Q1 profits up 12.3%
Financial services group Trustco has recorded a 12.3% increase in net profit in the first quarter of its current financial year despite declining revenues.
The increase in profit for the quarter ended 30 June 2013 was underpinned by strong performances in the local micro insurance business segment and the group’s micro-finance and education segment.
The Namibian insurance segment contributed 3.13 cents per share to headline earnings per share (HEPS) which represents a 66% growth on the comparative quarter. The increase was attributed to a combination of organic growth and innovative new offerings.
The local micro finance and educational segment contributed 2.03 cents per share to HEPS representing a growth of 128% on the comparative quarter. The education loan book which grew to N$408 million, maintained its growth as a result of the continued demand for current product offerings. Non-performing loans as a percentage of the gross loanbook were down to 4% from the previous 5.4% reflecting a 26% improvement in asset quality.
Headline earnings also grew by 12.3% to N$17.4 million resulting in headline earnings per share and basic earnings per share (EPS) of 2.36 cents compared to headline earnings of N$15.4 million with HEPS of 2.24 cents and EPS of 2.25 cents in the first quarter of the previous financial year.
The group’s gross profit margin for the quarter showed a healthy increase to 74.4% compared to 54.5% for the comparative period, representing a 37% increase in margins.
In a statement to shareholders released Wednesday, Trustco said it was pleased with the increase in profit despite falling revenue which was down to N$146.3 million from N$159.9 million in the comparative period.
However, the South African and the rest of Africa operations continue to weigh down on the group’s profitability. The South African insurance operations contributed a loss of 3.14 cents per share to HEPS. Trustco justified the loss saying it represents the costs of launching its insurance offering in South Africa which includes capacitating the recently acquired national branch network and the reduction in dependency on historic claims, administration and brokerage business.
The rest of Africa segment comprising the strategic business to explore other micro-financial opportunities in the rest of Africa, contributed a loss of 0.11 cents per share to HEPS while the properties segment contributed 0.46 cents per share to HEPS. The profit generated in this segment relates to the last sales on Phase 1 of the “Landbank” monetisation process. Phase 11 is expected to be launched in the 2014 calender year. Trustco refers to its industrial land development next to Lafrenz industrial area in Windhoek, as its “Landbank.”