Rikus Grobler | Oct 18, 2017 | 0
Trustco interim profit up 98%
Trustco shareholders are in for an early Christmas treat if interim results are anything to go by. Posting its interim results for 2015 on the Namibian Stock Exchange news service this week, Trustco reported that its interim results show an increase in net profit after tax of 98% on the comparative 2014 interim results.
A trading statement released in October highlighted Trustco’s expectations for headline earnings to increase 400% while basic earnings per share were expected to increase by at least 105%.
Said Trustco, “An increase in the returns from investment portfolios, coupled with a larger loan book generating higher net interest before impairments contributed to most of the increase. The increase was however offset by a reduction in insurance premiums received as a result of the curtailment of the South African legacy business in [the first six months of 2014] and an increase in the loan provision charge when compared to the comparative period.”
At the start of its financial year, Trustco announced its intention to acquire 100% of the share capital of Fides Bank Namibia and had acquired land measuring 2600 hectares approximately 20 kilometres north of Windhoek. Regulatory institutions Bank of Namibia and the Namibia Competition Commission have since approved Trustco’s take-over of the banking institution, now known as Trustco Bank.
Said Trustco, “The banking operations now run a portfolio of lending assets and deposits across five branches in Namibia and the group expects the bank to be one of the main areas for growth in the Namibian operations. Gross advances grew by 46% from the comparative interim period, predominantly due to the increased demand for student loans, but also coupled with an increase in secured lending.
The group remains firmly committed to growing this loan book in the future. As at the date of publication of this announcement, N$455 million of approved facilities were made available to the group by external funders. Of these facilities, N$130 million was drawn down by the reporting date.”
“The share price has reflected Trustco’s continued efforts in both local and international markets and has improved from R1.19 as at 31 March 2014 to R1.95 as at 30 September 2014. Coupled with the dividend stream this represents a 66% growth for shareholders in only six months,” said Trustco. With one eye on the South African insurance industry, Trustco re-modelled its insurance model at the start of its financial year.
Trustco expects exceptional growth in South Africa saying “The insurance division remains on the cutting edge of affordable insurance as various new products and ideas are currently on trial or being launched in Africa and other emerging markets.
The division benefited from substantial gains in its investment portfolio. N$15.4 million of fair value gains was augmented with realised gains of N$258 million.
Added Trustco “The decline in insurance premiums is predominantly due to the cessation of legacy business in South Africa which operated a high premiums receipting base, but very low margins in [the] financial year 2014.
In Namibia, a decision was taken not to burden insurance customers with a premium increase in the financial year 2015. This decision was made to demonstrate to our loyal policyholders that we remain committed to being affordable whilst still providing the best value in the market.”