Sagicor Group scores $14b profit
SAGICOR GROUP Jamaica Limited, SGJ, has made annual profit of $14.4 billion for its shareholders, recording gains on all its main business segments, except for investment banking due to the continuing effects of elevated interest rates.
“In Jamaica, inflation continues to be a concern … suggesting that higher interest rates may persist for longer than projected,” Sagicor Group said as it released its year end earnings report.
“We remain alert to the impact of a tight monetary climate and how it dilutes the demand for capital and an overall slowdown in economic activity, both of which will impact SGJ’s results in the medium term,” said the company that’s chaired by Peter Melhado and led by Christopher Zacca as president and CEO.
Annual inflation is now tracking at 7.4 per cent, which is 140 basis points outside the upper target range of the central bank. The Bank of Jamaica has been holding interest rates steady for over a year at 7.0 per cent, having previously executed a sustained round of hikes from a starting point of 0.5 per cent since the fall of 2021 in order to keep inflation in check.
The central bank’s policy actions have resulted in higher borrowing costs for business and consumers, and served to dampen activity on the equities market as investors turned to fixed income markets for better yields on their investments.
Sagicor Group is now a $560-billion business in terms of assets, $243 billion or 43 per cent of which is in the form of financial investments.
Profit made by the financial conglomerate in 2023 is up 50 per cent relative to adjusted figures reported by the group, which operates the largest insurance business in Jamaica. It’s also in the business of commercial banking, investment banking, pensions management and property services.
Initially in 2022, Sagicor reported shareholder profit of $16.4 billion, but that’s now been adjusted to $9.59 billion due to the adoption of new accounting treatment of insurance contracts, which took effect in 2023 but were applied to the prior year as well.
For this year, the insurance services segment made $8 billion in profit, up 13 per cent over the prior year. Notably, the group’s insurance product sales continued to expand across various product lines.
The commercial banking segment recorded net profit of $3.58 billion, 9.0 per cent. The segment benefited from loan growth and credit card services.
The investment banking segment navigated a challenging operating environment, with $760 million in profit, down from $1.2 billion.
“The high interest rate environment has fuelled a significant increase in funding costs, leading to a decline in net interest income for the Jamaican operations. The segment was also impacted by the decline in market value on a part of its portfolio of securities during the year,” Sagicor Group said.