Funds under management of United Capital Plc, a Lagos-based financial & investment firm, grew by 500 basis points in the first quarter of 2019, despite headwinds witnessed in the period ranging from uncertainties around the concluded-general elections, slow economic recovery to reduced issuance of securities by the three tiers of government.
Funds under management, which measures the total market value of the financial assets which the firm manages on behalf of its clients, hit N79.16 billion in the review period, an improvement over N75.69 billion reported in the previous comparable period.
Total revenue of the Lagos-based financial and investment firm, dipped tangibly by 34 percent to N1.45 billion in the review period, as against N2.20 billion posted a year earlier, triggered by reduced investment income, fees & commission income & net trading income.
Investment income from fixed deposits and investment securities contracted by 20 percent and 33 percent to N378.8 million and N392.8 million in the review period.
Fees & commission income was down by 17 percent, while net trading income plunged 71 percent to N31.9 million compared with N111.4 million posted a year before.
Commenting on the results, Peter Ashade, Group Chief Executive Officer, stated that reduction in the issuance of securities by the three tiers of government, coupled with inability of some states to issue securities owing to their huge debt burden given the Investment & Securities Act 2007 weighed on advisory income fees, but yet the firm still grew income fees from advisory services by 7 percent.
“The quarter under review was indeed a challenging one for us as uncertainties around the 2019 general elections which took place therein plagued the capital market, resulting in slower than expected economic activities in the period”, said Ashade.
The contraction in investment income, net trading income as well as fees & commission income, significantly weighed down on pre-tax and post-tax profit despite the 48 percent cut in tax expense.
Profit before and after taxation reduced nearly by half in the review period. Pre-tax profit dip 48 percent to N766.9 million in the review period, while after-tax profit plunged 49 percent from N1.25 billion twelve months back to N644.2 million in the first quarter of 2019.
Consequently, earnings per share (EPS) reduced 10 kobo to 11 kobo in the review period, while the annualized EPS dip 49 percent to 43 kobo in first quarter 2019, compared with 84 percent in the previous period.
A look at its balance sheet showed a marginal 3 percent appreciation in total assets to N153.1 billion, partly caused by 200 basis points increase in investment in financial assets as well as 300 basis points rise in cash & cash equivalents.
Going forward, Ashade said the impact of the cut in monetary policy rate to 13.5 percent will be felt in the second quarter, ceterisparibus.
“Going into the second quarter of 2019, we expect that with the relative calm that followed the 2019 general elections, the pace of Bond and Commercial Paper issuance would pick from late second quarter to early third quarter of 2019.”
ISRAEL ODUBOLA
