Gross earnings of Custodian Investment Plc, one of Nigeria’s leading non-bank financial institutions by market capitalisation, grew the most in since 2016 to deliver N7.11 billion after-tax profit in the 2018 financial year.
An analysis of the company’s audited financial results for the year shows strong financial performance across all business lines, confirming the resilience of the company’s business model.
Custodian’s turnover rose to N50.21 billion from N43.05 recorded in the previous year. This is the highest earnings recorded by the firm within the last six years, according to available data.
The company shrugged off increased operating expenses to shore up its net income to N15.92 billion from N13.06 billion, thanks to increases on its gross premium income, profit on investment contracts, fees and commission income as well as retainership and professional income.
Gross premium income from the insurance subsidiaries was up by 14.8 percent to N36.72 billion in 2018 from N31.99 billion reported in 2017. Likewise, fees and commission rose by 18.6 percent to N4.05 billion from N3.41 billion, while retainership and professional income grew from N1.6 billion to N14.38 billion.
Proceeds from its investment in fixed income securities which returned 16 percent more interest compared with the previous year, interest incomes received on call and deposit accounts, and loans to its employees also contributed to the firm’s 21.9 percent growth in net income for the review year.
Custodian’s management showed efficiency in managing the firm’s resources as key portability ratio improved in the year. Operating margin stood at 31.71 percent, implying that for every N100 realised in 2018 as revenue, it retained N31.71, which is an improvement when compared with N30 held in 2017.
Despite increased management expenses, fair value and net realised losses which show challenging business environment, the N15.92 billion net income supported the financial institution, making it stay afloat with a pre-tax profit N9.5 billion, a 6.36 percent surge from N8.93 billion achieved a year earlier.
Custodian Investment was not spared in the higher income tax expense paid by most companies operating with it under the same segment in the financial services sector as it almost doubled its 2017 income tax payment. The firm paid N2.38 billion on taxation in 2018, the highest in the last five years, as against N1.61 billion expended in 2017.
That weighed on Custodian’s profit after tax, pushing it from N7.32 billion in 2017 down to N7.11 billion at the end of the 2018 financial year.
Total assets remained strong at N98.12 billion, representing more than 21 percent increase from its asset value of N80.56 billion in the previous year. Similarly, the firm continued to grow its shareholders’ equity steadily since 2010 to N41.49 billion from N36.71 billion delivered in 2017.
The marginal decline in profit did not deter the company from rewarding its shareholders in line with its tradition as the Board of Directors recommended, subject to shareholders’ approval at the upcoming Annual General Meeting, the payment of a final dividend of 35 kobo.
The proposed dividend pay-out is in addition to the 10 kobo interim dividend that was previously paid to its shareholders, thereby making it a total dividend of 45 kobo per ordinary share of 50 kobo to be paid out of the results achieved in 2018.
Speaking on the performance for the year, Custodian’s managing director, Wole Oshin, expressed satisfaction with the result. He said considering the operational headwinds of the year 2018, he remained optimistic that the company would continue to thrive in all sectors in which it operates.
Oshin noted that the company would be guided by its vision to always exceed stakeholders’ expectations in the delivery of services to its esteemed clients, observance of high corporate governance standards and the recruitment and retention of highly skilled personnel while leveraging on innovation and bespoke technology for excellence.
Custodian Investment Plc was incorporated on August 22, 1991, and listed on the Nigerian Stock Exchange (NSE) on June 12, 2007. It has investments in life and non-life insurance, pension fund administration, trusteeship and property holding businesses.
