Executives of the VM Group and VM Investments Limited peruse the 2023 VMIL Annual Report following the Annual General Meeting.
VM Investments Limited (VMIL) is looking to get more Jamaicans invested while broadening its horizons in the Caribbean as it seeks to build on its asset management platform and become a larger player in the wealth management space.
That was the pronouncement of VMIL Chief Executive Officer Rezworth Burchenson at the company’s seventh hybrid annual general meeting (AGM) held on Thursday. VMIL has been seeking to expand its client reach through its subsidiary VM Wealth Management Limited which had $58.39 billion in off-balance sheet funds under management (AUM) at the end of 2023. While VM Wealth is among the top seven brokers in the market from an equity market share perspective, this is against the backdrop of a relatively underinvested Jamaican populace.
“There are three million Jamaicans. I want to say 200,000 Jamaicans have a product beyond the basic savings product. It certainly means that quite a number of Jamaicans are not capitalising on wealth-creating products. One easy way for persons to get involved is through our unit trust portfolios, which is why a key pillar for us is ensuring that we have a greater capture of those persons currently not investing in wealth-creating products like our equity fund, real estate and bond funds,” the VMIL CEO explained in his presentation.
VMIL will be leading this charge through acquisitions and digitisation of its wealth business through the automation of several tasks and greater access for clients to do self-serve options online. On this endeavour, VM Wealth is aiming to launch an online self-service onboarding portal by the end of the third quarter to make it easier for them to gain new clients. This will also be accompanied by a major system upgrade to its core investment management system. All of this will be crucial to build more consistent recurring revenue.
However, the efforts to get more clients will be a tall task as only a third of clients or about 140,000 clients use the online client management system. There has been a steady state increase in the use of Jtraderpro, a Jamaica Stock Exchange (JSE) trading platform, by clients as evidenced by 23.76 per cent of clients using it in 2023 compared to 13.96 per cent in 2021.
VMIL acquired Republic Funds (Barbados) Incorporated (now VM Wealth Funds Limited) on January 19 which was their first overseas acquisition. That gave them 2,000 new clients and an additional US$10 million in AUM. While Burchenson didn’t disclose the transaction price, he did note that they were in dialogue with the Barbadian regulators to introduce new products which would prove synergistic for Jamaican clients as well.
“We have always been looking regionally. We have a strategic investment team that is always combing the Caribbean for opportunities for the group, including VM Wealth and VMIL. We have gone numerous conversations in many other islands, conversations are ongoing. However, if a transaction may take place, as at right now, we have no live transactions in Guyana, but we salivate around the economic prospects of Guyana,” Burchenson added.
While all of these initiatives are great in growing the top line, the company has continued to report its audited financial statements late for two years straight and publishing in May, more than two months after the deadline. The key issues identified were around internal systems, audit resource planning and complex financial transactions which resulted in the late presentations. VMIL has made changes in how it is addressing this going forward with the company to report an unaudited fourth quarter and submit its 2024 audited financials in 90 days for the next audit.
“We have put together a comprehensive action plan to address some of the areas that would have needed improvement, and that was done in consultation with our audit partners, but we did a deep dive internally in the business as well. You should expect an improved process going forward going forward and certainly, we’re expecting that will have an increase in our shareholder confidence,” noted Allison Mais, vice-president – operations.
VMIL’s first quarter (January to March) report saw it earning $31.40 million in net interest income, a third of the prior year’s $91.63 million figure as interest expenses rise faster than interest income. However, a transaction with its parent company VM Financial Group Limited (VMFG) resulted in its operating revenue rising 107 per cent to $911.94 million. After accounting for higher operating expenses and its share of profit from associates, VMIL’s profit before tax was $456.24 million, well above the $23.87 million in Q1 2023. Net profit was $510.21 million with earnings per share of $0.34.
VMIL’s total assets grew two per cent during the quarter to $30.08 billion, with investment securities at $18.17 billion and cash at $461.91 million. Total liabilities and shareholders’ equity closed the quarter at $25.56 billion and $4.52 billion, respectively.
VMIL’s stock price closed Friday at $2.65 which leaves it down four per cent in 2024 and not far from its initial public offering price of $2.45. The company’s market capitalisation was $3.98 billion. VMIL’s Q2 report should be published by August 14.
VMIL paid a $0.032 totalling $45 million on July 9 which is the first since December 2021, with the possibility existing for another consideration later this year. This meant VMFG collected a $36 million dividend. This comes on the heels of VMFG injecting $1.50 billion into VM Wealth in October 2023 through the issuance of non-redeemable, non-cumulative preference shares and VMFG buying the 30 per cent stake in Carilend Caribbean Holdings Company US$4.92 million ($752.90 million) on March 27 from VMIL.
“This business relies on capital and talent. We got capital last year that was injected into the wealth management business, and as I said before, it bolstered all of our regulatory ratios. As you look to build a resilient business, we always have to be looking at ways in our capitalisation, whether it be through preference shares or ordinary shares. There is no plan at the moment to dilute equity shareholders. However, we want to ensure that if an opportunity were to arise, and we see opportunities across the space to raise capital, certainly, we can issue same via preference shares. So, it’s something we’re exploring and I’m quite sure by the end of Q3, the shareholders will hear more about it,” Burchenson closed.
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