Australian lender drives Somers’ profit gain
Somers Ltd’s first-quarter profits rose on the back of an increase in the value of the companies in which it invests.
The financial-services holding company and owner of Bermuda Commercial Bank, said net income for the first three months of the year was $18.5 million, up from $4.1 million in the first quarter of 2017.
The Bermuda Stock Exchange-listed company’s net asset value per share was $19.91 at the end of March, compared to $18.55 six months earlier.
Somers reported a $16.4 million gain on its investment portfolio during the three months — principally due to an increased valuation of the company’s holding in Australian lender Homeloans Ltd due to a stronger financial performance.
The bulk of Somers’ investments are in three companies — Homeloans at $138.2 million, BCB at $101.8 million and UK wealth manager firm Waverton Investment Management Ltd at $91.2 million, which together represent 83.9 per cent of total investments.
BCB made a profit of $0.8 million during the six months and a capital ratio of 23.3 per cent.
Homeloans reported normalised profit after tax of A$12.9 million ($9.94 million) for the six months ended December 31, 2017 and assets under management of A$11.1 billion.
Waverton has assets under management of £5.3 billion ($6.7 billion), while PCF, a UK specialists bank in which Somers has a 65.7 per cent stake, has retail deposits of £100 million ($135.7 million).
The Somers board declared an interim dividend of 21 cents per share for the six months of the company’s financial year.
Warren McLeland, chairman of Somers, said: “The investee companies continue to perform strongly with excellent financial results. In particular, assets under management growth at Homeloans and strong deposit and loan growth at PCF has been pleasing.
“While markets are currently more volatile, our investments continue to produce strong operating earnings. The company’s valuations have also been positively impacted by an increase in the value of sterling in the quarter which more than compensated for the slight fall in the value of the Australian dollar.”
Somers’ net foreign exchange gains were $2.7 million for the quarter. During the three months, the UK pound appreciated 3.9 per cent versus the US dollar while the Australian dollar depreciated by 1.6 per cent.
Mr McLeland added: “Post the quarter end we agreed to sell our investment in Merrion Capital and it is anticipated that this transaction will complete later in 2018.”
Somers’ share price ended the period at $14.25 — where it remained on the BSX yesterday — a discount of 28.4 per cent to the company’s net asset value per share.
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