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LOM profit surges 282% on broking fees and investment gains

Strong performance: LOM Financial Ltd has reported net income of $4.83 million for 2020 (File photograph)

LOM Financial Ltd achieved a 282 per cent rise in profit last year, to $4.83 million, driven by increased revenue from broking fees and gains on securities.

The company’s assets under administration rose from $1.2 billion at the beginning of 2020, to $1.27 billion at the end of the year.

Total revenue was up 35.7 per cent at $17.6 million, while operating costs increased 8.5 per cent to $12.78 million.

Scott Lines, LOM’s chief executive officer, said net income rose sharply due to a surge in broking activities and extraordinary gains on securities that were purchased in the middle of the year.

The company had a 67 per cent increase in broking fees, to $6.42 million, and a $2.8 million gain on securities held in inventory.

In a letter to shareholders, Mr Lines said: “The main drivers of the markets going forward this year are threefold; how long will it take various economies to recover from the coronavirus shutdowns; how long will nominal and real interest rates remain at zero or negative; and how will various countries deal with the legacy massive debts they have run up over the past year.

“Will politicians resist the siren call of taxing wealth creation? Without doubt, the combination of stimulus and zero or negative interest rates have supported and increased asset prices, and there are many calls to impose “temporary” extraordinary wealth taxes on individuals and businesses.“

He said equity markets around the world had a mixed result over the year. After falling sharply in March, rate cuts and government stimulus had boosted share prices. However, national performance was “deeply reliant on the market’s perception of the speed and efficiency with which countries could recover from the pandemic”.

Highlights of LOM’s financial performance during the year included:

  • Management and advisory fee revenues up 2.4 per cent to $5.54 million.
  • Net interest earnings fell 50% to $831,555.
  • Foreign exchange revenues rose 15.6 per cent to $579,663.

LOM’s fully diluted net income per common share was 90 cents, compared to 22 cents for the previous year. It ended 2020 with net equity of $24.3 million, and had a net return on equity of 19.7 per cent in 2020.

LOM has in place a share buyback to purchase up to 500,000 shares. During 2020 it purchased for cancellation 287,930 shares.

The company will pay an increased dividend of two cents per share on May 14 to shareholders of record on May 7.

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Published April 28, 2021 at 7:53 am (Updated April 28, 2021 at 7:56 am)

LOM profit surges 282% on broking fees and investment gains

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