Barita’s Q1 profit slashed in half Loop Jamaica

The content originally appeared on: Jamaica News Loop News

Barita Investments Limited attributed the fall in its first-quarter profit by half to $480 million from $1 billion to elevated rates by the Bank of Jamaica (BOJ) and the US Federal Reserve.

Revenue during the December 2023 first quarter also saw a sharp decrease falling to $1.3 billion from $2.4 billion a year ago.

Chairman Mark Myers blamed the profit fall on restrictive monetary policies and elevated interest rates.

“Our business and others in the securities dealer space are particularly sensitive to those monetary policy variables,” said Myers in the financials.

Despite the challenging environment, Myers expects an upbeat outlook, citing the eventual reductions in interest rates.  He expects a “potential turnaround in monetary policy in the US and locally in 2024 or 2025”.

Barita anticipates a shift in market dynamics as investors adjust to changing interest rate environments. This translates to improvements in net interest income, trading activities, and deal-making.

“Our business is poised to experience more positive tailwinds over the next couple of quarters,” Myers said.         

Myers said that in January, the US Federal Reserve’s Chairman, Jerome Powell gave one of the clearest signals that the interest rate hiking cycle is “most likely done”.

US benchmark rates span 5.25 per cent to 5.5 per cent.

Locally, the Bank of Jamaica is more likely to “maintain policy rates” at current levels over the foreseeable future, “rather” than pursue additional rate hikes. The local benchmark rate is seven per cent.