President and Chief Operating Officer of Dehring Bunitng and Golding (DB&G), Garfield Sinclair (left), fields a question at a January 18 press briefing, while the chairman of DB&G, Peter Bunting, looks on, at the company's Holborn Road, New Kingston, offices. - File

Dehring Bunting & Golding's net interest income, an indicator of business growth for the financial services firm, remained flat in the company's second quarter to September 30, 2006, although the company said it added $5 billion to its portfolio of funds under management.

Interest revenue grew by just over six per cent to $1.66 billion, but NII - interest revenue less interest expense - came out just $4 million or 1 per cent ahead of the $392 million recorded in the 6-month period the year prior.

DB&G is up for sale because, its partners have said, economic conditions suggest the financial sector is in a mature cycle with limits on earnings growth from interest rate spreads.

Sustained disinterest

Equities continue to "struggle through a period of sustained disinterest," the company said, reflected in poor income performance from unit trust and brokerage fees.

Like other companies feeling the same pinch, DB&G has attempted to expand other revenue streams.

Chairman, Peter Bunting, in a statement attached to the second quarter results said the company has attempted a delicate balancing act between its liabilities to clients and declining interest rates, and has attempted to offset the declining business in that segment by increasing its secured loan portfolio twofold to $3 billion through its merchant bank.

In fact, DB&G's maintenance of earnings at last year's levels attest that it is in a mature cycle.

Bunting chose to characterise the business as 'stable', a more tempered term than 'lacklustre', which he used to describe performance in the first quarter to March 2006.

Net revenues were up

DB&G's net revenues were up six per cent, while net profit for the review period grew a healthy 12 per cent, from $301 million in April-September 2005 to $338 million at the end of September, pushing its earnings per share to $1.09.

"This overall performance reflected a rebound in trading profits from the first quarter along with the continued stability of our net interest income business," the chairman's statement read.

Dampened income from fees, down by almost $45 million, was offset by strong foreign exchange gains of $70 million - from $15 million at September 2005 to $85 million in the current six months. The forex gains also fed into the bottom line.

Funds under management, according to the chairman, grew 17 per cent to $34.3 billion, compared to $29.3 billion in September 2005.

The company's capital base also grew $1.1 billion to $3.6 billion, but was flat compared to the March 2006 quarter.

lavern.clarke@gleanerjm.com