Barita Investments Limited (BIL) Earnings Call Transcript & Summary

Good afternoon, everyone. On behalf of the Board of Directors and senior management team, I'm pleased to welcome you to our Barita Beat investor briefing for the first quarter of our financial year covering the 3 months ended December 31, 2025. Thank you for joining us and for your continued confidence in and engagement with Barita Investments. My name is Kerrie Baylis. I'm the Vice President for Strategic Business Development and Investor Relations, and I'll be hosting and moderating today's session. The October to December quarter marks the beginning of our financial year and sets the tone for the months ahead. It is a period that calls for disciplined execution, strong risk oversight and clear strategic alignment, principles that remain central to how we operate and deliver value. We have a comprehensive agenda this afternoon, and I'm pleased to introduce the members of our senior management team, who will guide you through the presentation. First, Stephen Phillibert, our Group Chief Financial Officer, will provide a detailed review of Barita's Q1 financial performance. He will be followed by Richardo Williams, Senior Vice President for Asset Management and Interim Chief Executive Officer of JN Fund Managers, our newly acquired subsidiary. Richardo will present on the macroeconomic environment and outline elements of our 2026 strategic direction. We will then move to our market overview and future outlook to be delivered by Ramon Small-Ferguson, Chief Executive Officer of Barita Investments Limited and Managing Director of Barita Unit Trust Management Company Limited. Ramon will also provide insights into our broader strategy, corporate governance framework and our approach to risk management, controls and compliance. Following the formal presentations, we will open the floor for questions, and I encourage you to submit your questions throughout the session using the Q&A feature on your screen as it ensures that we're able to capture and address your questions appropriately. So with that, it is now my pleasure to hand over to Stephen to begin the financial review. Thank you.

All right. Thank you very much, Kerrie. So ladies and gentlemen, we'll get right into it. Let me make sure our technology is working here. Okay. Fantastic. All right. So we'll start, as usual, on the operating income slide. Net operating revenue decreased by $257 million, about 18% to $1.2 billion. As we look into details of that, we'll see lines that give us cause for optimism. Net interest income continued to increase. Net interest income is up to $222 million from $169 million, and that's about 31% up. That continues to be driven by the normalization of interest rates. We had seen where there was a pause in that normalization. But subsequent to the release of these financials, we've seen the BOJ in February, resume the reduction of interest rates. So that gives us hope for a continued trend in the improvement of our net interest income. Fees and commission income, up about 14% to $1 billion from about $900 million in the prior year. That's driven both by improved investment banking as well as asset management results. We also, while it's not reflected on the chart, had an improvement as it relates to FX losses. We had losses in the prior year of $185 million, which decreased to $103 million. So that's an improvement of about 44%, and we continue to work on reducing that further and in fact, turning it back to gains as we have seen in the past. Finally, we have the gains on investments, and this is where we had a downturn in the period, moving from -- in the prior year, we had gains of about $0.5 billion to roughly flat, just a small negative figure of $22 million in the current year. This is driven both by reduced gain on sales of investments down to about $246 million from $385 million in the prior year as well as fair value decline of $268 million versus a fair value gain in the prior year of about $119 million. Okay. Looking to operating expenses. We see here an increase overall of $164 million or 22% to $925 million from $762 million in the prior year. Here, we see staff costs having had the benefit of improved efficiency in costs, decreasing by $21 million or 6% to $346 million. Administrative costs increased by $78 million or about 15% to $595 million. So the net effect of these is about $57 million up and would have reflected on a total in the prior year of about $1.1 billion that would have reflected about a 5% increase, which is similar to inflation. So what's really moving expenses here is the impairment or ECL provisioning item. In the prior year, we benefited from a larger reversal of $122 million. And many of you may recall that this was as a result of the sale of a material portion of the loan portfolio in the prior year, which caused us to reduce the provisioning that we had against those loans. In the prior year -- in the current year, there is also a decline in the quality of the loan portfolio, but to a much smaller extent. And so we're seeing ECL down for that and other reasons related to the inputs to the calculation by only $15 million in the current year. So that is the most significant driver of the efficiency ratio increasing from 53% to 78% and of course, the overall change in expenses. Okay. Looking at the net profit after tax, the net effect of the income and expense changes that I've outlined total to a movement down to $211 million in net profit for the quarter versus $550 million in the prior year. That's a decline of 62% and a similar effect in earnings per share. For the balance sheet, it was a fairly flat period. So total assets down just about $1 billion or 1% to $148.6 billion from $149.6 billion in the prior year. Similarly, only a small movement in the securities portfolio, which is comprised of the pledged assets line and the marketable securities line, down about $1.2 billion. And I made reference earlier to the small decline in loans of about $400 million thereabouts. On the funding side, also not that much, and we had changes down just about 1% or $1.6 billion to just under $113 billion from $114.5 billion. Repurchase agreements virtually flat. We did have an increase in other debt facilities of about $1.1 billion. Shareholders' equity, a small improvement of about $0.6 billion to $35.7 billion from $35.1 billion in the prior year. Our capital adequacy ratio continues to outpace industry, so we're pleased to be able to share with you that the company continues to be very strongly capitalized. And finally, our usual recap of some of the highlights. So net operating revenue, $1.2 billion net profit, $211 million. Shareholders' equity, $35.7 billion. Total assets of $148.6 billion, efficiency ratio at 78% and the annualized return on equity and leverage at 2.4% and a little 4x, respectively. So with that, I will hand over to Richardo.

All right, thank you. Thank you, Stephen. And as usual, I will pretty much provide the macroeconomic context that underpins the numbers that Stephen just surfaced and presented. So the primary factor that we want to begin with, as usual, is really about Central Bank policy and inflation. These are the critical factors that underpin most of our business lines. The main development, as Stephen indicated just now, is that the Central Bank reduced its policy rate when they met in February by 25 basis points. So it's now at 5.5%, which is some ways down from the peak, which was 7%. This is important because lower rates are required to help stimulate economic growth given the damage that we experienced from Hurricane Melissa in October of last year. So even though the current account in the balance of payment is expected to record some higher deficits in the near term, the economy -- Sure. Right. So even though the economy is expected to project some higher deficit over the near term, most of this will be driven by the imports that we expect to get from the rebuilding efforts for Hurricane Melissa, the international reserves pretty much remain healthy and are projected to improve further. So what are the implications for our business? The primary one here is that the gradual policy easing alongside the strong reserve buffers should pretty much support stable domestic liquidity and funding conditions. And we expect that the reconstruction related imports may, in fact, widen the current account deficit, but the reserve position, which is pretty strong, will continue to anchor current stability, support balanced trading conditions and therefore, relatively stable NII spreads as we pretty much saw in the numbers that Stephen gave us now. So as the cycle from Central Bank policy and rates and inflation to growth and demand composition, this is pretty much topical. The PIOJ just released its estimates of the damage from Hurricane Melissa just yesterday, and the numbers are actually better than previously anticipated. The contraction in the October to December quarter was just about 7%, just substantially lower than 11% that was expected. Given the trajectory that we are on, we anticipate based on what the PIOJ's numbers are demonstrating that between the January to March -- in the January to March quarter, the possibility is that we're going to see a continued slowdown. And so there are considerations about a potential recessionary condition defined by the technical term of 2 quarters of negative growth. What the Director General of PIOJ was quick to indicate that, that is not a primary consideration of the PIOJ at this point, even though the growth conditions going forward will remain challenging, and we expect that we won't see any positive growth until about Q4 of 2026 when a full return to pre Melissa output is expected much further in the future. It is currently estimated about 3 to 5 years. So what are the implications here? The near-term growth slowdown is likely to weigh on our capital markets issuance and advisory business, certainly in the short run, there might be the possibility that we see increased volatility across rates, FX and risk assets. However, the general reconstruction side is expected to generate medium-term financing demand and investment opportunities across infrastructure, credit and capital markets. So that is our outlook where growth is concerned and how it ultimately will shape and fashion our numbers moving forward. In terms of FX dynamics and the continued BOJ interventions there, the currency continues to perform, I would say, incredibly well given the macro backdrop and experience we have had since last year. Up to December, we had a quarter-over-quarter depreciation -- appreciation, sorry, of 0.9%. The currency ended at about JMD 159.74 and the currency dynamics here are really reflecting elevated FX intervention from the BOJ to keep the currency market in order and widening interest rate differential with respect to U.S. federal funds rate. But that now has narrowed marginally given the actions of the MPC in February by reducing policy rate by 25 basis points. At the end of the quarter, the BOJ had pretty much injected about USD 310 million into the market via the B-FXITT tool. And therefore, that effectively eased pressures to basically support the relief efforts. What does this really mean for our business in a retrospective way and also going forward? What it means really is that the combination of the BOJ intervention and the interest rate differential is expected to support near-term FX stability, and we're already seeing that also in the numbers. That will moderate any kind of volatility. Again, we're seeing quarter-over-quarter appreciation in December evidences this. And what this will do is it will support our FX trading and translation gains. The trajectory, however, of inflation and the BOJ reserve management will be the 2 primary factors that determine currency liquidity and market dynamics going forward. So we are pretty much optimistic where this is concerned in terms of continued order in the currency market going forward on the basis of the BOJ's intervention. And the final element of things here that we want to touch on are really just rates and markets. So the JMD money market rates were relatively flat -- sorry. Right, so the JMD money market rates were relatively flat, while the [ GOJT ] bills declined quarter-over-quarter. The short end of the yield curve pretty much rose higher relative to the long end. And what it means is that we're seeing a flattening of the Jaman (sic) [ Jamaican ] yield curve. What this really means for our business is that the evolving yield curve and the stable domestic liquidity conditions that we're seeing effectively supports active balance sheet deployment while the decline in global rates are expected to continue to moderate our funding costs, particularly on our U.S.-denominated liabilities. Our fee-based revenues with recurring characteristics will remain a key contributor to our earnings resilience, effectively providing some kind of shock absorptive capacity to even out some of the volatility that we're seeing or might continue to experience in the risk section of the balance sheet. And with that said, ladies and gentlemen, I will turn over now to Ramon.

Right. Thank you very much, Richardo. Good afternoon, everyone. It is, as always, a pleasure for me to speak to you about our company and how we would have performed in the last quarter and just to give some perspective as to what us as management see as being probable as we look to the rest of the quarters in the financial year. So I want to start out by reminding you about the strategy that would have been underpinning our operations over the course of the last 18 to 24 months, right? And there are 5 main strategic pillars. And I'm just going to kind of go through them in the context of the Q1 performance in the background and the performance anticipated over the course of the next several quarters looking forward. So central to our overall strategy is our focus on the customer client centricity is critically important. We define that via 2 main objectives. The first is to get a deeper understanding of what our customers need, right? And the second is to enhance customer experience and technology, we are expecting will continue to play a more and more important role in enhancing customer experience. The second critical strategic pillar is business line optimization, and we have been focusing squarely on improving the organization's prospects for profitability by refining our revenue mix. Richardo spoke about the foundation of our revenue stack, which is really our recurring revenue that we define as being revenues that are contracted or revenues that have a clear system to generate them, right? And we have been seeking to improve the extent of our revenue stack that's comprised of these kinds of revenues. In essence, we are reducing the volatility of our performance, and we've made some serious inroads into that. We're also focused heavily on operational efficiency and excellence as a critical pillar to our strategy. We're seeking to boost productivity through automation, through ensuring that our resources are mapped in the right areas and ensuring that we streamline our operations, especially as they become larger and more complex, Central focus on risk management and compliance as well, given the regulated nature of our operations. And as I mentioned before, the complexity, everything that we do is underlined by risk management. And finally, we are focused on an inorganic expansion strategy. Given the size that the business has attained organically, it has become critically important for us to culture or cultivate rather strategic alliances and the intention there is to allow us to scale both locally and potentially into key regional markets. And then I'm going to talk a bit about how that is going, given the tangible manifestation of the acquisition of JN Fund Managers Limited. Now our business has had a critical focus from the get-go post-acquisition on building capacity for resilience as well as building capacity to be agile and to be able to take advantage of opportunities in the ultimate pursuit of sustainable value creation, right? So our strategy remains centered on those 3 things, right? And these 5 pillars are the media via which we are pursuing these objectives. So let me speak a bit about what that means for the strategic levels in relation to our revenue and by extension, ultimately, profitability. Stephen would have reported a downturn in revenue in Q1. And the primary driver there really was a key element of our revenue, which is really a difference in performance in our return on investment, our investment activity. When you zone in further into that line, the main difference there was really the performance of our equity exposures during Q1. You can appreciate that we had a significant event as a country during Q1, the onset of Hurricane Melissa in October would have certainly influenced asset prices down in some respects. I also influenced investor confidence, which are key ingredient in market performance, right? So we would have seen what we have now realized is a transitory hit to elements of our investment portfolio. Notwithstanding that fact, strategically, we still have some significant levels that really will underline our performance over the medium to long term, right? And the first is our focus on prudent capital management. That has really been central to both our defense and our offense as a business. We have been continuously focused as well on optimizing our operating costs as a business, constantly assessing how we can do more with the same and how we can deliver better quality with what we have. We are also focused on remaining fairly market neutral, which will allow us to tilt our business from time to time to respond to an evolving macroeconomic environment. And the final bit in terms of our strategic levers is the transition that we're going through with respect to our real estate platform and us moving towards cash-based revenues there. I'm going to speak a bit about that a little bit later. The key performance outcomes that we are looking for is, as Richardo indicated, growth in some of our key revenue areas to include our fee earning revenue areas. So we're looking to grow assets under management, and we're looking to do so by driving market-leading returns. We're looking at expanding our capital markets type activity and fees associated with that. The capital management strategy that we have also gives us optionality there in terms of supporting our robust investment banking pipeline. And finally, the agility, the market neutrality that we maintain allows us to really extract more value from the balance sheet as we see net interest income recovering. Stephen mentioned that earlier. So let's talk a bit about the acquisition of JN Fund Managers Limited. So we would have completed this acquisition in January of this year, and we are anticipating that we will see consolidated results from this subsidiary in our performances from Q2 onwards. We received no objection with respect to the acquisition in December, closed in January and assumed full ownership and operational control we set out immediately around the stability element of our transition strategy, and we would have appointed a new CEO, who is sitting to my right, Richardo, is there in as interim CEO, alongside his role within the Barita Group as SVP for Asset Management and Research. And the intention there is really to guide a seamless integration process between the business that is JN Fund Managers and our own group. So our focus on integration is really about being deliberate with respect to, one, maintaining continuity. I mean the business certainly was doing a lot of things, right, and we want to hold on to that. And our intention is to really be incremental in our approach, focusing on ensuring that clients are comfortable and happy. And to the extent that they are being served well, see how we can serve them better, right? We're ensuring that there are no operational disruptions, and that has gone very well so far and ensuring that we maintain and strengthen the governance of the organization, which is naturally functioning independently as a subsidiary. This particular acquisition is squarely in our strategy, as you would have seen before, I've been reminding, right? We are really focused on expanding in a very deliberate way, right? It extends our footprint in the pension fund management space. For example, it enhances our recurring and fee-based revenue streams, which is central to our focus. And it will -- and has actually pushed us over the $500 billion mark in terms of total assets under management, which is a milestone for our business. So beyond that, I just want to remind you about our key business lines and zone in a little bit on them as we bring the presentation to a close. The investment banking business did well during Q1, right? We would have had a strong pipeline, and we have capitalized on some key transactions during the period. And actually, we would have outpaced Q1 of 2025 by 25%. Looking out, we still have a robust pipeline of capital market transactions. And as Richardo indicated, we are anticipating that the post-Melissa environment, which will be characterized by reconstruction and recovery will present opportunities for us to collaborate with our clients and collaborate potentially with the state with respect to projects in infrastructure, real estate and companies looking to rebuild or expand in the way that starts. We're going to continue to leverage the expertise that we've built up over the last 8 years in advisory and structuring, and we're really going to do our part to help to rebuild Jamaica even as we also create value via those projects and for the business itself. The treasury trading and brokerage line would have seen a decline during the period. This is where our return on equity portfolio shows up, right? We would have also seen a negative outturn with respect to FX as well. So there was a sharp decline here during the quarter. There is a bright spot, however, a bright spot to continue in so far as we would have benefited from lower funding costs as our liabilities reprice lower. I would have seen an upsurge in net interest income during the period. The next business line is our asset management business line. Total AUM in this business line will have moved up by 7% and revenue would have gone up by 6%. We're anticipating that this business line will be most significantly affected by the acquisition of JN Fund Managers Limited , and it will really strengthen our scale and capabilities within this area. And finally, our alternative investment business line, which covers private equity, private credit, real estate strategies would have also seen an 18% uplift during Q1 of 2026. And as I mentioned before, the real estate platform has now moved into an active development phase. We are at the cusp now of doing significant predevelopment work with respect to 3 sites. Two are about to be the subject of demolition and 1 site is in an advanced planning stage with ground expected to be broken there soon, and that development is anticipated to be the first to come to completion. So we are well advanced in moving the real estate platform forward and towards delivering finished products there and actually converting it to cash flows. And with that, I think I have concluded the balance of the presentation. I will now move to the Q&A section where we can interact with you.

Thank you for that, Ramon, Stephen and Richardo for the comprehensive presentation. As Ramon says, this is where we will begin our Q&A section. So we did open the platform for questions to be pre-submitted, and we've also have the Q&A section open on the screen for you to submit your questions throughout the presentation. We still have time. So if you do have any questions, please feel free to go ahead and drop them in now. We're going to take as many as we can. I see quite a few coming in. So thank you for that. Let's get started.

Our first question that came in is asking how far is Barita Investments from completing their reorganization?

I think I'll take that one, Kerrie. Normally, if Dane were here, he would take that one. So let me see if I can substitute for him. So the reorganization being referred to is the reorganization of the broader group of which Barita Investments Limited is a part of. You would recall shareholders that we would have come to you via an extraordinary general meeting to seek permission to be the subject of participating in our reorganization and that reorganization is essentially to allow for our group to reconfigure itself into a financial holding company structure, right? That would have been done and Barita Investments Limited, which was previously owned directly by Cornerstone Financial Holdings Limited is now majority owned by the Barita Financial Group Limited. Barita Financial Group Limited also owns 100% of our sister company, Cornerstone Trust and Merchant Bank, right? And that reorganization in terms of corporate restructuring would have been done early last year. The final phase of this process is now seeing us in the final stages of interacting with the Bank of Jamaica in relation to consideration around the licensing of the Barita Financial Group. And I believe we are now at the tail end of that process. So the corporate reorganization is done, and we are concluding now the licensing process with the Bank of Jamaica.

Thank you, Ramon. So as expected, quite a number of questions coming in, in relation to JN. The next question is asking, with the recent acquisition of JN Fund Managers, how much revenue are we expected to pull in? And when do we expect revenue to start coming in? And there is a follow-up question, but I'll ask Ramon to take that question first.

Sure. So I will describe the size of the entity relative to ours, and I think I'll be able to speak to timing as well. So we would have started to consolidating the results of JN Fund Managers into our own results as a group as at the date of the acquisition, which was in January, right? So certainly, investors will start to see an impact from the acquisition in the Q2 report, right? With respect to the size of the entity, JN stand-alone has over JMD 80 billion in total assets under management. And prior to our acquisition of JN, we are about JMD 440 billion. So the business is roughly 20% of the size of Barita, right? So you can probably use that to get a sense for the size of the business activity and so on and so forth as they do relatively same thing as us in different proportion. They, for example, have a larger asset management business relative to other areas of their business, notwithstanding they are a full service broker. Now a key part of a successful acquisition is that 1 plus 1 should equal more than 2, right? And by virtue of the fact that we are specialists in the investment banking space, meaning that's the nature of our business, we see there being opportunities for us to extract synergies between our own platform and that of JN by virtue of that we are hoping that the combined results between our 2 businesses will be better than what the 2 businesses stand-alone did prior to the acquisition. So as we integrate, the investing public and the rest of the public should see the results of those synergies. I won't call a number, but I think I've given you a lot of ingredients for you to put together and get a sense, right?

Thanks, Ramon. I think you actually touched a little bit on the follow-up question, but I'll ask it anyway in case there are anything more you'd like to add. The follow-up was how soon do you plan on turning around JNFM to make it more in line with Barita's mandate?

So a good question. So I definitely didn't touch on that before. So the truth is that, as I mentioned in my presentation, the platform by itself has some fantastic strengths, right? There are many similarities between our business and theirs, not just with respect to what we do, but how we do it in terms of our approach, right? We are very focused on our risk management as a first port of call in our decision-making. So our intention is, again, to allow the platform to continue to function with its own independent governance. Again, there's a lot that they would have been doing well there. It's not an intention to recreate Barita via this platform. Instead, we are going to be focused initially on stability, learning from the platform and again, bringing the best of what we have to offer to the best of what they have to offer. I think that's the best way to execute on an acquisition. So that's the approach that we're taking there.

Thank you. All right. Our next one is a comment followed by a question. So stating Barita is viewed favorably by younger investors. What more can be done for Barita to be viewed as the financial champion of millennials and Gen Z?

I'll probably take that as a younger investor. No shade to Stephen or Richardo or even you, Kerrie. So -- yes, for sure, I couldn't leave you out. Now that perspective that is held, I think, was earned. We certainly focused very heavily post the acquisition of the company to engage the younger section of the investing public. And we want to continue to keep them engaged. Based on the feedback that we have received, a critical component of doing so is advancing our technology and ensuring that investors have more autonomy and more access to markets via all channels, in particular, to include the phone, right? So we are focused on making that a possibility in the near term. I don't want to get in trouble by calling a date, but I should be able to call a date in subsequent calls with respect to enhancing our accessibility via various channels to include mobile, right? That's one element of it. The other thing that we are continuing to do is to focus -- continue our focus on financial literacy, right? I think a big part of what younger investors want is information and information in their language. Investing can feel scary. Those are more specialist areas. Like, for example, if you don't know much about cars, trying to figure out how to get a car working again when it stops working is a challenging thing to contemplate. So for us, we want to continue on that journey of financial literacy and really engaging the younger public around that. So yes, I mean I think if we keep along that vein, we will continue to keep them engaged, we will remain relevant in this space and get more young Jamaicans investing.

Thank you, Ramon. Our next question is in regards to our real estate portfolio. Is there an official date for this year that construction will begin? And what is the estimated revenue that will be pulled in after completion of the first project?

So more numbers and dates. So I mean I had mentioned where we were in relation to the 3 focus sites that were unknown, and I'll probably get a little bit more specific. So there are 2 sites that had structures that we are doing demolition work in relation to prepare them for development. In parallel with that, we are getting now into detailed design work with respect to 2 sites that are going to be the subject of development. One site is already cleared. The other is being cleared. From there, we will move into approvals on developments or the concept, the contemplation is much more complex than the other, right? And by virtue of that, the less complex development is anticipated to go through the cycle of predevelopment much sooner than the other. Our expectation is that once that is done, there will be a clear runway at the construction, and we expect that the construction of that first site should take between 9 and 12 months, right? So if we were to backtrack from that, I would expect that very early in our next financial year, we will probably get into the finish line in relation to that particular project. I can't speak to a revenue number. I think it's a bit premature. I have certainly seen numbers on a page, but it's premature for me to speak to that. But suffice it to say, we anticipate that as we continue to unlock value in this portfolio, which is over 2,000 acres, shareholders will see increasingly meaningful contributions from those various projects. So we're really excited to bring more to the fore here. My expectation is that as the development phase of the real estate strategy gets into full swing, it will start to compete for attention in relation to the other aspects of our business. So we are looking forward to that.

Thank you, Ramon. I have an interesting question that's come in. I'm going to pose this one to Richardo. The question is, what potential impact could the conflict between the United States, Iran and Iraq as well as Russia have on Barita investments and Jamaica's financial markets?

All right. Thank you for that, Kerrie. So the first point of departure want to look at is the risk capacity of the entity that is Barita. We currently have just over 18 billion in excess capital, which means that in terms of just the capacity of the business to absorb any kind of shocks that might emanate out of this conflict, I would say we are fairly well positioned to weather through that. The next question then becomes what would be the likely vectors through which this conflict could affect us? The primary vector here would be through the commodities channel. The primary commodity here is oil. And the nature of oil price shock is that it will obviously impact our external accounts. That is it will cost us more to import oil, and therefore, our current account deficit could deteriorate very quickly. There is historical precedence for that during the '70s of the oil price shock. But unlike the '70s, we're very much more well positioned now as compared to then. As I indicated earlier in the presentation, our external reserves are pretty robust. And therefore, we don't expect that, that account should deteriorate too sharply should oil prices spike in the near term. But there is a mitigant to that globally. OPEC has already indicated that they are willing to effectively put on to the global market additional supply of oil to pretty much support what was displaced or is being displaced from Iran. So in terms of the outlook for oil prices, et cetera, we don't expect a continued sharp deterioration there as well. The final point that I would perhaps make there is that even yesterday, President Trump indicated or directed one of their financial institutions there to effectively provide maritime insurance to all of the ships that are operating are going through the street of hormones or in the Middle East in general, so as to ensure that there is continued flow of oil globally. So in a nutshell, while we continue to monitor this situation, we do not anticipate that it will deteriorate into something substantial that will thwart our current economic trajectory, right? The buffers that we have in place, both at the national level and both -- and within Barita itself, we think will get us through the next few quarters. That's it.

Thank you, Richardo. I appreciate that. All right. Our next question, given the notable decline in Jamaica's projected short-term economic growth, can management comment on how current macroeconomic conditions are anticipated to impact the broader equity markets and specifically Barita's trading gains throughout the year-end?

I'm probably going to start and then maybe have Richardo take a stab at it. So Richardo mentioned that it's not anticipated that the economy will get back to pre-hurricane levels for a number of years. Now with that in mind, it kind of a fairly gloomy outlook if you focus on that by itself. It doesn't mean, however, that there isn't a fairly wide channel between where we are today and returning to those levels, which implies that there would need to be growth and activity in the intervening period, right? And we are already seeing opportunities for that, several opportunities for that. The stated intention is for Jamaica to go on our drive to rebuild and not only rebuild but do so in a way that minors what would have existed before. And our role in that process as a financial institution and particularly as a leader in the capital market space will be to provide the fuel to the engine of that rebuilding and that growth. So we stand ready to do that. Where we see opportunities to participate on the investment banking side for sure. So funding projects that will be a part of this overall rebuilding economy. On the asset management side, it presents opportunities for us to, yes, invest in the rebuilding, but also form specific strategies that may benefit from rebuilding activity. In terms of our overarching economic presence, we believe that there are several segments of the economy that are represented on the Jamaica Stock Exchange that also stand to benefit from increased business activity during this period. So it will be important for us to position in those areas of the market and to recommend that our clients do so as well. So even against the backdrop of crisis, there represents opportunity for our business to play an active role in the recovery while generating revenues and profits for our shareholders. So from our perspective, despite the setback, it does not all represent a situation where our business has nowhere to go in the future. Again, quite the contrary, it sets us up well to use the capacity that we have to be a part of the ultimate growth and change that we're looking for.

Thank you, Ramon. Any comments, Richardo?

I mean Ramon was pretty comprehensive. The only overlay that I would add there is that recall that the expectation was for us to have a contraction in the last quarter of last year of 11%. The numbers came in at 7%, which means that we are doing much better than anticipated, right? The upshot to that as well is that the expectation of a larger fiscal deficit is likely to be lower as well, which means that just the pace and quantum of economic recovery, which bones our business is likely to be much more positive going forward. So it actually reinforces all of what Ramon has just indicated here. So we are positioned well and pretty much optimistic just in terms of how our balance sheet is designed to go forward in a very progressive way.

Thank you for the additional context. All right. The next question is asking if Barita will be in a position to pay more dividends given the acquisition of JN Fund Managers.

Yes. So I mean as usual, when the shareholders asked me about dividends, I'm going to give the full picture, right? So as we know, dividends are paid from retained earnings, retained earnings grow based on profit generation of the business. And from our perspective, capital and liquidity are our lifeblood as a business, right? So as we always do, and as I've said in this forum and others before, we tend to take stock of the whole picture in deciding as management when and the extent to which we recommend a dividend payment to the Board. Critical components include the operating environment at the time, the state of play with respect to key risk indicators to include profitability of the business and our outlook for the future, right? In Q1, no, we would have seen the passage of Melissa, and we are taking stock of the effects on the overall economy, the industry and by extension, the business. We would have just completed an acquisition as well, which has added to our platform. And yes, as was implied, added to our revenue generation capability. So as the year progresses, as we get into Q1, Q3, we're certainly going to check out all the variables that I mentioned and more. and then make a determination as to what to recommend to the Board. Our business has generally seen dividends as a key component of rewarding shareholders for their commitment to the company, and that perspective has not changed. But it is, of course, in the context of the various factors that I mentioned before. So early days, there is some time for us to make various assessments and then make the determination from there, as we always do.

Thank you, CEO. Our next question, how's the acquisition of JN Fund Managers position Barita relative to large competitors like NCB Capital Markets and JMMB in the collective investment space?

Richardo, do you want to take that in terms of where we rank in the CIS by AUM now?

Sure. So currently, in terms of the rank relative to those competitors, we are at about 1/3 just in terms of the combined size of our CIS. And with the addition of JNFM, we expect to move up incrementally, right? But the perspective that I would want to add here is that what the acquisition will actually do for us is to bolster our capabilities specifically in the pension fund management space. That was one of the critical synergies that we're going after and where we expect to derive substantial value for shareholders. The CIS space naturally will mean that both entities will seek to combine what is on the JNFM side with what is on the Barita side so that clients will have far more opportunities, wider menu of choices and also the consolidation of capabilities, both in terms of assets as well as investment acumen. So our expectation is that the continued investment performance on Barita side will actually enable the JNFM piece to actually do well or even better than they have been doing going forward. And what do I mean by that? If we look at last year's performance, our FX growth fund was the #1 in its category, which is a global equities facing fund. The FX bond fund as well came second in its category. So we take all of those things together, we believe that this business is actually going to be even more formidable going forward. So that is how it will shake out for us in terms of our expectation, both in terms of the size of the combined entity as well as our investment performance in the next few quarters.

So to me, Richardo, you're saying one, with respect to the collective investment scheme, unitrust mutual fund space, we have some fantastic funds, some top-of-the-line funds. So investors can check those out to see whether they make sense to add to their portfolio from a risk perspective. And as it relates to the pension fund space, we are very much open for business, whether you are a company that's large or small, we are very well equipped and even more so now to serve you and your employees in terms of providing pension solutions. I mean when I look at the numbers, less than 15% of the private sector workforce is my understanding, is enrolled in a pension plan, which screams to me that we could potentially have a crisis in our hands many years from now when people are to retire. So I'd encourage employers to think about how they can help to support their employees to get involved in a pension scheme. They can do so in a fairly noncommittal way. I mean we have individual retirement scheme options where the employer can simply steer the employee in that direction to allow them to get that access. So I'd encourage you to speak to us either on the Barita side or the JNFM side, we have a solution for your pension needs.

Thank you, both. So it looks like we're inspiring some new investors to get started. I have a comment saying from one of our viewers saying they definitely need to start their investment journey with Barita, how do they go about it? Do they have to come into office to sign up? Or can they do it online? And what kind of minimums are needed to start a portfolio?

So I'll probably take that one. You certainly can start online, but we will need to see in person as of now. But don't worry, I mean the experience is intended to be one that is seamless for you. And a misconception is that you need to have a mountain of money to start investing. That's not the case. We do encourage our investors and prospects to think about investing as being a long-term commitment. So we encourage them to become serial investors where they put aside a little until it becomes incrementally more and more and turns into a lot each month or each period that works for them. So you can start with fairly low minimums. I mean I think we have products that you can start with as little as $20,000. So I'd encourage you to check the website, reach out to us via phone. Our offices are our usual business or as we invite you to come in and let's help you to start your investing journey.

Thank you very much. All right. I think we have time for just one final question. All right. Given the Bank of Jamaica's recent reduction of the policy rates in response to favorable inflation developments, what is our perspective on the future direction of local monetary policy? And additionally, would -- given our view, how would that impact Barita's net interest income?

Richardo, that sounds like you.

[indiscernible] things. But anyway, it's a very good question on note to end on. Our expectation is that the Central Bank is likely to continue on the trajectory of lowering its policy rate, obviously, because of the outturn in inflation, that is inflation, the last reading came within its target band of 4% to 6% on the one hand. But on the other, growth is obviously of concern. And therefore, you need lower rates of interest in that environment to stimulate growth and to avert contractionary conditions or a recession. So that is our near-term expectation that the next time the BOJ meets, there is a possibility that there could be a further 25 basis points rate cut. to ensure that the economy does not slip into economic recession. How do we expect that to affect our performance going forward? It's a continuation of what we have been seeing. The net international reserves are strong, which means that we expect that the FX market will continue to be fairly stable, and that will influence our in terms of trading gains there. We continue to expect that our net interest income trajectory, as you saw in Stephen's numbers was on significantly positive uptrend based on how our positions -- our assets are positioned on the balance sheet. We expect that NII should continue to return robust performance over the next few quarters, certainly on a year-over-year perspective. So that is how we are seeing it. Just to recap in terms of the MPC or the monetary policy trajectory, it's like that the BOJ is going to be accommodative. And we think that the trajectory that we're seeing in terms of our net interest income will continue to be positive in subsequent quarters, supportive of our business.

Thank you very much. And I would like to just thank Ramon, Stephen and Richardo for their comprehensive updates and for addressing our viewers' questions so thoroughly. This does bring us to the end of our Q&A section. And so with that, I would like to thank everyone who joined us this afternoon for your time and your thoughtful engagement. As you've heard from the team, we remain firmly focused on strengthening our platform for sustainable growth and delivering long-term value to our shareholders. We do encourage you to review the full financial report, which is available on the Jamaica Stock Exchange website and also on our website at barita.com/financials. Again, we sincerely appreciate your continued confidence, your partnership and support, and it allows us to pursue opportunities strategically while maintaining the strong governance, risk management and compliance framework that underpin our business. Should you have any additional questions arise following today's session, please feel free to reach out to us directly. Our e-mail address remains open, that's [email protected]. And we, of course, remain committed to transparent, timely and consistent communication. So on behalf of the Board and the management team, we thank you again for joining us for this Q1 Barita Beat investor briefing, and we look forward to updating you on our continued progress next quarter. Have a wonderful afternoon, I will see you soon.