With markets volatile and a record breaking performance in 2021, it is unlikely that ANSA Merchant Group will have the same kind of results this year as it did last year.
But even as its Managing Director Gregory Hill admits to reduced expectation, he lauds that all of the Group’s fundamentals, other than its exposed to the vagaries of the market, are well positioned for the future.
Hill was asked, “So I take the point about the fact that the bond market and the equities market tend not to trade in the same way, but at the end of the day, you have a generally bearish market. At the moment some of the fundamental views of inflationary pressure, the war in Ukraine looks as though it’s going to play out for some time, there’s likely to be more challenges, particularly at the food side, as that war continues and as the blockade goes on. Therefore would you say in a reasonable way that it is likely the performance of ANSA Merchant Group is unlikely to be as stellar as it was last year, if only because of the extent of exposure?
Hill: “Yeah, I mean it’s hard to predict how the market is gonna pan out for the rest of the year. I mean, I shared with you what the pundits of all investment houses are saying. You know when you have an investment portfolio that is backed by both your internal business and your investment portfolios, both your internal business and your banking businesses, you know you will filter through some of that exposure. So of course, given what’s happening in the market, I can’t predict the same level of outsize performance as 2021 re 2020 and 76% growth. I mean, so that was a record year for us you know. So it’s gonna take it down a little bit this year I imagine.”
He added, “But the important thing is that we focus on quite a lot of other things. We have a very diversified business and our portfolio and divisions are all growing. There is, and you know, we will pushing our agenda, not just the investment market, as that is just one thing, but we’ve been pushing the agenda in terms of what we’re doing.”
He gave as an example the decision to purchase the Bank of Baroda and said it added an important piece to its portfolio by playing in the commercial banking space and there are major plans for ANSA Bank.
“We are a smaller player in the first instance. But we have huge ambitions. We are going to be the first to offer a really good banking offering which will be second to none, the first digitally enabled commercial bank and that is going to add some scale to what we are doing. We didn’t just scale, we are building on the franchise or things that we know how to do well. So we would have bought Bank of Baroda Limited and the company entered the commercial banking landscape right, and that move Curtis will allow us to compete with the commercial banks and be a player along with them. We re-branded it to ANSA Bank Limited on the sixth of April 2021 and so now we’re seeing a large growth in business. We have a Managing Director there, Robert and his executive team are doing a fantastic job growing the business, growing Customer base, exciting them with new products.
Hill acknowledged that the first quarter has been challenging but said that was due to the fall in global equities.
He told the Sunday Business Guardian that as a financial institution ANSA Merchant Group runs a very diversified business.
“In 2021, we would have produced profits of 360,000,000 and when you look at that over the prior year, it was a 76% increase and of course a 76% increase for a financial services, in a group as big as ours, is a significant increase. All the business lines did remarkably well. In 2021 our investment portfolio benefitted from resurgence in the international and regional markets. So rolling into 2022, what we saw was some anxiety in the global markets based on the war between Ukraine and Russia. We also saw a run up in commodity prices. We saw inflation risk in the United States and the Federal Reserve stepping up very quickly to react to that. So when you look at those factors, supply chain issue, logistics issues, when you look at all of those things, including what’s happening in China with the zero tolerance on COVID-19 and the slow down, the rising energy prices, which are affecting economies around the world, what you saw was the market reacts in a very conservative way, and market prices basically re-priced based on these new new conditions,” Hill explained.
He said the international markets reaction affected all investors globally.
“And what is interesting is that both equity market and the bond market reacted this way at the same time. By referencing rates it affected bond market and the international equity market was affected by the volatility. So normally you have two asset classes that don’t operate or function the same way, so it’s a bit of a long winded way to say that after 76% growth in profitability supported by investments, there was some repricing of that in 2022 in the first quarter, you know and you know what I wish I could say is that I have a crystal ball. I wish I could say that international markets will become a lot more settled in the next quarter on quarter after that. You know my estimation is that it’s gonna continue along this vein for the rest of the year until I would say closer to the end of the year when the markets would have stabilized at that point in time.” he added.
According to hill the S&P already appears to be rebounding a little but stressed that while there is volatility, and the market has turned bearish ANSA Merchant was in the business of taking a long view and would wait for markets to rebound, as they are sure to do.
“So you’ll see that kind of volatility across all the financial institutions in Trinidad and the region and internationally. So that’s what is taking place in the market and it’s non-cash mark to market price valuations, right? And if you look at the growth of the S&P and look at the other markets over time, there is an upward trajectory. We invest for the long term, our portfolios are well structured, we’re very comfortable with the way we’ve structured our portfolios and as the markets settle down under this wind in his sails, we will recover and write that up as well.” Hill posited.
He boasted that ANSA Merchant is a home-grown financial institution and added that while some of the international banks are de risking in the region, the domestic bank is actually expanding and spreading its wings and adding more services.
“The customer, you know the decisions that we make for credit and investing and lending and relationship with clients and client on boarding, knowing your customer, those decisions are made in Trinidad right and for Barbados made in Barbados. We are very domestic in the way that we operate, but very global in our mindset. So that just shows you why we have sound investment.” Hill told Sunday BG.
He pointed to the insurance brand like TATIL ‘where people are people’ as a strong brand, strong businesses, and the Group was deepening and adding scale with the purchase of Colfire and Trident insurance in Barbados.
Hill was particularly proud of the renewable energy projects and electric vehicles that ANSA Merchant is financing with major financing for green projects which ties into ANSA McAL’s fundamental views on ESG.
He said whether it is in green financing, wealth management, commercial banking, insurance or investment banking ANSA Merchant Group is seeing growth and grasping the opportunities.