Fixed income gains push British American back to profitability

British American Investment Company has returned to profitability, posting Sh1.6 billion profit after tax in the first half of the year.

The growth in revenue has been attributed to fixed income and a good show in the stock markets.

For the period under review, investment income grew to Sh2.6 billion from Sh54.9 million the year before. Over a similar period last year, the company recorded a Sh109.6 million loss.

Revenues for the asset management and insurance company jumped 29 per cent to Sh3.5 billion from Sh2.7 billion in 2011.

British American also achieved a 29 per cent upswing in its insurance business, recording Sh3.3 billion in revenue, up from Sh2.6 billion in a similar period last year.

“A major component of the investment income was from fixed income that is in line with the company’s strategy to stabilise earnings… and a vibrant securities exchange also contributed to the good performance of the company,” said managing director Benson Wairegi.

Last year’s loss was largely attributed to poor performance of the Nairobi Securities Exchange (NSE) where its investment suffered a loss of Sh1.9 billion.

The NSE lost 31.4 per cent in 2011 as investors shifted their cash to other well-paying investments.

The company has reduced its shareholding in Housing Finance and Equity Bank, earning more than Sh2.2 billion, which it plans to pump into real estate. “We expect revenue growth in the second half of the year to continue being strong,” the company noted.

It intends to invite international investors to put their money in a Sh10 billion property fund in which it will put Sh1.5 billion directly. The balance of Sh8.5 billion will be raised from other investors.

The company has operations in Uganda and has also opened business in South Sudan.