Newstar Financial (NEWS) has reported a 65.53 percent plunge in profit for the quarter ended Mar. 31, 2017. The company has earned $1.38 million, or $0.03 a share in the quarter, compared with $4.01 million, or $0.09 a share for the same period last year.
Revenue during the quarter plunged 41.61 percent to $13.99 million from $23.96 million in the previous year period. Net interest income for the quarter dropped 37.88 percent over the prior year period to $13.99 million. Non-interest income for the quarter fell 67.88 percent over the last year period to $6.15 million.
Newstar Financial has made provision of $6.15 million for loan losses during the quarter, down 65.29 percent from $17.71 million in the same period last year.
Net interest margin contracted 76 basis points to 1.45 percent in the quarter from 2.21 percent in the last year period. Efficiency ratio for the quarter deteriorated to 57.78 percent from 40.96 percent in the previous year period. A rise in efficiency ratio suggests a fall in profitability.
Tim Conway, NewStar's chairman and chief executive officer, commented on the Company's performance: "During the first quarter, we continued to make progress on the transition of our business model from a bank-styled, commercial lender to a hybrid asset manager focused on the credit markets. We achieved our cost saving targets, reducing expenses by nearly a third in the first quarter. We also capitalized on market conditions to refinance and reset CLOs, extending investment periods and lowering the cost of funding for investors, while launching marketing efforts for new managed funds employing middle market investment strategies."
Investments stood at $127.54 million as on Mar. 31, 2017, up 42.21 percent or $37.86 million from year-ago. Shareholders equity was at $643.01 million as on Mar. 31, 2017.
Return on average assets moved down 26 basis points to 0.14 percent in the quarter from 0.40 percent in the last year period. At the same time, return on average equity decreased 159 basis points to 0.87 percent in the quarter from 2.46 percent in the last year period.
Equity to assets ratio was 16.13 percent for the quarter, down from 16.45 percent for the previous year quarter. Book value per share was $15.21 for the quarter, up 9.90 percent or $1.37 compared to $13.84 for the same period last year.
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