For the quarter ending March 31, 2026, Dolla Financial Services Limited (DOLLA) saw a 55.0% jump in earnings to $187.09Mn, as lower credit loss provisions and leaner operating costs outweighed softer net interest income.
Net interest income, the company’s primary source of revenue, declined by 3.3%, as a modest 2.1% increase in interest income was outweighed by a 24.1% rise in interest expense. The growth in interest income reflects the continued expansion of the loan portfolio, which grew by 15.0% year-over-year to $4.90Bn and is made up primarily of business loans that account for 90% of its portfolio.
However, the decline in net interest income was largely driven by higher financing costs associated with the company’s recently issued $1.50Bn debt instrument in January 2026. The bond was issued in two tranches: an 11.00% 2029 bond and 2031 bond with a 12.00% coupon.
Driven by lower operating expenses, there was a 12% expansion in operating margin to 8% from 40.5%. Operating expenses declined by 28.3% for the quarter, driven by a sharp 66.5% drop in provisions for expected credit losses to $35.33Mn. The company rebounded from last year’s fraud-related loan provisions and write-offs. It had been disclosed in October that it was impacted by a fraud incident in March, which ultimately resulted in higher credit loss provisions. However, following the write-offs recorded in FY2025 and the implementation of stricter controls, provisions declined. Administrative expenses were also down 5.7% to $167.10Mn, further increasing earnings. This was due to the full wind-down of its Guyana subsidiary and the absence of non-recurring forensic and legal costs related to the 2025 fraud investigation.
Looking ahead, we expect further expansion in the company’s loan portfolio, driven by the recent acquisition of Evolve Loan Company and the continued deployment of proceeds from the bond raise. This should position the company for further growth in the coming quarters.
However, there are risks. Although interest rates are lower than last year, they remain elevated and could stay higher for longer amid inflation risks stemming from geopolitical tensions in the Middle East. This has already begun to translate into higher local prices. Persistently higher inflation could lead the Bank of Jamaica to maintain, or even increase, policy rates. Consequently, this may compress the spread between borrowing and lending rates, and by extension, weigh on earnings.
At the market close on Thursday, May 7, 2026, Dolla’s stock price had declined by 8.8% since the start of the year to J$2.50. At this price, Dolla trades at a Price-to-Book (P/B) ratio of 3.6x, which is above the Junior Market Financial Sector average of 1.5x.
