Sep 2010 Financial News

JMMB's net profit up 12 per cent in June quarter

Sep 03, 2010

Jamaica Money Market Brokers (JMMB) managed to navigate through choppy waters employing diligent skills despite being severely buffeted by foreboding squalls that put its abilities to the test.

Jamaica Money Market Brokers Limited (JMMB) recorded an EPS of J$0.12 for the three months ended June 30, 2010, representing a 20 per cent increase from the J$0.10 reported in the comparative period of 2009.

At the top line, the Group's interest income was down 19.0 per cent moving from J$3.4 billion to JA$2.8 billion.This was followed by a 28.4 per cent fall in interest expense which moved from J$3.2 billion to J$2.3 billion. Overall, JMMB's net interest income margin improved from 6.6 per cent in Q1 of 2010 to 17.4 per cent in Q1 2011, resulting in an increase in net interest income from J$223.7 million to J$481.7 million year-on-year.

Other operating revenue moved from J$403.4 million to J$266.2 million mainly as a result of the fall in the gains on securities trading (net), which declined 47.7 per cent to $183.4 million year-on-year. However, fees and commission income increased 66.6 per cent to J$48.3 million, while foreign exchange margins from cambio trading were also up, moving from J$23.5 million to J$34.5 million for the period.

Despite the eight per cent increase in operating expenses to J$522.2 million, the Group's operating profits increased 53.2 per cent reaching J$229.8 million year-on-year. According to a JMMB spokesperson, the increase in expenses was a result of inflationary increases granted to staff at the beginning of the financial year. The operating profit margin also improved moving from 24 per cent to 31 per cent.

Net profits were up 12 per cent to J$176.9 million as the Group faced a higher taxation charge of J$54.7 million compared to the J$2.8 million a year ago.

It should be noted that the total assets base fell from J$123.0 billion as at March 31, 2010 to J$118.3 billion in Q1 2011.

According to the Group's chairman, "this decrease in assets was due mainly to realising gains from the investment portfolio in addition to utilising proceeds and other maturities to liquidate debts."

The Group's capital to risk weighted assets ratio stood at 34.6 per cent, which is above the minimum requirement of 14 per cent by the Financial Services Commission (FSC), while its capital to total asset ratio was 8.9 per cent, which is above the FSC's benchmark of six per cent.

JMMB's ability to continue its performance will be tested in the following quarters. Going forward interest income, is expected to be lower as a result of lower interest rates stemming from the Jamaica Debt Exchange (JDX). The Group produced commendable improvements in its net interest income margin and continued improvement in this margin will be important.

The Group will need to continue its efforts in growing non-interest income such as the fees and commission income as well as foreign exchange margins from cambio trading.Foreign exchange gains may remain flat as the exchange rate is expected to remain fairly stable at current levels. For the year ended March 31, 2010 the Group benefited from strong performance of the gains on security trading, net which accounted for 82 per cent of non interest income. In the first quarter this was only 68.9 per cent. It will be a challenge to match the J$0.57 in the next three quarters if there is no improvement in this income stream.

Earlier this week JMMB announced that is seeking approval from its shareholders for a further 3 billion preference shares in an effort to raise J$2.5 billion. JMMB Group CEO Keith Duncan has made it clear that he is looking to up the ante and make forays into new areas of business and exploit new opportunities

"JMMB intends to have a new preference share issue in January 201 to satisfy client demands for low-risk investment opportunities with regular cash flows as well as deepen the institution's capital base, continuing the company's growth trajectory," it informed the Jamaica Stock Exchange in a written notification.

As at June 30, 2010 JMMB had J$7.3 billion in capital.


Source:
By Al Edwards
Jamaica Observer
Friday September 3, 2010

http://www.jamaicaobserver.com/business/JMMBs-net-profit-up-12-per-cent-in-June-quarter