Feb 2015 Financial News

Higher costs and taxes hit JMMB profit

Feb 18, 2015

THE large financial outfit, Jamaica Money Market Brokers Ltd (JMMB), benefited from double-digit revenue growth in its third quarter ending December 2014, but this didn't translate into higher profit.

Group after-tax profit dropped to $690 million in the quarter or 8.1 per cent lower than a year earlier. This was due to greater levels of taxation at $141 million in the quarter, or three times higher than $47 million recorded a year ago. But there was also an increase in its operating costs, up 19 per cent year-on-year to $1.97 billion.

"Management is taking medium-to-long term measures to correct this increase, mainly through extracting synergies from its recent acquisitions through its integrated financial services model across regional territories," stated JMMB in the preface to its financials.

These costs downplayed increased trading gains and organic revenue growth following its earlier acquisition of Trinidad-based Intercommercial Bank Limited (IBL). It resulted in the group's operating revenues net of interest expense hitting $2.8 billion over the three months compared to $2.4 billion a year earlier up 16 per cent year-on-year. Over nine months operating revenues totalled $77.7 billion compared to $6.6 billion "which was the result of expanded business lines through the acquisition of IBL in October 2013, coupled with effectively managing the group's investment portfolio and cost of funds," stated JMMB in statements prefacing the financials.

The locally-based JMMB operates eight subsidiaries incorporated in Jamaica with others incorporated in St Lucia, Domincan Republic, Trinidad and USA.

"Our operations in the Dominican Republic continue to produce positive results contributing $507.9 million to the group and in Trinidad & Tobago, IBL contributed $162.4 million to the group's earnings," stated JMMB about its nine months results.

"Operating expenses increased from $3.99 billion to $5.45 billion. Expenses associated with the expansion of the group through the acquisition of IBL and AIC Securities accounted for $795.8 million (54.6 per cent) of this increase and the remaining $662.4 million (45.4 per cent) is attributable to costs associated with integration, growth in subsidiaries in the regional markets, increase in asset tax and normal inflationary increases."

The company's capital to risk-weighted assets ratio stood at 14.6 per cent, whereas the Financial Services Commission (FSC) benchmark stipulates a minimum of 10 per cent. The company's capital to total assets ratio was 11.1 per cent whereas the FSC benchmark is six per cent.

Source:
BY STEVEN JACKSON
Business reporter
jacksons@jamaicaobserver.com
Jamaica Observer
Wednesday February 18, 2015    

http://www.jamaicaobserver.com/business/Higher-costs-and-taxes-hit-JMMB-profit_18419073