Nov 2009 Financial News

FX gains pushed up CCFG's profits 31 per cent in Sept Q

Nov 11, 2009

Foreign exchange gains rocketed Capital & Credit Financial Group's (CCFG) after-tax profits by 31 per cent to $94.4 million for the three months to September 30, 2009, when compared with the comparative 2008 quarter.

Foreign exchange trading and translation gains increased nearly ten-fold to $217.3 million in the September quarter versus $24.9 million in the comparative 2008 quarter.

This significantly contributed to the 44.5 per cent jump in net interest income and other income to $610.3 million when compared to the corresponding period in 2008.

Chairman and group president Ryland Campbell stated that improved results occurred "even with contracting spreads driven by the Central Bank's efforts between July and September to reduce interest rates".

At the same time, gross operating revenue increased by 14 per cent to $1.6 billion, compared to the corresponding period in 2008, with net interest income of $346.8 million up 2.3 per cent when compared with the same quarter last year.

Campbell added that challenges during the quarter included containing expenses and counteracting the weakened remittance market.

"Albeit an improved quarter performance, the results continue to be impacted by increased non-interest expense and fallouts in the remittance and broker-dealer business lines," he further added. "A congruent alliance, through an expanded role of the Florida-based broker/dealer, as well as a new thrust in the remittance business, has been initiated and the anticipated positive outcome of this deliberation is expected to position the group to take advantage of forthcoming market opportunities in order to improve value for all stakeholders."

Stockholders' equity, as at September 30, was $5.6 billion - a decrease of 0.35 per cent when compared to the same period in 2008. Same-year, quarter-over-quarter comparison has shown that the group is increasing its efficiency.

"For the third quarter, cost containment initiatives remained an important feature of the group's management strategy, resulting in a 5.95 per cent decline in staff costs, to $152.6 million, when compared to the $162.2 million reported in the 2009 second quarter. There was a marginal increase of 2.32 per cent in overall expenses, with the exclusion of Loan Loss expense," he stated in the financials released to the Jamaica Stock Exchange.

Earnings per stock unit (EPS), at 10 cents, represented a 42.8 per cent increase for the quarter, up from the seven cents reported for the 2009 second quarter. The EPS unit is based on the net profit after tax on the 926 million ordinary stock units in issue. Total assets, as at September 30, 2009 of $43.84 billion, was $6.18 billion or 11.8 per cent below the $49.72 billion reported in 2008.

"This reflects the effects of the continuing global economic conditions, as well as the strategy employed by management to de-emphasise lower-yielding treasury activities," stated Campbell.

The treasury portfolio's investment in securities totalled $32.46 billion, as against $38.59 billion at the corresponding 2008 quarter.

The group foresees continued challenges in its outlook for 2009.

"Faced with the continuing global economic challenges, CCFG continues to demonstrate its ability to sustain profitability during tough times," Campbell stated. "The loan portfolio is under clearly defined strategies to ensure orderly settlement. The group continues to build on its strategies and core competencies, cost containment, improved customer service delivery and staff efficiency."

He said that the country is experiencing severe social, economic and financial constraints, but "as a people we must summon the will to make structural adjustments and rebuild the economy".


Source:
Jamaica Observer
Wednesday, November 11, 2009

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