Jun 2013 Financial News

JMMB’s regional push paying off

Jun 12, 2013

NOT accounting for a one-off gain from its acquisition of Capital and Credit last year, Jamaica Money Market Brokers (JMMB) made more profit outside of Jamaica than it did in its home country.

A $750-million loss on the National Debt Exchange (NDX) — Government’s swap of domestic debt, which took place in February — lowered operating profit from $2.8 billion for the year ended March 31, 2012 to $1.7 billion in its last financial year.

In some respects, the decline reflected JMMB’s high exposure to government paper. The company held $91.6 billion of its $166.9 billion in assets in GOJ securities as at March 31.

But the $1.1 billion the bank made overseas is perhaps testament to the success of JMMB’s diversification drive — both geographically and across product lines — so far.

Growth in the Dominican Republic, where the company officially launched in late 2007, has been staggering.

The operations there grew its asset base from US$29.6 million, as at March 31, 2009, to US$174 million in 2013, when it posted net earnings of US$6.4 million ($640 million), up from US$1.2 million the year before.

Not that the operations in the Spanish-speaking Caribbean country wasn’t making money before; net earnings averaged over US$1 million a year for the three years prior to 2012.

What’s more, JMMB’s associate in Trinidad and Tobago saw its asset base climb from $13.7 billion, as at March 31, 2009, to $23.8 billion in 2013, while its profit grew from $89 million to $144.7 million over the fiveyear period.

Now, the banking group plans to acquire the remaining 50 per cent stake in Intercommercial Banking Group Limited in Trinidad and Tobago making JMMB the sole owner.

“Strategically, we are building an integrated financial services model with securities dealing, portfolio management, banking and insurance,” said Keith Duncan, JMMB Group CEO. “In diversifying across services and the region we are reducing risk across the board.”

JMMB expects to roll out mutual fund products in both the DR and Trinidad by the end of this financial year, or by next April.

The bank, which is pursuing a commercial bank licence, is also pushing to grow its loan portfolio.

“Over time, exposure to GOJ securities will be reduced, while exposure to loans and corporate credit will increase,” Duncan added.

Already, loans and notes receivables have grown to $10.2 billion as at March 31, 2013, from $3.4 billion a year earlier, mainly, reflecting the addition of Capital and Credit’s loan book.

What’s more, the proportion of loans which were taken on and deemed to be nonperforming was reduced from 50 per cent of total loans to around 10 per cent.

“We sold most of the loans and rehabilitated some,” said Patrick Ellis, JMMB’s Group chief financial officer. “It was about 14 loans, but they were backed by good collateral. Seventy per cent of the loans were in real estate.”

Other loans were placed into a special purpose entity as the bank is working to recover the value.

Locally, JMMB expects to fully integrate at least four more of its 12 branches, within three years, according to Jerome Smalling, CEO of Capital and Credit Merchant Bank.

At the same time, Kisha Anderson, JMMB’s new head of investment services, will drive the roll-out of new products under collective investment schemes and insurance.

In DR — where JMMB has three branches, including its head office, it has become the third largest Puesto de Bolsa, or security dealer — the company is shifting its focus more towards retail clients.

“We are now funded primarily by corporate institutions and high net worth clients,” said Duncan. “We are now moving towards middle-income clients — we are looking to build out and diversify the client base.”


Source:
CAMILO THAME Business co-ordinator thamec@jamaicaobserver.com
Jamaica Observer
Wednesday June 12, 2013

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