Jun 2013 Financial News

JMMB profits soar despite large NDX hit

Jun 05, 2013

Jamaica Money Market Brokers Limited (JMMB) made J$3.86 billion for its March 2013 year end, up 72 per cent, mainly because of its bank acquisition.

Still its earnings were tempered by a J$754 million hit from the National Debt Exchange (NDX) executed in late February.

The group earned J$11.2 billion in revenues, up from J$9 billion a year earlier, aided by the acquisition of Capital & Credit Financial Group (CCFG) and its subsidiaries. The acquired company contributed J$1.2 billion in revenues and incurred operating expenses of J$1 billion for the JMMB group.

JMMB executed a friendly takeover of CCFG last June. It made a J$2-billion gain on the acquisition, having paid J$4.2 billion on J$6.7 billion net assets at fair value.

JMMB has since wound up CCFG's securities arm, while retaining its merchant bank, pension, funds management and remittance businesses. JMMB essentially wanted to gain CCFG's merchant bank licence as a leg-up to a commercial banking licence, which it said it will seek in the future.

JMMB already operates a boutique commercial banking subsidiary, IBL, in Trinidad - it announced plans in May to acquire full ownership - but has previously been denied a similar licence in its home market, Jamaica.

The group's operations outside of Jamaica - Trinidad and Dominican Republic - contributed J$659.1 million to operations.

JMMB now worth J$167 billion

JMMB is currently worth J$167 billion in assets, more than J$32 billion of which was contributed by CCFG. Additionally, its total equity jumped to J$17.2 billion, from J$10.8 billion a year earlier.

Under the NDX, Jamaica's second debt-exchange programme in three years, investors in GOJ bonds have given up an estimated J$17 billion in annual returns, which will be pocketed as savings to the Government amounting to 8.5 per cent of GDP under a targeted debt-reduction programme extending to year 2020.

JMMB swapped J$53.8 billion worth of Jamaican-dollar bonds and US$53.6 million (J5.36b) of US-dollar securities.

"The group and company realised a one-time loss of $J$754.2 million and J$749.5 million, respectively," JMMB disclosed in its year end financials.

Patrick Ellis, group chief financial officer at JMMB Group, said the hit was a one-off event.

"There will be no further loss from NDX. This was a one-time loss from the exchange/swap in assets," he said.

It is the largest NDX loss reported to date, but Ellis insisted that JMMB is not too heavily exposed to government paper.

"The JMMB group's portfolio consists mainly of sovereign investment grade assets consistent with the group's investment policy statement and regulatory guidelines," he said.

"The increased profitability from the regional subsidiaries, despite the impact of loss from NDX in Jamaica, is evidence of the group's prudent and sound management practices," he indicated.


Source:
steven.jackson@gleanerjm.com
Jamaica Gleaner
Wednesday June 5, 2013

http://jamaica-gleaner.com/gleaner/20130605/business/business11.html