Feb 2007 Financial News

JMMB Releases Nine Months Results

Feb 15, 2007

Results for the Nine Months Ended December 31, 2006

All figures quoted in Jamaica Dollars

For the Nine Months ended December 31, 2006, Jamaica Money Market Brokers Limited (JMMB) reported Earnings Per Share (EPS) of 52 cents, which was 42.22 per cent or 38 cents lower than the EPS of 90 cents in the comparable period in 2005. Q3-FY2007 on Q3-FY2006, EPS was down by 33.33 per cent or 10 cents from 30 cents in 2005 to 20 cents in 2006. The Chairman has stated in his report that the fall in Profits and consequently EPS is mainly due to the decline in Share of Profits from Associated Companies.

Interest Income for the period under review amounted to $6.40 billion, up by a minimal 5.34 per cent or $324.31 million on the corresponding nine months in FY 2006. While Interest Expense was up by a higher margin of 15.19 per cent to end the period at $5.30 billion. Thus, Net Interest Income was down by a considerable 25.43 per cent or $374.83 million to close the nine month period at $1.10 billion. Q3-FY2007 on Q3-FY2006, Net Interest Income was down by 17.36 per cent or $73.59 million.

For the Nine Month period, JMMB’s Gains on Securities Trading amounted to $669.57 million and was up by 36.61 per cent on the corresponding Nine Month period in 2005. However, Q3-FY2007 on Q3-FY2006, this figure was down by 17.97 per cent from $269.05 million in 2005 to $220.69 million in 2006. Fees and Commissions for the Nine Months showed positive growth moving from $73.49 million (FY2006) to $111.00 million (FY2007), which was a substantial increase of 51.05 per cent. Q3-FY2007 on Q3-FY2006, the Company also saw an improvement in Fees and Commissions of 114.30 per cent or $23.84 million. However, Foreign Exchange Margins from Cambio Trading was down by 23.19 per cent or $13.31 million, nine months on nine months.

Operating Revenue net of Interest Expense amounted to $1.92 billion for the Nine Months, this represented a fall of 8.17 per cent when compared to the corresponding period in 2005. As mentioned earlier, Share of Profits from Associated Companies was down by 75.83 per cent, nine months on nine months, and ended the period at $129.47 million. Administrative Expenses rose by 8.40 per cent from $1.10 billion (nine months 2005) to $1.20 billion (nine months 2006), also contributing to the negative performance of JMMB.

Profit Before Income Tax for the period under review stood at $859.42 million, representing a fall of 43.87 per cent on the corresponding figure for FY2006. The Effective Tax Rate for the Nine Month period ended December 31, 2006 was 11.05 per cent compared to 13.70 per cent for the comparable period ended December 31, 2005. Thus, Profit After Taxation stood at $764.44 million down by 42.15 per cent on the nine months.

The Chairman has stated that going forward; JMMB will continue to execute the strategy that included the launch of several new products, such as the Managed Global Bond portfolio (MGBP), the Trinidad and Tobago Select Index Fund (TTSIF), Corporate Finance and general Insurance services.

The shares of JMMB are currently trading at a price of TT$1.21. In light of the current results, we are maintaining our Forecasted EPS of TT$0.07. At the current price and Forecasted EPS, these shares are trading at a price to earnings multiple of 17.29 times. This is high for this Company and as such we continue to recommend a SELL on this share.

Gia Singh
WISE Research Team