Nov 2016 Financial News

JMMB benefits from bond buy-back windfall

Nov 16, 2016

The JMMB Group reported net profit of $2.03 billion for the six months ended September 30, a 68 per cent increase year over year.

Net operating revenue grew by 31.2 per cent, totalling $7.70 billion over the six-month period.

A release from the group said the uptick was influenced by the tender offer by the Government of Jamaica in August for its 2017 and 2019 global bonds, with enhanced liquidity resulting in higher levels of trading.

The GOJ offered to buy back old 2017 and 2019 notes valued in total at US$870.9 million at the same time as it reissued US$1.2 billion in new notes.

Further, for JMMB, earnings improved from market opportunities presented by “bullish market sentiments on emerging market assets, arising from both the outlook for Federal interest rates as well as the implications of Brexit on interest rates in Europe”, the company said.

Growth across core revenue activities included net gains on securities trading; net interest income; fee and commission income; and net foreign exchange trading of 52 per cent, 18 per cent, 26 per cent and 23 per cent, respectively.

Gains on securities trading grew by $1.10 billion, thereby totalling $3.19 billion at the end of the reporting period.

The group’s net interest income (NII) rose to $3.26 billion, an increase of $491 million when compared with the prior period.

This increase, directors said, is attributable to growth in the loan and investment portfolios, in addition to higher spreads. Fee and commission income also grew by $113 million to $554.3 million year over year.

JMMB indicated that its suite of managed funds and collective investment schemes (CIS) across the group grew by 37 per cent (or $99.03 billion) when compared to the corresponding period.

“This increase was positively impacted by strong growth in the company’s unit trust, pension business and the introduction of the first USD real estate closed investment (REIT) fund in August 2016.

“Additionally, net foreign exchange trading revenue increased by $127.3 million to $689.3 million, relative to the prior year on account of increased volume activity across the region, coupled with a one-off market opportunity in the first quarter,” the company stated.

Operating expenses moved from $4.16 billion to $5.08 billion over the corresponding period due to start-up costs in the Dominican Republic and inflationary increases in all territories.

Still, the group ended the period with an operational efficiency ratio of 65.8 per cent, down from 73 per cent, for the corresponding period.

JMMB said Trinidad and Tobago showed an increase of 17 per cent in operating revenue from its core banking business, while operating revenue from the Dominican Republic grew by 19 per cent and reflected, in part, the growth of the asset management and mutual funds business lines.

Jamaica, however, retained the lion’s share of the revenue generated by the financial entity, totalling $5.9 billion in operating revenue, primarily due to increased trading.

At the end of the second quarter the group’s asset base grew by seven per cent, totalling $247.42 billion, up $16.81 billion, when compared to March 30, 2016 based on larger investment and loan portfolios.

JMMB said credit quality that continues to perform well.

The group’s capital base increased by 21 per cent (or $4.7 billion) to end the period at $27.42 billion. Moreover, the individually regulated companies within the group continued to exceed the regulatory capital requirements.

Keith Duncan, JMMB Group CEO, in commenting on the performance of the group, said the recent approval from the Bank of Jamaica to upgrade the operations of JMMB Merchant Bank in Jamaica to a commercial bank reinforces the company’s “drive to offer our clients a full suite of financial solutions.

“At this time, the JMMB team is executing our plans to transition into commercial banking operations,” he stated.

He noted as well that the company continues to bolster digital services delivery channels and further enhance its sales force and client experience.

 

Source:
Jamaica Observer
Wednesday November 16, 2016    

http://www.jamaicaobserver.com/business/JMMB-benefits-from-bond-buy-back-windfall_80543