Oct 2007 Financial News

DB&G now has assets under management of close to J$100 billion

Oct 19, 2007

Chief executive officer of Dehring, Bunting and Golding (DB&G), Anya Schnoor has said that the brokerage house's acquisition by Scotiabank has provided it with the resources to become the island's leading wealth management provider.

In her address at Mayberry Investment Limited's Monthly Investor Forum, at the Knutsford Court Hotel on Wednesday, Schnoor gave shareholders an insight into how the transaction will catalyse the transformation of DB&G into a dynamic entity.

Last December, Scotia acquired 68 per cent of the shares in DB&G to complete the bank's takeover bid of the company. Schnoor said that since the takeover, the brokerage's client base has moved from 25000 to over 35000, and Scotia's 90,0000 plus clients represents a great opportunity for the company to expand its business.

"That was the biggest transaction that DB&G has done in its history, the benefits that it will bring is a unified company that will pull on the strengths of both companies," said Schnoor. "It will give us a robust sales and service unit with far-reaching footprint....obviously the wider Scotiabank network gives us distribution that we could not have acheived on our own."

With the acquisition, DB&G's asset under management has grown to some $59.3 billion while its funds under management has increased to $56.6 billion as of the end of July, second to only Jamaica Money Market Brokers (JMMB) among merchant banks.

"One of the most important apects of the purchase of Scotia investments is that it has brought us to the number two position in terms of size and funds under management," noted Schnoor.

According to the CEO, when combined with its off-balance sheet assets under management, this figure is actually just under $100 billion.

"This is just on balance sheet assets, we also manage off balance sheet assets of probably another $30 or $40 billion," she said.

In addition to assets and funds under management, DB&G, whose financial year-end has been changed from the end of March to the end of October, in order to be in line with Scotiabank's year-end, has also seen added shareholder value. Shareholder's equity grew to $5.7 billion over the four-month period ended July 2007, 72 per cent above the corresponding period in 2006.

However, despite these lofty numbers, DB&G's net profit was relatively flat for the period under review. For the four months to July, net profit was $179.1 billion, marginally less than the $180.8 billion posted last year. Schnoor attributed this difference to a one-off transaction last year, but said that the real impact of the acquisition on its profit will be seen in the full year-end results.

"(The flat net profit) was really as a result of some one time gains that were taken in 2006 which was not repeated in 2007," said Schnoor. "The company, during that period, sold assets from its trading portfolio to realise those profits and that sale was not repeated in 2007.

"However, with the acquisition and synergies that we expect from the transaction, we expect that our full-year results will show an improvement over 2006," said the DB&G boss.

DB&G's journey forward will be against the backdrop of the company's new senior management team. The company's former head, Peter Bunting, left the company to return to representational politics earlier this year, while senior executives Mark Golding and Gary Sinclair handed in their resignations as well. However, Schnoor is convinced that the company's new blood, which includes herself, brought in from Scotia's Wealth Management division to head the brokerage, will be able to effectively carry the company forward.

"There have been significant changes at the senior management level of the company, but we have put in place a transition plan," said Schnoor. "We have a new management team....this change has allowed us to take another look at our organisation with the merger of Scotia Investments and reorganise the company to focus on key divisions that we feel are going to be the future of our company as we move forward."

One of the primary focuses of the new management team, according to Schnoor, is to diversify the company's income stream, which for the four months ended July 2007 was 69 per cent comprised of Net Interest Revenue. Fees and Other Income accounted for 16 per cent; Foreign Exchange Trading, the segment with the greatest potential according to Schnoor, accounted for 11 per cent; while securities trading accounted for a mere four per cent.

"One of the things that we have tried to do over the past few years, and been very successful at, is to diversify the revenue base of the company," noted Schnoor. "This is something that we are going to be focusing on as we move forward."

The CEO attributed the decreased income from securities trading to the bearish stock market, and emphasised that when the equity market rebounds, this segment should account for a significant amount of DB&G's revenue.

"Securities trading is really dependent on the market and our ability to make a market for the securities that we trade," she said. "It is something that we feel is going to be important as the market recovers from what has been a very difficult year and this revenue segment is going to be very important as we move forward."

Source:
The Jamaican Observer
Julian Richardson
Friday, October 19, 2007

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