Friday, August 29, 2008

Playing catch up to inflation - Interest rate crests 15%

Published: Friday August 29, 2008

Jamaica's treasuries rose to a new high this month above 15 per cent as interest rates continue to trend up, but not enough to offset inflation which the central bank now estimates could end as high as 17 per cent this fiscal year.

The six-month treasury bill yielded 15.08 per cent on average in the central bank auction of August 27, but allotments were made on rates that ranged as high as 15.5 per cent; the three month averaged 14.58 per cent. The six-month bill is generally cited as the benchmark interest rate.

Subscriptions for the two bills topped $1.6 billion, but only $900 million was allotted in the auction.

The yield on the six-month treasury bill was 18 basis points above the July bill, and close to three percentage points above the August 2007 yield of 12.21 per cent.

The market has, since last year, been demanding higher returns on government paper, to offset inflation, which is growing at a rate of two per cent per month and running at an annual 26 per cent.

Forecast adjustment

The Bank of Jamaica adjusted its forecast on fiscal inflation just last week, raising its estimate from 14 per cent to between 15 per cent and 17 per cent.

"The risks to the inflation forecast continue to be biased towards the upside (17 per cent), mainly because of the strong probability of adverse weather changes and higher than anticipated increases in international commodity prices," said the June 'Quarterly Monetary Policy Report'.

Essentially, though, the central bank, while acknowledging that world commodity prices could have a deeper impact than projected at the top of the year, is still predicting a better outcome for inflation over last year's 19.9 per cent.

The next monthly T-bill auction is on September 17.

Source: Jamaica Gleaner

Tourism to play a big part in Grenada's new economy

Published: Friday August 29, 2008

The new Grenadian government has outlined plans to build New Economy, saying that the country's economic prospects will be heavily influenced by development in the tourism sector.

In his Throne Speech delivered last week at the first session of Parliament since Tillman Thomas' National Democratic Congress (NDC) was swept to power in the July 8 elections, Governor General Sir Daniel Williams said the government would invest heavily in product development as well as destination marketing, as it seeks to boost tourism earnings.

"In addition, my government will provide opportunities for new and small businesses to bring onto the market fresh tourism products. Our objectives are to earn more from tourism and to secure more employment for our people," he said.

"The critical importance of the sector requires that optimal arrangements be put in place on the public sector side for policy development and management. My government intends to establish a tourism authority dedicated specifically at pursuing the business interests and goals of the sector and negotiating with the key players in the trade."

Sir Daniel added that the medium term focus will be "to establish Grenada as the Dive Capital of the Eastern Caribbean, and to position Grenada as a preferred cruise destination".

Private sector development was also identified as a major factor in the New Economy plan, with the governor general saying that the government sees that sector as "the engine of growth".

"In this regard, my government will soon establish an Office of Private Sector Development in the Ministry of Finance to manage private sector relations and deliver on key reforms such as the new Investment Code, a Small Business Policy and faster transaction times for processing the private sector's business with Government," he said.

"With these arrangements, my government aims to present a fair, transparent, predictable and efficient fiscal path for businesses to run on."

The government also announced it would take "bold steps" towards oil and gas exploration, new food production methods and techniques, fashion designing, cultural products for tourism, Information and Communications Technology (ICT) and ICT-enabled products, among others.

Sir Daniel said that in an effort to manage Grenada's limited financial resources, the government will pursue disciplined fiscal policy and ensure successful completion of the Poverty Reduction and Growth Facility with the International Monetary Fund.

He added that the tax reforms to modernise tax policy and administration will also be implemented in an effort to maximise government revenue.

Source: Jamaica Observer

Sagicor strong but Jamaica worried by inflation

Published: Friday August 29, 2008

Sagicor Financial Corporation, strengthened by its Jamaican subsidiaries, has recorded a solid half-year performance in which its net profit climbed 25 per cent at the end of June 2008.

For the six month period, the Barbados-based insurance conglomerate, garnered net income of US$45.4 million, or earnings per share of US$12, compared with the prior year's US$36.2 million or US$9.50 per share.

Sagicor's revenue also shot up 48 per cent to US$461.7 million, while net investment and other income amounted to US$171.3 million, moving from US$145.8 million in the corresponding six-month period of 2007.

The Barbados conglomerate has declared dividends of US 3 cents per share, payable October 15, which converted to Jamaican currency amounts to $599.5 million based on the more than 277.5 million shares listed on the exchange.

J$1.5b profit

Sagicor Life Jamaica, its top performing subsidiary, reported a net profit, attributable to stockholders, of J$1.5 billion or 40 cents per share, up 22 per cent.

Within the second quarter the life insurance giant recorded a profit of $729 million, up 17 per cent compared with the second quarter in 2007.

The Jamaican operation in the last quarter struck a deal with Blue Cross of Jamaica to acquire its health insurance portfolio. The acquisition is subject to regulatory approval.

Increased ownership

Sagicor Jamaica, which is led by Patrick Byles, attributes its performance for the period under review to higher interest rates, lower reinsurance cost and amortisation charges as well as a larger share of earnings from Sagicor Cayman, having increased its ownership from 51 per cent to 75.2 per cent.

Consolidated revenues for the half year amounted to $9.2 billion with investment income up by 11 per cent to $2.3 billion.

During the six-month period, Sagicor Jamaica's administrative expenses grew to $2.2 billion, an increase of 18 per cent over the prior year's $1.88 billion.

The company fears its operating expenses could grow even more with inflation still on an upward trajectory.

Partially reflected in the current numbers were higher spending by investment subsidiary, Pan Caribbean Financial Services (PCFS), relating to the set-up of its commercial bank.

The brokerage in June gave up its merchant banking licence and launched into commercial banking under the name PanCaribbeanBank.

In the periods ahead, Sagicor Jamaica says it expects rising inflation - already at 14.7 per cent year to date - to affect its cost of operations.

Pursue opportunities

"During the second half-year we will be implementing initiatives to raise our operating efficiencies even as we pursue opportunities for business growth," said chairman Dodridge Miller and president Byles in the statement to the accounts.

For the second quarter, Pan Caribbean recorded a 32 per cent growth in profit, which totalled $351.7 million.

The company's net interest income, representing 70 per cent of gross income, grew by 19 per cent to $952 million.

Assets totalled $54.9 billion.

Pan Caribbean has declared a dividend but on its preference shares. The brokerage will pay $6.28 per share on its 6.32 million 12.5% prefs, a total of $39.7 million, on September 17.

Sabrina Gordon
Jamaica Gleaner

Scotia DBG retreats from Trinidad

Published: Friday August 29, 2008

Jamaica's Scotiabank DBG Investments Limited is selling its Trinidad operation to affiliated company Scotiatrust and Merchant Bank Trinidad and Tobago Limited, a disclosure made in Port-of-Spain this week.

Scotiabank Trinidad, parent to Scotiatrust, in its six-months earnings report released Wednesday, told shareholders that negotiations, while ongoing, "would soon come to fruition."

Scotia DBG's Chief Executive Officer, Anya Schnoor, told the Financial Gleaner that the Trinidad subsidiary's assets were now being valued.

The disposal, she said, would allow the company to refocus on its Jamaican market, where the company trails big rival NCB Capital Markets Limited.

But it also offers Scotia Group Jamaica, parent to Scotia DBG Investments, the opportunity to pull back from its sister company's operating space, on which it would have encroached by happenstance when it acquired the Dehring Bunting and Golding Limited financial group in late 2006.

"We are focusing on our core operations in Jamaica, but will maintain a partnership with our sister operations in Trinidad where they will continue to sell our unit trust/mutual fund products in the future," said Schnoor.

"As a part of the Scotia Group, we have access to the worldwide Scotia operations and therefore the need to set up separate SDBG offices in various countries is not needed," she added.

PRICE unclear

Scotia DBG Trinidad, run by country manager Lisa-Maria Alexander, is currently trading on on the Port-of-Spain exchange at TT$2.52 per share, but it is unclear at this time how the deal is being priced - whether as a cash or combination shares transaction.

Schnoor said that the deal will be to sell to Scotiatrust the assets and liabilities of the branch in Trinidad.

"We are still in the negotiating stage of this transaction and no sale price has been determined," she said.

"We will be engaging the services of an external valuator to guide us in that matter."

Scotiabank Trinidad has indicated that the deal is close to being sealed, saying negotiations were advanced and "would soon come to fruition."

"This acquisition would bring to the group a company which is licensed as a securities company, entitled to provide investment advice and act as a securities dealer and underwriter," the banking group said.

Scotia DBG Trinidad became operational in November 2005 as Dehring Bunting & Golding Trinidad Limited, a year before Scotiabank Jamaica's acquisition of the brokerage.

Its offerings in the Trinidad market includes mutual funds and multi-currency repurchase agreements.

Partnerships possible

Schnoor said that future expansion to other markets has not been ruled out.

"Where we can partner with various countries we will do so."

The sale will now contain Scotia DBG operations to two principal geographical areas - Jamaica where its main assets are deployed, and the Cayman Islands.

In its nine-month results to July 2008, Scotia DBG recorded sales of $5.5 billion - up by more than $2 billion year-on-year, from which it reported net profit of $936 million or $2.21 per share.

The company is capitalised at $38 billion and is valued on its balance sheet at $64 billion by total assets.

Schnoor says the Trinidad branch is small and represents less than one per cent of the company's revenue.

Sabrina Gordon
Jamaica Gleaner

Inflation in T&T rises to 11.9 per cent

Published: Friday August 29, 2008

Inflation in T&T continues to increase, jumping to 11.9 per cent at the end of July, according to the Central Bank.

In its latest repo rate announcement yesterday, the bank said the rate of inflation had increased to 11.9 per cent from 11.3 per cent at the end of June.

The bank said that on a monthly basis the increase in July was the highest monthly increase for the year so far.

Food inflation continued to rise, going up by 25.3 per cent in July from 23.1 per cent at the end of June. Rising prices of bread and cereals, meat, oils and fats, fruit and vegetables were mainly to blame.

Meanwhile, core inflation, which filters out the impact of food prices, went down slightly to 6.2 at the end of July from 6.4 per cent in June.

Source: Trinidad Guardian Newspapers

IMF's wages warning

Published: Friday August 29, 2008

THE INTERNATIONAL MONETARY FUND (IMF) has added its voice to the call to moderate wages in Barbados.

The IMF said "wage moderation was needed to minimise second-round effects of the oil and food price shocks and thereby help the economy adjust in the least harmful way".

Wage negotiations were critical to determining the "effectiveness of the overall policy response to the current challenges", the IMF said.

Its executive directors warned "specifically about the risk" posed by the link between wage increases and inflation.

In the latest word from the Washington-based institution on the performance of the economy, the IMF said Barbados had done well to weather the international financial turmoil now gripping many of its top trading partners.

The fund's executive directors cautioned, however, that the international situation still posed a serious challenge to the country's economic security.

In its assessment following the Article IV consultation on Barbados released yesterday, the institution said the main threat to the economy was a possible downturn in tourist arrivals at a time of high oil and food prices.

"With the exchange rate pegged to the United States dollar and fiscal space constrained by high public debt, directors stressed the importance of addressing these challenges through a coordinated policy response," the IMF's executive board release said.

It advised the David Thompson-led administration that it had to find ways to finance programmes that helped the most vulnerable in Barbados without risking the medium-term stability of the economy.

In addition, the fund "welcomed the recently revised budget, which combines a reduction in the central government deficit with well-identified revenue measures to finance additional social and other priority spending".

Directors encouraged the Government to make "additional efforts to generate a modest overall public sector surplus over the medium term, to reverse unfavourable debt dynamics and put public debt on a firmly declining trajectory".

The IMF agreed with the country's monetary policy which was aimed at containing inflation, describing it as "appropriately tight".

At the same time, IMF economists believed it might be time to reduce interest rates "should a more severe slowdown in economic activity be accompanied by easing of inflationary pressures".

Source: Nation Newspapers

Thursday, August 28, 2008

Broadcast draft not up to code, says OCM

Published: Thursday August 28, 2008

The Draft National Broadcasting Code requires more carefully-crafted provisions since it does not currently safeguard all stakeholders, including broadcasters, media group One Caribbean Media Ltd has said.

In its comments on the July 11 consultative document by the Telecommunications Authority of Trinidad and Tobago, OCM supported the idea of a broadcast code, viewing it as an important part of the "process of establishing and upholding high standards of conduct in the broadcast sector of the media".

OCM is the parent company of broadcast licensees CCN TV6 and CCCL (radio station Hott 93.5FM) and publishes the Trinidad Express newspapers.

Noting that it had recently begun the implementation of its own editorial principles and operational guidelines for the group, however, OCM maintained that more carefully-drafted provisions in the code would reflect a more thoughtful approach that was implementable and did not create "more mischief than it seeks to fix".

In its current state, though, OCM said the draft broadcast code contains several inconsistencies that, if implemented, could help create a "Big Brother" state to regulate the news, information and entertainment consumed by citizens.

The draft code also skates on thin ice in attempting to address questions of race and religion, with the definitions of "racial group" and "racist" which it proffers being challengeable, OCM stated.

The draft code also threatens the imposition of statutory penalties on conviction of a $250,000 fine and imprisonment for up to five years.

Arising out of its analysis of the draft code, OCM proposed a number of recommendations to improve the code.

"We would like to see the code explicitly embrace the foundation principles of freedom of expression as enshrined in the Constitution of Trinidad and Tobago," OCM stated.

TATT, OCM added, should embrace the view of a regulatory landscape for broadcasters that acknowledge the roles of broadcasters themselves, the Media Complaints Council, the courts of law and TATT itself.

OCM also recommended that the draft code make clear that it was not intended to substitute for the editorial judgment of broadcasters and also suggested that the authority require each broadcaster to implement its own editorial policy document.

Source: Trinidad Express Newspapers

Wednesday, August 27, 2008

Barbados to modernise statistical services

Published: Wednesday August 27, 2008

The Government of Barbados will receive a US$5 million (BDS$10m) loan from the Inter-American Development Bank (IDB) to modernise its statistical services, the Washington-based bank announced on the weekend.

Barbados will match the loan with US$1.25 million (BDS$2.5m) of its own funds.

"The programme will help the government provide relevant, timely and quality economic and social statistics," said IDB project team leader Joel Korn.

20 years loan

The loan is for 20 years, repayable at a variable interest rate to be priced on the prevailing London Inter-Bank Rate or Libor, which is currently performing at or around 3.22 per cent.

The IDB did not specify a reset component of the rate. Barbados has a four-year grace period on repayment.

The loan will go to the Ministry of Finance, Economic Affairs and Energy, but the project is to be handled by the Barbados Statistical Service.

Several countries of the Caribbean are now upgrading their national databases as part of the move towards economic integration under the Caricom Single Market and Economy.

Statistical expert

Jamaica's top statistical expert, Dr Sonia Jackson, is leading that programme.

Barbados' project, according to the IDB, includes strengthening the legal framework for collection of data, and building a statistics network to link public sector agencies,which produce relevant public data - focussing on the management and administrative procedures, development of statistical tools, training for those who collect and massage the data for public consumption, and building the portals for public access.

Barbados wants to prioritise revenue areas, such as customs and tax administration, as well as procurement and statistical services.

Source: Jamaica Gleaner

Brand Jamaica stocks price gains beat returns from alternative investment schemes

Published: Wednesday August 27, 2008

Brand Jamaica stocks are posting gains over 300 per cent outperforming the returns offered by alternative investment clubs.

Those who invested in fashion, coffee, rum, real estate or hotel stocks since August last year are now reaping the highest capital gains on the market.

Up to Monday, coffee maker Salada saw its stock price reach 278 per cent higher than last August; Pulse, which profits are underpinned by its success in the fashion industry, reached 180 per cent; Real estate company CMP reached 160 per cent (52-week high); Pegasus Hotel reached 119 per cent; and Lascelles, the rum maker and conglomerate reached 98 percent.

Alternative investment schemes offered returns of some 10 per cent a month. However, since earlier this year investors have not been able to gain easy access to their money following the restructuring or fall-out of these institutions.
Gains by these stocks on the market, signifies that despite the tough economic times, opportunity still exists in the formal investment environment.

In fact, Monday's stock prices are not the highest these stocks traded over the year. For instance, Salada reached 354 per cent from $33 to $150 in May; Pulse reached 300 per cent from $2 to $8 in April; Lascelles reached 128 per cent from $266.50 to $610 in February; and Pegasus reached 124 per cent from $10.01 to $22.50 in June.

These stocks' core activities are associated with Jamaica's cultural enterprises - the Jamaica brand. A notable exception in performance is Red Stripe, the brewer whose stock has been stagnant over the year affected by waning profits. It posted a $853-million profit after tax for nine months or three per cent less than the previous year.

Apart from those stocks, other big winners are FirstCaribbean Jamaica, Gleaner, Goodyear, Palace, Supreme Ventures Ltd, Trinidad Cement and Seprod.

Currently nine stocks are trading close to 52-week lows offering an opportunity for investors looking to buy cheap.

Source: Jamaica Observer

Scotiabank's voice heard

Published: Wednesday August 27, 2008

A billion here, a billion there and pretty soon it adds up to real money. Is Scotia Group Jamaica (JSE: SGJ) now making 'real money'?... let's talk. The earnings results of the group are out and they are solid. SGJ released its earnings of J$7.14 billion for nine months ended July 31, 2008. This represents an increase of 32 per cent over the same period last financial year. Additionally, SGJ saw an increase for the specific quarter ended July 31, 2008 of J$356 million or 18 per cent when compared to the same quarter last financial year. However, when one compares this quarter's performance to that of the quarter ended April 30, 2008, then we are faced with a decline of J$221 million or nine per cent.

The primary reason for this would have been the one-off gain that SGJ realised in the second quarter from the redemption of class C shares they held in Visa Inc, due to the Initial Public Offering (IPO).

To get a clear understanding of how these profits were achieved, a segmented analysis must be done.

Retail & corporate banking

This segment includes the Branch Banking and Retail & Electronic Banking divisions of the group. Profit before tax for this segment came in at J$3.04 billion, which represents an increase of J$561 million or 23 per cent year over year.

These results are purely creditable to former SGJ Retail head Audrey Tugwell-Henry and SGJ Branch banking head Wayne Powell. SGJ's retail and branch banking operations have managed to swell the loan book by J$7.88 billion or 11 per cent to J$82.10b for the period under review.

Additionally, the group grew its deposit base respectably by J$16b or 16 per cent to J$149 billion as at July 31, 2008. Additionally, net fee and commission moved from J$2.29 billion to J$2.84 billion - which represents an increase of J$555 million or 24 per cent.

A financial services entity must possess the ability to grant credit to not only individuals and some institutions, but to also structure large credit deals to suit large corporate clients.

SGJ has indeed shown its ability to do such. The Corporate Banking segment has posted profits before tax of J$1.82 billion for the nine months ended July 31, 2008, an increase of J$436 million or 31 per cent. This was largely due to an increase in its revenues, or in much clearer words, its ability to attract new business. Much laud has to be given to Wayne Hewitt and his team at the Corporate and Commercial Banking division for such superb performance.

The performance of this division continues to be fair. The profits before tax closed in at J$2.07 billion which is precisely 341 million or 19 per cent higher than the J$1.73 billion it posted last year. In a global financial atmosphere such as this, any level of increase in profits from its players deserves some credit. It will be very interesting to see where these profits come November.

This has been the big hit for SGJ over the past few years.

Scotia Jamaica Life Insurance Company obviously has a tested, tried and true system at work. The segment's profit before tax stood at a hefty J$1.81 billion, which is quite estimable if you consider the level of competition that exists in the local life insurance market. Over J$615 million was added to the J$1.20 billion it recorded for the same nine months last financial year. The main driver for this was the robust 28 per cent increase in net insurance premium growth; which when translated simply means, more Scotiamint and Credit Life insurance customers. It is expected that Scotia Jamaica Life Insurance Company will continue to make its presence felt in the Life insurance industry and post respectable profits.

Was the acquisition of Scotia DBG Investments (JSE: SDBG) a good or bad move?... let's see. For the nine month period ended July 31, 2007, profit before tax stood for the Investment Management segment of the group stood at J$426 million. Forward to July 31, 2008, we now see nine months profit before tax of J$1.09 billion. I say a profit jump of 158 per cent would mean a splendid move. SDBG has restructured, re-energised and repositioned itself and the result of this is now evident in the bottom line.


From an investor's view, the stock is reasonable from a Price to Earnings (P/E) standpoint. The current P/E for SGJ is 8.52 times. This is way below the industry average of 10 times earnings. The stock is a recommended BUY at current trading levels.

William Clarke has announced his retirement. As a matter of fact, the new pilot is now seated in the cockpit and many are anxious to see what his cruising altitude will be. Whatever it may be, the fact is, SGJ has no room for air pockets or altitude dips. To remain the most profitable institution in the country, SGJ most post in excess of J$9 billion at year end or have that title stripped.

Source: Jamaica Observer

Barbados Central Bank governor wants tighter regulation

Published: Wednesday August 27, 2008

Barbados Central Bank governor Dr Marion Williams has said that fraudulent financial reporting and insider trading are signs of bad governance, but that excessive risk-taking and inappropriate incentive schemes should be added to the list.

Dr Williams added that today “poor risk-management practices, inappropriate incentive schemes and excessive risk-taking” can mislead investors and lead to a breakdown in the integrity of markets.

Her comments were made as she addressed a symposium titled Caribbean Impact, Global Reach at the 60th anniversary of the University of the West Indies (UWI), Mona Campus in Jamaica over the weekend.

She said these bad governance practices were made more serious by the “moral hazard of compensation tied to stock prices encouraging such manipulation.”

She said that if a corporation was confronted with more than one of these problems at the same time, “it could shake the foundation of or, as we have seen, even destroy the largest entities.”

According to Williams, “The hunt for yield by investment houses coupled with extraordinary reward systems can lead to huge profits and mislead investors about the strength of balance sheets.”

Speaking on the role of financial regulators, she said, “Financial entities which have a fiduciary responsibility to manage clients' funds should be licensed. The existence of unregulated financial entities which interact with the public can be problematic,” she added.

Source: Trinidad Guardian Newspapers

Ansa Merchant Bank makes $71.4 million profit

Published: Wednesday August 27, 2008

Ansa Merchant Bank Ltd’s insurance companies’ international portfolios have not been spared from the turbulence in the overseas financial markets, Anthony Sabga, chairman emeritus of Ansa McAL, has reported in unaudited half-year results 2008.

Ansa Merchant Bank is a subsidiary of the Ansa McAL Group.

Sabga declared that half-year profits attributable to shareholders of $71.4 million is $3.1 million, four per cent lower than the figure for the first half of 2007.

“This result represents a significant improvement in the second quarter where earnings per share of 52 cents was 19 cents better than in the first quarter,” Sabga stated.

He said that despite the turbulence in international financial markets and their effects on Ansa Merchant’s insurance companies’ international portfolios, the bank found buoyant conditions in local equities encouraging.

“Your directors maintain a very positive outlook for the second half of 2008, and accordingly agreed to pay an interim dividend of 15 cents per share (2007: 15 cents),” Sabga stated.

Source: Trinidad Guardian Newspapers

C&W cellphone ease

Published: Wednesday August 27, 2008

CABLE & WIRELESS' mobile customers who travel to Caribbean countries where the company operates will now be able to reap the benefit of savings.

Erma Banfield, manager of mobile and fixed line services , Cable & Wireless, explained that "with home rate roaming one of our mobile customers visiting Grenada and making a call home on a Saturday for example will be charged 10 cents per minute, the same price they would pay for a local call during the same time period".

Banfield confirmed that the offer was valid in the 14 countries where the company operated including Trinidad & Tobago.

"Calls made by our customers to any of these Cable & Wireless countries will be charged our international direct dial rate, however, calls to other countries will be charged at the applicable international roaming rates . . . Calls from local mobile and all international numbers are free."

This offering comes as one of the first initiatives from the new, single pan-Caribbean Cable & Wireless entity now taking shape, and signals the company's intention of delivering on its promise to offer a more consistent and uniform suite of products and services to all customers across the region.

Richard Dodd, CEO Cable & Wireless Caribbean said: "Our customers have been anticipating this news for a long time and we are very pleased that we can finally deliver," he said.

According to Dodd the initiative will translate into unbeatable value, with associated savings for Caribbean customers with families and businesses spread throughout the region.

"Cable & Wireless' objective is to take its place as a truly Caribbean company therefore our technologies must benefit the people of the Caribbean in a seamless manner," he said.

Source: Nation Newspapers

Bill Clarke's last hurrah - Scotia ahead in profit race

Published: Tuesday August 27, 2008

Scotia Group Jamaica Limited continues to top the market in earnings, reporting big profits of $7.14 billion so far this year, according to its latest earnings report for the nine-month period ending July 31.

The banking group, now in leadership transition, improved its profit performance by 32 per cent, year on year, to trounce chief rival and second most profitable stock market company National Commercial Bank's $6.7 billion.

President William 'Bill' Clarke leaves the bank at the end of October, at the close of its financial year. Replacement Bruce Bowen is in place at the bank's corporate headquarters on the Kingston waterfront, and, according to bank sources, already running the show.

Big improvement

The July quarter was also a big improvement relative to the 2007 three-month period, but was more than $300 million below the previous quarter.

The bank also reported a bigger loan portfolio, but alongside it a substantial hike in non-performing loans - described by Scotia as "a reflection of the trend in the eco-nomy" - has outdistanced the group's loan loss provisions.

The bank was no more specific about the cause, and central bank chief Derick Latibeaudiere has denied a causal link at his August 20 quarterly monetary policy briefing, but there is market speculation that commercial banks will see more loans going bad as more unregulated investment schemes fail.

Trading activities

In the past week, another of the so called clubs, F1 Investments Inc - whose holdings are intertwined with Olint and May Daisy Corporation - has told investors it has reduced trading activity, commenced an audit of two of its funds to be completed in a month, and would report back to its members on October 3. In the meantime, F1 said it would accept no deposits nor pay returns.

Scotia otherwise has recorded strong growth in its key markers in the nine-month period. Revenues blazed to $28.7 billion, up $6 billion relative to the comparative nine-month period in 2007. Net interest income rose 29 per cent to $15.8 billion, while operating profit climbed 28 per cent to $21 billion. This despite a substantial 26 per cent rise in expenses which climbed to $11 billion notwithstanding Clarke's comment that the bank held a tight grip on expenses in the period.

Clarke, in a company statement accompanying the earnings report, said the group continued "to demonstrate strong performance in all business lines".

Its core business, banking, accounted for 64 per cent or $4.4 billion of profit, the insurance arm contributed 23 per cent or $1.6 billion, its 68 per cent ownership of Scotia DBG Investments added another $603 million of the $936 million net profit reported by that company, while its mortgage company contributed $339 million.

The banking group's balance sheet was also considerably stronger by 12 per cent at $286.5 billion - enhanced in part by an expanded loan portfolio, which grew more than 10 per cent to $82 billion.

Company's performance

Weighing on that performance was the $590 million added to its bad loans.

Scotia Group's total non-performing loans reached $2.6 billion against the regulatory requirement of loss provisions of $2.044 billion.

For the Bank of Nova Scotia Jamaica (BNSJ), non-performing loans climbed above $1.8 billion, against provisions of $1.646 billion.

"The BNSJ group's non-performing loans now represent 2.35 per cent of total loans and 0.82 per cent of total assets, compared with 1.76 per cent and 0.62 per cent respectively, in the prior year," said Scotia.

Still, the big bank has declared itself capable of weathering the turn of events, saying its past performance demonstrates continued growth in the loan portfolio and a strong credit policy.

Central banker Latibeaudiere, whose posture last week was that the banking system was healthy, said one of the indicators of this was continued growth in deposits.

Both Scotia and NCB have progressed on this front: NCB by nine per cent to $119 billion; Scotia by 12 per cent to $148 billion.

Source: Trinidad Express Newspapers

Monday, August 25, 2008

$91m to C&W in 2007/08

Published: Monday August 25, 2008

CABLE & WIRELESS (BARBADOS) recorded an after tax profit of $91 million for the 2007-08 period.

A Press release stated that the local telecommunications company had another strong performance for the financial year ending last March 30, showing an after tax income of $91.7 million, an increase of 14 per cent over last year.

Don Austin, President of Cable & Wireless (Barbados) reported that the significant growth of the broadband customer base, new product offerings and creative marketing promotions along with prudent cost management all contributed to the year-end results, counteracting declining revenues from traditional services.

Ola Ogun, chief financial officer of Cable & Wireless, explained that there was eight per cent and 43 per cent growth respectively in mobile and broadband customer base. In addition, the company injected over $50 million in capital and, as a result, there were improvements in the Mobile GSM network, prepaid platforms and Metro-Ethernet network, which facilitated improved traffic management and service to customers.

Austin said that "the roll out of the Multi-Service Access Nodes (MSAN) project allowed for additional capacity to be provided for fixed line and broadband services to customers in several large catchments areas". The total investment for the MSAN project was more than $10 million and it has benefited over 18 000 customers to date.

"During the year, there was also a focus on deploying systems to drive first class customer service.

Call Quality training was conducted for members of the Contact Centre and the company progressed the development of an e-Business strategy to allow customers to purchase goods and services online.

The company also spent $1.2 million on the training for employees during the financial year.

With respect to the declining revenues in traditional lines of business, Ogun reported that there was a downward trend of 21 per cent and 11 per cent respectively in international outgoing calls and international lease circuits. Cost of sales rose by five per cent due to increased leased rentals network plant and equipment and operating expenditure also rose by nine per cent, primarily as a result of the negotiated increase in staff wages.

Looking to the new financial year, Austin noted that the company was bracing itself for increased competition in the market and the impact of the global recession.

However, he confirmed that customer service programmes would continue to be high priority as the company entered the period of transformation towards One Caribbean.

Source: Nation Newspapers

'No growth' for BICO, chairman says

Published: Monday August 25, 2008

BICO's EXECUTIVE CHAIRMAN, Edwin Thirlwell, has reported that although sales and revenues are "holding up", there is no growth in the market due to tight global economic conditions.

Addressing the company's recent staff awards function at the Savannah Hotel, Thirlwell said the challenging environment resulted from increased raw material and electricity costs.

He said there was a 35 per cent increase in electricity costs and the company was again generating its own electricity after Government granted manufacturers a concession in May.

Looking ahead, the chairman mentioned that BICO is seeking ways to first reduce energy consumption, then convert to alternative sources of energy to do away with relying on oil in the long term.

The company is being assisted by the Barbados Investment and Development Corporation in an effort to find solutions that will help all manufacturers and businesses cope with high energy costs.

Solar and wind power were two possible alternatives.

Staff were urged to continue to play their part by conserving energy where possible, and keeping up the levels of customer service to hold or increase market share.

Awards were presented by directors and senior managers for excellent performance and long service, and staff were thanked for their hard work and dedication.

Source: Nation Newspapers

Alert system for new BSE rule

Published: Monday August 25, 2008

AN AUTOMATIC ALERT SYSTEM will be a major part of the new price stabilisation rule to be implemented by the Barbados Stock Exchange (BSE).

This was revealed by BSE deputy general manager of operations Ezra Marshall during a panel discussion at the Grande Salle, Tom Adams Financial Centre, last Monday.

The new rule states: "The general manager or in his absence the operations manager of the exchange may halt trading in a security for a period of not more than two hours if the offer price or the bid price rises or falls more than ten per cent above or below the closing price of the previous day's trading without apparent reason."

Marshall said prices falling outside the ten per cent band would initiate the alert system and markets would automatically be notified.

He noted that manual intervention would be required for trading to resume.

Marshall said there were three possible types of alerts – green, amber and red.

Green alerts meant that prices did not affect the best market price and trading would therefore continue unaffected.

When prices affected the best market price and trading might or might not be halted, amber alerts were triggered.

Red alerts halted trading in stock at ten per cent above or below its last closing price. Marshall noted that this would bring the local exchange in line with international best practice.

"We have identified the reasons why we need to address weaknesses in the market," he said, adding that the new regulation would allow for better price discovery and greater liquidity.

In addition, he projected that it would make the BSE more competitive in regional markets.

Marshall said the length of suspension would vary according to market trend, magnitude of price change and prevailing market conditions.

Source: Nation Newspapers

Friday, August 22, 2008

Banks safe after forex fallout

Published: Friday August 22, 2008

Jamaica's central bank says it sees no sign of impact on the island's economy on the apparent collapse of a number of so-called alternative investment schemes.

Neither have they detected any impairment of commercial banks from the fallout, Bank of Jamaica (BOJ) governor, Derick Latibeaudiere, told reporters Wednesday.

"We have seen no impact on their ratios," he said. "I haven't seen any movement that would cause us concern."

The investment schemes, which fought attempts at being brought into the regulatory net, mushroomed in Jamaica during the past three years, offering returns, in some cases, of upwards of 10 per cent per month.

Most said they were involved in foreign exchange trading.

One think-tank estimated that Jamaicans invested between $100 billion and $200 billion in these schemes, so when they started a seeming slow motion meltdown earlier this year there were fears that it could hurt the economy.

According to Latibeaudiere, banks here were still showing debt impairment ratios of under three per cent, in line with their normal rates. And neither had he seen any fall-off in deposits.

"It (the fallout) could have an impact on consumption and on some people's expenditure plans," Latibeaudiere said.

No impact

"But overall, given the nature of the schemes and the circularity of the flows (which should make such an impact obvious) I don't see an impact on the economy. We haven't seen that macro-economic impact."

The central bank boss conceded the difficulty, given their lack of regulation, at arriving at real numbers on these schemes.

Indeed, much of the information about them has been anecdotal. Officials at one mortgage bank, Victoria Mutual Building Society (VMBS) recently suggested, for instance, that part of its difficulty in raising deposits last year was because of the prevalence of the schemes.

They seemed to believe that a recent uptick in the bank's deposit accounts was because of the demise of the unregulated forex traders.

Luxury vehicles

There have also been suggestions that people who enjoyed the heady returns from these schemes drove the market for luxury vehicles and up-scale real estate.

The suggestion is that such purchases have dipped, but these claims have not been bolstered by empirical data.

And, based on Latibeaudiere's pronouncement, no data has yet emerged to back the claim that people borrowed heavily from banks to invest in the alternative schemes.

"The loan loss (ratio) is very strong in the banks," Latibeaudiere said.

He added: "The central bank is not seeing it as an issue at all. Based on my discussions, there isn't any evidence of a major fallout."

Source: Jamaica Gleaner

Using the right technology to combat money laundering

Published: Friday August 22, 2008

Acting executive director of the Financial Services Commission (FSC) George Roper is urging the financial sector to use the necessary technology to prevent breaches of the Proceeds of Crime Act such as money laundering.

Roper was speaking at the launch yesterday by Half-Way Tree, St Andrew-based software company SymSure Limited, which has already sold its products to financial institutions in Jamaica, the Caribbean, Latin America and as far away as Australia, assisted by Jamaica Trade and Invest (JTI).

He said that financial institutions need to exercise great care in ensuring that clients were not operating as unregulated financial organisations (UFOs).

"The country is depending on you to prevent Jamaica's image being tarnished, to prevent us being seen as a nation that spawns numerous illegal ponzi schemes. You have duties and responsibilities under the Proceeds of Crime Act to report any suspicous activity that you see to the Financial Investigations Division (FID). Faithfully report any cash transactions that are above the prescribed thresholds and use technology where you can assist in carrying our that objective," he told the audience at the launch held at the Jamaica Pegasus Hotel in New Kingston yesterday.

However, he declined to comment as to whether an investigation would be launched into the financial sector's dealings with UFOs. Both he and Sharon Crooks, FID chief technical director, who also attended the event, said their organisations would be considering the adoption of AML.

"We will certainly be evaluating whether it can be used and certainly if others (financial institutions) are using it so that we can have a collective effort with everyone using the same system, which wil be more efficient," Crooks told Caribbean Business Report.

"We will have to look at its feasibility for use in government and once we can afford to use it I think it would be the most economic and efficient for us, which is why we are here today."

AML functions as a plug-in to the existing SymSure Monitor framework, which helps companies monitor risk and provides employees with their own personal dashboard which notifies them of irregularities. Should an employee not take action then the 'threat' level will be escalated and superiors notified.

GraceKennedy's financial arm is among several local clients of SymSure including Jamaica Money Market Brokers (JMMB), City of Kingston Credit Union (COK) and the National Housing Trust (NHT). GraceKennedy Risk Manager Lee-Ann Steele previously told Caribbean Business Report that AML has successfully automated what used to be a manual checking process which forced analysts to work 12-hour days, including on weekends.

"Everything is evidence including attachments, documents - everything," explained SymSure managing director Andrew Simpson. AML will also prevent employees playing "poker" with company finances quipped Marlon Cooper, managing director of sister company Symptai Consulting.

Also attending the launch was recently recruited SymSure Chairman Robert Gordon, a Canadian former Vice-President with software giants Oracle. He is based at the company's sales and marketing office in Toronto while the software development team will remain based in Jamaica, said Simpson.

Developing locally but marketing as a Canadian company was necessary, he explained as presenting SymSure as 'Jamaican software' would be commercial suicide until the country achieves a greater level of respect within the industry.

But said Gordon, Symsure "will be one of the finest software developers in the world".

The response from financial institutions at the launch was encouraging with several appointments scheduled with the larger companies, said Simpson.

Source: Jamaica Observer

Lessons in Leadership with R Danny Williams

Published: Friday August 22, 2008

R Danny Williams is the father of the Jamaican insurance industry and the founder of the foremost life insurance company in Jamaica, Life of Jamaica (LOJ) now Sagicor Life Jamaica. He formed LOJ at a time when the insurance industry in Jamaica was dominated by foreign interests, more particularly,Canadians. This move in 1970 served notice that he was a man of vision, drive and purpose. He was prepared to take on the big boys and lead from the front.

R Danny Williams is a gentleman of the old school, one that says what he means and means what he says.

He began LOJ by raising the capital without calling on its underwriting, deciding to do it in two tranches: (1) 1,740,000 shares through a private placement; (2) a public placement of 760, 000 shares. On the first day of business the agents took to the streets and sold more insurance than the company had ever sold in a month! Life of Jamaica was the first life insurance company listed on the Jamaica Stock Exchange.

R Danny Williams' leadership qualities are well known and it was perhaps this asset that Prime Minister Michael Manley decided to second from the private sector back in 1977, when he invited the insurance man to join his administration. He was first appointed Minister of State in the Ministry of Industry & Commerce before being promoted to full Cabinet rank.

R Danny Williams' leadership qualities are well sought and he has sat on a number of private sector boards. His character sets him apart as a man in full.

"Contrary to the often expressed view I do not think that good leaders are born. Undoubtedly some people are born with the qualities that help to make them good leaders but these qualities have to be developed and honed over time.
The points that came to mine as I started thinking about the matter are as follows. They are not listed in any order. A good leader must:

1) Be a hard worker and lead by example

2) Plan his work and so ensure maximum use of his time.

3) Have confidence in himself without being arrogant. Be prepared to admit when he is wrong and to change when necessary. Put mistakes behind him and start again.

4) Have a positive attitude to life.

5) Have a clear vision of what he wants to achieve and commit it to paper. He must possess imagination and be able to dream of possibilities.

6) Listen to what others have to say and learn from them.

7) Treat everyone the way you would like to be treated if the position were reversed.

8) Let your word be your bond. All those you deal with must be able to respect you for your integrity and forthrightness.

9) Motivate those you would wish to lead and ensure that they share your vision and if necessary you must sell it to them.

10) Be a person of action. Procrastination must not be a part of your way of life. A leader must be willing to make decisions and to take risks where appropriate.

11) Develop through training etc all who work with you and compensate them fairly and generously.

12) Give credit to your associates and not steal their ideas. Be generous in your praise and encourage their creativity. No one of us is the fountain of all knowledge.

13) Delegate as much as possible but realise that you still have the responsibility, consequently you must master the art of follow-up.

14) Genuinely respect and care for those you would wish to lead. Insincerity is easily detected.

15) Make time for those close to you. Success without being able to share it with those you love and who love you is empty.

16) Be a good communicator at all levels in as simple and straight forward a manner as is possible.

17) Take time off to refresh yourself. It is the fountain of creativity.

18) Have a sense of humour. Never take yourself too seriously."

Source: Jamaica Observer

C&W Caribbean marshals senior team - Appoints vice-chairman

Published: Friday August 22, 2008

Cable & Wireless Caribbean, based in Barbados, has appointed five new senior executives and retained two others who now form chief executive officer Richard Dodd's team, one of whom will also hold a seat on the company's board.

All seven, who come to their posts with experience in different countries, have the titles of executive vice-president (EVP).

"These appointments reflect the placement in key positions of experienced managers who have demonstrated high levels of competence based on extensive exposure around the world," said C&W Caribbean in a statement.

But Donald Austin, a Barbadian, alongside his responsibilities for corporate and regulatory affairs and head of operations in Barbados, has also been tapped as vice-chairman, second to Jamaica's Phil Green, who chairs C&W Caribbean.

Austin as EVP is answerable to Dodd, but his board position muddies the reporting relationship and puts a question mark on his actual standing in the company's pecking order, which C&W Caribbean up to press time had not clarified.

Top man

The same situation prevails with Green who as head of national subsidiary Jamaica, should have been answerable to Barbados, but is the top man in charge as chairman and as a board member of C&W International under whose portfolio the Caribbean falls.

Dominican Ian Blanchard, a former chief executive of the Grenadian operation but whose track record of experience is boosted by postings in the United States and the Middle East, is the new EVP transformation.

Jamaican Lawrence McNaughton, who has worked with Cable and Wireless and since March 2008 has been chairman of C&W St Kitts, is EVP carrier services and international facilities, while Marsha Lewis retains the portfolio of human resources.

McNaughton and Lewis were among the original team members at C&W Caribbean, a company that is months old and the hub of the telecom's transformation into a pan-Caribbean operation, spanning 13 markets.

Jesus Luzardo, who whose two decades in the business has taken him to places in Europe, the Middle East, and Africa, is new EVP enterprise sales, Mariano Doble is EVP commercial.

C&W Caribbean's seventh pick is Tom Hatfield, whose job will include hunting down merger and acquisition (M&A) prospects. Green in a May interview with this newspaper had said that an important part of the telecom's growth strategy going forward is M&As that can add value to the company.

The telecom, following its loss of monopoly status throughout the region, starting in Jamaica at the turn of the decade, is now playing catch up to rivals, whose aggressive hunt for market share has caught Cable and Wireless off guard.

Its biggest headache, Digicel, has partially used that strategy to grow its customer base to six million mobile users, while C&W has five million regionwide.

Hatfield, who has global experience but is relatively new to the C&W, landing that job in 2005, joins the Caribbean office as EVP strategy and business development.

"His main mission will be leading the drive in content strategy with responsibility for merger and acquisitions," said C&W Caribbean.

Source: Jamaica Gleaner

Banks safe after forex fallout

Published: Friday August 22, 2008

Jamaica's central bank says it sees no sign of impact on the island's economy on the apparent collapse of a number of so-called alternative investment schemes.

Neither have they detected any impairment of commercial banks from the fallout, Bank of Jamaica (BOJ) governor, Derick Latibeaudiere, told reporters Wednesday.

"We have seen no impact on their ratios," he said. "I haven't seen any movement that would cause us concern."

The investment schemes, which fought attempts at being brought into the regulatory net, mushroomed in Jamaica during the past three years, offering returns, in some cases, of upwards of 10 per cent per month.

Most said they were involved in foreign exchange trading.

One think-tank estimated that Jamaicans invested between $100 billion and $200 billion in these schemes, so when they started a seeming slow motion meltdown earlier this year there were fears that it could hurt the economy.

According to Latibeaudiere, banks here were still showing debt impairment ratios of under three per cent, in line with their normal rates. And neither had he seen any fall-off in deposits.

"It (the fallout) could have an impact on consumption and on some people's expenditure plans," Latibeaudiere said.

No impact

"But overall, given the nature of the schemes and the circularity of the flows (which should make such an impact obvious) I don't see an impact on the economy. We haven't seen that macro-economic impact."

The central bank boss conceded the difficulty, given their lack of regulation, at arriving at real numbers on these schemes.

Indeed, much of the information about them has been anecdotal. Officials at one mortgage bank, Victoria Mutual Building Society (VMBS) recently suggested, for instance, that part of its difficulty in raising deposits last year was because of the prevalence of the schemes.

They seemed to believe that a recent uptick in the bank's deposit accounts was because of the demise of the unregulated forex traders.

Luxury vehicles

There have also been suggestions that people who enjoyed the heady returns from these schemes drove the market for luxury vehicles and up-scale real estate.

The suggestion is that such purchases have dipped, but these claims have not been bolstered by empirical data.

And, based on Latibeaudiere's pronouncement, no data has yet emerged to back the claim that people borrowed heavily from banks to invest in the alternative schemes.

"The loan loss (ratio) is very strong in the banks," Latibeaudiere said.

He added: "The central bank is not seeing it as an issue at all. Based on my discussions, there isn't any evidence of a major fallout."

Source: Jamaica Gleaner

Thursday, August 21, 2008

Record sales for Jamaican products

Published: Thursday August 21, 2008


National pride has translated into major sales for Jamaican flags and apparel in Montego Bay, St James, following the record-breaking performances by Usain Bolt and Melaine Walker yesterday morning.

Flag sales in the Second City ballooned to unprecedented levels for one merchant, Egbert Donaldson, who operates The Cage in Sam Sharpe Square, downtown Montego Bay.

"We sold over 400 Jamaican flags in less than an hour, following the stellar performances of our two athletes. I had to order more, which is expected in shortly, but sales are doing well," Donaldson explained with much excitement.


He added that prior to the Beijing Olympics, sales of Jamaican items were very slow but are now "flying through the roof and we are happy with what we have seen".

Flags are not the only items reporting huge sales; apparel representing the national colours is also 'flying off' the shelves.

Donaldson noted that Jamaican shirts and blouses were also doing well but not as superbly as the flags.

However, Bhagwan Chuganey, who manages Payless Bargain Centre, revealed that his Jamaican clothing had not been able to stay on the shelves since the huge successes of the Jamaican athletes at the 2008 Olympics.

"Anything and everything that has Jamaica on it, persons are buying them."

Source: Jamaica Gleaner

Wednesday, August 20, 2008

C&WJ still in the red

Published: Wednesday August 20, 2008

Telecom provider Cable & Wireless Jamaica (C&WJ) posted a $27.4 million loss for its first quarter, but on the positive side its EBITDA earning increased 17 per cent.

On news of the results the sluggish stock advanced one cent to $0.73. It hit a high of $0.93 within the last 52 weeks. But yesterday patient investors received a net loss of $27.4m, slightly better than the same quarter last year at $0.16 per stock unit loss compared to $0.17 loss a year prior.

"We are working hard to improve our performance and are focused on delivering world-class customer experience, better value to our customers and increased value to our stockholders in the future. We expect to see the benefits in the coming quarters," said the C&WJ board in its release to shareholders.

C&WJ is building its new network, as a result its finance costs almost doubled to $420.7 million for the quarter, but it is also affected by non-cash depreciation and amortisation charges at $748 million. When these costs are discounted and arrive at EBITDA earning, C&WJ increased its earning by 17 per cent over the previous quarter last year at $1.14 billion.

C&W is sitting on over $11 billion due to its parent company which increased by some $4 billion since March this year. This increase helped to offset increases in loans of $3.9 billion, presumably to build its 3G service. It resulted in providing the company with cash and equivalents at $725.7 million. But even without the financing and investing activities, its net cash position has improved. It had $595.3 million in net cash from its operating activities, which is a complete reversal of the previous year when it had a cash shortfall of $580.8 million.

Additionally, revenue for the quarter declined four per cent from $5.9 billion in 2007 to $5.7 billion in 2008. This was due to a "16 per cent reduction in mobile revenue to $1.3 billion as a result of our change in strategy since the first quarter of 2007 to focus on gross margin which has improved by 11 percentage points," the board said. At the same time gross margin as a percentage of revenue increased from 60 per cent to 66 per cent. "This improvement was largely driven by improved mobile margins, changes in fixed line traffic mix and fixed line rate increases implemented in the second half of 2007/08," it said. Total operating expenses (excluding depreciation & amortisation) increased by three per cent over the quarter ended June 2007. Employee expenses increased by 23 per cent due to a reduction in pension credit compared with the same period last year. This increase was partially offset by a 3 per cent decline in administrative, marketing and selling expenses due to ICC Cricket World Cup sponsorship costs in the first quarter of 2007/08. "We have continued our focus on getting the basics right and implementing the 'CWJ Transformation Plan'. The highlights are:

. We signed a contract with Ericsson on July 2, 2008 for the first phase of our 3G wireless network;

. We launched new mobile calling plans to deliver better value to customers - "Superpak" and "Ultrapak" were launched on May 12, 2008;

. We were the first to launch a prepaid BlackBerry service in Jamaica on June 23, 2008;

. In June 2008, we deployed "Homefone Xpress" which delivers traditional fixed voice services over our mobile network - this makes voice services available to customers in remote areas and expedites service provisioning;

. We've improved our customer service metrics - repair time improved by 100 per cent and installation time by 57 per cent in the quarter; and

. We implemented a cost reduction programme to mitigate rising inflation and fuel costs - we expect to see the benefits in the second half of the year."

Source: Jamaica Observer

Global diversification key to beating inflation, says Mayberry director

Published: Wednesday August 20, 2008

Mandeville, Manchester - Mayberry Investments Limited says making overseas investments, sprinkling a little of your money in various business sectors locally and internationally with a mixture of stocks, bonds and mutual funds is the perfect recipe for a sound investment.

Under the heading 'How to Make the Most of your Local and International Investments', Mayberry hosted its monthly investor forum in Mandeville for the first time late last Thursday at the Golf View Hotel. The first of two speakers at the educational forum Sushil Jain - a non-executive director at Mayberry - informed the audience of the purpose of investing money and also offered some investment do's and don'ts.

"The main purpose of investing money is to increase wealth and ensure that your money grows after it has been invested with the rate of inflation of the things we want to buy," Jain told the audience. "Any investment that gives you a rate of return lower than the rate of inflation is not a good investment," he explained further.

According to Jain, a good investment means global diversification; that is investing in a foreign country with a stable economy, in a sector and/or business that has a steady economic growth rate.
But while Jain sought to highlight the positives of investing abroad, Neilson Rose, equity asset manager at Mayberry Investments, said that there is still much value in investing locally and named the Jamaica Stock Exchange as an area of wise local investment.

"In 1991, the Stock Market index was just about 7,000 points, in 1992 the Stock Market index grew three-fold to 25,000 points. by 2004 the index grew to 112,000 points, so the Stock Market is certainly a good area we can invest in locally," he said.

Rose also listed the real estate sector and the services sector as good areas of possible investment.

Source: Jamaica Observer

Year-over-year inflation hits 26.2%

Published: Wednesday August 20, 2008

Consumers paid more than 25 per cent more for their goods last month when compared to the same month last year as rising energy cost continued to drive up the price of essential items in the inflation basket.

Prices rose by 2.8 per cent during the month of July 2008 according to the latest consumer price index (CPI) issued by the Statistical Institute of Jamaica (Statin).

Higher electricity and transportation costs mainly drove up inflation during the month as rising gas prices continued to push up energy cost.

The 'transport' category measured a 9.9 per cent increase in prices during July, while housing, water, electricity, gas and other fuels went up by 6.9 per cent. Combined the two categories contributed to just under 75 per cent of the overall increase measured across the items in the inflation basket.

Food prices continued to rise - up 1.2 per cent during the month - which due to its heavy weight in the inflation basket - making up 37.4 per cent - contributed to 15 per cent of the increase in overall prices.

Other categories saw marginal increases in prices and make up a smaller proportion of the inflation basket, such as furnishing, household equipment and routine household maintenance which went up by 1.9 per cent in July but contributed three per cent to the overall increase in prices.

Rural areas took the biggest hit in price adjustments - 3.5 per cent - while the Greater Kingston Metropolitan area saw prices go up by 1.6 per cent. Other urban centres experienced headline inflation of 3.4 per cent.

The 2.8 per cent increase in prices during the month of July pushed the rate of inflation for the calendar year to July to 14.7 per cent and fiscal year to date inflation to nine per cent.

Point-to-point inflation of 26.2 per cent was recorded for the period July 2008 when compared to July 2007.

Source: Jamaica Observer

C&W creates key posts

Published: Wednesday August 20, 2008

CABLE & WIRELESS (C&W) CARIBBEAN, which recently announced a major transformation programme in direct response to customer demands and to meet the new challenges in the regional telecommunications market, has made seven key management appointments.

Donald Austin, who is in charge of the Barbados operations, becomes executive vice-president, corporate affairs and regulatory and also assumes the role of vice-chairman of C&W Caribbean.

"Interaction with governments, regulatory agencies and the unions is critical to ensuring that Cable & Wireless lives up to the expectations of the national communities it serves," said Austin, who managed operations in St Lucia and St Vincent & the Grenadines, before returning to his home to lead the Barbados business unit.

Austin's appointment as an executive vice-president is one of seven such positions created under the transformation programme that sees a full restructuring of the management team.

Dominican national Ian Blanchard has become executive vice-president, transformation.

New company

Blanchard is the former chief executive for Grenada and his native Dominica and has worked with C&W International in the US and the Middle East.

"What we are embarking on is the creation of a whole new company based on international best practices and providing new and challenging opportunities for growth of our staff and most importantly improved customer service," says Blanchard on the eve of his appointment.

Two members of the original regional leadership team have also been confirmed in their new roles.

Jamaican national Lawrence McNaughton retains the role of executive vice-president, carrier services and international facilities, while Marsha Lewis continues as executive vice-president, human resources.

McNaughton has nearly three decades' experience in C&W and has been a member of the board of directors of the St Kitts & Nevis business since 2004. He was appointed chairman in March 2008.


Lewis has led the assessment of the manpower requirements for the company. She has been confirmed as vice-president human resources for the new Pan-Caribbean business.

She has gained considerable experience in the human resources management field and has worked in similar transformation programmes in the region.

The job of executive vice-president, enterprise sales has gone to Jesus Luzardo who brings extensive international experience to the new position.

Over the past 20 years Luzardo has been working in Europe, the Middle East, Africa and the Caribbean.

Also joining the team is Mariano Doble as the new executive vice-president, commercial.

Doble's main responsibility will be to lead the effort to ensure that C&W is a truly customer-driven organisation.

He has some 20 years' experience in sales, marketing and management in Jamaica, the Dominican Republic and Puerto Rico.

The other major appointment is that of Tom Hatfield as executive vice-president, strategy and business development. His main mission will be leading the drive in content strategy with responsibility for merger and acquisitions.

Hatfield has been with C&W since 2005 and completed assignments in Honduras, Bermuda, Africa, Malta, Channel Islands and the Caribbean.

Source: Nation Newspapers

'Since takeover, RBTT doing well'

Published: Wednesday August 20, 2008

Despite the long debates which surrounded the takeover, RBTT representatives have said that since the bank was taken over by the Royal Bank of Canada earlier this year, it has been doing very well. They added that RBTT is also making strides in terms of financing projects in the booming local construction industry.

Speaking at an RBTT forum, Partnering with Construction, at the Hyatt Regency Hotel in Port of Spain yesterday, RBTT's general manager of corporate banking, Hadyn Gittens, said, "With the support of our new parent, the Royal Bank of Canada, RBTT is now well poised and ready to play an even more meaningful role in the development of the (construction) sector."

He said the company's access to a larger asset base had provided the necessary muscle for RBTT to participate in more projects than before, and had deepened their expertise.

Gittens said the company's improved rating had allowed them to bid more competitively to finance projects, and they have now doubled their focus on the construction sector and have developed a support structure that enables them to recognise and work with their customers' demands more effectively.

During his speech, Gittens said, "RBTT has developed a menu of business, trade financing, cash management and investment products and services that are on par with... most of the other products available within the local financial sector."

He said now that the bank is part of a much larger financial organisation, it has the size, rating and resource base to fund itself more efficiently and bid more competitively for business.

Nearing the conclusion of his speech, he added, "Our increased international expertise and credit bench strengthening are the most significant and immediate benefits of the new ownership structure."

Source: Trinidad Express Newspapers

Tuesday, August 19, 2008

Tightrope for shares

Published: Tuesday August 18, 2008

PUBLIC COMPANIES in Barbados can re-purchase their shares from exiting shareholders to stimulate trading but they will be walking a tightrope – reducing their share numbers and upping the value of earnings per share (EPS).

This assessment from Barbados Association of Corporate Shareholders president Douglas Skeete came last week as he commented on the slow trading on the Barbados Stock Exchange (BSE).

He pointed to countries like the United States where companies buy back shares and hold them in treasury for resale to the public when there is greater demand for them.

"But in Barbados our Companies Act does not allow you to buy back shares and then sell them. When you buy back shares, you have to cancel them. It means that you are left with less shares trading in that company.

"You would have to issue new shares and that would mean going back to the Barbados Stock Exchange with a prospectus," Skeete explained.

On the other hand, a lower volume of shares in a company boosts its EPS value, the chartered accountant pointed out.

Skeete noted that especially when there is little or no activity or when market prices were dropping, this is a strategy that companies use.

However, the company must have the liquidity to complete the transaction and bear in mind that while it could stimulate interest in the share, because buying back at a higher price increases the share price, when the price goes up it is not going to attract buyers.

He said that he would recommend the repurchase of shares to increase trading activity but "I'm not sure that it is something that appeals to a lot of companies in Barbados".

Source: Nation Newspapers

Investors avoiding stock market now

Published: Tuesday August 18, 2008

NOT A SINGLE SHARE was traded on the Barbados Stock Exchange regular market last Monday and one broker says investors were avoiding stock investments now.

"Most of the money seems to be going to fixed income paper," a Royal Bank of Canada (RBC) broker told BARBADOS BUSINESS AUTHORITY.

The broker observed that two $100 million treasury notes issued by the Central Bank of Barbados earlier this year were oversubscribed, the last one snapped up within 24 hours of issue.

"That is where people seem to be interested right now, the fixed income; there is no depreciation in the capital and they are guaranteed an income."

BSE officials confirmed that Friday, August 8, was also a day of no trading on the regular market and there were four other such days in 2008.

"The market is very, very flat right now . . . and very little money is coming into the stock market," the RBC broker stressed.

"Every day I'm getting calls from people with a lot of money asking what instruments are available rather than shares . . . ."

He reasoned that uncertain economic conditions had put investors into a caution mode.

"People seem to want to watch and see how the rest of the year will pan out, where oil prices are going to land us," the official noted.

The broker said the expected money generated by recent takeovers and mergers had not materialised.

Source: Nation Newspapers

Comment on ICBL stock 'difficult'

Published: Wednesday August 19, 2008

BERMUDIAN INSURER BF&M Limited, which has controlling interest in the Insurance Corporation of Barbados Limited (ICBL), is waiting on talks with Government before exercising the option to increase its share ownership in the former state-owned company.

BF&M president and chief executive officer John Wight told BARBADOS BUSINESS AUTHORITY, "We had heard recently the announcement made by Government relating to its decision to sell its remaining shares in ICBL but we haven't actually discussed this with them."

In a telephone interview Thursday from his Bermudian office Wight said it was "difficult and premature" to comment on possibly buying another major chunk of ICBL stock.

In November 2005 BF&M, through its subsidiary Hamilton Financial Limited, gained a near-52 per cent stake in ICBL when it bought 19 million of Government's shares for $51.7 million.

Prime Minister David Thompson announced on Budget day this year that Government would dispose of its remaining shares in ICBL and Barbados National Bank to raise funds for upgrading and expanding the Queen Elizabeth Hospital.

Prime Minister Thompson said Government's remaining 15.01 per cent shareholding in the company was "no longer useful in determining the strategic direction" of ICBL.

The stock would therefore be offered first to individuals, then to the National Insurance Board which already owned 5.13 per cent, other local companies, and lastly to the current majority shareholder.

Wight, who is also chairman of ICBL, noted that "there are various options for BF&M to take at this point and we have not made a decision as to what our course of action is".

Government now owns 5.8 million ICBL shares currently trading at $4.75 on the Barbados Stock Exchange.

Source: Nation Newspapers

Monday, August 18, 2008

Cocoa, coffee export on the rise

Published: Monday August 18, 2008

The export of cocoa and coffee is making a comeback, according to chairman of the National Agricultural Marketing and Development Corporation, (NAMDEVCO), Noel Garcia.

Garcia, who was the feature speaker at NAMDEVCO’s Agribusiness workshop, Strengthening Capacity for Agribusiness Development and Marketing, at the auditorium of the T&T Bureau of Standards, Macoya Industrial Estate, Macoya, said market prices had been rising.

“Surprisingly cocoa and coffee have suddenly re-emerged as major exporters,” he said.

Noting that local coffee had once “enjoyed a special position” in the international market “because of its flavour,” Garcia said labour issues and fluctuating prices had over the years led to farms being abandoned and a subsequent fall in the nation’s export of the two crops.

He said, however, that there is now an attempt to resucitate the industry in an effort to capitalise on market prices.

“Cocoa has been one of the more traditional crops that have been grown and you had large cocoa estates everywhere in Trinidad: East Trinidad, Paria, Central, La Vega Estate in Grand Couva, in South you have in Maruga,” he said.

“The Cocoa and Coffee Board in conjunction with the Ministry of Agriculture are resucitating those abandoned estates because cocoa prices are now the highest for a long, long, time also coffee,” Garcia said.

Adding that the comeback is not without its own problems, Garcia said that T&T may have to look to the region to satisfy the labour needs related to these crops.

“The problem, however, is that again the labour issues which may have to be solved by bringing in labour from Caricom, because we have a shortage of labour,” he said,

Garcia said, “With Namdevco we have some marketing and technical issues to resolve but quite a lot of emphasis is being placed on cocoa and coffee. In fact, the CEO of the Agricultural Development Bank is now the chairman of the Cocoa and Coffee Board.”


Answering questions about the possible mechanisation of the crops, Garcia said it would be nearly impossible mechanise the whole process and what could be done would be largely limited to farms.

“Cocoa is grown on slopes and in shaded environments so it is almost impossible,” he said. “What you could mechanise is instead of having to dance on the cocoa beans ... but in terms of the actual production, keeping the trees clean, harvesting, it it would be impossible.”

He said: “Mechanisation lends itself to large areas and in Trinidad, typically, our farm sizes are between ten and 15 acres. There are some between 14 and 15 large farms which would be between 50-200 acres, but again that is rare and under 200 acres or even a 100 to put a mechanised harvester does not make sense.”

Garcia said the answer to T&T’s food and nutrition security was “to move along the value chain - not just as primary producer but get into agri-processing.”

He said the government should help farmers become more competitive in the international marketplace.

Source: Trinidad Guardian Newspapers

NML on track for 2008

Published: Monday August 18, 2008

Neal & Massy Financial Holdings Limited

On course to deliver a blistering financial year 2008, Neal & Massy Holdings Limited (NML) reported an impressive first nine months of 2008 with an EPS growth of 30 per cent from $2.74 to $3.56. It should be noted that this EPS calculation was obtained using a weighted average shareholding of 92.2M shares as compared to 88.9 million at the end of the first half of 2007. This was a reflection of the increased number of shares that were issued in accordance with the takeover of Barbados Shipping & Trading Company (BS&T).

Healthy growth of 41.4 per cent in Group Third Party Revenue led to an increase at the top line from $3.7B to $5.2B. Strong Revenue growth paved the way for an impressive 38.5 per cent improvement in Operating Profit from $318.6M to $441.2M.

On a similar note, Share of Profits of Associated Companies & Joint Ventures moved up from $43.9M to $60.9M, representing a 38.6 per cent increase. These strong results filtered down as Profit before Taxation improved from $362.5M to $502.1M, a 38.5 per cent increase. A 6.2 per cent increase in the effective taxation rate to 29 per cent did not significantly hamper the Group as NML reported a 35.3 per cent improvement in Profit after taxation for the first nine months of 2008 from $263.2M to $356.2M.

A 37.9 per cent increase in Profit Attributable to Minority Interest led to a 35.1 per cent increase in Profit Attributable to Shareholders from $243.1M to $328.5M.

With the takeover of the Barbadian conglomerate BS&T, the Group's Total Assets more than doubled at the end of the first nine months of 2008 over the June 2007 mark, increasing from $3.7B to $7.9B. The effects of this transaction were also seen in the Total Liabilities section of the Group's Balance Sheet which rose from $2B to $5.1B year on year. Total Shareholders' Equity increased by 38.6 per cent but the Group's Annualised Return on Equity however remained relatively unchanged from the 2007 financial year at around 22 per cent.

NML's performance over the first nine months of 2008 was therefore a reflection of the increased shareholding in BS&T over the four month period March to June 2008.

The chairman highlighted in his comments on the Group's nine months performance that the integration of the operations and management of BS&T into the NML Group is still an ongoing process, leaving one to expect increased earnings and shareholder value in the medium to long term as a result of the efficiencies and synergies which should be created.

Over the years NML has developed a history of a stronger second half EPS with the fourth quarter being the strongest. Exhibit 1 below is a graphical demonstration of NML's EPS trend over the past two years in comparison to that of 2008 thus far. For the financial year so far the Group has managed to report consistent improvement quarter after quarter which is very encouraging as we anticipate results for the last quarter of the year. Taking this EPS trend into consideration and the fact that the first nine months of financial year 2008 have not deviated from this trend, the Group is well poised to deliver a strong fourth quarter performance. Furthermore, the second half the year would contain a full six months of earnings from the recently acquired BS&T, signaling a very strong second half performance.

At a price of $61.96, shares of NML are trading at a forward P/E multiple of approximately 12 times, still below the 13.2 times average multiple of the past five financial years. The chairman of the Group has also expressed his expectation of a substantially improved 2008 performance as compared with the previous year barring any unforeseen circumstances. As such, BOURSE maintains a BUY recommendation on this stock.

Republic Bank Limited

For the nine months ended June 30, 2008, Republic Bank Limited (RBL) reported an EPS of $5.85, a 10.6 per cent decline from an EPS of $6.54 in the previous comparable period. With both periods including one-off gains, core earnings revealed a different scenario as shown in Exhibit 2 left.

From the diagram above it can be deduced that despite higher overall profitability for the first nine months of 2007 compared to that of the same period of 2008, core earnings (exclusive of one-off gains) was actually higher at the end of June 2008 when compared to June 2007. Profit for the first nine months of 2008 included a net gain of $82M from the allocation of shares in VISA Inc, while the first nine months of 2007 included a gain of $370M from the disposal of shares in FirstCaribbean International Bank. When these are excluded, core earnings were up 26 per cent from $$677M to $855M.

A look at the results reveals a profit before taxation figure of $1.29B, a mere 1.1 per cent decline from the $1.31B at the end of June 2007. However, Profit after taxation declined 9.1 per cent from $1.1B to $1M. This led to a 10.5 per cent deterioration in Profit Attributable to Shareholders from $1B to $937.3M.

The Group was able to maintain a strong Balance Sheet as Total Assets recorded increased by 12.3 per cent to $41.6B, while Total Shareholders' Equity improved 17.4 per cent year on year.

Although our local market and RBL have remained relatively unscathed by the ongoing global macro economic conditions, RBL acknowledges that this still remains a concern and should not be ignored. The Group continues to exercise caution due to these market conditions and has advised that strategies will be adjusted accordingly should the Group become affected.

With core earnings growth of 26 per cent year on year, the Group is well on its way to delivering a strong 2008 financial year operational performance. As has been the trend over the years, the second half of RBL's financial year is usually characterised by stronger earnings growth when measured against the first half. It is anticipated that this financial year will continue along this developed trend. However, with the ongoing global challenges being faced by companies and more specifically the financial sector abroad, RBL must ensure that it has positioned itself to minimise the impact of any slowdown in economic activity that could filter down into our market.

At the current price of $102.14, shares of RBL have already appreciated 28 per cent year to date, and trading close to value. As such BOURSE maintains a HOLD recommendation at this time.

Source: Trinidad Express Newspapers

Friday, August 15, 2008

Grenada invited to supply aggregates to T&T

Published: Friday August 15, 2008

Grenada was yesterday invited to supply aggregates to the T&T construction industry.

In extending the invitation to a delegation led by Grenadian Prime Minister Tillman Thomas, Minister of State in the Ministry of Works, Roger Joseph, said T&T does not have enough aggregates to build the first phase of Government's $15 billion National Highways Programme.

Joseph was making a presentation on the ministry's new trunk road network and highways expansion programme to Thomas and his delegation during a visit to the Pt Lisas Industrial Estate.

The briefing session was hosted at the offices of the National Gas Company.

Joseph said because of the shortage, T&T may have to import aggregates from countries in the region such as Dominica.

He said construction should begin this year on six major highways which would reduce travel time and open up a wealth of opportunities for motorists.

He said the highways would also open up new areas to commercial, industrial and agricultural development.

Joseph also said that motorists would be charged a toll to use the new thoroughfares. The proposed new highways:

Solomon Hochoy highway to Point Fortin/ La Brea - $4.08 billion
San Fernando to Princess Town - $842 million
Uriah Butler to Trincity freeway - $950 million
Churchill Roosevelt Highway ex tension to Manzanilla - $4.5 billion
New North-South highway linking the East-West Corridor to Princess Town - $3.8 billion

Joseph said Phase 1 of the project would represent the largest capital development programme in T&T and call for very large infrastructure construction firms with available capacity and the latest technology.

He said it was likely that international companies might be invited to tender for the projects because of their size.

Joseph said that by the time the highways are completed in 5 years, Government might well welcome more new cars and encourage citizens to buy vehicles. He said transportation projects such as the water taxis and the rapid rail system should ease congestion on the country’s roads.

Source: Trinidad Guardian Nespapers

Sagicor, CaribRM building a market for 'captives'

Published: Friday 15, 2008

Two regional outfits that provide insurance risk analyses and related back-office services to so-called captive insurance companies are pitching for business in Jamaica, telling large local firms that it is likely to be more cost effective if they shoulder their own risks rather than pay premiums to traditional insurance companies.

"... If companies are paying a couple of million dollars in premium every year in insurance programmes, then there is a good chance that the captive is going to be cost benefit to them, just from a purely financial perspective," Dr Simon Young, the CEO, Caribbean Risk Managers (CariRM), told the Financial Gleaner in an interview.

It was the same message that Young, as well as officials of Sagicor Insurance Insurance Managers, a subsidiary of the big insurance group Sagicor, was carrying to Jamaican company bosses at a seminar in Kingston, Thursday.

Unlike regular players in the insurance market, captives do not go out seeking business from all and sundry, then share the underwriting risks with mostly external reinsurers.

Instead, big firms, which pay large premiums, may decide to underwrite their own risks through companies they establish themselves, hence the term captives.

In the process, the company saves some of the underwriting commission that is built into its premium payments.

"It is as if you are paying the premium directly to the reinsurer, instead of to the insurer who takes a commission," Young explained.

System not alien

This not a system that is alien to the Jamaican market, although its use may not be widespread. In a early 1990s, a handful of large firms here established captives.

"Of the top companies in Jamaica, probably about five per cent to 10 per cent are using captive right now," Young said.

According to Young, by going to the route of captive insurance, a company could save between 15 per cent and 20 per cent on its insurance costs annually, but that is assuming it pays out a hefty premium - say US$1.5 million or more.

If a company finds such an approach useful, this is where Caribbean Risk Managers Limited (CaribRM) and Sagicor Insurance Managers Limited come in.

The former will help such a firm do its risk and actuarial analyses, while the latter will help it establish its captive in an offshore environment like the Cayman Islands, then conduct all of the captive's backroom operations.

"We do risk assessment, surveys if required," said Young. "For example, in the case of major industrial facilities (we look) to see where the risks are, risk modelling, looking for cost-saving out of the insurance you buy if the company is multi-island."

Actuarial services

"We also offer actuarial services - looking at the loss history, see where heavy and light losses are and use all these tools to help structure a risk transfer programme that is more cost effective," said Young.

Source: Jamaica Gleaner

Capital and Credit group ejects low income assets, reports slight profit

Published: Friday August 15, 2008

The Capital and Credit Financial Group's (CCFG) decision in January to restructure its investment portfolio has resulted in marginal improvements in its bottom line for the six-month period ending June 30, 2008.

The group - bolstered by an increase in its net interest income, from $818 million in the 2007 period to $938 million - recorded a net profit of $269.2 million for the first six months or a 5.8 per cent increase in profit over the corresponding period, $127 million of which was made in the second quarter.

CCFG's merchant banking arm, CCMB, remains the heavy hitter in the group, contributing a near 66 per cent to pretax profit, followed by Capital and Credit Securities Limited (CCSL).

"We've liquidated our low income assets so our treasury portfolio has moved from a negative spread to a positive spread on our balance sheet," CCFG chief executive officer Curtis Martin told the Financial Gleaner.

"We sold off over $120 million in low yielding assets."

The group's securities investment portfolio was revalued at $39 billion, down by $5 billion in a year.

CCMB's profits were down by $5 million in the six-month period to $189 million, but up in the second quarter.

Remittance arm failed to shine

However, the remittance arm and international broker business Capital and Credit International Inc (CCII), failed to shine, suffering a combined 5.5 per cent loss.

Launched June 2007, CCII was expected to make an initial contribution of 10 to 15 per cent to the group earnings, according to chairman and CEO Ryland Campbell. Instead, the new operation subtracted three per cent from CCFG's profit.

The largest gain of 41 per cent was in the asset management and related services segment to $151 million before taxes in the half year; while CCFG's remittance and related services segment suffered losses of $8.7 million, which was 10 per cent greater than the loss in the comparative 2007 period.

Andrew Cocking, deputy group president and the senior executive with oversight of CCFG's overseas operations, was not available for comment to explain the weak performance of the segment.

Explanatory note

However, an explanatory note in the statement to the accounts linked it to delayed product roll-outs.

Said chairman Campbell: "CCII, our Florida-based broker/dealer, had a slow start and a few hiccups in personnel competencies in the roll-out of products and services. These matters have been resolved and the company is projected to become profitable by the end of 2008."

CCFG's balance sheet was lighter in the period, down $5 billion in a year to $50 billion, of which the merchant bank, CCMB, stills commands a little over 50 per cent of group assets.

Susan Gordon
Jamaica Gleaner