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.


Source:
Susan Gordon
Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080815/business/business2.html
susan.gordon@gleanerjm.com