Published: Friday November 7, 2008
Jamaica's largest brokerage house, Jamaica Money Market Brokers (JMMB), saw a boost in its profits for the six-month period ended September 2008 largely due to the sale of Caribbean Money Market Brokers (CMMB) and a jump in its net interest income.
Unaudited financial statements for the period under review show the Group reporting gross revenues of J$6.15 billion, generating a net profit of J$1.1 billion. This compares favourably with gross revenues of J $5.12 billion producing a net profit of J$473.6 million for the six-month period ended 30th September 2007.
JMMB's Group CEO Keith Duncan made it clear that this 140 per cent jump in profits was primarily due to two one-off events, namely, a realised gain of J$2.32 billion from the sale of CMMB, and a write-down of the impairment of bond holdings in the Group's investment portfolio of J$1.87 billion as a result of its exposure to Lehman Brothers. However, the Group profit grew 44 per cent over the prior period, irrespective of the two major one-off events.
Net interest income increased by 45 per cent and came in at J$993.6 million for the six-month period ended 30 September 2008. This represents a J$306.6 million increase on the J$687 million registered for the same period last year.
Gains on securities trading have been steadily falling throughout the brokerage sector and JMMB was not immune.
Here the Group saw this revenue stream fall to J$323 million compared to the J$562.5 million it booked for the corresponding period last year. Fees and commission income made a marginal increase on the previous year, coming in at J$98.4 million compared with J$98 million for the same period last year.
JMMB's cambio trading operations put in a creditable performance, raking in J$72 million - J$20 million more than the J$52 million posted last year. Operating revenue net of interest expense increased by 6.3 per cent to J$1.5 billion despite a 42.6 per cent decline in trading gains.
Like many of its competitors JMMB saw an increase in its administrative expenses. Expenses rose to J$1.19 billion compared to J$956 million for the same period last year, an 18.5 per cent increase due to increase in staff costs and spiralling inflation.
Operating profit of J$288.2 million spelt a decline of 35 per cent largely due to an increase in administrative expenses. The Group's total assets of J$118 billion were boosted by a J$23 billion increase in investments and resale agreements, representing a 27.8 per cent increase on the J$92.3 billion posted last year for investments and resale agreements.
Speaking at a press conference held at its Kingston headquarters, Group CEO Keith Duncan outlined JMMB's strategy of focusing on different revenue steams and becoming an integrated financial service provider. The aim is to package a suite of services for corporates, which will help to grow the Group's asset base.
The private sector has long bemoaned the absence of reasonable financing facilities in Jamaica and cites this as one of the reasons for the anaemic performance of the productive sector. JMMB intends to address this with a special focus on small and medium enterprises. With 120,000 clients, JMMB is able to diversify its product offering and not allow it to be stymied by car loans serving as its leading credit facility. It sees opportunities in the agricultural sector and energy-saving measures, and is actively encouraging people to come forward with their plans and ideas. It will in effect be offering practical corporate solutions.
Later this month, JMMB will launch its dual currency ETMs at three locations within the city.
Looking to the next fifteen years JMMB will be employing a five-pronged strategy, namely:
1. Asset management (providing access to global investment opportunities for its client base including pension fund management);
3. Financing (consumer, commercial and corporate finance together with securitisation and syndication;
4.Greenfield expansion (JMMB bdi Americana (Dominican Republic), Central America (CAFTA);
5. Commercial banking (Application to the Bank of Jamaica for a licence to operate commercial banking facilities).
JMMB will continue to extend its footprint across the Caribbean. It currently has a 50 per cent stake in Trinidad's Intercommercial Bank Limited together with management control. It has an option to increase its holdings in this institution of which the steel magnate Mittal also has an interest. Next month, JMMB will open a new branch of IBL in Trinidad's capital Port-of-Spain.
Speaking with Caribbean Business Report yesterday, Duncan said: "We are very pleased with these financial results as we have taken prudent provisions which you can see have paid off. We are well capitalised to move forward.
Over the next six months the financial markets will face their fair share of challenges and we at JMMB are well equipped to face them."
Source: Jamaica Observer