Tuesday 20 November, 2018

JMMB makes two-thirds higher profit

JMMB Group made net profit of J$2.03 billion over the first half of its financial year, 68 per cent more than the corresponding period last year.

During the period, the group also received word that it would get its long-awaited commercial banking licence. 

"The recent approval from the Bank of Jamaica to upgrade the operations of the JMMB Merchant Bank in Jamaica to a commercial bank reinforces our drive to offer our clients a full suite of financial solutions, as well as our strategy to diversify our revenues both regionally and through our various business lines," said the financials.

The JMMB Group posted net operating revenue of J$7.7 billion for the first six months ended September 30, 2016 or a 31 per cent increase when compared to the prior year, against the background of growth in all business lines, namely net gains on securities trading, net interest income, fee and commission income, and net foreign exchange trading.

Gains on securities trading, net grew by 52 per cent or J$1.10 billion to J$3.19 billion. Trading activity increased in the second quarter on account of bullish sentiments on Emerging Market (EM) assets given the outlook for US Fed rates as well as negative interest rates in Europe arising from Brexit.

"In August, there was a tender offer by the Government of Jamaica for its 2017 and 2019 Global bonds which was favourable for our portfolios. Following the tender offer, market liquidity increased which resulted in higher levels of trading," explained JMMB.

The Group’s net interest income (NII) rose by 18 per cent or J$491 million to J$3.26 billion relative to the prior period. This was due to larger loan and investment portfolios as well as higher spreads. Fees and commission income grew by 26 per cent or J$113 million to J$554.3 million when compared to the prior period. There was significant growth in the suite of managed funds and collective investment schemes across the Group. Additionally, loan fees increased given the material growth in the loan portfolio. Net foreign exchange trading revenue increased by 23 per cent or J$127.3 million to J$689.3 million, relative to the prior period. This was on account of increased volume activity across the region coupled with a one-off market opportunity in the first quarter. 

Net operating revenue grew substantially in all the territories. However, due to increased trading activities in Jamaica, a smaller proportion of revenue was generated outside of Jamaica in this period. In Trinidad and Tobago, there was a 17 per cent increase in operating revenue on account of the core banking business. While, our operations in the Dominican Republic grew by 19 per cent and reflected in part the growth of our asset management and mutual funds business lines. 

Operating expenses for the first six months totaled J$5.08 billion and was 18 per cent higher than the corresponding period a year ago and reflected a confluence of factors. 

"We continued to enhance our integrated group sales and support frameworks to drive growth and to ensure seamless and standardized operations across the region. Additionally, there were start-up costs in Dom Rep and inflationary increases in all territories," said the financials.

The group continued to be adequately capitalised as its capital base increased by 21 per cent or J$4.7 billion to end the period at J$27.42 billion when compared to the end of the last financial year. This was due in part to net profits generated over the period. The individually regulated companies within the Group continued to exceed the regulatory capital requirements.