Thursday 26 November, 2020

JMMB to pay out dividends despite BOJ caution

JMMB Group CEO, Keith Duncan.

JMMB Group CEO, Keith Duncan.

Though dividends have been delayed under Bank of Jamaica (BOJ) directives, JMMB Group said it is still committed to making a payment.

The financial group said it would advise the Jamaica Stock Exchange (JSE) of its board decisions in short order.

Total dividends paid and proposed by JMMB in respect of the 2019/20 financial year amounted to $867 million. The amount compares to $799 million in dividends paid out in the previous financial year.

“The amount of $867 million was already paid. The first dividend that would normally be paid was not paid. However, the company is committed to making dividend payments. As such, JMMB Group will be going to JSE and TTSE in the near future when the board considers the dividend payment. This is despite the BOJ's directive,” JMMB said.

Local financial holding companies and deposit-taking institutions have suspended the distribution of dividends for the 2020 financial year. Jamaica’s central bank said the suspension is being done to conserve capital and further enhance licensees’ lending and loss-absorption capacities amid the COVID-19 pandemic.

JMMB CEO Keith Duncan, however, stated, “We are committed to paying dividends, delivering  performance and ensuring that you participate in the  positive results in a meaningful way.”

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Both Duncan and Patrick Ellis, Chief Financial Officer at JMMB  indicated that company business lines performed above market in the year ended,  and continue to do so under COVID-19 conditions.

JMMB delivered a net profit of $7 billion at March 31, 2020.

Ellis said though the result included the one-off gain from the Sagicor acquisition, there were indicators of strong growth. The company spent $35 billion to acquire 22.5 per cent of regional finance company Sagicor Financial in 2019.

JMMB expects to receive 22.5 per cent of profit going forward, in addition to dividend payments. Dividend payout from Sagicor to JMMB in the final quarter was $225 million, while the payment received in the first quarter of 2020 to 2021 was $125 million.

Ellis described this as “a steady dividend stream which impacts cash flow and funds under management in a significant manner.”

Chief financial officer at JMMB, Patrick Ellis

The CFO  highlighted the performance of funds under management which grew in the year ended by 21 per cent driven by deposits and repo growth, among other drivers.

“Overall, from a core perspective we continue to see strong growth in the group,” he stated. 

Assets ended the year at $400 billion, which is an improvement of $ 80 billion over 2019, coming principally from growth in the company’s loan book and other contributors.

Ellis noted, “We have one of the lowest non-performing ratios on the market. Ninety-five per cent of assets are quality, liquid assets.”

JMMB CEO, Duncan,  meanwhile praised the performance of the company’s digital team which he said has ensured that the group continues to deliver under COVID conditions.

He stated, “ especially in Jamaica, Trinidad and Tobago  and the Dominican Republic,  we are ahead of projections and we are seeing growth almost at pre-COVID levels.

“The team has been working diligently to ensure we can return profitability to pre-COVID levels.”

The group CEO said he was thankful to shareholders for their participation in the additional public offer in 2019 which attracted over $19.7 billion in subscriptions and allowed the addition of $12.3 billion to support the company’s tier one capital.

“Since then we have seen the market respond with more APOs. JMMB was a pioneer,” Duncan stated.

Prior to the APO  an investment-grade rating of A-plus was assigned by Cari-Cris to JMMB.

In September this was reaffirmed, Duncan disclosed noting, “It meant that as a group we are solid and have the ability to continue to perform. This provides an independent assessment of our stability. It gives us access to markets through cheaper funding, and increases investor confidence.”

He also thanked the JMMB Capital Markets team “which did $44 billion in deals and they have increased that to $59 billion this year. We have to acknowledge the online team which has helped us to build out the capacity.”

Referring to the company’s participation in the TransJamaican Highway project at the start of 2020, Duncan said, “the TransJamaican project put us in a position to provide cash for the Jamaican government…Our digital team, our settlement team ensured we had the digital online capacity to  provide a seamless experience.”

The JMMB CEO went on to acknowledge business units for their performance, including the JMMB Bank which grew market share to six per cent, representing a  48 per cent improvement year over year and comparing positively to average market growth of 16.3 per cent.

Duncan noted that in Trinidad and Tobago the bank was at two per cent market share but said, “the brand not as strong as Jamaica, but we are making inroads,” adding that improvement year over year was  40 per cent.

Duncan said the group has also entered Tobago with an integrated banking and investment service, moving market share from zero to five per cent.

That operation, as at May 2020, is now into profitability, he disclosed.  In the Dominican Republic, the savings and loans subsidiary grew revenue by 53 per cent.

“Looking across the whole banking space, our growth rate has been tremendous. The DR has been very hard hit by COVID, but the performance of JMMB was stellar,”  Duncan stated.

Across the group, he outlined, funds under management grew  21 per cent to over $300 billion,  “a very positive development driven by deposits, repo agreements, pension funds, mutual funds and unit trusts.”

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Duncan added that the group meanwhile, had also migrated over 65,500 clients from Save Smart to Easi Access accounts which afford savers  low and no fees compared to the rest of the market.

He stated, “the  Easi Access account is the most attractive account in Jamaica. I can say that unequivocally,” adding that the accounts are twinned with Visa card access which allow transactions internationally.

The company has also upgraded ATMS to permit all transactions nationally and internationally.

“From having our own network, all our clients can now use our card anywhere in the world. We acknowledge the digital team and the change support team for their work,” the company head stated.

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