JMMB Group Profits Bolstered by Diversification Strategy & One-off Gains in Associate 

For the nine-month period ended December 31, 2023, JMMB Group, regional financial services conglomerate, reported a net profit of J$17.0 billion for the period, as a result of a material one-off earning from its share of profit in Sagicor Financial Corporation (SFC). This, while also posting operating revenue of J$17.6 billion.

Patrick Ellis, chief financial officer at JMMB Group, noted that the company’s diversification strategy has been a driver for its financial performance, pointing specifically to a one-off-gain attributable to the Group’s investment in Sagicor Financial Corporation (SFC). The Group’s 23.44% stake in SFC contributed J$16.28 billion in share of profit in the form of realized gains from SFC’s acquisition of Ivari Holdings, a mid-size individual life insurance company based in Canada; in addition to J$1.38 billion in dividends over the period. The JMMB Group exec noted that the returns from the Group’s investment in SFC underscores its efficacy as part of its diversification strategy, even as its core earnings remain credible in a challenging macro-economic environment. 

Geographic Diversification Bolsters Credible Performance 
In giving details about the Group’s core earnings, Ellis shared that within the context of a challenging operating environment with global interest rates trending higher than the prior period, the Group’s margins were impacted. “Excluding the one-off we would have attributed J$2.3 billion to (core) earnings to the Group, you would have (also) seen our operating profit down to approximately J$1.1 billion, and that reflection (is) as a result of our net interest income down being impacted by the high interest rate and therefore we would have had some spread compression especially in our investments business line,” he highlighted during the company’s quarterly investor briefing (on February 15). The financial entity therefore reported a 24% dip in its net interest income which stood at J$6.40 billion over the period. Further, market sentiment negatively compressed foreign exchange gains and commission income, which stood at J$2.03 billion and J$3.89 billion respectively; this reflects a 10% and 18% falloff year-over-year. 

The Group despite trading in an environment characterized by low trading activity, saw a 43% uptick in gains on securities trading totaling J$5.0 billion. Ellis gives credit to the Group’s geographic diversification which saw the Dominican Republic portfolio delivering this boost in gains on securities trading to non-interest income revenues for the Group. The CFO explained that Dominican Republic the monetary policy environment has been more accommodative, as a result of reductions in the central bank’s policy rates, that with   the fact that Trinidad & Tobago has maintained a low interest rate environment, has redounded favorably for the Group These countries therefore increased their contribution to the Group’s operating revenue, with Dominican Republic and Trinidad & Tobago contributing 21% and 27% respectively. In further reiterating the benefits of the Group’s diversification strategy Ellis shared that its diversification in its business lines have also borne fruit, with an 8% growth year-over-year in its banking and related services, which contributed 60% to the Group’s operating revenue. 

During the reporting period, operating expenses went up by 12% to J$16.48 billion, as a result of inflationary costs and project related costs that will support the Group’s long-term growth strategy and accelerate its digital transformation. Nevertheless, the Group remains committed to managing its expenses in line with its revenue, while it seeks to yield scale, manage cost of funds, leverage synergies across the Group and improve its efficiency, in a bid to contribute to long-term shareholder value.  

At the end of the reporting period, the Group’s asset base totaled J$726 billion, up 10% relative to the start of the financial year. This was mainly on account of a larger loan portfolio, which grew by 14% to J$202.7 billion. The credit quality of the loan portfolio continues to be in line with international standards and the Group maintains enhanced monitoring to mitigate against possible deterioration in credit quality. Growth in the asset base over the nine-month period was primarily funded by an increase in customer deposits and notes payable. Deposits grew by 13% to J$195.4 billion, while notes payable increased by 35% to J$83.7 billion. 

Additionally, shareholders’ equity increased by 47% to J$72.8 billion on account of increased net profit and recovery on asset prices on investment revaluation reserves. Thus, the Group continues to be adequately capitalized and all individually regulated companies within the Group continue to exceed their regulatory capital requirements. 

Rating Agency, CaricRis Underscores JMMB Group’s Financial Stability
The Group’s stability and diversified strategy is backed by international rating agency, Caribbean Information and Credit Rating Services Limited (CariCRIS). According to the rating’s agency’s latest statement, “The ratings of the (JMMB Group) continue to reflect its strong brand equity and long history of operations in the Jamaican securities industry. The Group’s strong brand has facilitated its expansion into the wider Caribbean region and positioned it as an emerging player. (Additionally), the Group’s ratings also reflect its well-diversified asset portfolio, characterized by good asset quality and good financial performance…Furthermore, JMMBGL’s governance structure, risk management practices and capitalization remain robust.” 

The rating agency also assigned a stable outlook, based on the expectation that over the next 12-15 months the Group is likely to continue to record good financial performance and capitalization levels. Additionally, the continued recovery of the Jamaican economy is expected to positively impact the Group’s performance.  

Strategic Outlook – Path to Growth & Digital Acceleration 

Speaking to the strategic outlook of the Group, Keith Duncan, CEO, noted that in spite of the prevailing uncertainties and challenges in the global economy, the Group remains confident in its strategy to navigate the environment and capitalize on emerging opportunities. “Through the support of our team, we have remained resilient and have achieved credible financial performance. As such, we continue to monitor the global, regional and domestic economic conditions, even as we accelerate initiatives focused on enhancing efficiency and driving revenue generation, in line with our “Smart Growth” strategy” to generate sustainable medium-long term risk adjusted returns for our stakeholders.” 

During the briefing Duncan pointed to specific areas of focus for growth, “We are looking to efficiently grow our balance sheets across the Group, and looking at increasing our non-interest income through value-added fees for services provided; we are (also) looking to increase our FX trading and grow our off-balance sheet offerings across the Group (as we) provide more fund solutions that will cater to our clients…and consistent with our smart growth strategy continue to deliver the products and services that enhance our risk adjusted returns of the respective business lines.”

The JMMB Group CEO also announced the latest in its move to accelerate its digital solutions with the launch of the much anticipated, JMMB Moneyline app, which is available to JMMB clients for download as of February 15. 

Additionally, the Group has rolled-out other digital solutions such as: the full-scale launch of the JMMB Money Transfer Visa Prepaid Card solution, which allows clients to receive remittances seamlessly and conduct business online or at any Visa accepted point-of-sale machine. Other digital solutions set to come onboard by the end of the financial year include: new features to the virtual assistant, Johanna, which is currently in its infancy stage and now allows clients to check account balances and money transfer status; and online onboarding that will allow individuals to start the account opening process from the comfort of their homes. In catering to corporate and small and medium-sized business segments, JMMB Bank will also launch a Visa Business Debit Card. 

The JMMB Group head, Duncan, also emphasized that the company has the financial foundation to withstand the current challenging realities and remains focused on its strategic plan that will see it continually reassessing and re-imagining new opportunities to expand and grow its revenue and diversify its income stream, while delivering exceptional client experience and adding shareholder value. He also thanked the JMMB team’s leadership for the steady guidance and the wider team for the support that they have provided in delivering exceptional client experience and solutions to clients. Adding, “JMMB continues to be who we are, consistent with our Vision of Love, and we are happy that we continue to deliver solutions to our clients in a loving and caring manner and return on equity to our shareholders.”