Home' Trinidad and Tobago Guardian : November 29th 2015 Contents SBG14 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt NOVEMBER 29 • 2015
The JMMB Group acquired 90
per cent of the Dominican
Republic bank, Banco Rio de
Ahorro y Credito JMMB Bank
SA, on July 1, 2015. The pur-
chase price was US$2.15 mil-
lion or J$254.5 million, which approximates
TT$13.76 million. This acquisition increased
its operating expenses for the second quarter,
thus lowering its profits for that period. Despite
this distortion, its year-to-date results con-
tinued to improve.
Let us now further expand on these and
related issues that impacted on its half-year
Changes in financial positions
Total assets expanded by 2.8 per cent to
J$223.8 billion from the March 2015 year-end
balance of J$217.7 billion.
The main constituent, investments and
resale agreements, which remains the largest
component, declined marginally to J$154.3 bil-
lion from J$157.5 billion.
Helped by its banking acquisition, net loans
and receivables advanced by 11.6 per cent to
close at J$35.6 billion from last March s J$31.9
Cash and equivalents also rose strongly
moving from J$18.7 billion to J$23.6 billion as
at September 30, 2015. This was also partly
due to the inclusion of J$265 million from the
new bank, Banco Rio.
Finally, property, plant and equipment
advanced to J$3.57 billion from J$3.09 billion.
Total liabilities grew by 3.2 per cent to reach
J$202.2 billion from J$196 billion.
Securities sold under agreements to repur-
chase registered at J$146.6 billion; this was
1.4 per cent greater than the J$144.5 billion
held as at March 31, 2015.
Customers deposits increased by 6.4 per
cent to J$40.9 billion from the year-end balance
of J$38.5 billion. About J$1 billion of this
improvement can be attributed to the Banco
Both notes payable and other payables rose.
The former moved to J$4.26 billion from J$3.64
billion while the latter climbed to J$3.3 billion
from J$2.36 billion.
Its redeemable preference shares held steady
at J$4.2 billion.
On the other hand, the amounts due to
other banks increased to J$519 million from
Total equity declined to J$21.56 billion from
J$21.72 billion. After allowing for minority
interests, shareholders equity also fell to J$20.81
billion from last year-end s J20.96 billion.
Both share capital and retained earnings
reserve held steady at J$1.86 billion and J$9.6
In contrast, the investment revaluation
reserve fell to J$1.02 billion from J$2.04 billion;
this reflected a negative comprehensive income
for the period. This was mainly due to unre-
alised losses on available-for-sale investments
and, to a lesser extent, foreign exchange trans-
The retained earnings component benefitted
from the current period s profit of J$1.18 billion
before giving back J$261 million in dividends
to shareholders. These changes saw the ending
balance improve to J$8.49 billion from J$7.57
billion as at last March.
With 1,630,552,530 shares outstanding, each
share has a book value of J$12.76 (March 2015:
Revenues and profit
Total interest income fell to J$6.52 billion
from J$6.83 billion. Interest expense, however,
fell by a greater percentage to end at J$3.75
billion from J$4.13 billion.
These favourable swings allowed JMMB to
record a higher net interest income of J$2.77
billion from last half-year s J$2.7 billion.
All other major sources of income registered
Fees and commission income climbed by
46.4 per cent to J$441.3 million from J$301.4
The net gains on securities trading improved
by 35.2 per cent, moving from J$1.55 billion
in 2014 to J$2.1 billion in the current half-
year. These gains were fuelled by volume
increases combined with the buoyancy of the
Jamaican Stock Exchange, especially since
Foreign exchange trading gains were also
robust, moving from J$430.6 million to J$562
million; this reflected an improvement of 30.5
Meanwhile, dividend income rose to J$12.75
million from J$8.53 million.
These changes allowed JMMB Group to
report total income of J$5.88 billion; this
showed a 17.8 per cent improvement over the
J$4.99 billion earned for the comparative 2014
Distorted by higher expenses under its bank-
ing segment, total operating expenses climbed
by 17.3 per cent to J$4.29 billion from J$3.66
This allowed JMMB to report a pre-tax profit
of J$1.59 billion; this represents an improvement
of 18.4 per cent over the J$1.34 billion recorded
for the six months ended September 2014.
With the effective tax rate increasing from
19.53 per cent to 23.77 per cent in the current
period, the after-tax profit improved by only
12.2 per cent to J$1.21 billion from J$1.08 bil-
The non-controlling interests fell to J$28.7
million from J$55 million; this change helped
JMMB report a profit attributable to share-
holders of J$1.18 billion versus J$1.02 billion.
This result translated into EPS of J$0.72
Both major segments reported higher exter-
nal revenues and greater pre-tax profits.
Notably, there was a marginal decline in
the operating expense at the financial segment.
On the other hand, the banking segment
experienced a doubling of its operating expens-
es; this was mainly caused by the one-off
expenses triggered by both the asset tax
(J$184.9 million) and the Banco Rio acquisi-
In the case of the latter, the purchase price
of J$254.5 million exceeded the provisional
valuation of the net assets acquired of J$155.8
million, which gave rise to a goodwill charge
of J$98.7 million. It is expected that the final
valuations of the assets acquired will be con-
cluded by the end of the fiscal year in March
The decline in interest income was most
pronounced under the financial services seg-
Most of the group s profits are derived from
its Jamaican home base. There, the merchant
bank subsidiary contributed J$221.5 million
to the group s after-tax profits; this represented
an improvement of 76 per cent over the prior
period s results.
Its operations in the Dominican Republic
contributed J$77.1 million to these results.
Those results were derived from its securities
and mutual fund operations as well as its
newly acquired bank, Banco Rio de Ahorro y
Credito JMMB Bank SA.
Locally, JMMB Investments (T&T) Ltd and
the Intercommercial Bank Ltd combined con-
tribution amounted to J$96.8 million.
The group also derives significant income
from managing off-balance sheet funds for
its clients on a non-recourse basis. The value
of those managed funds increased by 77.7 per
cent to J$58.3 billion from last year s J$32.8
Dividends and share price
On July 2, 2015 JMMBGL share price closed
at J$7.50. A few weeks later, on July 22, it had
declined to J$7.07. For the next couple of
months the price drifted within a narrow range.
During October, the price advanced to J$8.41
on the ninth, then closed at J$8.90 on October
20 and then further advanced to J$9.93 by
the October 27.
The price closed at J$10.00 on November
3, 2015, when 1,030,443 shares changed hands.
By November 12, it was at J$10.99 at which
point it started to exhibit some resistance.
Under its old corporate name and structure,
JMMB s 2014 calendar dividend was J$0.33.
On December 18, 2015, JMMBGL will pay a
dividend of J$0.19; this, when added to the
mid-year dividend of J$0.16 will bring its total
dividend for calendar 2015 to J$0.35.
That total dividend, when related to its
recent peak price of J$10.99, gives investors
a yield of 3.18 per cent.
On the local exchange, the share price has
moved in a very similar fashion. The share
was traded at TT$0.45 in July and then fell
to TT$0.41 in August. The release of these
results has seen prices as high as TT$0.53 on
November 13 and again on November 23.
On September 16, 2015, shareholders
approved a resolution for the issuance of six
billion cumulative redeemable preference
shares. Very likely, these new instruments will
be used to replace and/or augment the existing
stock of J$4.2 billion when they are redeemed.
The existing preference shares bear interest
rates ranging from 7.25 to 8.75 per cent.
Although JMMBGL has commercial banking
subsidiaries in both T&T and the Dominican
Republic, it does not yet own a commercial
bank in its home country. The group eventually
expects this to become a reality, possibly
within two years.
Investors may recall that, many years ago,
Republic Bank Ltd s foray into the Dominican
Republic did not end well for the bank and
Perhaps, this may one reason why JMMBGL
is buying only 90 per cent of Banco Rio; it
probably expects that having a local share-
holder will improve its chances for success.
JMMB Group acquires a bank
in the Dominican Republic
Most of the group's profits
are derived from its
Jamaican home base.
There, the merchant bank
J$221.5 million to the
group's after-tax profits
Links Archive November 28th 2015 November 30th 2015 Navigation Previous Page Next Page