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BUSINESS GUARDIAN guardian.co.tt AUGUST 3 • 2017
JMMB secures commercial bank licence in Jca
For fiscal 2017, JMMB Group Ltd
(JMMBGL) delivered a 45 per
cent improvement in net profit
while its share price appreciated
by almost 68 per cent. In 2017,
the group celebrates its 25th year
NCB Capital Markets (in escrow) owns 26.3
per cent while CLICO (Trinidad) Ltd has about
6.35 per cent of the group's outstanding shares.
Let us now review JMMBGL's results to March
Total assets expanded from J$230.6 billion
to J$251.6 billion or by 9.1 per cent.
Investment securities advanced to J$171.6
billion from J$157 billion. The largest category,
available for sale investments, rose to J$152.9
billion from J$123.2 billion. Here, the greatest
exposures were to Government of Jamaica se-
curities and other sovereign bonds; the former
closed at J$97.1 billion from J$76.1 billion while
the latter ended at J$31 billion from J$21 billion.
Notably, its holdings of corporate bonds
climbed to J$13 billion from J$4.44 billion. In
contrast, the loans and receivables component
declined to J$18 billion from J$22.3 billion. Also
falling were investments at fair value through
profit or loss and held to maturity securities;
the former fell to J$0.9 billion from J$2.1 billion
while the latter contracted to J$57 million from
Loans and notes receivable increased to
J$47.1 billion from J$37.5 billion. At the gross
level, its exposure to individuals climbed to
J$25.5 billion from J$16.4 billion while that
to financial institutions grew to J$1.8 billion
from J$0.4 billion. Its exposure to corporate
customers fell marginally to J$21.1 billion from
In terms of territorial concentration, Jamaica
had the largest exposure of J$24.4 billion (2016:
J$17.6 billion) while T&T had the second high-
est at J$20.6 billion (2016: J$18.7 billion). Its
third operating hub, the Dominican Republic,
had exposures of J$1.8 billion and J$1.1 billion
for 2017 and 2016 respectively. The remain-
der reflected exposures to North America and
Property, plant and equipment rose to J$3.1
billion from J$2.4 billion. Computer equipment
increased to J$275.1 million from J$175.3 million
while the value of equipment, furniture and
fittings closed at J$683 million from J$532.4
million. In addition, the value of freehold land
and building increased from J$1.38 billion to
Intangible assets advanced to J$1.52 billion
from J$1.35 billion. The largest components
were computer software of J$740.8 million
(2016: J$559 million) and customer lists and
core deposits of J$370.2 million (2016: J$391.7
Cash and cash equivalents fell to J$20.9
billion from J$25.5 billion. This reduction
mainly reflected its increased purchases of
investments and physical assets. There were
some interesting shifts in the location of these
balances; funds in Jamaica were J$8.8 billion
(2016: J$14.4 billion) while funds in T&T were
J$7.6 billion (2016: J$7.9 billion) and funds in
North America declined from J$2.8 billion to
J$1.9 billion. On the other hand, cash in the
Dominican Republic climbed from J$99.2
million to J$2.4 billion.
Total liabilities increased by 8.1 per cent to
J$224.8 billion from J$207.9 billion.
Securities sold under agreements to repur-
chase increased to J$156.7 billion from J$149.3
billion and are denominated in seven curren-
cies. The largest portion was denominated in
US dollars and was equivalent to J$95.2 billion
(2016: J$84.1 billion).
Securities denominated in Jamaican dollars
declined to J$40 billion from J$48.2 billion
while those TT dollar securities rose from zero
to J$3.2 billion and those carried in Dominican
Republic pesos increased to J$14.6 billion from
Customers deposits improved to J$49 billion
from J$41.3 billion. Deposits maturing beyond
one year increased from J$12.2 billion in 2016
to J$13.6 billion. All other deposits mature in
less than one year.
Redeemable preference shares increased
from J$8.56 billion to J$8.84 billion. No new
preference shares were redeemed nor issued
during the year; almost the entire increase re-
flected the higher local currency value of the US
dollar tranche, which mirrored the devaluation
of the Jamaican currency.
Notes payable edged up to J$4.5 billion from
J$4.4 billion. Two of these notes are denomi-
nated in US dollars while one is denominated in
TT dollars. All of these debts mature between
2019 and 2022.
Total equity improved to J$26.8 billion from
J$22.7 billion. Excluding minority interests of
J$888.6 million, shareholders' equity closed
at J$25.9 billion from J$21.9 billion.
Retained earnings expanded to J$11.9 billion
from J$9.3 billion. The opening figure was en-
hanced by the current period's profit of J$3.3
billion while dividends to shareholders of
J$652.2 million restrained the closing balance.
The investment revaluation reserve ben-
efitted from net unrealised gains on availa-
ble-for-sale investments of J$1.05 billion. This
saw the ending balance improve to J$2.2 billion
from J$1.15 billion.
In a similar vein, the cumulative translation
reserves moved from J$41.2 million to J$312.2
million; this component benefitted by J$271
million from foreign exchange differences on
translation of the foreign operations. (T&T and
Both share capital and retained earnings
reserve were unchanged at J$1.86 billion and
J$9.61 billion respectively. The weighted av-
erage number of stock units outstanding was
stable at 1,630,552,532; consequently, the book
value of each share improved to J$15.89 from
March 2016's J$13.45.
Income and profit
Total net revenues advanced by 28.2 per cent
to J$14.7 billion from J$11.5 billion.
Net interest income improved to J$6.77
billion from J$5.50 billion. The interest in-
come component advanced by 10.3 per cent
to J$14.7 billion from J$13.3 billion. The larg-
est contributor was interest on investment
securities, which rose to J$10.81 billion from
The other major contributor was interest on
loans and notes receivable, which increased
from J$2.93 billion to J$3.79 billion; this im-
provement is consistent with higher loan
The interest expenses component rose mar-
ginally to J$7.94 billion from J$7.83 billion.
Helping this modest advance was the decline
in interest on notes payable to J$498.3 million
from J$1.7 billion. The largest contributor was
interest on repurchase agreements, which in-
creased to J$5.88 billion from J$5.04 billion.
Interest on customers' deposits closed at J$988
million from J$796 million.
Fee and commission income expanded to
J$918.3 million from J$749.1 million. The net
gains on securities trading swelled to J$5.4
billion from J$4.0 billion. Making smaller
contributions, foreign exchange margins from
cambio trading improved to J$1.2 billion from
J$935 million while fees from managed funds
increased to J$369 million from J$218.3 million.
Other income comprised of dividends of
J$31.3 million and "other" of J$12.1 million.
Total expenses rose to J$10.45 billion from
J$8.78 billion. Staff costs climbed by 23.4 per
cent to J$5.4 billion from J$4.4 billion. Included
in this figure was other staff benefits which
more than doubled to J$564 million from J$277
Operating expenses increased to J$5.06 bil-
lion from J$4.41 billion or by 14.36 per cent.
Directors fees climbed to J$152 million from
Consistent with its larger asset base, depre-
ciation and amortisation expenses expanded
to J$544 million from J$479.2 million.
Similarly, information technology expenses
advanced to J$515.7 million from J$407.8 mil-
lion. Marketing, corporate affairs and dona-
tions rose to J$532 million from J$424.6 million.
These movements saw operating profit register
at J$4.25 billion from 2016's J$2.68 billion.
There was a small gain of J$5.2 million on
the disposal of physical assets and an impair-
ment loss of J$8.7 million on financial assets.
In addition, the acquisition of Corporation de
Credito America SA in the Dominican Republic
generated a loss of J$87.6 million; that subsid-
iary's operations were then transferred to the
existing Banco Rio.
These changes resulted in a pre-tax profit
of J$4.16 billion (2016: J$2.6 billion).
The effective tax rate climbed to 19.4 from
11.4 per cent; consequently, taxes rose to
J$805.5 million from J$296.3 million. Lower
income not subject to tax and higher green fund
levy were among the variables that influenced
Consequently, the net profit registered at
J$3.35 billion versus J$2.3 billion; after de-
ducting profit of J$37.7 million due to minority
interests, the net profit attributable to share-
holders registered at J$3.31 billion (2016: J$2.26
billion). This result translated to EPS of J$2.03
compared with the previous year's J$1.39.
The financial and related services segment
recorded a 13.5 per cent revenue increase ac-
companied by a 52 per cent improvement in
profit. At the banking and related services divi-
sion, revenues grew by almost 30 per cent while
segment profit expanded by 79.2 per cent.
Geographically, net revenues from Jamaica
accounted for J$11.06 billion (2016: J$8.29 bil-
lion) while that from T&T was J$2.39 billion
(2016: J$2.09 billion) and the Dominican Re-
public contributed J$1.21 billion (2016: J$1.05
The T&T operations saw JMMB Bank (T&T)
Ltd deliver after-tax profits of TT$11.1 mil-
lion (2016: TT$12.4 million), TT$0.46 million
(2016: TT$0.44 million) for Intercommercial
Trust & Merchant Bank and TT$12 million
(2016: TT$10 million) for JMMB Money Market
JMMBGL's share price closed at J$10.01 on
March 31, 2016 and appreciated to J$16.81
at March 31, 2017. This strong appreciation,
particularly in the latter part of its fiscal year,
was hugely influenced by the upgrading of its
existing merchant banking licence to include
commercial banking at its Jamaican subsidi-
ary and higher profits. The group now offers
commercial banking services in all three ju-
In 2017, the price peaked at J$21.74 on May
15 and closed last Thursday at J$19.98. On the
TTSE, the price has followed a similar pattern;
it ended on March 31, 2017 at TT$1.25 while it
closed last week at TT$1.20.
Total dividends increased from J$0.37 for
fiscal 2016 to J$0.45 for fiscal 2017. The final
dividend for fiscal 2017 of J$0.23 was paid on
June 30, 2017. Relating the total 2017 dividend
of J$0.45 to the recent price of J$19.98, the yield
is 2.25 per cent. That price also reflects a P/E
multiple of 9.8 and price to book value of 1.26.
In next week's article, we will review National
Enterprises Ltd's results to March 2017.
Total assets expanded
from J$230.6 billion to
J$251.6 billion or by
9.1 per cent.
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