JMMB Group CEO Keith Duncan is bullish on the financial institution’s real estate business prospects here in Jamaica.

Commenting on the matter during the company’s annual general meeting on Monday, September 23, 2024, at Jamaica Pegasus hotel in New Kingston, Duncan told shareholders that he is optimistic about the “future of our real estate business line”.

“We are monetising our land bank because JMMB had built up a land bank a number of years ago – about four or five years ago… and this real estate business line we expect to continue to deliver for us” he said.

JMMB Chief Investment Officer Paul Gray, who also manages special projects, will add the new real estate business line to his responsibilities.

So far, the JMMB has realised one new project in its recently completed Liguanea building. The four-storey facility will house a digital banking operation on the ground floor and the financial institution will lease the remaining floors to other businesses.

“There is a pipeline of projects in place [for] about 80,000 square feet,” Duncan further revealed, adding that the company owns a multi-storey edifice in New Kingston and has plans to renovate another property in downtown Kingston.

JMMB is now awaiting approvals for those two projects, the group’s CEO stated, pointing out that there are more projects still to come.

Challenging environment

The addition of the real estate business line forms part of the financial institution’s strategy of diversifying its revenues by adding new business lines, as the Jamaican operation suffers from falling profit margins due to a low-liquidity, high interest rate environment. In particular, JMMB Jamaica’s commercial and investment banking segments reported lower revenues.

Duncan explained that with the Bank of Jamaica reducing liquidity in the economy using various tools such as treasury bills and certificates of deposits, it has also increased interest rates, making it difficult for JMMB to access new capital while paying out higher interest on fixed-income instruments.

“While interest rates are going up, our cost of funds is increasing, so we have to adjust our cost of funds to meet market rates,” Duncan told shareholders, adding: “We could not adjust at the same pace as Bank of Jamaica because it would impact our clients, so we were very conservative in how we adjusted interest rates.

He added that another challenge JMMB Jamaica faced was a high capital adequacy ratio, when compared to its sister companies in the Dominican Republic, Trinidad and Tobago and Barbados.

“In spite of all of that, JMMB [Group] was able to deliver $11.8 billion in profitability for the year…2023/2024 at an ROE (return on equity) of 25 per cent,” the CEO stated.