Regional integrated financial services provider, the JMMB Group, recorded J$1.97 billion in net profit for the first quarter of the new financial year, ending June 30, 2022, reflecting a marginal two per cent increase in profit year-over-year.
Patrick Ellis, chief financial officer (CFO) at JMMB Group, outlined that the company’s performance remains stable despite the challenging macroeconomic environment, which is characterised by rising inflation, persistent geopolitical uncertainties; supply chain disruptions and increasing interest rates and the resulting reduction in the liquidity in the market.
The CFO noted, “The group’s regional diversification strategy continues to pay dividends, as we have been able to maintain positive earnings in spite of the difficult macroeconomic climate; due largely to the improved performance of the group’s operations in Trinidad and Tobago, whose economy is in recovery mode and has not been affected by interest rate hikes by the central bank. Additionally, operations in the Dominican Republic contributed 25 per cent of operating revenue or J$1.63 billion, underscoring the continued value of that market.”
In reiterating the value of the regional diversification strategy, Keith Duncan, JMMB Group CEO noted, “The group continues to build out this strategy by leveraging inorganic growth opportunities, as evidenced by the recent approval from the Monetary Board of the Dominican Republic for JMMB Holding Company, SRI, and its parent JMMB Group, for merger and acquisition of a commercial bank in the DR, Banco Múltiple Bell Bank SA. The group is also committed to diversifying its income stream by deepening its footprint across the region, so that it can bolster its core earnings in a bid to add shareholder value.”
Additionally, Duncan highlighted the continued value being realised by the company’s 23.33 per cent investment in Sagicor Financial Company (SFC).
“This investment complements the solid foundation that JMMB Group has built as a regional integrated financial provider and underscores the efficacy of the group’s inorganic growth strategy,” he said.
JMMB Group reeled in approximately J$1.26 billion in the share of profit of its associate for the quarter and received J$602.66 million in dividends.
In detailing the performance of JMMB Group’s core earnings, Ellis shared that although rising interest rates have negatively impacted gains on securities trading, there was commendable growth seen in net interest income, foreign exchange trading, income from capital markets transactions and fees and commission income – largely from collective investment schemes, as clients continue to demonstrate confidence in the solutions and the company’s expertise.
Net interest income grew by two per cent year-over-year, moving from J$2.86 billion to J$2.91 billion. Trading gains fell by 58 per cent to J$1.03 billion, as a result of the higher interest rate environment which saw investors responding by de-risking, thereby in reducing demand for emerging market assets.
Consequently, asset prices fell and trading activity was reduced. While rising interest rates have negatively impacted gains on securities trading, the JMMB Group has recorded positive growth in fees and commission which income grew by 75 per cent over the corresponding period, to J$1.67 billion.
This was mainly driven by increased economic activity, as well as significant growth in managed funds, collective investment schemes and capital market activities across the group. Foreign exchange gains also increased from J$583.17 million to J$883.20 million, which reflects a 51 per cent growth in earnings over the comparative period.
Asset base growth & capital adequacy maintained
At the end of the first quarter of 2022/23 financial year, the JMMB Group’s asset base stood at J$624.89 billion, up two per cent relative to the start of the financial year.
This was driven by the seven per cent growth in the loans portfolio; even as the company maintains a solid credit quality in line with international standards and mitigates against possible deterioration in credit quality.
Over the three-month period, shareholders’ equity decreased by 10 per cent to J$50.67 billion, due to the decline in investment revaluation reserve. During the current reporting period, bond prices and by extension investment revaluation reserve continued to be negatively impacted by rising interest rates, increased global uncertainty, rising commodity prices as well as supply chain disruptions.
The group remains adequately capitalised and all individually regulated companies within the JMMB Group continue to exceed regulatory capital requirements.
As the group pursues its business growth path, it saw an increase in its operational expenses, from J$4.72 billion to J$5.32 billion, over the corresponding period. This was largely driven by long-term project-related activities to support the strategic position of the group, improve operational efficiency and contribute to long-term shareholder value, in addition to inflationary increases.
JMMB Group: Looking to geographic, business-line diversification for further growth
Keith Duncan, sharing the strategic outlook of the group, outlined, “As we seek to execute our strategic imperatives to ensure that we continue to maximize shareholder value, the group will focus on strategic revenue diversification, strong capital management, and growing core activities in key business lines.”
“We are looking to Trinidad and Tobago, to leverage more opportunities as the operating environment is currently more accommodative to growth. Additionally, as clients seek to identify financial solutions to meet their needs and achieve their goals in the changing macroeconomic environment, we will seek to further build out our suite of fund management solutions with new unit trust and mutual funds, subject to regulatory approval,” he explained further.
The JMMB Group head honcho also shared that increased strategic focus will be placed on capital efficient growth from lending, as well as opportunistic growth in the investment portfolio, as a result of the high-interest rate environment.
The group is also looking to further expand its payment services to include niche card solutions and other e-commerce solutions in the upcoming quarters, to complement its existing e-payment card that marked the group’s entry into the fintech space with the launch of this card in February 2022. These solutions are expected to better meet the needs of small- and medium-sized businesses and will complement the group’s current offerings and further generate core revenue.
With this, the group expects to continue to deliver solid results and value to stakeholders for the remainder of the financial year, even as it actively explores and further capitalises on opportunities for future growth through acquisitions across the region.