Regional finance house JMMB will be making a greater push into the productive sector as inflation and rising interest rates impact investment income of all players in the financial sector.

For the nine-month period ended December 31, 2022, JMMB made a net profit of J$4.8 billion while it’s expense increased by J$6 billion. Net interest income was reduced year-over-year by six per cent. That profit figure was impacted by the high interest rate environment that still pertains.

JMMB’s capital markets division was a source of good news, contributing J$770 million up 44 per cent.

Gains On Securities Trading (GOST) was down year-over-year by around J$3.7 billion. In this high interest rate regime, the fair value of those assets would be impacted.

“This is significant because when you take our net interest income and our GOST on our business line that accounts for about 70 per cent of our revenue. The diversification strategy of JMMB still allowed us to post operating revenue of J$18.9 billion. While down 14 per cent, it is still a strong number. Our operating profit came in at J$4.2 billion.

“In a high interest rate environment, the liability side of your portfolio ( cost of funds, repo liability) would have increased faster than on the asset side of the balance sheet and as a result of that, you would have seen the reduction of net interest income,” said JMMB Group CFO Patrick Ellis.

Speaking at JMMB’ s press briefing, Group CEO Keith Duncan said: “We will continue to pivot with our diversification and the productive sector is very important to us. The SMEs account for 60 per cent of GDP and 60 to 80 per cent of the employment in Jamaica. This is a sector we see as critical to Jamaica’s continued growth and innovation.”

Duncan added: “We would like to see SMEs grow into large enterprises in the same way JMMB started as a small enterprise and grew into a large multi-regional corporate entity. We would like to support other SMEs in their growth strategies by offering them financial services across the business lines -banking, investments, pensions, payments. They need the solutions to grow.

“It is a key segment for us as we continue to grow and maintain our relationships with our corporate clients also. We offer integrated solutions taking a segment approach where we offer them not just one solution. We don’t operate with a siloed approach but from a total segment approach, for example whether it is corporate, retail or SMEs, we deliver integrated financial solutions which draws from the various business lines based on the needs of the individuals and businesses. We look to meet their needs helping them to grow and create value.”

CROWDING OUT OF PRODUCRTIVE SECTOR BEING FURTHER REDUCED

The JMMB boss stressed the productive sector is where JMMB wants to be, again making it clear that is where Jamaica is going as it reduces its debt to GDP ratios. It is projected to reach just under 80 per cent by the end of this year. This will be an incredible performance which sees Jamaica reducing its debilitating ratio by half in 10 years.

Duncan points out that the crowding out of the productive sector which characterised Jamaica for decades is being further reduced which sees the country dwelling in the world of the private sector, private businesses, hence JMMB positioning to meet those needs.