JMMB Group Maintains Solid Performance Despite COVID-19 Pandemic

Regional financial services provider, JMMB Group has reported net profit of J$2.42 billion, for the six-month period ending September 30, which is a 14% dip in its profit, compared to the corresponding prior reporting period. The Group attributes this decline in its profitability to the economic slowdown and uncertainty in the market, as a result of the COVID-19 pandemic, while noting that it remains a solid financial entity, built on a stable foundation. 

In reiterating JMMB Group’s sound financial foundation, chief financial officer, Patrick Ellis shared, “The company’s core earnings remains positive, as evidenced by an 8% growth in the company’s net interest income, totaling J$4.9 billion, as a result of the solid growth in the Group’s loan and investment portfolios. This demonstrates the confidence and value derived by clients, from the financial solutions offered by the JMMB Group.” Additionally, in light of the current economic environment, the Group has ensured effective spread management and implemented a cost containment programme, while prioritizing efficiency related projects and accelerated its digital strategy. 

During the reporting period, earnings from fees and commission income saw a marginal decline of 5% to J$1.5 billion, as lower business activity was partially offset by significant growth in managed funds and collective investment schemes across the Group. While gains on securities traded and foreign exchange earnings showed a corresponding 19% and 30% decrease, totaling J$3.2 billion and J$1.1 billion respectively. This decline in earnings from these revenue streams were largely attributed to the downturn seen in trading activities as the market reacted to the uncertainties brought on by the COVID-19 pandemic and slowdown in economic activities, regionally and globally.

In addition, the share of profits from Sagicor Financial Corporation Limited (SFC) was adversely impacted by the pandemic, resulting in JMMB Group’s share of losses standing at J$106.9 million, for the six-month period. The results was primarily related to its US operations, which had higher Expected Credit Losses (ECLs) and adverse change in the actuarial adjustments due to the pandemic. The Group CFO, however, underscored the long-term value of the transaction as part of the company’s strategic direction to grow through inorganic means. Additionally, the Group also expects the investment will generate income through any dividend distribution which will positively impact cash flow and liquidity. 

The company saw a decrease in its operational expenses by J$246.2 million, to J$7.1 billion, which is a 3% decline, in line with the reduction in business activities and cost containment strategies being implemented by the Group, and as part of the prioritization of its efficiency related projects.

JMMB Group Outlook Remains Positive 
JMMB Group CEO, Keith Duncan, in commending the team for performing ahead of target, said that the company’s performance to date remains credible in the challenging economic environment and expressed optimism about the company’s strategic outlook. This positive outlook was further echoed by regional credit rating CariCRIS who, last month, reaffirmed the overall ‘good creditworthiness’ ratings (jmA/A+), despite the uncertainty of the COVID-19 environment. According to CariCRIS, “despite the negative impact of the coronavirus on economic activity in Jamaica and the wider Caribbean region, the Group’s financial performance will continue to be good over the next 12-15 months …”. This is a positive and significant independent affirmation of JMMB’s performance and strategy.

In sharing about the Group’s strategic direction, Duncan notes, “We are looking to augment our organic growth by realizing acquisition opportunities as we expand into new markets in the short-term, in addition to extending our banking products and services. Our investment business line continues to deliver robust results, as we build out our solution offerings across the Group, through our integrated financial partnership approach. We will, therefore, take advantage of opportunities to raise capital to position ourselves for this future growth, in line with our strategic objectives.”

The Group also remained focused on pursuing other growth opportunities during the pandemic as well as embedding efficiency gains from the use of digital channels. As such, the company has increased focus on digitization and improved operational efficiency, as key imperatives to drive its profitability over this financial year and beyond.

JMMB Group Builds on Solid Financial Foundation
At the end of the reporting period, the JMMB Group’s asset base totaled J$466.84 billion, up J$66.62 billion or 17%, relative to the start of the financial year. This increase is attributable to a larger loan and investment portfolio, as well as a larger liquidity buffer. The credit quality of the loan portfolio continued to be comparable to international standards and the company implemented enhanced monitoring to mitigate against possible deterioration in credit quality. Growth in the asset base over the six-month period was funded by increases in client deposits and repurchase agreements (repos), which increased by J$13.21 billion or 13% and repos by J$37.83 billion or 21%, respectively.

The company has also sought to further strengthen its capital base and further manage its expenses, as such, the Group continues to focus on extracting operational efficiency from all entities. It also remains adequately capitalized, exceeding regulatory capital requirements, with an uptick in shareholders’ equity by 24%, to J$51.10 billion. This was largely on account of the profitability for the quarter and rebound in emerging market bond prices, which resulted in positive movement in the investment revaluation reserve.