Profit growth reversal at JMMB
Published:Wednesday | June 2, 2010 | 12:00 AM
Securities dealer and investment house, Jamaica Money Market Brokers Limited (JMMB), has reported a 10.5 per cent net profit decline for the year ended March to $986 million, showing an about turn on the profit growth momentum it recorded last year.
Profit for the year ended March 2009 had been pumped up by a gain of $2.3 billion on the sale of its 45 per cent equity holding in associated companies, Caribbean Money Market Broker Limited and CMMB Securities Limited in September 2008. This cash inflow had helped to counter the impact of an impairment loss of $3.6 billion on some of its investment portfolio in that year.
The 2010 performance, JMMB said this week, was affected by what the Duncan family-run outfit described as "one-off events" related to financial assets impairment in the previous year, which it noted, were not repeated in the current reporting year.
The 2008 equity sale resulted in more robust results for JMMB in 2009.
For the year just ended, JMMB had reflected quarterly improvements in net profits, with the fourth quarter generating the highest growth of 17.7 per cent.
"After successfully navigating an extremely volatile 2008-9 financial year and notwithstanding the significant challenges of 2009-2010, the JMMB group continued on a sound path," a company statement from marketing manager, Imani Duncan, said.
Net interest income for the year was up at $1.9 billion, an increase the company attributes to the what it termed "strategic realignment of the Group's portfolio through active asset liability management and growth in the balance sheet assets".
For the year assets moved to $122.9 billion, growing by 10.5 per cent when compared to the $111.2 billion recorded in the previous year.
Other revenue segments, however, reflected declines. Largely reflecting an industry-wide trend, fees and commission income plummeted to $73.8 million from $130.6 million for the similar period last year. Fees earned on managing clients' funds as well as foreign exchange margins from cambio trading were down 13.58 per cent and 37.70 per cent respectively. Gains on securities trading, according to the company, " normalised" to $961 million against extraordinary foreign exchange gains of $3.36 billion in the previous year. JMMB said this resulted from a significant devaluation in the Jamaican dollar against its US counterpart in the wake of the global economic crisis.
Prudent expense management
With prudent expense management strategies, JMMB also managed to lower its operating expense 14.1 per cent from $2.455 billion to $2.1 billion over 2008 to 2009.
"This reduction was underpinned by prudent decisions made in the previous financial year to reduce administrative cost through a strategic realignment process," the firm said.
Going forward, JMMB says it intends to continue focus on the diversification of its business line, building out credit solutions with attractive rates and value-added offerings.
So far, JMMB has launched a retirement scheme with funds under management of just over $1 billion. The company has also cut rates on new and existing loans for motor-vehicle, home-equity, personal, education, and business purposes in an effort to drive business in these segments.
In an effort to build business for its insurance brokerage subsidiary, JMMB says it also intends to leverage its client base to offer special discounts in the general insurance.
The brokerage house continues to have a regional presence with operations in the Dominican Republic and Trinidad and Tobago.