Hayden-Cater looks to Jamaicans overseas as source of new business
Although JN Bank Limited is a new kid on the block in commercial banking, it comes to the market with decades of history as the premier private mortgage lender and aims to leverage that business into market share in its new zone of operation, but it also has to be thinking about how to sell other loan products to close the gap with its new rivals.
In its former life as Jamaica National Building Society, the institution had built up business in places like the United Kingdom and North America by tapping into the Jamaican communities there.
JN Bank's managing director, Maureen Hayden-Cater, plans to focus on those markets in order to drive up business both for savings products and loans.
"We hope to increase our disbursement of non-mortgage loans and widen our share of mortgages," Hayden-Cater said.
When JN transitioned from a building society to a commercial bank in February, it brought with it a loan book of $75 billion.
"The bank continues to enjoy the largest portion of the market share with close to 50 per cent of private mortgages done by JN Bank," said Hayden-Cater.
Still, within the commercial banking sector, its share of the overall loan market is just around 12 per cent. But the bank is not saying what targets it is aiming for, either for loans or deposits, noting instead that its focus is 'optimal service and customer satisfaction' as the best long-term strategy to build market share.
At the JN Bank's financial year ending March, it reported net interest income of $7.14 billion and profit of $479 million. Those numbers reflected improvements at both the top and bottom lines over FY2016 when the bank's net interest income amounted to $6.7 billion and profit at $306 million.
JN Bank entered the market as the No. 3 commercial banking operation by assets, $162 billion, but it sits a distant third behind National Commercial Bank's $459 billion and Scotiabank Jamaica's $329 billion, according to banking industry data for the March quarter published by Bank of Jamaica.
Hayden-Cater said JN Bank is now seeking opportunities to grow its overall share in the commercial banking arena "by offering products that provide easier access to credit and encourage Jamaicans to dip into their savings only for investment, as well as maintain a primary relationship with JN Bank".
One target comprises Jamaicans in the diaspora, who, the bank head noted already represent a significant portion of the mortgages disbursed by JN Bank. Another is corporate lending, including to SMEs who might need working capital and inventory financing.
Specially targeted products
The bank also came to the market with a captive client base of savers, who migrated with the building society's assets. The deposit gap with its big rivals remains substantial, but not as wide as with loans. JN Bank has $109 billion of deposits under management, while NCB has $253 billion and Scotiabank $243 billion, according to the industry data produced by the central bank.
"We continue to look at ways to further strengthen overall investment from the diaspora in Jamaica through specially targeted products, such as the JN Bank Diaspora Certificate of Deposit, which offers Jamaicans an opportunity to earn attractive rates of interest on their investment and an opportunity to invest a portion of the yield in the development of social enterprises in the Social Enterprise Boost Initiative project," said Hayden-Cater.
"The bank also carefully manages relationships and implements strategies to grow investment from the diaspora through its JN Bank representative offices in London and Birmingham in the United Kingdom; Tamarac, Florida in the United States of America; and Toronto, Canada," she told the Financial Gleaner.
To back up her take on the promise that overseas communities hold for new business, Hayden-Cater cited a study by think tank CaPRI showing that the diaspora already contributes 23 per cent to Jamaica's GDP and has the potential to contribute up to 35 per cent; and another study done by InfoDev for the World Bank showing a quarter of Jamaicans in the diaspora have investable wealth or annual earnings of US$100,000 or more.
"More than 70 per cent are interested in investing in start-ups and small and medium-sized enterprises, and 63 per cent are also interested in diaspora bonds. Therefore, there is a lot of opportunity for more Jamaicans overseas to invest in the country," the banker said.
JN is also pushing its VISA credit cards, which Hayden-Cater notes "have had a fair rate of take-up" since their introduction in May 2016.
Since January, JN Bank's card distribution grew 70 per cent, and activation 48 per cent, she said.
The cards charge interest of 35 per cent, and "are the only credit cards on the market with an interest rate below 40 per cent," said Hayden-Cater.
JN Bank is the largest member of JN Financial Group Limited, contributing 78 per cent to the group's total assets, valued at $200 billion. The ultimate parent company is Jamaica National Group Limited.
JN Bank itself has one subsidiary, JN Cayman Limited, a mortgage-lending company that also provides other financial services. The bank also has a 20 per cent stake in associate company JN Money Services Cayman.