Commercial bank launch bites into JMMB profit
JMMB group said an 18 per cent decline in its net profit to $1.67 billion for the second quarter ended September 30, down from $2.03 billion during the corresponding period last year, was as a result of the buildout of new services.
In addition to the roll-out of the group's integrated financial services business model, marked by the launch of its commercial banking operations in Jamaica, there were also higher costs which, it said, were attached to the introduction of its pensions fund management business, JMMB Administradora de Fondos de Pensiones (JMMB AFP), in the Dominican Republic.
For the second quarter, net profit fell to $1.05 billion on operating revenue of $4 billion, compared to $1.34 billion in net profit on operating revenue of $4.27 billion for the similar period in 2016.
Keith Duncan, JMMB Group CEO, said in a release on the performance that with the buildout of its commercial banking network/ financial life goals centre, "the group is better poised to leverage the new efficiencies and synergies from the addition of these two new business lines, while also offering a full suite of financial solutions that
will help individuals and businesses to achieve their goals".
The group posted a five percent increase in operating revenue of $8.13 billion for the half-year, but costs associated with the roll-outs drove a 15 per cent increase over the prior year in the group's operating expenses, ending the reporting period at J$5.83 billion.
Earnings per stock unit of $1.03 was down by $0.21.
The group outlined that higher spend included upgrades to JMMB Merchant Bank's operations, and infrastructure, and enhancements to the bank's technology platform.
It said those are "expected to improve operational efficiency and allow for a seamless integration with the rest of the JMMB Group, in keeping with the financial life goals centre approach".
The group said that since JMMB Bank began operations it has added demand accounts - both savings and chequing - expanded its loan solutions to include home loans with longer tenures and a suite of offerings tailored to small and medium-size entities, in addition to upgrading its online banking platform.
"The expansion of the bank's suite of offering is expected to attract a broader cross section of clients while also providing the group with the opportunity to offer a complete suite of financial solutions to assist individuals and businesses to achieve their goals," JMMB said.
"In the Dominican Republic, the introduction of JMMB AFP enables JMMB to tap the retirement planning and savings market, as individuals take advantage of the competitive landscape," it added.
Net interest income for the reporting period stood at $3.76 billion, reflecting growth of 15 per cent or $499.6 million. Fees and commission income saw an uptick of 44 per cent or $791.1 million. However, there was a decline in net gains on securities trading and net foreign exchange trading, which totalled $3.01 billion or $179.3 million lower than the corresponding period last year.
The group's assets for the period amounted to $275.58 billion, up 10 per cent or $24.03 billion compared to the end of March 2017, with higher cash holdings and larger loans and investment portfolios.
Cash at the end of the six-month period was $31.6 billion, compared to $25 billion for the similar period last year.
The group indicated that growth in its asset base was funded by clients' deposit and repurchase agreements, which increased by $2.11 billion and $173.7 billion, respectively.