Thu | Aug 24, 2017

NCB Capital Market hits record growth, eyes regional markets

Published:Friday | March 10, 2017 | 3:00 AM
Steven Gooden

NCB Capital Markets (NCBCM) recently announced record growth in its wealth-management portfolio and its unit-trust product, CapFunds, the fastest growing unit-trust investment in Jamaica.

According to Steven Gooden, CEO, NCBCM, has seen strong growth in its wealth management portfolio over the past five years, contributing to some 22 per cent of its overall operating profits, which is the highest of all of its business lines.

The portfolio further added some J$5.2B to operating profits in 2016 and J$877M to attendant fee income in the same year. This was up from $193M in 2012. Additionally, the NCBCM's CapFunds, despite investing primarily in equities, experienced the fastest growth rate compared with its local counterparts.

 

Product development

 

He further explained that NCBCM's strategic priorities will focus on product development as a means of rolling out new wealth-management service to include additional unit trust portfolios, CAPLoans, which are secured by unit trust investments, as well as structured product offerings with higher risk-reward profiles.

To support this strategy and accelerate its regional expansion, NCBCM has also made efforts to establish its wealth-management portfolio as a hub in the Cayman Islands. Operations have also been launched in Barbados to service clients in the Eastern Caribbean, while new lines of business have been added in Trinidad. NCBCM is now seeking a licence to begin operations in the Dominican Republic, which has been cited as one of the region's fastest-growing economies.

Meanwhile Herbert Hall, vice-president, investment banking indicated that the best pathway to growing capital markets across the Caribbean is through deepening and mobilising the expansion of investment funds. This, he said, may be because of structured financial transactions that facilitate lower cost of capital for corporations, and in doing so, improve the growth prospects of economies across the region.

 

Challenges

 

However, there are challenges to achieving this, including funding that is driven primarily by deposit-taking institution banks rather than by the use of specially structured bonds, equities and quasi-equity in the private placement or initial public offerings (IPO) space of financial markets.

"The large number of family-owned small and medium-sized enterprises that are reluctant to share financial details on their companies and prefer to access loans from banks is another hindrance. In addition, a high need for debt financing by the region's governments makes it more difficult for the private sector to access funding as there is a preference for holding government debt that theoretically is considered less risky," Hall said.