Nov 2009 Financial News

JMMB moves to shore up regional operations. Local firm to acquire 80% of Domincan Republic savings and loans

Nov 18, 2009

Jamaica Money Market Brokers Limited (JMMB) plans to acquire the majority share in Dominican Republic savings and loan company, Corporacion de Credito America (CCA) SA, for US$1.2 million ($107 million) to shore up its overseas operations, even while a turn in fortune has placed its operations in other markets in a loss position during the three months to September 30, 2009.

According to JMMB's most recent financial statements, its business operations in St Lucia incurred an operating loss of $79 million during the September 2009 quarter compared to an operating profit of $138 million during the comparative period last year.

JMMB's operation in other markets saw an operating loss of $4 million during the quarter compared to a $2- million profit in the comparative period last year.

"As a range of other financial institutions have done in response to the international economic environment in making prudent decisions, we employed a strategy of reducing our investment portfolio in certain areas until the markets settles or shows sustained signs of stability," JMMB group CEO, Keith Duncan said of the St Lucia operations. "As prices have been depressed with regards to some asset classes, this affects the performance of those portfolios."

"As has been the case over our growth path for the past 17 years, regional diversification has served our stockholders well. National economies go through different cycles, thus providing JMMB opportunity for sustained growth from different revenue sources. This strategic initiative represents real opportunity for further income diversification over the medium-term," he continued.

JMMB already has a brokerage house in Dominican Republic - JMMB BDI America, which was established two years ago in the Dominican Republic.

"We have chosen to pursue this acquisition as it complements our regional diversification strategy as we seek to more effectively fulfill the financial needs of the local market in the Dominican Republic," JMMB group CEO, Keith Duncan of the move to acquire 80 per cent of the company at a cost of US$1.2 million. "Accordingly, as we have completed negotiations, we have submitted an application for regulatory approval and expect a response within five months."

CCA, SA is a registered savings and loans institution and investment holding and management firm.

Duncan noted, however, that regional diversification has accounted for growth in other areas. The Jamaican operations reflected an increased of 23 per cent in gross external revenues from $5.1 billion to $6.6 billion over the period.

"Of course with our diversified business model (investments, loans, pensions, insurance, cambio etc) with a regional footprint, the core operations in Jamaica and the Dominican Republic continue to generate significant growth in terms of client base and total assets. This, coupled with a marked reduction in administrative expenses of 14.5 per cent, has led to overall greater efficiencies in the business."

JMMB's core operations in Jamaica also saw its profit position improve.

Operating profit was reported to be $277 million for the three months to September 30, 2009, which was considerably lower than the $2.24 billion reported for the comparative period last year.

But last year's profit included $2.33 billion in gains from the sale of its 40 per cent stake in Caribbean Money Market Brokers (CMMB).

After impairment losses were accounted for during the September quarter last year, JMMB's pre-tax profit, which at the time included share of profit from CMMB, was $687 million compared to $205 million for the comparative period this year.

Even then, JMMB's core profit, as reflected by its operating profit grew from $51 million to $194 million during the period under review.

During the review quarter, the group's net interest income rose 8.5 per cent, or $46 million, from $499 million in the comparative period last year to $545 million following on the reduction in interest rates by the Bank of Jamaica which resulted in a repricing of the Group's portfolio and a consequent appreciation in net interest income for the second quarter.


Source:
Alicia Roache
Business Observer reporter
roachea@jamaicaobserver.com
Jamaica Observer
Wednesday, November 18, 2009

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