More Dough for Dealers: revenue climbs, FUM increases to $1.8 trillion at June

 



Retail investors have increasingly diversified their portfolios to include short- to medium-term debt instruments with brokers responding with new product rollouts.

The investors have opted in many cases for fixed rate, secured debt. Brokers in the market have found good take up for secured bonds, especially for publicly tradable fixed-rate debt instruments.

According to the Financial Services Commission (FSC) From June 2023 to June 2024, there was an uptick in issuance of exempt distribution debt instruments and significant increase in the value amounts for JMD. The trend crested in March quarter 2024 with 50 new instruments issued.

At June 2024 outstanding XD instruments were primarily debt and denominated in local currency. The FSC said that it expected that as short-term interest rates decline, demand for XD debt instruments 
may slow down as the potential for earning higher investment returns diminish.

Overall, at June 2024 profitability increased for local brokerage houses, as reported by the FSC up to June 2024, which is the most recent reporting period available.

Local brokers reported to the Commission a net profit of $2.65 billion generated in the June 2024 quarter, reflecting an $860 million increase quarter over quarter. For the 26 companies reported on whose primary activity is dealing in securities, this net income resulted in a return on equity of 3.81 per cent for the quarter ended June 2024 compared to 2.67 per cent for the corresponding period last year

The combined total balance sheet assets as at the June 30, 2024, stood at $956.60 billion, a 0.18 per cent increase when compared to the previous quarter as at March 2024, where assets amounted to $954.85 billion.

A year over year comparison showed an improvement of 5.16 per cent where total assets grew from
$909.69 billion as at June 30, 2023. Aggregate funds under management (FUM) were approximately
$1,846.57 billion as at June 30, 2024, representing a $17.74 billion or 0.97 per cent increase over the previous quarter.

The year-over-year (y-o-y) comparison saw a 9.14 per cent growth in FUM from the amount seen as at June 30, 2023, arising from growth recorded primarily in balance sheet positions.

The aggregate balance sheet capital at the end of the reporting period was $145.01 billion, a marginal increase of 0.24 per cent from the $144.66 billion reported for the March 2024 quarter. On a y-o-y basis, there was a 3.97 per cent increase in the total balance sheet capital for securities dealers.

For the June 2024 period, there was an approximate $9.82 billion or 29.13 per cent y-o-y increase and an approximate $20.43 billion or 88.43 per cent from the previous quarter (March 2024) in combined total revenues (comprising of interest income and other income).

This was primarily driven by domestic and foreign interest-bearing investments coupled with securities purchased under repurchase agreements and income from loans, advances and discounts. Service charges, transaction fees, and commissions further contributed to the increase.

Cumulative total expenses increased by 32.39 per cent over the year, whereas 91.81 per cent over the previous quarter. The y-o-y movement was primarily driven by interest expenses on repo liabilities, borrowings, staff expenses, and other operating costs.

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