Earnings from Sagicor Financial puts JMMB in the black, group looks to greater diversification

 

 

JMMB Group for the nine-month period ending December 31, 2024, reported net profit of J$1.83 billion.

The group's strategic investment in Sagicor Financial Company (SFC) continues to be accretive to JMMB, contributing J$1.76 billion to share of profit for the nine-month ending December 31, 2024.

Back in December 2018, JMMB acquired a 22.5 percent stake in Sagicor Financial secured through the acquisition of 33,213,764 common shares for the equivalent of US$250,000,000.

JMMB, meanwhile, continues to look to diversification as a way out of the challenges posed by tight monetary policy in the Caribbean and the United States.

In 2024 the Group entered into a strategic joint venture partnership with Liberty Latin America parents of FLOW Jamaica, to create a digital microfinance lending company- MyneLend Jamaica Limited of which it has 50 per cent ownership.

On August 12, 2024, the entity received its microcredit license from the Bank of Jamaica and is now currently serving a closed group of FLOW clients providing digital micro lending solutions.

JMMB meanwhile has made upfront investments in the lending company for its operational, technical, administrative and infrastructural set up.

Management said, “Post this start-up phase, the entity is expected to efficiently scale its operations as it grows and provide accretive returns to its shareholders over time.”

The Group has reflected a loss of approximately J$114.7 million arising from this startup of operations.

For the first six months of the financial year, JMMB Group reported operating loss of J$570 million, there was a rebound in the third quarter resulting in year-to-date operating profit of J$379 million.

Additionally, Q2 net profit improved by 164 per cent from J$696 million to J$1.83 billion in Q3 year to date (YTD).

Tight monetary policy

Management notes that the JMMB Jamaica operation, which was significantly impacted by the tight monetary policy, continues to execute strategies to drive core revenues and increase efficiency.

Jamaica’s contribution to net operating revenue increasing by 12 per cent as well as 48 per cent improvement in operating profit.

The Dominican Republic and Trinidad and Tobago operations produced 19 per cent and 29 per cent of net operating revenues respectively.

Globally, there has been easing of monetary policy with the lowering of policy rates in Jamaica and the Dominican Republic.

The Group notes that despite the recent reduction in interest rates, rates remain elevated as the US Federal Reserve held its policy rate at its recent sitting in January 2025.

“This policy decision could see the Central Banks in the Dominican Republic and Jamaica who have been reducing policy rates possibly holding their policy rates especially with the uncertainty created within the global economy. Therefore, the expected path of reduction in interest rates are on hold and could continue to keep interest rates at these elevated levels which could continue to compress net interest margins.”

Management concluded, “The JMMB Group will continue to diversify and grow its business and revenue lines and work towards a more resilient earnings profile in tandem with active cost management to increase operational efficiency, productivity, and profitability.

The Group posted net operating revenue of J$18.13 billion for the nine months ended December 31, 2024, reflecting a decline of 4 per cent when compared to the corresponding period in the previous year.

Management stated, “The operating environment continued to be challenging especially as it relates to global interest rates which continued to be sustained at elevated levels. Thus, interest margins remained under pressure and trading activities continued to be adversely affected.”

Net interest income increased by 6 per cent to J$8.13 billion. Also, FX trading gains increased by 7 per cent to J$2.18 billion.

However, fixed income trading gains were lower by 28 per cent at J$3.58 billion. Also, fees and commission income was flat at J$3.89 billion.

Loan growth was robust. The Banking and Related Services segment contributed J$12.29 billion, up 16 per cent and representing 68 per cent of operating revenue.

The Financial and Related Services segment contributed J$5.34 billion or 29 per cent of net operating revenue and reflected a decline of 33 per cent compared to prior period, affected by elevated interest rates and reduced appetite for emerging markets assets.

The investment portfolio increased by 2 per cent to J$326.93 billion.

Liabilities grew by 5 per cent to J$649.32 billion. Customer deposits rose by 10 per cent to J$219.65 billion. Over the nine-month period, shareholders’ equity increased by 2 per cent to J$55.43 billion.

Photo: Keith Duncan, Group CEO JMMB

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