August 17, 2020
JMMB Group Limited – (JMMBGL) for the three months ended June 30, 2020 booked Net interest income of $2.42 billion compared to $2.20 billion booked June 2019, an increase of 10%. Of this, Interest income grew by 19% to close at $5.46 billion, from the $4.60 billion booked in 2019, while interest expenses increased by 26% to total $3.04 billion relative to $2.40 billion in the prior year.
Fees and commission income for the quarter amounted to $720.20 million a reduction of 2% from the $736.67 million recorded last year’s corresponding period. According to JMMBGL, “business activity was muted, there was significant growth in managed funds and collective investment schemes across the Group”. Foreign exchange margins from cambio trading recorded a decrease of 29% year over year to close the quarter at $527.79 million (2019: $744,67 million), while net gains from securities trading showed a decrease of 39% totalling $1.31 billion (2019: $2.16 billion). However, dividend income for the three months surged 265% to close at $18.23 million relative to $5.00 million in 2019’s first quarter.
As a result, operating revenue net of interest expense amounted to $5.00 million (2019: $5.84 million), the Company noted, “while this represented a 14% decline when compared to the prior period, the operating environment was markedly different given the pandemic. In the prior period, market sentiment was bullish and we successfully identified and capitalized on trading activities. Nevertheless, our clients continued to demonstrate confidence in the value of products and services which was evidenced by strong growth in the loan and investment portfolios. This coupled with effective spread management resulted in a 10% growth in net interest income which moved from J$2.20 billion in the prior period to J$2.42 billion in the period under review.”
The Company recorded an impairment loss on financial assets of $169.37 million compared to $153.27 million for the same quarter of 2019.
Operating expenses amounted to $3.71 billion (2019: $3.84 billion), a decline of 3% year over year. This led to an operating profit of $1.12 billion, a decline of 39% when compared to the $1.85 billion booked twelve months earlier.
Notably, other income declined 42% to $59,000 relative to $102,000 million recorded the prior first quarter. Share of loss of associated company amounted to $8.95 million (2019: nil). Management noted, “this was primarily related to higher expected Credit losses (ECLs) due to the pandemic as well as an internal reinsurance transaction that resulted in a strengthening of the reserves. However, “we are confident that this position will soon return to profitability and materially contribute to shareholders’ value in a positive manner.” As such, pre-tax profit amounted to $1.11 million (2019: $1.85 billion).
Following taxes of $328.51 million (2019: $727.78 million), JMMBGL booked a 30% decrease in net profit to $780.21 million compared to $1.12 billion reported for the similar period of 2019.
Net profit attributable to the shareholders of the company totalled $769.32 million relative to $1.11 billion in 2019, a 31% reduction year over year. Total comprehensive income for the quarter amounted to $5.73 billion (2019: $2.73 billion).
As a result, earnings per share (EPS) for the three months amounted to $0.39 (2019: $0.57). The twelve-month trailing EPS amounted to $3.40 where the number of shares used in the calculations amounted to 1,955,552,532 units. Notably, JMMBGL’s stock price closed trading on August 14, 2020 at $30.27.
JMMB stated, “Given the uncertainty surrounding the pandemic, we shifted our focus to safeguarding the needs of our clients as well as our team members. As a result, we implemented a very rigorous sanitization routine and other necessary protocols to ensure that our valued clients and team members could feel and transact safely. There was also an increased focus on convenience whereby we encouraged our clients to use our Moneyline platform. This resulted in strong growth in new users and increased usage from existing users. Further, the pandemic served as a catalyst for the expansion of our digital footprint as during the quarter we launched Real Time Equity Trading. This furnishes our clients with added capability of executing equity transactions in real time with the Jamaican Stock Exchange. We continued to support our clients by means of timely and sound financial advice as they navigate a period of heightened uncertainty. This was largely through our digital marketing initiatives as we remained in our client’s world, albeit virtually. Client loyalty remained high during the period and was evidenced by strong growth in our clients’ funds under management.”
Balance Sheet at a glance:
Total assets as at June 30, 2020 amounted to $431.80 billion relative to $351.39 billion in 2019. According to JMMBGL, “This was mainly on account of a larger loan and investment portfolio as well as a larger liquidity buffer. Investment portfolio and loans and notes receivable grew by 8% and 3% to J$213.84 billion and J$101.61 billion, respectively. The credit quality of the loan portfolio continued to be comparable to international standards and we implemented enhanced monitoring to mitigate against possible deterioration in credit quality. Growth in the asset base over the three-month period was funded by increases in customer deposits and repos. Customer deposits increased by J$4.72 billion or 5% to J$108.90 billion, while repos grew by J$19.65 billion or 11% to J$199.24 billion.”
Shareholders’ equity totalled $45.96 billion (2019: $32.79 billion). As a result, book value per share stood at $23.50 (2019: $16.77).
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