JMMB big bump in profits

JMMB reported a big jump in profits from ongoing operations for the first quarter to June this year with profit after tax and due to shareholders of J$753 million and earnings per share of 46 cents for the quarter ending June 2013 compared to $470 million in 2012. The investment bank now looks set to rake in profits of around $2 per share for the year to March 2014, which makes the stock cheap at the last selling price of $8.

Last year, JMMB acquired all the shares of Capital & Credit Group. The 2013 figures are a combination of both entities, unlike 2012 when there was only a few days results included of both. Hence, the comparison with each year’s figures may appear distorted. For the current year, net interest income grew to $1.178 billion from $984 million in 2012. Gains on securities trading jumped more than 100 percent to $674 million from $300 million. Overall, net operating income was up strongly to $2.06 billion from $1.39 billion. Operating expenses also moved up from $837 million to $1.13 billion, a 35 percent increase that is mostly related to the CCFG acquired entities. Last year’s results had a one-off gain of $1.57 billion resulting from the CCFG acquisition, which was a surplus of assets acquired over the purchase price.

Regionally, Dominican Republic contributed J$390.9 million to Group profits. The Trinidad & Tobago based IBL Group, an associated company, contributed a loss of J$25.5 million due mainly to additional provisioning for loans. The Group has already stated that they have agreed to acquire the shares held by the other shareholder in the bank.

Shareholders’ equity stands at $18.7 billion at the end of June and the group has total assets under management of $175.5 billion and increase of $20 billion since last year June, a growth of 14 percent. JMMB has placed focus on lending with loans having increased by 17 percent to $12 billion since March or 69 percent annualised. While loans are a relatively small part of the assets, it could be one of the more profitable areas if lending is done smartly to minimize losses. If growth continues at the current pace, in a few years it could be a major part of the group’s assets and add much to profits. More importantly, when the IBL shares are fully owned the total loans will effective increase sharply over what is being shown now.

For the quarter, banking and related services only contributed revenues of $487 million out of a total revenues of $3.77 billion and profit of only $77 million.

JMMB is a financial conglomerate with the principal activities are securities brokering, securities trading, merchant banking, dealing in money market instruments, operating a foreign exchange cambio and managing funds on behalf of clients.

Insider call | JMMB is an IC Insider Buy Rated stock.