Jamaica Money Market Brokers (JMMB) reported continued strong growth in profits attributable to shareholders in the September quarter of $697 million or a 24 percent increase over the September quarter last year.
The performance is even better than first appearance as there was a gain relating to the acquisition of Capital & Credit Group of $117 million in the September 2012 quarter. Without this gain, profits for this year’s quarter would have been up by 56 percent. This comes against the background of 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 $753 million. Earnings for the six months hit $1.45 billion compared to $2.5 billion. The latter includes the booking of the difference between the purchase price and net asset of Capital & Credit Group, which was acquired in the June quarter 2012 amounting to $1.6 billion; excluding this item, profits would be up an impressive 59 percent.
Earnings per share of 43 cents for the latest quarter is up to 89 cents for the six months. The investment bank continues on track 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. However, this depends on a number of factors, the most of which is the level of investments and foreign exchange gains they are likely to book in the next two quarters.
Net Interest | For the September quarter, net interest income grew slightly to $1.23 billion from $1.196 billion in 2012 and from $1.178 billion in the 2013 June quarter. For the year to September, net interest income is up to $2.4 billion from $2.18 billion in 2012. Gains on securities trading almost doubled to $646 million from $333 million for the quarter compared with 2012 and from $633 million in 2012 to $1.3 billion in 2013. Net operating income was up strongly to $2.09 billion in the quarter from $1.7 billion in 2012 and for the six months $4.16 billion versus $3.1 billion in 2012. Operating expenses remained fairly stable at $1.2 billion in the latest quarter compared with to $1.13 billion in the first quarter and $1.1 in the 2012 September quarter. Year to date expenses climbed to $2.34 billion from $1.88 billion in 2012.
Regionally, Dominican Republic contributed J$754.6 million to the Group, driven mainly by growth in Net Interest Income and gains on securities trading compared to J$390.9 million in the first quarter. The Trinidad & Tobago based IBL Group, an associated company, contributed a loss of $$24.3 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.
Financial Strength | Shareholders’ equity declined from $18.7 billion at the end of June to $16.5 billion at the end of September as a result of a fall in the value of investments. The group’s total assets under management fell to $172.4 billion at the end of September versus $175 billion at the end of June. Loans having increased by 17 percent to $12 billion to June, contracted slightly in September to $11.7 billion. Loans are a relatively small part of the asset base but could be one of the more profitable and fastest growing areas of its operations if lending is done smartly to minimize losses. Importantly, the full ownership of IBL will increase loans sharply when the group reports results for the December quarter.
JMMB is a financial conglomerate with the principal activities being securities brokering, securities trading, commercial and merchant banking, dealing in money market instruments, operating foreign exchange cambio and managing funds on behalf of clients.
JMMB is an IC Insider Buy Rated stock.
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