JMMB Bank delivers third solid year of profits

JMMB Bank delivers third solid year of profits

Stands behind clients first especially during the COVID-19 period

BY DAVID ROSE

Wednesday, August 12, 2020

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Following the transition from a merchant bank to a commercial bank in 2017, JMMB Bank has set the stage to improve the banking experience for customers as seen through the disbursement of $28 billion in loans for their financial year (FY) ending March 31, 2020.

JMMB Bank has managed to grow its net profit from $636.6 million in 2018 to currently $1.12 billion and asset base from $46 billion to now $84 billion within the last three years, in an already competitive space. A major part of this transformation has come from the group's ability to offer enhanced service delivery to clients as a commercial bank.

For the 2019/ 2020 FY, net interest income grew by 27 per cent to $2.72 billion with total operating income climbing by 17 per cent to $4.63 billion. Apart from a decline on one-off sales of investments, which is based on management's decision to focus more on core banking income; fee income, foreign exchange trading gains and other income all increased over the prior FY.

Non-interest expenses rose by 27 per cent to $3.2 billion primarily as a result of increased staff costs and impairment losses on financial assets with the latter being driven more due to IFRS 9 provisions which require more forward-looking estimations to be taken for loan loss provisions.

Also a higher income and asset tax drove down profits by two per cent from the record $1.14 billion set in the prior FY.

Total assets for the bank grew by 48 per cent to $84 billion with investments in securities and loans and notes receivable standing at $10.39 billion and $50.17 billion, respectively.

Although loans to all segments grew, loans to personal customers grew by more than 55 per cent to the tune of $9.6 billion, while construction and real estate loans grew by more than 100 per cent, growth is at $3.4 billion.

Total liabilities increased by 53 per cent to $73 billion with deposits at $67 billion making up the majority of balance sheet item. This represents a major rise from the $31 billion in deposits for the 2018 FY in their initial year as a commercial bank.

JMMB Bank's Chief Executive Officer (CEO) Jerome Smalling credited the bank's success to their strategy of expanding their sales team and working to make financing more accessible for customers and businesses.

“Our strategy was crafted towards supporting personal and business loans equally with a greater focus on small and medium-sized enterprise (SME) businesses,” Smalling said.

“We launched our SME resource centre to primarily support clients to access throughout their business life cycles and to put the necessary structures and processes in place to access capital for bank loans, equity financing and other alternative sources of financing. Informing clients on how to formalise their business was a critical part in ensuring that more of them were able to become more regularised and structured in doing business, which I believe has played a role in SMEs being able to access financing in a more seamless way.

“We crafted and deployed a new method for adjudicating loans to SMEs based on Jamaica's situation. We looked at unique products such as factoring, receivables financing and supply chain financing. By utilising more of these solutions, we were able to free up more cash flow for players in the segment,” Smalling said.

EXPANSION STILL ON THE CARDS

Smalling offered that for the remainder of the year, JMMB Bank will be focused on supporting their clients, protecting capital and managing liquidity in this uncertain environment.

“We have already waived the real-time gross settlement (RTGS) charges for online transactions and extended moratoriums to clients who were impacted by the effects of COVID-19.

“JMMB strongly values our clients and being able to satisfy their needs. We believe alternate channels provide additional value, but we aren't penalising anyone for choosing a traditional channel.”

Fee income made up less than eight per cent of JMMB Bank's total income for the most recent financial year which was well below the industry standard.

As a part of increasing their product suite, JMMB Bank launched its Visa debit card in January to clients across the overall group.

“A Visa card allows you to shop internationally and even on sites like Amazon which accept Visa. The card has a chip and pin with a touchless enabled feature which allows you to conduct transactions at point of sale (POS) terminals without having to physically swipe the card.”

When asked about the bank's planned branch expansion and digital plans during COVID-19, Smalling said: “We were considering deploying two additional branches, but we're waiting out this period to see how we should proceed. We still believe there is a place for branch banking and looking strategically for branch locations. We want to let our clients choose how to bank and are working on the digital network to make it more convenient for them. Currently, the process for opening an additional account for existing accounts is online with our Moneyline platform sign up being a seamless process.”

The bank is rolling out smart ATM's by the end of this calendar year that will immediately credit accounts for cash deposited through the ATM, he said.

“Credit card and POS terminals are still on the table from the group level, but might be released in the following FY due to the COVID-19 situation. This is a part of our digital strategy to make ourselves more accessible to our clients. JMMB Bank remains sufficiently capitalised above the required regulatory ratios and received a capital infusion from the group during the year to bolster our capital base,” Smalling said.


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