Even against the backdrop of a pandemic, which has derailed the performance of several financial companies, JMMB Group Limited (JMMBGL) saw its total operating income peak at $22.62 billion.

Net profit attributable to shareholders rose by 7 per cent to $7.51 billion for its financial year (FY) ending March 31, 2021.

The financial conglomerate, which has operations in Trinidad and Tobago and the Dominican Republic (DR) plus its home territory of Jamaica, saw its consolidated net interest income climb by 13 per cent to $10.46 billion.

The group’s core local entity Jamaica Money Market Brokers Limited (JMMB) saw a slight decrease in net interest income to $2.36 billion due to higher interest expenses. Apart from the gains on securities trading, management fees, and unrealised gains on financial assets, which improved year on year, JMMBGL’s fee and commission income, along with its foreign exchange margins from cambio trading, performed lower during the period. However, operating revenue net of interest expense still increased by 4 per cent to $22.44 billion.

Operating expenses for the group declined by 9 per cent to $14.53 billion as staff costs dropped by 15 per cent to $8.01 billion, while other expenses marginally rose to $6.52 billion. Group salary and benefits, including profit-related pay, dropped by 17 per cent to $6.43 billion, with JMMB’s company cost falling by 39 per cent to $2.30 billion. These cost-cutting measures resulted in group operating profit increasing by 43 per cent to $8.09 billion.

Despite this positive improvement in the group’s income base, JMMBGL had to record a higher impairment provision on financial assets of $2.01 billion, which was related to the risk metrics for the uncertainty in the current environment. With a 22.73 per cent stake in its associate Sagicor Financial Company (SFC), JMMBGL was able to record a $1.88 billion share of profit compared to the $195.21 million in the prior FY which only included one quarter. With there being no gain on acquisition during the 2021 FY, JMMBGL was able to recognise a 10 per cent rise in profit before taxation (PBT) to $7.96 billion. Even with a higher tax bill of $242.20 million, JMMBGL’s consolidated net profit rose to $7.72 billion with an earnings per share of $3.84. This is just $1.28 billion shy of the $9-billion target which JMMBGL aimed to achieve by March 2022, according to Chief Executive Officer Keith Duncan at their 2019 annual general meeting.

Total assets jumped by an astounding 22 per cent to $513.71 billion versus the $399.7 billion in the 2020 FY. This was achieved largely from a 36 per cent rise in investment security valuations to $262.39 billion, along with a 58 per cent growth in cash and cash equivalents to $67.29 billion. The cash balance growth was driven largely by the issuance of $9.97 billion in redeemable preference shares in March, along with a bigger repurchase agreement (repo) book which soared by $48.14 billion year over year.

Total liabilities grew by 26 per cent to $452.50 billion as customer deposits hit $128.30 billion, with repo’s increasing to $227.73 billion. Equity attributable to shareholders rose by 48 per cent to $59.65 billion as JMMBGL’s unrealised gains on its debt securities drove its investment revaluation reserve to a positive $4.56 billion, while retained earnings closed the period at $30.12 billion.

JMMBGL invested another $1.5 billion in JMMB Bank, after deploying $1.2 billion through the purchase of more share capital in the 2020 FY. Its securities brokerage arm Puesto de Bolsa in the DR experienced a 71 per cent improvement in net profit to $1 billion, despite only seeing a 16 per cent rise in revenue to $4.33 billion. JMMB as a standalone entity also saw its PBT grow by 91 per cent to $3.13 billion. JMMBGL’s financial and related services segment recorded a 36 per cent rise to $5.50 billion, while its banking and related services segment had a 68 per cent rise to $2.45 billion.

JMMBGL’s 2021 performance saw investors rush to purchase the stock on the open market from its opening price of $32.63. More than 993,000 units of the group traded yesterday with an intraday high of $36.99 which was $0.01 short of its 52 week high. JMMBGL’s price to earnings ratio before the results was 8.50 times, while its book value was at 1.07 times with a book value of $30.50.

“The credible performance of the Group is a testament to our core earnings, as the company’s profit has shown signs of rebounding to pre-COVID-19 financial performance. This is noteworthy, as the reporting period would have coincided with significant economic slowdown and uncertainty in the market, as a result of the pandemic,“ said JMMB Group’s chief financial officer, Patrick Ellis.

Ellis noted that the associate’s contribution to the Group’s earnings underscores the value of the investment and the Group’s strategic direction to diversify its income stream through inorganic means.