FUNDS under management in the securities dealers sector took a hit last year, declining by 3.4 per cent as at September 30, 2022 from a year earlier.

The decline brought the funds under management at the end of that period to $1.587 trillion due mainly to a contraction in balance sheet positions, the Financial Services Commission (FSC) outlined.

The regulator’s analysis concentrates on the 30 companies whose primary activity is dealing in securities, although there are 37 licensees.

The combined total balance sheet assets at the end of the September 2022 quarter stood at $867 billion, an improvement of 6 per cent from $817 billion as at September 30, 2021.

Revaluation losses, revenue falls

The aggregate balance sheet capital at the end of the reporting period was $124 billion, a 16.72 per cent decline from the prior year. Revaluation losses contributed to the fall in the capital base.

The FSC reports a significant fall-off in income in some segments. There was an approximate $1.8 billion or 10.3 per cent year-over-year decrease in combined total revenues (comprising interest income and other income) reported for the September 2022 quarter. This is due to the 40 per cent fall in non-interest income (other income) compared to the corresponding period of 2021. Some contributing factors to the contraction in the non-interest income included trading losses, foreign exchange losses, and revaluation losses. Bond prices have fallen due to higher yields on GOJ bonds stemming from central bank action, the FSC noted in reference to higher interest rates during the year.

The accumulated interest income and combined interest expense fell by 22 per cent and rose by 55 per cent, respectively, for September 2022 when compared to the same period the year before.

The FSC said that this came in the context of the Bank of Jamaica’s policy rate which was increased to 6.50 per cent within the reporting quarter against the backdrop of high inflation driven by soaring energy and food prices, supply chain disruptions, and the adverse effects of the ongoing Russia/Ukraine war.

The regulator stated, “The elevated inflationary pressure has led the BOJ, like other central banks across the globe, to adopt a hawkish stance on its monetary policy.”

The FSC said at September, profits were on the decline. Cumulative total expenses remained the same as last quarter, amounting to approximately $13.3 billion, but this increased by $2.4 billion or 22 per cent compared to the corresponding period of 2021. A net profit of $2 billion was generated in the September 2022 quarter, reflecting a $1-billion decrease quarter over quarter.