JMMB Group Limited (JMMBGL) has acquired Banco Múltiple Bell Bank, SA in the Dominican Republic as it deepens its presence in the Spanish-speaking nation of 10.85 million people with a banking system worth RD$2.36 trillion (US$43.31 billion).
JMMB Group completed the 100 per cent acquisition through JMMB Holding Company and plans to merge it with Banco Rio De Ahorro Y Credito JMMB Bank, SA, a savings and loan bank in which it has a 90 per cent stake. This comes after JMMB gained regulatory approval on July 28 from the Superintendence of Banks of the Dominican Republic.
Banco Múltiple was formed in October 2007 and was majority controlled by Víctor Rafael Moreno Estaba who owned 97.40 per cent of the bank at the end of 2021. JMMB entered the Dominican Republic in 2007 when it formed fund manager JMMB Puesto de Bolsa, SA. The JMMB Group acquired its interest in Banco Rio in July 2015 for US$2.15 million ($252.7 million). The remaining 10 per cent is held by a well-respected private investor in the DR. Banco Rio's net loan portfolio grew 30 per cent to $7.6 billion (RD$21.36 billion) in 2021 with its market share in the savings and loan sector growing to 2.3 per cent. Its deposit base was $9.5 billion.
"This acquisition and merger complements our regional diversification strategy as we seek to leverage operational efficiencies and synergies, introduce innovative financial solutions, while fulfilling the needs of our clients across the Caribbean. The group is now poised to expand its range of offerings in the Dominican Republic, as an integrated financial services provider, with this approval," said JMMB Group Chief Executive Officer (CEO) Keith Duncan in a press release.
Banco Múltiple had RD$1.66 billion (US$30.54 million) in total assets at the end of 2021 and RD$217.29 million (US$3.99 million) in shareholders equity or capital. It earned RD$125.94 million (US$2.31 million) in interest income, a 44 per cent increase against a loan portfolio of RD$1.31 billion (US$24 million). Despite recording a 124 per cent jump in other operational income of RD$20.87 million, it still generated a RD$39.27 million operating loss compared to the RD$65.32 million loss in 2020. Its net loss declined from RD$58.85 million in 2020 to RD$24.62 million at the end of 2021.
It had RD$504.52 million in commercial loans, RD$461.11 million in micro enterprise loans, RD$322.09 million in consumer loans and RD$36.09 million in mortgages in 2021. Banco Múltiple was last profitable in 2018 when it generated RD$6 million in net profit on an asset base of RD$696.01 million and a loan portfolio of RD$534.46 million. According to its Instagram page, the bank offers factoring, lines of credit and certificates of deposit (CD). It also offers Bellbanking Empresarial and Préstamos (loans) Bellnomia to its customers online.
Duncan told the Jamaica Observer, "The acquisition and merger of Bell Bank in the Dominican Republic will allow JMMB Group to further expand its banking solutions to meet the varying needs of its clients, especially small and medium-sized clients, in that country and provide new financial offerings over time. JMMB Group will be able to expand it suite of banking solutions to include more commercial offerings and deepen its client base."
While Duncan didn't speak to the acquisition cost, JMMB Group had a balance sheet of $614.47 billion and cash and cash equivalents of $62.18 billion at the end of the 2022 financial year. The JMMB Group will be releasing its first quarter numbers within the next two weeks.
With respect to the integration, Duncan added, "JMMB Group will continue with the transition process, in line with our core values of love, transparency and integrity, as is evidenced by previous mergers and acquisitions and mergers done by the company, where we seek to engage the respective teams, leverage operational efficiencies and bolster synergies in line with the vision of the new entity, and will provide further information on the way forward, as these plans are finalised internally and the respective stakeholders are engaged."
The merger and integration of both banking entities is expected to take place within the next six months from July 28 or based on operational readiness based on the regulatory approval granted by the Monetary Board of the Dominican Republic.
Juan José Melo is the JMMB Group's chief country officer for the Dominican Republic and CEO of JMMB Puesto de Bolsa, SA and AFP JMMB BDI SA. The JMMB Group owns 80 per cent of Puesto de Bolsa which is a securities broker and 50 per cent of AFP which is a pension fund administrator. JMMB also owns 70 per cent of JMMB Sociedad Administradora de Fondos de Inversion, SA (JMMB Funds) which is led by Jesus Cornejo and became profitable in the 2021 financial year.
JMMB Group's Dominican Republic operations saw a 76 improvement in operating revenue at $5.4 billion and contributed to 35 per cent of the overall JMMB Group's $8.30 billion in operating profit. It also contributed to 23 per cent of the record $12.02 billion in net profit the JMMB Group reported for its 2022 financial year. Puesto de Bolsa saw its credit rating improve from BBB+ to A- by Feller Rate while Banco Rio saw its credit rating move to BBB+ with a stable outlook from Pacific Credit Rating. Its Dominican Republic segment had $3.06 billion in cash and cash equivalents along with $45.79 billion in investment securities at the end of 2022.
Due to the growth in its banking operations and its limited physical presence in the market, JMMB will open three more branches of Banco Múltiple in the Dominican Republic. The group also plans to introduce credit cards in Jamaica, the Dominican Republic and Trinidad and Tobago. It will also deploy new key enabling technology plus new solutions and services through Moneyline. JMMB Funds launched its SAFI Funds in 2022 which is its mutual fund investing exclusively in renewable energy projects in the Dominican Republic. It launched the US$60-million JMMB Sustainable Energy Fund in August 2021 which in Project Villarpando and Project Cotoperí I, II & III.
The JMMB Group's acquisition represents the growing number of international firms looking to build its presence in the Dominican Republic. The Bank of Nova Scotia acquired Banco Dominicano del Progreso in March 2019 for CAD$440 million as part of its international banking segment while disposing of its pension and insurance operations a month later for a gain of CAD$273 million. The largest bank at the end of 2020 was Banco De Reservas which had assets of RD$717 billion and net income of RD$10.4 billion.
With JMMB Group celebrating its 30th anniversary in November, the 60-year-old Duncan who's been leading the company since December 2005 is confident that it is being positioned to grow organically and inorganically in the 2023 financial year. JMMB was founded by Joan Duncan and Dr Noel Lyon.
"JMMB Group remains committed to pursue inorganic growth by constantly exploring market opportunities that fit within the group's diversification strategy and will continue to roll out new solutions to better meet the needs of current clients and new client segments. It is expected with the further diversification of financial solutions, the operations in the DR will continue to fulfil the needs of our clients and result in increased profitability," Duncan ended.
RD$ - Dominican Peso. 1
USD = $54.49 RD
CAD – Canadian Dollar