JMMB Group plans to launch credit cards in its three markets this financial year. JMMB

JMMB Group is looking to enter the multi-billion-dollar credit card market and expand its payment solutions in Jamaica, the Dominican Republic and Trinidad and Tobago (T&T).

The financial services conglomerate, which serves over 412,000 clients, launched a payment services division during its 2022 financial year and completed bank standardisation across its three operating territories. In February, its subsidiary JMMB Bank (Jamaica) formed a partnership with Norbrook Transaction Services Limited which provides the ePay payment services. This led to JMMB Bank launching the ePay meals card which allows for employers to provide meal subsidies or benefits to employees. This partnership came after the suspension of Alliance Financial Services Limited by the Bank of Jamaica (BOJ) in December.

After establishing its various banking outfits as commercial banks between 2015 to 2017, the JMMB Group plans to enter the credit card market in Jamaica which had transaction values of $645.48 million spread over 3.14 million transactions in 2021 according to BOJ data. There were an estimated 360,000 Jamaican dollar credit cards in circulation relative to more than 4.5 million debit cards in issuance.

"In the 2022/23 financial year, the group will be rolling out merchant acquiring products including point-of-sale and e-commerce solutions to better serve small and medium-sized enterprises and corporate clients. Additionally, the group will launch new payment products via JMMB Bank in partnership with Norbrook Transaction Services Limited as well as other payment solutions through the remittance business line," the JMMB Group annual report stated.

JMMB Group's banking and payment services segment saw revenue climb 30 per cent to $15.35 billion in 2022, but the segment result was down four per cent to $2.36 billion. JMMB Bank's net loan book improved by 33 per cent to $91.50 billion which made it the fifth largest commercial bank in Jamaica by its loan book.

A credit card allows a cardholder to conduct a transaction with a merchant and pay the balance at a future date depending on the billing cycle to the issuer. A debit card allows a cardholder to pay a merchant for a transaction using current funds held in the cardholder's own account at the issuing institution. Banks and credit card issuers make money from annual fees to cardholders, interest on balances carried at the end of the billing cycle, interchange fees to merchants which accept the card and other associated fees.

There are 32 personal credit cards and 12 business cards offered among the eight local commercial banks excluding Citibank and JMMB Bank. Visa is the dominant payment network for both personal and business credit cards with 22 personal and seven business credit cards being issued under the international payment giant. The Bank of Nova Scotia Jamaica Limited offered the most personal credit cards while National Commercial Bank Jamaica Limited offered the most business credit cards.

The T&T credit card market was valued at TT$943 million (US$137.26 million) in 2021 with 234,024 credit cards in use. There were 2.83 million credit cards in use in the Dominican Republic at the end of 2021. There are eight commercial banks in T&T while there are 17 different financial institutions and banks in the Dominican Republic.

Apart from the issuance of credit cards, JMMB Group will also be issuing point-of-sale devices in Jamaica and T&T along with prepaid cards in Jamaica. With its current Norbrook partnership, JMMB Group intends to offer a suite of prepaid cards for its remittance and banking business lines. The partnership should also bring niche-based card solutions, digital wallets for essential services and digital solutions to enhance existing payment capabilities. Both territories have the Visa debit card in issuance already while its other subsidiary should have seen implementation of the product in the market during the 2022 financial year.

When quizzed at its recent investor briefing about the implementation of Basel III for its banking subsidiaries, Chief Risk Officer Dereck Rajack said, "JMMB Bank and the wider banking sector is currently working with the Bank of Jamaica (BOJ) on the proposed Basel III framework. While there will be changes to risk weights we do not currently anticipate any material impact on the bank's ability to lend. Additionally, there are opportunities for certain sectors such as retail and small and medium-sized enterprises [SMEs] to benefit from more favourable risk weights. This international regulatory framework is still a work in progress and we will have a more fulsome view of the overall impact once the testing phase begins."

All of these enhancements come ahead of JMMB Group's plans to launch an onboarding solution and a long touted mobile application during the 2023 financial year. JMMB Group intends to deploy key enabling technologies for digital channels in the Dominican Republic through Moneyline while T&T will have additional transactional and information functionalities through the digital platform.

After launching the optimal funds and other associated US dollar unit trusts in T&T in April, JMMB Group is aiming to launch US dollar unit trusts for global equity, sovereign and corporate bonds in addition to a private equity fund in Jamaica. Its Dominican Republic arm launched a US$60-million sustainable energy fund which has deployed into Project Villarpando and Project Cotoperí so far. Its capital markets arm managed $154.8 billion in capital markets deals during its 2021 financial year.

The group continues to explore mergers and acquisition opportunities in the Caribbean and Latin America. While the group plans to continue its inorganic growth strategy in the short to medium term, multi-jurisdictional regulatory hurdles continue to act as a delay to the completion of the transactions. Group Chief Strategy Officer Claudine Tracey explained at the recent briefing that the two acquisitions announced in 2021 still remain in its pipeline and that they are excited by them.

The financial and related services segment saw a 20 per cent jump in revenue to $26.71 billion with the segment result marginally up to $5.83 billion. JMMB Group's net profit attributable to shareholders moved up by 52 per cent to $11.44 billion in its 2021 financial year. Total assets eclipsed $614.47 billion with equity attributable to shareholders down eight per cent due to the unrealised fair value losses on debt securities. JMMB Group's stock price is up nine per cent year to date to $42.99 which gives it a market capitalisation of $84.08 billion.

BY DAVID ROSE Observer business writer davidr@jamaicaobserver.com

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