JMMB International Limited has gained a securities dealer license in Barbados and marks JMMB Group Limited's (JMMBGL) latest thrust in diversifying its operations and gaining a larger presence in the Caribbean.
JMMB International will initially be offering a concise suite of investment solutions to institutions, corporates and high net worth individuals. Some products which will be offered include JMMB International Access, an online international brokerage service, service; access to regional equity and fixed income markets; as well as various capital markets solutions. The business will be led by Tricia Kissoon, chief executive officer (CEO) of JMMB Investments (Trinidad and Tobago) Limited, and Michael Jordan, the Barbados-based head of business development and executive director.
"We're continuing our expansion into new territories, and we would have announced that we're now licensed to operate as a securities company/dealer in Barbados through JMMB International Limited. As at October 12, we're up and running in Barbados and we're very happy about this because we're now able to consolidate across the region. We're happy to be in the Bajan market and we're looking forward to growth in that market and acquiring some market share in Barbados," said JMMB Group CEO Keith Duncan at Thursday's investor briefing.
JMMB International directly owns the 33,213,764 shares of Sagicor Financial Company Limited (SFC) or a 23.44 per cent stake and holds other long-term portfolio investments as part of JMMBGL's investment management arm. JMMBGL injected $5.39 billion into JMMB International during the 2023 FY. JMMBGL is currently a reporting issuer to the Barbados Financial Services Commission despite delisting from the Barbados Stock Exchange in October 2019.
JMMBGL previously had exposure to the Barbadian securities market through its 45 per cent associate Caribbean Money Market Brokers Limited and its Barbadian broker subsidiary. JMMBGL sold the stake to CL Financial in October 2008 where it collected US$41.37 million (J$2.99 billion) and realised a gain of $2.33 billion.
Duncan highlighted that the improving macroeconomic environment and aim to reduce debt are factors that work with Barbados which acts as a financial centre within the Caribbean. Even Proven Group Limited is opening up a securities arm and exploring other business in Barbados.
Barbados is set to receive an on-site visit from the Financial Action Task Force (FATF) shortly in order to be removed from its grey list. It is also working on leaving other blacklists by different European bodies.
Although Duncan didn't delve further into other opportunities regarding expansion into South America, he noted that business development and acquisition opportunities exist in the pipeline.
JMMBGL's announcement comes following the publication of its second quarter report where net interest income compressed from $2.79 billion to $2.05 billion as liabilities repriced faster than the group's assets. The mixed performance of other income lines saw operating revenue drop 13 per cent to $5.11 billion with Trinidad and Tobago and the Dominican Republic contributing 28 and 16 per cent, respectively.
Higher operating expenses pushed JMMBGL from an operating profit of $1.20 billion to a $36.66 million operating loss. After accounting for a share of loss from Sagicor Financial Company, JMMBGL's had a consolidated net loss of $633.87 million compared to the restated net loss of $1.88 billion.
For the overall first half of 2024 financial year (FY), net interest income fell 27 per cent to $4.15 billion while operating revenue net of interest expense was decreased six per cent to $11.70 billion. JMMBGL reported a consolidated net profit of $1.92 billion compared to a restated net loss of $4.06 billion due to SFC adopting IFRS 17 from IFRS 4 earlier this year and restating its financials.
With the current compression that has occurred following the refinancing of several liabilities at the Jamaica Money Market Brokers Limited level in the 2023 FY, Duncan noted that there would be a rebalancing of the balance sheet within the coming months. This would also be supported by the growth of non-interest income such as money transfer, insurance brokerage, credit cards and growing its banking segment based on risk-adjusted returns on capital. Four JMMBGL preference shares totalling $8.33 billion are set to mature on January 14, 2024.
"So, we have to do some rebalancing on the balance sheet, especially in Jamaica and the Dominican Republic where we would have acquired lower yielding assets. So, we're going to have to look to migrate into higher yielding assets from lower yielding assets and this may mean us looking to reduce the portfolio, moving to cash and looking to take on higher yielding assets to boost our portfolios. It's optimising your funding mix and bringing down your cost of funds so that you can restore and increasing the numbers of net interest income," Duncan added.
JMMBGL's total assets climbed to $688.13 billion with loans and notes receivable growing to $200.16 billion and its investment and resale agreements at $348.03 billion. Total liabilities grew to $636.38 billion with equity attributable to shareholders rising to $50.26 billion.
JMMBGL's stock price closed Thursday at $27.05 which left the stock down 18 per cent year to date with a market capitalisation of $52.90 billion. JMMBGL purchased 50,000 shares recently under its share buy-back programme.
With Basel III currently coming into play for Jamaican deposit-taking institutions in 2024, JMMBGL is currently building up the capital base of JMMB Bank (Jamaica) Limited. JMMB Bank's regulatory capital in March was $17.44 billion with its capital adequacy ratio at 12.12 per cent. Regulatory capital was $16.69 billion with the capital adequacy ratio at 11.57 per cent at the end of September.
"On the capital side in terms of the financial holding company, we have injected $1.3 billion into the bank. Currently, our capital adequacy ratio stands at approximately 17 per cent. In terms of the Basel III initiative, you know that's an industry initiative, we continue to work through with the regulators, providing the feedback. We're running the respective scenarios and by the end of the financial year, I would say we should be on track thereabout," said Group Chief Financial Officer Patrick Ellis.