CAPITAL & Credit Financial Group (CCFG) made an $87.1-million first-quarter profit after-tax or 7.8 per cent more when compared to the similar period in 2009 due to staff cuts and continued high-interest income.

The profit was split amongst two of its four divisions with the banking division earning $48.9 million after tax and its financial division earning $45.1 million after-tax. Its remittance and holding investments divisions made losses of $5 million and $1.8 million respectively.

It’s the group’s first financial report following the Jamaica debt exchange (JDX), which affected one month of its operations during the quarter ending March 31. The group announced that it would seek to grow its corporate loan portfolio going forward in order to mitigate the JDX effect. The JDX, concluded on February 24, 2010, offered holders of locally issued investments securities lower yields and extended maturities.

“The management team has been proactive in taking the necessary precautionary measures by reassessing and realigning the business models. These actions will allow us to capitalise on other opportunities offered by the JDX, particularly in providing additional credit facilities to the productive industries,” stated Chairman Ryland Campbell and President & CEO Curtis Martin in a joint statement to shareholders accompanying the financials posted to the Jamaica Stock Exchange (JSE) this month.

During the quarter, total revenues (net interest income and other revenue) declined nine per cent to $406.2 million compared with the similar period in 2009. The main reason for the cut in total income was that its foreign exchange trading and translation gains at $13.26 million during the quarter was less than 10 per cent of the $162.2 million made in the similar quarter in 2009. The group made 16 per cent more net interest income during the quarter at $319.72 million from $274.57 million in the first quarter of 2009.

The executives said that the net interest income for the quarter “included approximately one month of income on these securities at the lower yields”, as is reflected by the reduction in total interest income to $1.08 billion, in comparison to $1.39 billion in 2009. “The group will continue to streamline its portfolio to mitigate the JDX impact on the net interest income,” the executives stated.

The group’s bottom line was assisted by total expenses, which declined at a faster rate than revenues at 15 per cent to $292.5 million due to a nine per cent slash in the wage bill to $148.9 million and a $22-million slash in its loan loss reserve to only $71,000. The earnings per stock (EPS) unit remained at $0.09 when compared to the comparable period of 2009. The EPS unit is based on the net profit after tax and the weighted average number of 926.79 million stock units in issue.

Total assets as at March 31, 2010, stood at $43.24 billion, compared to $47.70 billion in 2009.

“During the year, the Group continued to focus on expanding its Retail and Corporate lines, while selectively acquiring higher-yielding assets and selling low-yielding ones, in order to maintain an optimal risk profile. As consumers continue to be impacted negatively by the onset of the global recession, there has been a reduction in the loan portfolio, when compared to the higher volume during the previous year,” management stated in its financials.

At March 31, 2010, loans, after provision for loan losses, stood at $6.6 billion, a 12 per cent reduction over the $7.5 billion for the comparative period of 2009. Total stockholders’ equity amounted to $6.31 billion, an increase of 26 per cent over the comparative period of $5 billion for 2009. The outlook for CCFG is one of cautious optimism within the context of anticipated local and global economic recovery in 2010. The group also plans to launch new products and services.

“The road ahead is laden with challenges, but we have already made the paradigm shift to the new economic realities and with our strong capital base of over $6.31 billion, coupled with the new strategic alliances in process, the CCFG expects to restore its growth and maintain its stability.”