JMMB Group looks to start-ups to fuel growth

JMMB Group, which now earns one-quarter of its total revenues outside Jamaica, plans to grow that further with its five new start-up companies spread across Dominican Republic and Trinidad.

That's where the future growth will come from, according to Group Chief Executive Officer Keith Duncan.

Concurrently, the group announced at its annual general meeting on Wednesday that deputy Chairman Archibald Campbell would assume the position of

chairman following the resignation of Dr Noel Lyon, who held that position since inception in 1992.

And JMMB also expressed optimism that its commercial banking licence application will this time find favour with the authorities. The financial conglomerate reapplied for the licence in the 2015-16 financial year, following its non-approval in 2008.

The company already operates a merchant bank in Jamaica and a commercial bank in Trinidad.

Jamaica earned 74 per cent of the $3.4 billion in total group revenues reported for the first quarter ending June 2016, down from 78 per cent a year earlier.

The companies described as start-ups includes JMMB Investments T&T, JMMB Securities T&T, JMMB Funds DR, JMMB BDI, and JMMB Bank DR.

"All of these companies are in the start-up phase," said Duncan. "These companies require taking out of the ground and to be built."

Significant opportunities

JMMB provides securities dealing, stock broking, foreign exchange trading, insurance broking, banking and remittances. The group owns and operates a raft of companies spanning four stages of the JMMB business cycle, which Duncan termed as start-up, pre-growth, growth and established.

"We have significant work to do, to move the companies from the start-up phase into a growth mode and into an established phase of the business cycle. So these companies represent significant opportunity for us," Duncan said.

Companies in the pre-growth stage of the business cycle include JMMB Insurance Brokers, and JMMB Money Transfer, stated Duncan. And companies in the growth trajectory are JMMB Bank T&T, JMMB Merchant Bank, JMMB Fund Managers, and Intercommercial Trust and Merchant Bank; while those in the established phase include JMMB Limited, JMMB Securities and JMMB Puestro de Bolsa.

Duncan explained that expanding in the region provides geographic and business line diversification which improves the group's risk profile. Second, it lowers the effective tax rate for the group, as the rates in other territories are lower relative to Jamaica. Third, it would provide increased real return to our shareholders, he reasoned.

The group's earnings per share closed the March year end at $1.39 up from $1.18. But it's still lower than the five-year average at $1.63. That translated to the group making $2.3 billion in net profit after tax for its 2015-16 financial year, up from $2.05 billion in the previous year.

Duncan described the stock as a "good buy" as the book value per share, at $13.45, continues to trade above the stock price. JMMB Group is listed on the Trinidad and Tobago, Barbados and Jamaica stock exchanges.

The stock closed at $10 on the Jamaica Stock Exchange on Wednesday. Its performance has been largely flat for the 2016 calendar year-to-date.

steven.jackson@gleanerjm.com