RATING DRIVERS
Supporting Factors
- Strong brand and long history in the Jamaican securities industry and an emerging financial services player in the Caribbean region
- Well-diversified asset portfolio with good asset quality
- Strong financial performance in FY2021 bolstered by the Group’s investment in SFC
- Comfortable capitalization, reflected in good capital adequacy ratios
- Robust governance structure and risk management practices
Constraining Factors
- Funding base characterized by moderate concentration in repurchase agreement (repo) instruments which has contributed to asset/liability mismatches and high gearing
- Sluggish economic conditions could constrain growth
Rating Sensitivity Factors
Factors that could, individually, or collectively lead to an improvement in the ratings and/or Outlook include:
- Improvement in the Government of Jamaica’s (GOJ) credit rating, leading to an improved overall credit risk profile of the GOJ
- Growth in PAT of 10% for 2 consecutive years
- Material improvements in the Group’s market share in its key business segments
Factors that could, individually, or collectively lead to a lowering of the ratings and/or Outlook include:
- Deterioration of the NPLs to Gross loans ratio to 8% or more
- Deterioration of the CAR of any of the Group’s subsidiaries to below the country specific regulatory requirements
- Cost to Income ratio weakens to 75% and over
COMPANY BACKGROUND
JMMB Group Limited (JMMBGL or the Group) is a financial services Group incorporated and domiciled in Jamaica and listed on the Stock Exchanges of Jamaica and Trinidad and Tobago. The Group was initially established as Jamaica Money Market Brokers Limited (JMMB) in 1992 as a joint venture among the National Development Bank, Mutual Security Bank, Jamaica Producers Group Limited, Jamaica Venture Fund and Antrim Limited. JMMB has been a pioneer in the Jamaican securities industry as the first exclusive money market broker and dealer. Over the ensuing years, the Group’s operations have expanded and evolved to include 19 subsidiaries and 1 associated company in Jamaica, Trinidad and Tobago (T&T) and the Dominican Republic (Chart 1). In April 2015, a holding company, JMMBGL was formed, under an approved Scheme of Arrangement, as the parent of the Group of companies including JMMB. As at June 2021, JMMBGL’s 2 largest shareholders were Proven Investments Limited[1] (20.01%) and Trustees JMMB ESOP (9.34%).
The Group offers its products and services through 5 main business lines which include investment management[2], banking, insurance brokerage, remittances, and other related services, to 386,000 clients[3] in the 3 countries that it serves. JMMBGL’s total assets as at March 2021 stood at J $506.2 billion[4] and total revenue for the period ended March 2021 was J $22.6 billion. The Group’s largest subsidiary, Jamaica Money Market Brokers Limited domiciled in Jamaica, accounted for approximately 48% and 42%[5] of JMMBGL’s total assets and revenue respectively. Over the past 8 years, the Group has focused on regional expansion and diversification of its business lines through acquisitions and the development of strategic partnerships. JMMBGL, over the next 5 years, will seek to standardise, centralise and integrate its operations across all entities within the Group, which will serve to improve its operational efficiency. Further, the Group also intends to grow its banking business line regionally with a view to enhancing the diversification of its income and reducing the cost of its funding.
[1] Proven Investments Limited is a public investment firm. The Company’s primary activities include the holding of tradeable securities for investment purposes and holding private equity investments in small and medium sized companies throughout the region with significant potential for medium term growth.
[2] Investment management includes asset management services i.e. on and off-balance sheet solutions, treasury, cambio, fixed income and equities trading and capital market services. On-balance sheet solutions include mutual funds and off-balance sheet solutions include collective investment schemes, pension funds and unit trusts.
[3] As at March 2021
[4] Total assets have been adjusted to exclude intangible assets, unrealized gains/(losses) and contingencies.
[5] On a consolidated basis.
Analytical Contacts:
Kathryn Budhooram
Tel: 1-868-627-8879 Ext. 227
E-mail: kbudhooram@caricris.com
Keith Hamlet
Tel: 1-868-627-8879 Ext. 244
E-mail: khamlet@caricris.com
Website: www.caricris.com
E-mail: info@caricris.com
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