RATING DRIVERS
Supporting Factors
- Moderate diversification and good market position in Jamaica with international expansion.
- Strong capitalization of regulated subsidiaries in excess of regulatory requirements.
- History of profitable operations underpinned by diverse income streams
- Adequate liquidity to support debt servicing.
- Good governance structure and risk management practices.
Constraining Factors
- High cost to income ratio.
- Economic conditions in Jamaica could constrain revenue growth and profitability.
Rating Sensitivity Factors
Factors that could lead to an improvement in the ratings and/ or Outlook include:
- Expansion of the Group’s product and service offerings and/or improvements in operating efficiencies leading to a sustained increased in PAT of 10% for more than 2 years.
- An increase in the credit rating of the Government of Jamaica.
Factors that could lead to a lowering of the ratings and/ or Outlook include:
- A greater than 10% decline in total income for 2 consecutive years.
- A lowering of the credit rating of the Government of Jamaica.
- Breach of covenants stipulated in the final term sheet/prospectus for the bond offering.
- Failure of JN Bank to meet its debt servicing and repayment obligations to JN Group in a timely manner.
- An increase in the Company’s debt leading to a material change in its debt servicing ability.
COMPANY BACKGROUND
The Jamaica National Group Limited (JN Group or the Company), a holding company, was incorporated in Jamaica in February 2017. The Company’s subsidiaries (the Group) commenced operations as the Westmoreland Building Society in 1874. In 1960, the Westmoreland Building Society completed its first merger with the Manchester Mutual Building Society. In 1970, following several mergers, the Westmoreland Building Society executed several organisational adjustments, including a name change to the Jamaica National Building Society (JNBS or the Building Society). In 2016, the members of JNBS voted to reorganise the entity into the JN Group and convert the deposit-taking arm of the Building Society to Jamaica’s only mutually-owned (fully owned by savers and borrowers) commercial bank called JN Bank – the third-largest commercial bank in Jamaica. The Bank of Jamaica subsequently exchanged JNBS’ building society licence for a commercial banking licence and following the reorganisation of the JN Group, a mutual holding company, named The Jamaica National Group Limited, became the ultimate parent company for the JN subsidiaries.
The Company holds 100% ownership in MCS Group Limited (a non-financial holding company) and JN Financial Group Limited[1] (a financial holding company). The Group comprises 13 subsidiaries, two associated companies, and one related company in Jamaica, the United Kingdom (UK), Canada, the United States of America (USA), and the Cayman Islands (Chart 1). The Group’s portfolio of products and services span a wide array of financial, technological, creative, and fleet management services that support its position as a leading performer among mixed conglomerates in the region.
Analytical Contacts:
Keith Hamlet
Tel: 1-868-627-8879 Ext. 229
E-mail: khamlet@caricris.com
Maxwell Gooding
Tel: 1-868-627-8879 Ext. 229
E-mail: mgooding@caricris.com
Website: www.caricris.com
E-mail: info@caricris.com
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