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Diversified Business Strategy Working. Sept. 17, 2008. AGM Agenda. JMMB Group Results (2007-8). Group Profit relatively stable, from J$1.09b to$1.06b Revenues held stable from J$3.384b to $3.324b during aggressive build-out year Investment in diversified business model for JMMB Jamaica:

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JMMB Group Results (2007-8)

  • Group Profit relatively stable, from J$1.09b to$1.06b
  • Revenues held stable from J$3.384b to $3.324b during aggressive build-out year
  • Investment in diversified business model for JMMB Jamaica:
    • 28% in Admin costs
      • Staff cost increased by 17% driven by inflation and increase in staff resources required to operate the new business lines
      • Developmental investments (one-off) comprised 67% of incremental increase of $317m
  • JMMB’s Associate Companies Contribution ( by 209%)
    • CMMB TnT and Barbados rebounded with a 145% in profitability
    • Profitability by 30% for IBL, before tax
jmmb group results 2007 8
JMMB Group Results (2007-8)
  • Total JMMB Group Assets by 14%, from 89.6b to $102b
  • Driven by:
    • JMMB Jamaica Retail base grew by $5.5b to close the year with $50b under management
      • Continued strong client loyalty and satisfaction
      • Despite active competition from alternative schemes
    • Successful Preference Share Offer, oversubscribed by 500% ($2.5b)
  • NII by 6% to $1.535b
    • Despite volatility in interest rates in the local market and the fallout from the US sub prime crisis
    • Turnaround driven by Investment Management capability
  • Fee Income and Commissions by 35% to J$321m
  • These increases offset Gain on Securities Trading a 13% or $1.468b
jmmb group results 2007 85
JMMB Group Results (2007-8)
  • Consistent growth in retained profits to J$7.099b, an of J$741m or 12% over last FY, 2007
  • Reduction in total equity relates to unrealized fair value losses on our available for sale portfolio
  • We continue to maintain our dividend distribution policy ranging from 15% to 30% of profits
    • Profits retained are reinvested for growth and expansion.
corporate social responsibility 2007 8
Corporate Social Responsibility 2007-8

Recognizing and accepting our social responsibility, we are actively and publicly involved in charitable/voluntary activities across our society:

  • Committee for the Upliftment of the Mentally Ill (CUMI) Children’s Programme
  • Jamaicans for Justice (JFJ)
  • 21 Days of Christmas
    • donations to 21 non-profit organisations throughout Jamaica
  • SOS Children’s Village
  • Supporting Jamaica’s Drive for Excellence in Sports
    • JAAA Meet
    • Gold Sponsorship of Reggae Boyz
cmmb 2007 8 diversified business strategy
CMMB 2007-8: Diversified Business Strategy
  • Threefold increase in net profits from $11m to $35.4m
  • Barbados subsidiary returned to profitability
  • Net interest income increased 112% from TT$56m to TT$119m due to:
    • Asset growth
    • Higher spreads:
      • Interest Income increased by 8.5% due largely to a 7.3% increase in CMMB’s Investment Portfolio and the generation of higher portfolio yields
  • Total assets increased by 9% to over $8b
  • Shareholders’ equity improved by 10% to $231m
ibl group 2007 8 diversified business strategy
IBL Group 2007-8: Diversified Business Strategy
  • Became BILLION DOLLAR Bank
  • The Group’s total assets increased from TT$860m as at March 2007 to TT$1.085b as at March 2008
    • Asset Growth of 26%
ibl group 2007 8 diversified business strategy9
IBL Group 2007-8: Diversified Business Strategy

Group Profit Before Tax for the 12-month period closed at TT$11.43m, an increase of 29.5% against the pro-rated prior 12 months period of TT$8.82m

Major financial achievements during the period included the reduction in the non-performing loans as a percentage of total loans from 7.08% in 2003 to 2.09% in 2008

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JMMB BDI America 2007-8: Diversified Business Strategy

  • JMMB acquired 80% of Puesto de Bolsa (local brokerage firm) and opened in October 2007
    • To enable sale of products to wider market
  • Full Licence for Puesto be Bolsa received in Feb. 2008
    • Company now fully operational and returned profit in March
  • Satisfied all regulatory requirements
  • REPO approved by the Superintendence of Securities
  • Based on positive market outlook (post-election), we are projecting increased profitability for 2008-9 FY
jmmb group results q1 2008 9 diversified business strategy working
JMMB Group Results Q1, 2008-9: Diversified Business Strategy Working
  • Group Profit After Tax grew to J$376.6m, an of J$145.4m or 63% (J$231.2m in Q1, 2007-8)
  • Contribution from Associated Companies by 46%
    • Consistent with projections, profit from Associated Companies continue to show growth and to J$150m compared to $27m in Q1, 2007-8
jmmb group results q1 2008 9 diversified business strategy working14
JMMB Group Results Q1, 2008-9: Diversified Business Strategy Working
  • Group Total Assets grew to J$114b, a significant of J$22.3b or 24% (2007-8 J$91.6b)
  • Reduction in total equity for Q1 relates to unrealized fair value losses on our available for sale portfolio
jmmb group results q1 2008 9 diversified business strategy working15
JMMB Group Results Q1, 2008-9: Diversified Business Strategy Working
  • Group Operating Revenue grew to J$818m an of J$145.6m or 22% (J$672.3m in Q1, 2007-8)
  • Significant growth in:
    • Net Interest Income by 37% to J$490m, due to:
      • Increased contribution from Regional Partners
    • Fees and Commissions by 51% to J$54m, due mainly to:
      • Retail Credit (Sure Advance Plus) & Commercial and Corporate Credit
      • Corporate Solutions (Pensions, Structured Financing and Insurance)
    • Gains from Cambio trading by 73% to J$37m
    • Earnings per Stock Unit by 63% to J$0.26
outlook on macro environment local
Outlook on Macro Environment - Local
  • As at July-08 the 12-month inflation rate stands at 26.2%, the highest since the index was adjusted with new weights
outlook on macro environment local18
Outlook on Macro Environment - Local
  • Energy prices have recently abated with crude oil prices falling below US$100
    • Due to concerns about global growth and change in investor sentiment

Impact:

  • Domestic inflation will come down but remain high
  • Not much upward pressure on interest rates
outlook on macro environment international
Outlook on Macro Environment - International
  • The Federal Reserve, the US central bank, reduced interest rates to support the US economy and created facilities to improve liquidity in the financial system.
  • US government provided a fiscal stimulus package to help support consumer spending
  • The US government tried to support the economy through fiscal support, by giving tax rebates to consumers in an attempt to get them to spend more (consumption spending accounts for over 2/3 of US economy)
  • Despite attempts by the Federal Reserve to lower interest rates and facilitate greater liquidity in markets, the disruption to financial markets has continued for over a year (since Aug. 2007).
  • Other international central banks have also had to facilitate liquidity to financial markets
    • The economies of UK and Euro-area are threatened with a possible recession
stunning events in the international financial markets
Stunning Events in the International Financial Markets
  • Major Wall Street Brokerage house, Bear Stearns taken over in March 2008
    • Supported by Government bail-out
  • Government bail-out of Fannie Mae and Freddie Mac
  • Unexpected filing for Chapter 11 by Lehman Brothers
    • Up to Fri. Sept. 12, rated investment grade and considered solvent
  • Government bail-out of AIG (Sept. 16)
  • Continued significant volatility across the world financial markets
    • Extreme fluctuations in market prices (upwards and downwards)
outlook for future diversified business strategy works in volatile times 2008 9
Outlook for Future: Diversified Business Strategy Works in Volatile Times (2008-9)
  • Strong Q1 performance puts us in an even better position to manage through these unusual and significantly volatile times in the international financial markets
    • We are actively monitoring the dynamic situation
    • No impact on our core business
    • In our OWN portfolio we have minimal exposure
  • Investments in new business lines and expansion of current business lines, have started to and will continue to reap results in 2008-9
    • Retail Credit (Sure Advance Plus) & Commercial and Corporate Credit
    • Corporate Solutions (Investment Services, Pensions, Structured Financing, Cambio and Insurance)
  • Continued Greenfield Expansion
    • Profitability from DR
    • Assessing expansion opportunities in Central America Free Trade Area (CAFTA)
  • Expect continued Growth in profitability from Regional Businesses
    • Continued rebound in profitability from CMMB
    • Continued Growth in profitability from IBL

*This represents the exposure. Due to level of volatility, it is too early to determine the potential % loss.

outlook for 2008 9 fy jamaica diversified business strategy working
Outlook for 2008-9 FY - Jamaica: Diversified Business Strategy Working
  • Continued Growth in Retail Asset Management Business
    • Client driven product offerings
      • Tax Shelter (most competitive rates in the market place)
      • Cambio
      • International Money Market products (US$, CDN, Euro, GBP)
    • Expansion of retail channels to increase and optimize client access
      • Agency in Sav-La-Mar
      • 5 new ETMs
        • Mandeville and May Pen in operation
        • Montego Bay, Sav and Corporate Area by March 2009
      • Sales Strategy bolstered with Financial Advisors supporting the Branch Network
  • Credit Capability – retail (Sure Advance Plus), commercial and corporate financing – now in place
outlook for 2008 9 fy jamaica diversified business strategy working24
Outlook for 2008-9 FY - Jamaica: Diversified Business Strategy Working
  • Corporate Solutions offers expanded suite of products and services for Institutional and Mid-Tier Corporates
    • Cash Management, Investment Services, Pensions, Commercial Loans, Cambio, Corporate Financing and Insurance
    • Market launch throughout JMMB network in Oct. 2008
      • Build-out Corporate Unit in Kingston
      • Strong presence in Montego Bay, Ocho Rios and Mandeville
    • To deliver value-added services and products to this client segment in true JMMB fashion
  • Integration of Equities and Insurance Brokerage continues with the Retail and Corporate Client base
    • Bundling of products and services
      • e.g. Motor Vehicle Loans and Insurance; Equities and Pensions Investment Management
outlook for 2008 9 fy regional businesses diversified business strategy working in volatile times
Outlook for 2008-9 FY - Regional Businesses: Diversified Business Strategy Working in Volatile Times

CMMB

  • Continued stability in interest rate environment in TnT and Barbados
  • Focus now on building out their retail presence
  • Further expansion into Eastern Caribbean through new branch in St. Vincent
    • Regional Business Development Officers covering the remainder of the Organization of Eastern Caribbean States (OECS)
outlook for 2008 9 fy regional businesses diversified business strategy working in volatile times26
Outlook for 2008-9 FY - Regional Businesses: Diversified Business Strategy Working in Volatile Times

IBL Group

  • In the current year and going forward IBL will be expanding its Retail Bank network at strategic locations across the twin island.
  • Consistent with strategy to establish a “national” branch network, IBL is actively engaged in building the Port of Spain branch which will be the flagship location for Northern Trinidad
    • expected to open in Dec. 2008
  • Expanding their “Personal Banking” through “Home Banking” and the deployment of a highly motivated and aggressive sales team.
outlook for 2008 9 fy regional businesses diversified business strategy working in volatile times29
Outlook for 2008-9 FY - Regional Businesses: Diversified Business Strategy Working in Volatile Times

JMMB BDI America

  • Strategy:
    • Aggressively going to the market this year – Corporate and HNW market penetration
    • Developing Capital Markets business line to generate fee income
    • Expansion to Central America
  • We entered the financial services sector in DR and began the development of the money market:
    • Building a fixed income/money market portfolio
    • Attractive returns to our clients, attractive spreads for JMMB – WIN/WIN
jmmb group in the business lifecycle 1992 2008 diversified business strategy working
JMMB Group in the Business Lifecycle: 1992 – 2008Diversified Business Strategy Working

Maturity: Largest Brokerage presence in the Caribbean. Investment in business diversification & fine-tuning business model for sustainable growth

Expansion: Sustainable growth driven by 5 Strategic Imperatives

On the look for Acquisitions

Expansion: Weathered financial sector meltdown in Ja; Hypergrowth, Leading Brokerage in Jamaica, began to diversify regionally

Early Growth: Established the money market in Jamaica

Regional Client base: >120,000

3rd largest financial institution in Jamaica (J$121.9b in AUM)*

Grounded in our Value Driver: Client Intimacy

1992

2006

1998

2002

2010

2014

2018

*as of June 30, 2008