Ashford W. Meikle, Staff Reporter
MAJOR INVESTMENT bank and financial service provider, Dehring Bunting and Golding (DB&G), says that it will be offering mortgage-backed securities as it attempts to develop new revenue stream.
At a briefing on Wednesday to present its third quarter (September 30, 2005) results at its Holborn Road head office the chairman of DB&G, Peter Bunting, said "essentially we will be focusing on commercial models, so what we are essentially going to do is to look at sub-stantial real estate property -
typically these would be properties that are already built - with a strong income stream from rentals and then we would go into a refinancing deal and take out the existing lenders."
According to Mr. Bunting, once DB&G refinanced the deal the merchant bank would build a package that it would be able to make into a marketable security.
Chief operating officer of DB&G, Garfield Sinclair, rationalised this income generating strategy from the merchant bank.
"A lot of these properties are flowing off rental cash flow now that, certainly in U.S. dollar terms, are generating nice returns on investments" so the ability to go in there and refinance those opportunity actually [presents] an attractive proposition to refinance securities and flow the funds off to the individual investors. So we think there is a market there [and] that we "intend to go after quite aggressively."
His comments are understandable given the fact that DB&G - like many in its peer group - have been challenged by a weak equities market and faced with shrinking spreads caused by the lowering of interest rates by the Bank of Jamaica.
Notwithstanding, for the nine-month period the group returned a fairly healthy performance compared to the similar period in 2004.
Specifically, there was a 41 per cent increase in net interest revenue, which jumped form $416 million to $588 million. However, on the other hand, net revenue recorded a 18 per cent increase to $1.2 billion. The financial group's net profit after tax jumped to 546 million, an increase of almost 19 per cent over 2004.
Apart from its mortgage-backed securities Sinclair identified three other revenue streams that DB&G would develop:
Renewing its emphasis on corporate finance, particularly as it relates to debt structuring and other equity type deals both in Jamaica and Trinidad.
Consumer finance initiative
U.S. dollar Caribbean Bank Fund. This, according to the COO "definitely will come on stream this quarter and will be offered throughout the Caribbean."
In his presentation, Mr. Sinclair, noted that DB&G would continue to optimise existing revenue streams such as focusing market share in existing lines, sharpening focus on attracting commercial bank deposits, growing its loan portfolio and improving cost efficiency.
