Headquarters of the Capital and Credit Merchant Bank in New Kingston. CCMB reported depressed revenues and $338.5m of substantially reduced net profit in its nine-month results released this week. - File
Capital and Credit Merchant Bank Limited (CCMB) has recorded a substantial drop in earnings in a poor nine-month period for the company, whose earnings fell by almost 50 per cent in some areas.
In a year when most companies have grown revenues, CCMB's turnover for its nine-month period was down 10 per cent year-on-year to September 30, to just over $4.07 billion from $4.5 billion.
The reduction resulted from a decline in trading and investment income on its treasury portfolio.
The earnings report drove the CCMB stock back down to its 52-week low Wednesday to $9.01, pulling its stock market value down to $6.8 billion. The stock has traded as high as $18.50 in the past year.
Expected improvements
But the company has said it expects to see improvements going forward, noting that it had introduced several "high-yield credit products" and was putting renewed focus on foreign currency trading.
CCMB also anticipates that interest rates in the United States will continue to adjust downwards and that more investors will hedge with high yield emerging market bonds like Jamaica's, in the process enhancing net interest spreads on the merchant bank's global bond portfolio.
Its critical net interest income, used as an indicator of the well-being of investment and loan dependent companies, was off by 22 per cent - falling from $723 million to $561 million.
The company, which is run by president Curtis Martin, reported smaller day-to-day expenses in the period but savings there were only $8 billion which, given the direction of other line items, had little impact on its bottomline.
Net profits were down by a substantial 48.6 per cent to $338.5 million or earnings per share of 53 cents, despite a smaller tax bill, compared to last year's $659 million or $1.03 per share value.
Pretax profits were also off by 48.6 per cent to $418 million.
CCMB's third quarter performance tracks the nine-month numbers, except for net interest income which was up by $1 million to $201.7 million. But revenues were also down in the July-September period and post-tax profits were less than a third of last year's outcome, falling 67 per cent from $181 million to $59 million.
In its fourth quarter outlook, on the home front, the merchant bank hopes to leverage business from its newly placed focus on the small and medium size business market under its Resource Entrepreneurship Advancement Programme (REAP); and expects to start booking earnings from its investment in Capital and Credit International, a U.S.-based associate in which it has a 20 per cent share.
CCMB, a jewel in Ryland Campbell's Capital and Credit Financial Group whose assets top $67 billion, is also banking on its ongoing technology upgrades, which includes ABM and Internet banking services, to drive efficiencies and leverage business for the company.
business@gleanerjm.com
