Business

Jamaica National Enhances Performance

KINGSTON, Jamaica – Jamaica National Building Society (JNBS) has improved its operational efficiency and was successful in boosting its profitability during the 2011/12 financial period ended March 31, states Earl Jarrett, General Manager.
 
As overall interest rates fell, there was a decline in interest income from its assets, which was counterbalanced by a reduction in interest expense, Mr. Jarrett stated. According to data from the recently released audited financial statements, JNBS, the country’s largest building society and its subsidiaries, effectively adjusted their operations to boost income and contain expenses.
 
“We did well in the year just ended as the Building Society earned a surplus of $1,397 million, while the overall JN Group earned $2,071 million,” Mr. Jarrett declared. 
 
The after tax surplus for 2011/2012 represented a 50% increase from the previous financial year for JNBS, while the JN Group boasted a 60% increase. Jamaica National is an entity owned by its members and unlike many other financial institutions, the JN Group records its net revenue position as either losses or surpluses.
 
The Group earned interest on loans amounting to $5,283 million, down $184 million from prior year and interest on investments fell $366 million to $4,628 million. “Overall income from our core business was less than the previous year,” Mr. Jarrett said.
 
Interest income from loans and investments for the Group amounted to $9,912 million, a reduction of $550 million from the previous year. This reduction is significantly lower than the interest income decline of $3,267 million for 2010/11 financial year.
 
“There has been a decrease in interest rates on our investment portfolio in addition to a decline in mortgage rates,” Mr. Jarrett pointed out. Jamaica National has responded by strengthening its operations and implemented more innovative and efficient ways of serving its members.
 
Interest expense declined $1,023 million to $2,805 million for the year, which more than compensated for the $550 million reduction in interest income. This resulted in net interest revenue of $7,107 million, an increase of $474 million from prior year.  
 
The JN Group showed significant improvement in the category of other operating income, which grew by $1,139 million to $4,537 million for the financial year. This success can be attributed to the reassessment of less profitable operations and a focus on revenue enhancement.
 
Unrealised foreign exchange gains amounted to $112 million for the year, a substantial $316 million improvement from the previous year, as a result of the appreciation of the Jamaican dollar, which had led to losses.
 
Operating expenses were contained at $9,250 million, an increase of $589 million. According to data sourced from the Ministry of Finance, this 6.8% growth was just below the 7.3% inflation outturn for the fiscal year.
Mr. Jarrett further highlighted that, “we have been able to contain our expenses by improvement in key areas of operations which has been a major contributing factor to the improved profit performance.”
 
In a period of weak overall economic performance, the total JN Group assets grew by $3,716 million to $135.0 billion, a 3% increase. This was in addition to shareholders’ savings growing by $712 million to $73.4 billion.
 
Subsidiaries earned $674 million of the JN Groups surplus of $2,071 million, and Mr. Jarrett made special mention of the performances of NEM Insurance Company (JN General Insurance) and JN Fund Managers Limited for their contribution to the outcome.

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