Jamaica National (JN) Profits as Loans, Investments Rise

KINGSTON, Jamaica – The JN Group grew its profits the traditional way, primarily increasing its loan and investment revenues for the 2010 year ended March 31, says General Manager, Earl Jarrett.

Consisting of Jamaica National Building Society (JNBS) and its subsidiaries, the JN Group recorded a $1.2 billion after tax surplus during the year. This represented a six percent increase, or approximately $69 million over the previous year.

“This growth resulted from the $381 million increase in our operating surplus,” said Mr. Jarrett, “and, the operating surplus expanded by 30 percent to $1.6 billion.”

General Manager, Earl Jarrett

In his analysis, Carlton Barclay, Assistant General Manager, Finance, Administration and Planning, said that the buoyant operating surplus itself was based on a 13 percent growth in interest on loans to $5.2 billion, along with a 36 percent rise in interest on investments to $8.5 billion. Interest expense jumped 30 percent to $6.4 billion, leaving net interest revenue of $7.3 billion.

He pointed out that other operating revenue fell by six percent to $3 billion and operating expenses were contained at $8.7 billion, a rise of 10 percent, ultimately tying back to the operating surplus. Revenue growth was boosted by an aggressive marketing programme aimed at attracting deposits with attractive rates.

The Group achieved growth in several of its key indicators, as new initiatives were launched to drive business and help members of the Society to weather the economic crisis, he stated. This was achieved against the background of one the most challenging periods in the 136 year history of JNBS; and the adjustments in the Jamaican economy.

In 2009, there was an $873 million unrealized foreign exchange gain accompanied by a $197 million gain on the disposal of a business unit. This was offset by $561 million impairment loss on equities and a large $650 million tax bill. The smaller $474 million 2010 tax bill has thus resulted in a slightly higher profit although there were no comparable unrealized gains or gains from disposal of business units or impairment losses on equities.

The JN Group also started the process of enhancing operational efficiency from as early as 2007. “We have been reshaping our internal processes and developing new service channels such as our ATM and online facilities to drive down costs while improving service delivery,” Mr. Barclay explained.

He said that investment for the fiscal year totaled $52 billion, up 17 percent on the previous year, while the savings portfolio of $67.7 billion grew 14.5 percent. And loans totaled $43.4 billion, up 13.3 percent on the prior year. And said, “Overall, we had a decent performance.”

The Finance Executive maintained that “Our balance sheet continues to show positive growth, which is indicated by the increase in our investment and loan portfolios, our savings and capital and reserves.”

Mr. Jarrett noted that programmes were also launched to assist members to weather the economic crisis with rebates provided to targeted groups of mortgagors and the building society also dropping its mortgage upkeep savings requirement.

The new ‘Membership Matters’ customer service mantra was adopted last year when a survey revealed that many of our members were not aware of the advantages open to them. The mantra was aimed at reminding members about the many benefits they can derive from their membership in the building society.

“Another key initiative, which supported Member loyalty and revenue growth, was a series of financial planning sessions in locations across the island and in its key international markets, to which members were invited during the year,” he stated. At these sessions members were informed about the nature of the global and national financial crisis, how the JN Group was responding, and provided with options for the management of their financial portfolios.

“Despite the fact that interest rates fell, we recorded strong growth in interest income,” Mr. Jarrett pointed out. “The investment portfolio also recorded an increase, indicating that members have responded to our advice that, even in these difficult times, they should continue to save.”

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