The JMMB Group plans to launch credit cards in its three markets this fiscal year. JMMB
The JMMB Group is looking to enter the multi-billion dollar credit card market and expand its payment solutions in Jamaica, the Dominican Republic and Trinidad and Tobago (T&T).
The financial services conglomerate, which serves more than 412,000 customers, launched a payment services division in its fiscal year 2022 and completed banking standardization in its three operating territories. In February, its subsidiary JMMB Bank (Jamaica) formed a partnership with Norbrook Transaction Services Limited which provides ePay payment services. This led JMMB Bank to launch the ePay Meal Card which allows employers to provide meal subsidies or benefits to employees. This partnership came after the suspension of Alliance Financial Services Limited by the Bank of Jamaica (BOJ) in December.
After establishing its various banking entities as commercial banks between 2015 and 2017, the JMMB Group plans to enter the credit card market in Jamaica, which had transaction values of $645.48 million spread over 3 .14 million transactions in 2021 according to BOJ data. There were approximately 360,000 Jamaican dollar credit cards in circulation compared to over 4.5 million debit cards in circulation.
“In fiscal year 2022/23, the group will roll out merchant acquisition products, including point-of-sale and e-commerce solutions, to better serve small and medium-sized businesses and enterprise customers. the group will launch new payment solutions produced through JMMB Bank in partnership with Norbrook Transaction Services Limited as well as other payment solutions through the remittance industry,” the JMMB Group annual report states.
JMMB Group’s banking and payment services segment saw revenue climb 30% to $15.35 billion in 2022, but segment profit fell 4% to $2.36 billion. JMMB Bank’s net loan portfolio improved by 33% to $91.50 billion, making it the fifth largest commercial bank in Jamaica by loan portfolio.
A credit card allows a cardholder to complete a transaction with a merchant and pay the balance at a later date based on the issuer’s billing cycle. A debit card allows a cardholder to pay a merchant for a transaction using current funds held in the cardholder’s account with the issuing institution. Banks and credit card issuers make money from annual fees paid to cardholders, interest on balances charged at the end of the billing cycle, interchange fees to merchants who accept the card, and other associated costs.
There are 32 personal credit cards and 12 business cards offered among the eight local commercial banks, excluding Citibank and JMMB Bank. Visa is the dominant payment network for personal and business credit cards with 22 personal credit cards and seven business credit cards issued by the international payments giant. Bank of Nova Scotia Jamaica Limited offered the most personal credit cards, while National Commercial Bank Jamaica Limited offered the most business credit cards.
The T&T credit card market was valued at TT$943 million (US$137.26 million) in 2021 with 234,024 credit cards in use. There were 2.83 million credit cards in use in the Dominican Republic at the end of 2021. There are eight commercial banks at T&T while there are 17 different financial institutions and banks in the Dominican Republic.
Apart from issuing credit cards, the JMMB Group will also issue POS devices in Jamaica and T&T as well as prepaid cards in Jamaica. With its current partnership with Norbrook, the JMMB Group intends to offer a suite of prepaid cards for its money transfer and banking businesses. The partnership is also expected to bring niche card solutions, digital wallets for essential services, and digital solutions to enhance existing payment capabilities. The two territories already have the Visa debit card in the process of being issued, while its other subsidiary should have seen the implementation of the product in the market during fiscal year 2022.
Asked during his recent investor briefing about the implementation of Basel III for its banking subsidiaries, Chief Risk Officer Derek Rajack said, “JMMB Bank and the wider banking industry are currently working with the Bank of Jamaica (BOJ) on the proposed Basel III framework. Although there are changes in the risk weightings, we do not currently expect a significant impact on the bank’s lending capacity. In addition, there are opportunities for certain sectors such as retail and small and medium enterprises. [SMEs] benefit from more favorable risk weightings. This international regulatory framework is still ongoing and we will have a more complete picture of the overall impact once the testing phase begins.”
All of these enhancements come ahead of JMMB Group’s plans to launch a long-vaunted integration solution and mobile app in fiscal year 2023. JMMB Group intends to deploy key technologies for digital channels in the Dominican Republic through Moneyline, while T&T will have transactional functionality and additional information through the digital platform.
After launching Optimal Funds and other related US dollar mutual funds in T&T in April, JMMB Group aims to launch US dollar mutual funds for global equities, sovereign and corporate bonds in more than one private equity fund in Jamaica. Its branch in the Dominican Republic launched a US$60 million sustainable energy fund that has been deployed so far in the Villarpando project and the CotoperÃ project. Its capital markets arm handled $154.8 billion in capital markets transactions in its 2021 fiscal year.
The group continues to explore mergers and acquisitions opportunities in the Caribbean and Latin America. While the group plans to pursue its inorganic growth strategy in the short to medium term, multi-jurisdictional regulatory hurdles continue to delay the completion of transactions. Group Chief Strategy Officer Claudine Tracey explained at the recent briefing that the two acquisitions announced in 2021 still remain in its pipeline and are excited about them.
The financial and related services segment recorded a 20% increase in revenue to $26.71 billion, with the segment’s result coming in at just $5.83 billion. JMMB Group’s net profit attributable to shareholders rose 52% to $11.44 billion in its 2021 financial year. Total assets eclipsed $614.47 billion as shareholders’ equity declined 8% due to unrealized fair value losses on debt securities. JMMB Group’s share price is up 9% year-to-date to $42.99, giving it a market capitalization of $84.08 billion.