Citing inflationary pressures, JMMB has said it will increase interest rates on variable loan contracts with its commercial bank.
JMMB Group President and CEO Keith Duncan said the cost of funds has significantly increased and will have to be reflected in an interest rate pass-through.
Accordingly, the interest rate on variable loan contracts with JMMB Bank will increase to 1.5 per cent effective August 1.
“What we have seen is that we have moved into an inflationary environment, and with the geopolitical tension ( the Russia/Ukraine crisis), we are seeing an inflationary outlook being fairly significant,” Duncan told JMMB Group’s investor briefing last week.
Jamaicans are to brace for a further rise in inflation over the next two months.
Inflation as at April 2022 of 11.8 per cent was higher than the outturn in the previous month and represented the ninth consecutive month that inflation breached the Bank of Jamaica’s (BOJ) target range of four and six per cent.
To contain inflation, the BOJ recently applied an increase to its policy interest rate by 50 basis points to five per cent per annum. The latest rate hike reflected a cumulative increase in the policy rate of 450 basis points since October 2021.
The JMMB Group CEO noted that central banks have been doing their best to contain inflation and ensure that prices do not move countries into a recession, but JMMB must take steps to navigate the current environment.
“As we go forward we expect that high-interest rates will be a feature for us over the next year or so. We, however, will continue to stay close to our clients because we expect that there will be an impact on our them as interest rates move up,” Duncan said.
Duncan, nonetheless, expressed confidence in JMMB Group’s diversified business line to navigate the current conditions.
The Group CEO reiterated, “We are prepared as we normally are, to face this (challenging economic environment) as we know that diversification helps us, (and) we expect stronger results out of Trinidad and Tobago… and continue to grow our banking business line and our investments business lines.”
The JMMB Group said its diversification strategy across business lines, geographies and client segments resulted in the highest-ever profit of J$12.02 billion for the 2021/2022 financial year, representing a 56 per cent jump year-over-year.
To complement the geographic diversification, the Group CEO outlined that JMMB is looking to also diversify offerings to its client segments, with the roll-out of new solutions in the near term, such as point-of-sales, to serve its small and medium-sized (SME) client base.
Duncan also said investment management and corporate payment solutions products would enable JMMB Group to embed diversification in its revenue streams and maximize income from non-capital absorbing lines.
In the meantime, the Group will continue to accelerate its digital strategy to serve the changing needs of its clients.
“Within two years, all of our clients will be able to have a full digital experience if they so desire. Our clients will be able to move between our digital and physical channels as they need to, or as they desire so that we are always in the client’s world,” shared Patricia Sutherland, chief operations officer, JMMB Group.