Overview
This section provides information on the securities industry for the quarter ended September 2019.
Market Intermediaries
There were thirty-nine (39) securities dealer companies, three (3) individual dealers, two (2) investment adviser companies and two (2) individual investment advisers registered by the Financial Services Commission (FSC) to operate in Jamaica. Of these forty-six (46) licensed intermediaries, the analysis will focus on thirty (30) securities dealer companies whose core business is dealing in securities.
Aggregate Assets as at the end of September 2019 stood at J$664.8 billion reflecting 10.8 per cent increase over September 2018 and a 7.7 per cent growth over June 2019 levels. Capital levels continue to rise and stood at J$110.9 billion, a 30.5 per cent growth over the levels recorded as at September 30, 2018. When compared to the previous quarter, capital levels recorded a 12.6 per cent increase moving from J$ 98.5 billion as at June 30, 2019. The growth in capital improved the industry’s capital to assets and the capital to risk weighted assets ratios. Year over year, both the capital to total assets ratio and the capital base to risk weighted assets ratio increased by 1.6 percentage points and 2.6 percentage points respectfully as at September 2019 (see Table 2).
Total funds under management (FUM)[1] was approximately J$1.31 trillion as at September 30, 2019, representing a J$47.8 billion or 3.8 per cent increase over the previous quarter (J$47.7 billion or 3.8 per cent growth over September 2018) (see Table 1).
The securities firms’ aggregate total revenue (comprising of interest income and other income) of $J18.6 billion was recorded for the third quarter of 2019, reflecting a 28.3 per cent increase over the corresponding period of 2018. This was due to a 77.1 per cent upward trajectory of non-interest income that accounted for 79.0 per cent of total revenue for the September 2019 quarter, partially attributable to fees and commission income, dividend incomes and capital gains. Total Interest income contracted by 37.1 per cent with a corresponding contraction of 34.3 per cent in interest expense recorded during the period when compared with September 2018. The decline in interest income is a result of the low interest rate environment.
Despite this decline in interest income, net profits grew by J$11.0 billion, a 134.0 per cent increase over the comparative quarter of 2018. This was primarily due to the growth in non-interest income. This resulted into a return on equity (“ROE”) of 9.9 per cent for the quarter ended September 2019 compared to 5.5 per cent for the corresponding period last year.
[1] This amount includes pension funds and CIS funds managed by core securities dealer companies
