Jamaica Mortgage Bank strengthening balance sheet and operations for divestment

The Jamaica Mortgage Bank (JMB) is moving to strengthen its balance sheet and operations in preparation for divestment, which is planned later this year.

The Jamaica Mortgage Bank intends to execute an initial public offer this year.

To this end the JMB has sought to tackle among other things its bad debt portfolio ahead of its divestment, which would be executed via an Initial Public Offer of shares being planned by the Development Bank of Jamaica. The issue of sorting out the bank’s bad debt portfolio is being viewed as a pre-divestment priority item.

The extent of the bad debt portfolio is not known but the bank’s board is looking to present a clean balance thus presenting a public company attractive for private capital with long term profitability and little to no bad debts. The JMB reports that it will seek to reduce its bad debt portfolio by “closely monitoring performance of new loans and continue to pursue the implementation of immediate strategies to dispose of and recover bad debts.”

As part of its strategic plan for the upcoming financial year, JMB plans to drive growth of Mortgage Indemnity Insurance by adding at least one new mortgage granting institution to the number of approved lenders. The bank is projecting that it will issue 120 new Mortgage Indemnity Insurance undertakings at a value of $144 million per annum and increased income from non-traditional sources.

The JMB’s initial public offer is being planned by the Development Bank of Jamaica.

These include technical and project management services. The management of the bank reports that plans to facilitate the divestment of the JMB will continue during the budget year. Notwithstanding these plans, JMB will through the mobilisation of financial resources continue to contribute to the overall growth in the supply of housing solutions.

“Accordingly, securing low cost funding for on-lending in the Primary Mortgage Market to increase the bank’s support in fulfilling the Country’s housing demand will remain of primary focus during the budget year,” the JMB reported in its summary for the Jamaica Public Bodies Estimates of Revenue and Expenditure for the Year Ending March 2021.

JMB says it will continue to drive growth of Mortgage Indemnity Insurance by increasing the number of approved mortgage granting institutions. The bank is projecting to record a reduced surplus in the upcoming financial year.

A surplus before tax of $104.94 million is projected, which represents a decline of 50 per cent from the current surplus estimated for 2019/2020 of $207.23 million. JMB will maintain its staff complement of 24 during 2020/2021 fiscal year.

JMB was established on June 197 as a private limited company and then converted to a Statutory Corporation in June 1973. The bank is charged with the responsibility of promoting environmentally acceptable residential housing solutions and economic growth in Jamaica.

In pursuit of its mission to promote environmentally acceptable residential housing solutions and economic growth in Jamaica, JMB mobilises loan funds for on-lending to public and private sector housing developers and to other lending institution in addition to providing mortgage insurance services on behalf of the Government of Jamaica.