Non-Banking Finance Sector to Rebound in 2025? |10.02.2025

HIGHLIGHTS

  • Non – Banking Finance Sector Performance Drivers
    • Resilient Economic Activity
    • Insurance-related events
    • Energy sector cyclicality
    • Dividend Visibility
  • GHL: Price Target Range: $15.90 – $17.00, Rating: OVERWEIGHT
  • AMBL: Price Target Range: $39.15 – $42.10, Rating: MARKETWEIGHT
  • NEL: Price Target Range: $2.65 – $2.90, Rating: MARKETWEIGHT
  • JMMBGL: Price Target Range: N/A, Rating: MARKETWEIGHT

In this week’s edition of Bourse review, we review the outlook of Non -Banking Finance Sector of the Trinidad & Tobago Stock Exchange (TTSE), the third largest sector by value or market capitalization, representing over 10% of total market capitalization. Our 2025 outlook remains cautiously optimistic, driven by resilient economic activity and modest revenue growth. Could the sector’s constituent stocks make a turnaround in 2025?  We discuss below.

Local Market Composition

The Non-Banking Finance sector is the third largest sector of the TTSE market, accounting for 10.4% or $10.6B of the index value.  Banking and conglomerates top the index with 56.2% and 21.5%, respectively. Manufacturing and Trading combined accounts for 11.2%, and the Energy sector is 0.5% of the index value.

Non-Banking Finance stocks

The Non-Banking Finance sector is made up of prominent companies including Guardian Holdings Limited (GHL) with a market value of $3.5B, which accounts for 32.7% of total non-banking finance sector value. Ansa Merchant Bank Limited (AMBL) represents 31.9% of the sector, with a market value of $3.4B. JMMB Group Limited (JMMBGL) and National Enterprises Limited (NEL) each make up significant portions of the sector, with JMMBGL accounting for 19.7% ($2.1B) and NEL representing 15.8% ($1.7B).

While not as significant in size as the Banking and Conglomerate sectors, the non-banking finance sector (10.4%) stock performance still has the capacity to collectively influence the direction of the TTSE indices in a meaningful way.

Sector Constituent Overview

Unlike the Banking Sector, the Non-Banking Finance Sector comprises stocks with relatively more diverse operations and industry exposures.

Ansa Merchant Bank Limited (AMBL), for example, is a financial services company offering merchant banking, asset financing, investment management and insurance services. By business segment, General Insurance accounts for 68% of the Group’s total operating income, followed by the Banking segment (21%), Life Insurance (10%) and the Mutual Funds segment (1%), excluding eliminations.

Guardian Holdings Limited (GHL) is the parent company of the integrated financial services group known as Guardian Group. Its life, health and pension (LHP) segment contribute 72% of the Group’s Net Income from all activities trailed by the property and casualty insurance segment (22%), and Asset Management (6%), excluding adjustments. The company serves 21 countries across the English and Dutch Caribbean.

JMMB Group Limited (JMMBGL) is a regional financial services company headquartered in Jamaica, with operations in Trinidad and Tobago, Jamaica, Dominican Republic and Barbados. It offers a diverse range of financial products in relation to banking, investment and wealth management and insurance brokerage. The Group’s Banking and Related services segment accounts for 67% of Net Operating Revenue followed by Financial and Related Services (31%) and other services (2%).

National Enterprises Limited (NEL) is a state-controlled investment holding company that primarily holds equity investments in various industries, including energy, manufacturing and telecommunications. The company primarily generates revenue through dividends from its subsidiaries and associates.

2025 Non-Banking Finance Sector Forecast

 

In 2024, non-banking finance sector market capitalization fell sharply with continued headwinds to stock market performance and weaker investor sentiment.  All constituents of the Non-Banking Finance sector fell, including NEL falling 32.8%, GHL ↓ 21.0%, JMMBGL ↓ 20.7%and AMBL ↓ 12.4%. As a result, the market value of the entire non-banking finance sector contracted 20.7%, dropping from $13.4B to $10.6B in 2024.

Looking ahead to 2025, the sector is estimated to grow by 4.8%, according to Bourse’s forecast for individual stocks in the sector. Price movements for the non-banking finance constituents are expected to range between +1% to +12%.

The Non-banking finance sector performance for 2025 is premised on several industry-level drivers including: (i) resilient economy activity, (ii) modest revenue growth, (iii) insurance-related events and (iv) energy sector cyclicality.

  • Resilient economic activity – A resilient economic outlook, both locally and regionally, should continue to support activities from its diverse revenue streams and strong domestic demand from its product lines (insurance, asset management, investments etc.)
  • Revenue growth – Continued reductions in interest rates regionally and globally should support net interest income (NII), as well as asset prices.
  • Insurance-related events – A wild-card for sector members with insurance business is always the occurrence of extraordinary events, particularly within the property and casualty segments. Increased adverse events tend to drive costs/payouts up, impacting financial performance.
  • Energy sector cyclicality – In relation to NEL and its significant investment in and exposure to the energy sector, the company’s financial performance will continue to be influenced by domestic energy production levels and international energy price fluctuations.

Are Non-Banking Finance stocks right for you?

Being smaller in size compared to the Banking and Conglomerate sectors, investors seeking to replicate the performance of an index such as the T&T Composite would require a smaller proportion of Non-Banking Finance stocks in their portfolio. However, the sector offers diversification opportunities and exposure to different lines of business within the financial services.

With broad declines across prices, this sector’s stocks may be trading at more attractive valuations, presenting a potential value opportunity for investors. Groups such as GHL and JMMBGL offer a fairly high degree of regional diversification benefits, with operations across the Caribbean. 

For investors looking for dividend reliability, AMBL and GHL have a track record of providing relatively consistent and stable-to-growing dividends to shareholders, enhancing their attractiveness to income-oriented investors.

As always, investors should consult a trusted and experienced advisor, such as Bourse, to make more informed investment decisions.

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