Wed | Nov 14, 2018

NCB expects challenging but rewarding year ahead

Published:Sunday | January 31, 2016 | 12:00 AM
NCB Group headquarters, The Atrium, at Trafalgar Road, New Kingston.
An Intelligent Deposit ABM at NCB’s Atrium Trafalgar Road branch. Such equipment are meant to foster the bank’s digital agenda.

National Commercial Bank Jamaica (NCB) expects a 'challenging but very rewarding' year ahead amid posting double-digit profit gains for its December first quarter.

It signals increased activity for Jamaica's largest bank, whose total assets are now well north of half-trillion dollars.

The bank earned $2.39 billion in net profit in the quarter or 12.3 per cent higher year on year due to higher operating revenues. The gains came despite only posting higher profit in only three of its seven segments. The retail segment was also a lossmaker.

"We expect another challenging year; however, our team has the skills and ability to manage the likely scenarios and, therefore, we anticipate a very rewarding year for the organisation and our stakeholders," said the banking group in its first-quarter financial report.

On Friday, NCB Deputy Managing Director and Finance Director Dennis Cohen also touted the bank's focus on its digital initiatives as a driver of business.

"Our results reflected continued improvement in operating revenue arising from our focus on sales and service effectiveness and new processes to enhance the customer experience through our digital agenda," Cohen said at the bank's quarterly investor briefing.

The group earned $12.67 billion in revenue compared to $11.96 billion a year earlier, with most coming from net interest income at $7.04 billion compared to $6.5 billion a year earlier amid a sharp drop in interest expense. Cohen said some of the interest expense shaved by the banking group came as a result of the shrinkage of the repurchase agreement operations. Contrastingly, its operating expenses grew to $9.65 billion from $9.22 billion, stoked by insurance payouts and rising staff costs.

The segment operating profit results included:

Retail & SME $24 million loss compared to a $256 million operating profit a year earlier.

Payment services $555 million compared to a $172 million a year earlier.

Corporate banking at $355 million compared to $237 million.

Treasury and correspondent banking $939 million compared to $982 million.

Wealth asset management and investment banking $609 million compared to $645 million;

Life insurance and pension fund management $988 million from $701 million; and

General insurance at $259 million, down from $307 million a year earlier.

AIC Barbados holds a majority 51.83 per cent of the NCB group with the ultimate parent being Canada-based Portland Holding, an entity controlled by Jamaica-born Canadian Michael Lee-Chin.

The banking group's asset base climbed to $540 billion at December 2015, up $14 billion from its September year end, and $38 billion over a one-year span. Its loan book grew nine per cent year on year to $171 billion while customer deposits grew 17 per cent to $241 billion driven by a growth in the bank's savings, current account and fixed deposit portfolios.

Last November, NCB finalised an agreement to purchase 29.99 per cent of Guardian Holding Limited (GHL). The deal increases the banks stake in the business of insurance.

The transaction is pending regulatory approvals in Jamaica, Trinidad & Tobago and other relevant jurisdictions, stated NCB in the financials.

GHL is the leading insurer across the region, with significant market share in Trinidad & Tobago and Jamaica.

"This is the first transaction of its kind between two of the largest indigenous financial institutions in the [anglophone] region and is consistent with our regional expansion strategy," said NCB.

The banking group will pay dividends of 50 cents per share or $1.23 billion in total on February 26.