Tue | Aug 22, 2017

NCB records highest ever net profit of $5.87B

Published:Sunday | April 30, 2017 | 4:00 AMSteven Jackson
NCB Group headquarters, The Atrium, Trafalgar Road, New Kingston.

National Commercial Bank Jamaica (NCB) reported record profits of $5.87 billion for its second quarter to March 2017, up two-thirds over a year earlier.

That equates to earnings per share of $2.39 from $1.47 a year earlier and represents the initial fruits of NCB's growth strategy, which includes regional expansion and efficiency measures.

"We recorded our highest ever net profit performance," said NCB deputy managing director Dennis Cohen at an investor briefing at NCB's Wellness Centre, St. Andrew on Friday. "We are encouraged by the performance," he added.

The group gained more than $822 million over three months from associated company profits, mainly from its 29.9 per cent acquisition of Guardian Holdings. In addition, the Group benefited from a 34 per cent rise in net fees and commissions during the quarter at $3.5 billion, up from $2.6 billion a year earlier.

Group managing director Patrick Hylton revealed that the institution hired a cost "tsar" tasked with reviewing key spending within the group.

"What we have done is essentially started the process of creating a framework for a more rigorous assessment of all the areas of spend across the group," he said. "We have given that responsibility to one person to create a plan, the major areas of which have been defined to create governance structure around spending in order to ensure that we get the best value for money," said Hylton on its new tsar, without revealing the name of the individual. "It really is a simple thing: it's about revisiting some of the major areas of spending to ensure that we are getting the best value for money."

Overall, Hylton lauded the group's performance, noting that NCB now needs to maintain its growth momentum.

"We are accustomed to challenges and look forward to these challenges," Hylton said.

Locally, the company continues to invest heavily in its future expansion with capital expenditure $2.4 billion or double from a year earlier. The spend mainly relates to its Retail Banking division with capex at $1 billion associated in part with the construction of its modern banking centre in Fairveiw, Montego Bay, St. James. There is also a $628.7 million capital expenditure which relates to its Payment Services division in relation to card upgrade technologies. A $284 million capital expenditure at the Wealth Management arm was not fully explained when Sunday Business made enquiries of NCB's management.

Over six months the Group's profits totaled $9.5 billion, up from $5.9 billion. Earnings per share was $3.84 from $2.44 a year earlier.

The treasury segment made the most for the group over six months at $3.53 billion, followed by its wealth arm at $2.86 billion and life insurance at $2.55 billion.

NEW SCHEME

During the quarter, NCB Financial Group (NCBFG) became the holding company for NCB and its businesses. The Supreme Court and shareholders separately approved the new scheme of arrangement resulting in the current shareholders of NCB becoming owners of the holding company. The existing shares of NCBJ were cancelled and shareholders received new shares in NCBFG.

The restructuring is also aimed at facilitating the future expansion of the entity throughout the Caribbean region.

NCB completed a $28-billion acquisition of 29.99 per cent of Guardian Holdings Limited (GHL) in 2016. Its GHL shares were held in NCB Financial Group which at that time was a new company formed a month prior to the acquisition of the GHL shares.

NCBFG became the holding company, with National Commercial Bank Jamaica Limited and Summer Success Limited (Trinidad & Tobago) as its two immediate fully controlled subsidiaries. Summer Success will only hold the 29.99 per cent shareholding in GHL.

NCB Investments, NCB Capital Markets Limited, NCB Jamaica Nominees Limited, Data-Cap Processing Limited, West Indies Trust Company Limited, NCB Remittance Services UK Limited, NCB Remittance Services Jamaica, Mutual Security Insurance Brokers, NCB Cayman Limited and NCB Insurance Company will all remain direct subsidiaries of National Commercial Bank Jamaica Limited.

steven.jackson@gleanerjm.com