Profit dips at NCB
NCB Financial Group, which operates Jamaica’s largest bank, expects the second half of its financial year to yield positive returns, with or without the closure of the Guardian deal.
The banking group said on Friday that it is awaiting approval on three licences from the Trinidad government to move towards wrapping up its takeover bid for insurance conglomerate Guardian Holdings Limited (GHL).
Meanwhile, NCB Financial reported a rare quarterly dip in profit. Earnings per share for the March quarter fell to $2.04 from $2.56 a year earlier.
Last week, executives from NCB responded to concerns raised about the GHL acquisition by T&T Minister of Finance Colm Imbert regarding payments for the shares being acquired by the Jamaican bank.
“We have had a brief exchange of communications from that time and now we await a response from the ministry. So hopefully, we should hear something soon,” said NCB Financial President & CEO Patrick Hylton at an investor briefing on Friday.
After several extensions, the bid for GHL minority shares will close April 30.
Through subsidiary NCB Global Holdings, the Jamaican banking conglomerate launched a bid for additional shares in GHL, which it initially expected to wrap up in two months after the December 2017 offer came on the market. However, the offer is now in its 16th month, following resistance and procedural queries from minority investors, regulators, and the finance minister.
The latest hurdle involved regulatory concern over a US$45 million loan that NCB had negotiated with GHL key shareholders, Arthur Lok Jack and the Ahamad family, to part finance the share acquisitions. NCB is bidding for an additional 32 per cent stake in GHL for US$207 million, which would double its holdings to 62 per cent.
The Ministry of Finance, however, argued that while the financing can remain, that all shareholders must receive cash upon the sale of shares. NCB has said that it will comply.
The acquisition is expected to boost the NCB’s numbers going forward once GHL is consolidated into the banking group’s books.
In the March quarter, profit at NCB declined by 21 per cent year on year to $5 billion, while revenue slipped from $19 billion to $18.2 billion.
“It is unusual for us to make less profit,” said Deputy CEO and Chief Financial Officer Dennis Cohen, who notes that NCB continues to seek out new deals beyond Guardian, both in Jamaica and the region.
“We are not dependent on a single source of income,” said Cohen. “There are other opportunities in the local market which we are taking advantage of and also seeking to drive our regional expansion and we think we can enter other markets to continue to grow.”
Over six months, October to March, the banking group grew revenue from $36 billion to $40 billion, but its net earnings did not flow the same track. Net profit slipped from $14 billion to $12.4 billion at the half-year mark.
The prior year’s results included a gain of $4.4 billion related to the acquisition of Clarien Group Limited. During this year, it booked a $3.3 billion gain from the disposal of its holdings in JMMB Group.
NCB said in its financials that without those one-off transactions, the results would have been $9.2 billion of profit for the current period, or just a 3.0 per cent decline from $9.4 billion the prior year.
On a positive note, the group’s total comprehensive income for the March quarter doubled to $5.3 billion for the quarter up from $2.5 billion which it attributed to higher unrealised gains.
The NCB Financial Group now holds shareholders equity of $145.7 billion. Its assets top $970 billion.