NCB profit tops $30b - Jamaican bank announces plans to grow further in the region
Jamaica’s top banking conglomerate, NCB Financial Group, plans to enter into new markets as part of its five-year growth aspirations.
The bank, which has been growing through acquisition, racked up another year of record profit for the fiscal period ending September, performance that has pushed the stock to new highs.
NCBFG inched up inched up 1.1 per cent on Friday to close at $204.11 per share, a day after NCB disclosed a new profit high of $30.7 billion or $12.18 per share. That’s up 7.3 per cent from last year’s $28.6 billion of earnings.
The downside in the results was NCB’s key commercial banking segment, which recorded a net loss due to credit impairments that topped $4 billion.
NCB Financial wants to cement itself as the regional financial powerhouse. That includes integration of the existing services throughout its Caribbean ‘eco-system’.
“It means going beyond a presence in 21 countries but to create an integrated platform that will enable us to seamlessly provide solutions to allow our customers to live a fulfilled life,” said President and CEO Patrick Hylton at NCB Financial’s investors briefing at the NCB Wellness Centre on Friday, which was streamed online.
Hylton added that the pillars of his new 2024 target include strong financial performance, strong organisational health, delighted customers and digital banking.
The banking group has been laser-focussed on regional growth since 2016, when NCB launched its five-year strategy to become a regional provider of services earning over US$200 million in annual profit by 2020.
The group achieved that goal in 2018 aided by its acquisition of the Clarien Bank in Bermuda and insurance provider Guardian Holdings Limited.
These acquisitions resulted in NCB Financial Group taking the top spot as the largest financial provider in the region, said Dennis Cohen group chief financial officer in his address to stakeholders.
“This is our highest annual performance and highest quarterly performance and we hit all our targets,” said Cohen who admitted that the rapid growth came with challenges.
They included higher non-performing loans mostly originating outside of Jamaica, and problems with the transition to a new banking platform in Jamaica.
The group now holds $1.6 trillion in assets, up from $978.6 billion a year earlier; while NCB Financial’s book value grew by 13 per cent to $147 billion.
Six of the seven segments operated by the group earned higher revenue and profit. But the commercial and consumer banking segment recorded a $413.6 million net loss due to a $4.14 billion credit impairment loss. A year earlier the segment earned some $2.7 billion.
Cohen said that the higher impairments came with increased loan activity. The bank’s loan portfolio was estimated at $423 billion in 2019, up from $373 billion.
For the financial year, operating revenue totaled $90.6 billion, a 30 per cent improvement over the prior year, with $31.3 billion of that total earned in the fourth quarter. The group’s banking and investment services and insurance activities contributed equally to this increase.
The fourth quarter also included an extraordinary gain from the sale of Advantage General Insurance Company which was finalised on September 30. Advantage General’s full year’s performance has been included in the income statement; contributing $2.5 billion to operating income and $561 million to profit, Cohen said.