NCB to enter Guyana
NCB Financial Group Limited, NCBFG, is taking steps to enter Guyana, likely through its investment banking unit.
The Jamaican banking conglomerate has been eyeing a deal to finance oil development in Guyana, just as the South American country and Caricom member was joining the ranks of oil-exporting economies, with its first shipment last month.
NCB Financial is yet to decide whether it will enter the market there through acquisition, or as a greenfield operation via a subsidiary, or take a more “novel approach”. The latter may be a reference to some sort of partnership or coalition, but the banking group’s executives were sparse on details at NCB Financial’s annual general meeting on Friday.
And while it seems likely that any foray into Guyana would be through NCB Capital Markets Limited, even that is still to be affirmed by the group.
“We are looking at Guyana, but clearly we have to see the opportunity and understand it,” said NCBFG President and CEO Patrick Hylton in response to a query at the annual general meeting on Friday in New Kingston.
“We are aware of the developments there, based on the oil finds with Exxon, and so on. We see what is happening in the economy and the projections. So, it is a country we are looking at with keen interest,” he said.
However, other executives gave the impression that a fair amount of footwork had already been done through NCB Cap, and that an oil-financing deal was in the making.
The move into Guyana fits into NCB Financial’s strategy to consolidate and deepen its presence in the Caribbean, which was aided by its recent acquisition of Guardian Holdings Limited, a Trinidad-based insurance conglomerate with businesses across the region.
There are reports that NCB is liaising with ExxonMobil’s subsidiary Esso and other partners in that country. NCB told shareholders at the annual general meeting that such plans are still in the preliminary stages.
NCB Financial will later determine whether the putative deal will be structured through NCB Cap or another entity in the group, said NCBFG Chief Financial Officer and Deputy CEO Dennis Cohen.
“The opportunity was uncovered by our investment banking unit NCB Capital Markets, but the details of the financing will be determined in the future. So that is not yet finalised,” said Cohen, adding that the investment bank was exploring the environment and developing relationships with key contacts.
“As part of that process, the opportunity arose, but as to the specific structure of the deal, that will have to be finalised.”
Aided by acquisitions, NCB Financial Group has grown to a $1.6-trillion financial conglomerate by assets. Its businesses span commercial banking, insurance, and wealth management. The bank that once had to be rescued by the government is now comparable, Hylton indicated, to those in large markets.
Of the 88 banks in Canada, only seven have higher net income than NCB Financial Group, he said.
“Our performance has allowed us to provide attractive compensation and benefits to our team members,” Hylton told shareholders.
“No one wanted the bank back in the late ’90s,” he recalled, saying it took more than a year to convince Jamaican-Canadian investor Michael Lee-Chin to acquire the bank. “A banker even said that it was not a bank, but an ugly monkey,” said Hylton, who at the time was in charge of divesting assets taken over by the government under the financial sector rescue programme of the 1990s.
NCB Financial Group made net profit of $7.8 billion, for the first quarter of the 2020 financial year, up from $7.4 billion a year earlier. But net profit attributable to stockholders fell 21 per cent to $5.9 billion.
Cohen explained that the prior year’s results included a one-off gain of $3.3 billion from the disposal of NCBFG’s interest in an associate company. Excluding that gain, net profit would have increased by $1.7 billion or 42 per cent over the prior year.
“We expect record profits in 2020, regardless,” said Cohen. “We expect to surpass previous targets.”
NCBFG last reported record annual profit of $30.7 billion at year ending September 2019.