NCB blames debt swap for profit decline
Published:Sunday | April 28, 2013 | 12:00 AM
Despite low prospects for economic growth, the leadership of National Commercial Bank Jamaica (NCB) remains optimistic, asserting Friday that there are enough opportunities for the bank to capitalise on and grow.
NCB made J$1.7 billion in its second quarter ending March 2013, down J$259m or 12.9 per cent from the corresponding period last year.
NCB Group Managing Director Patrick Hylton blamed the Government's debt restructuring for some of the decline.
"The results for the period reflects in a major way the sacrifice that this institution made through participation in the recently concluded National Debt Exchange, as well as the subsequent Private Debt exchange," said Hylton on Friday at the bank's quarterly investor briefing in New Kingston.
GROWTH AND DEVELOPMENT
"We hope that the economic programme that the debt exchange is a part of will give us the platform to grow and create the trajectory for economic growth and development and so as an institution, a major financial institution, we are committed to playing our part in that process," he said.
The bank swapped a total of J$125 billion worth of government bonds under the National Debt Exchange and the Private Debt Exchange.
The transactions in February and March pushed net foreign currency and investment activities into a loss position of $728.7 million for the March quarter compared to gains of J$1.4 billion in the corresponding 2012 period.
NCB's half-year profit of J$4.5 billion was down six per cent relative to the prior-year period when the bank made J$4.8 billion in net profit.
The bank reported that the decline was offset by an increase in net on interest income by 10 per cent to J$11.8 billion at the end of the six-month period.
Net fee and commission income also increased by 11.6 per cent to J$3.9 billion due primarily to increased card transaction volumes in the payment services segment, as well as increased fees earned from new loans, primarily in the retail & small and medium-size enterprise segment.
The bank also had good performance in its insurance services segment with premium income increasing by 73.7 per cent, boosted by general insurance premiums as a result of the acquisition of Advantage General Insurance Company Limited.
At the end of March loans and advances totalled J$128.8 billion, reflecting growth of 24.9 per cent or J$25.7 billion. Non-performing loans (NPLs) remain relatively flat for the period at J$7.5 billion. However, NPLs relative to the total loan portfolio fell to 5.7 per cent from 7.1 per cent in the corresponding period in 2012.
NCB has updated its IT infrastructure and expanded its Internet banking services to include e-statements and other enhancements.
In the periods ahead, the focus will be on sales and growth in the various business lines, said Hylton.
"Investment and improvement in technology will be a key endeavour of this strategy," he said.
The bank will pay a dividend of 16 cents per share amounting to J$394 million on May 24, based on the March-quarter results.