Jul 2012 Financial News

Good quarter, but bad year so far for NCB's bottom line

Jul 30, 2012

Unless he pulls off a spectacular fourth quarter, Patrick Hylton will not be able to deliver another record year of profit for National Commercial Bank Jamaica this year.

The banking group's third-quarter performance at J$2.6 billion net profit did better than the previous quarter but was down by 18 per cent relative to the June 2011 period. Its nine-month profit at J$7.4 billion was down by 21 per cent year on year.

The bank will pay interim dividend of 17 cents per share - a total of J$419 million on August 27 based on the results.

Hylton, the group managing director, credited the third-quarter performance to product innovation and the strengthening of the sales team.

"Our results reflect strong growth in the loan and deposit portfolios of our commercial banking business as well as repurchase agreements of our main wealth management subsidiary," he said at Friday's investors' briefing.

"We have expanded our sales team and introduced a retail mortgage product and a new credit card product and we continued our commitment to fostering economic growth and have seen significant growth in the uptake of the various products offered to the small and medium sized business sector."

Hylton has consistently delivered improved profits for the bank over his tenure as banker in chief at NCB, but his streak appears set to be broken this year. At the current rate, the bank is looking at annualised profits of about J$10 billion or J$11 billion.

It would have to deliver around J$6 billion of profit in the fourth quarter - or more than double the current average quarterly performance of J$2.5b - to best the J$13 billion made in 2011.

Profits that year were fattened by a J$1 billion gain from investment in an associate company.

So far, this year to date, the bank has made J$1.9 billion less profit at this corresponding point in 2011.

Dennis Cohen, deputy managing director, said the big push for the June 2012 quarter included a focus on sales and service, revamp of credit cards to improve on turnaround time and also upgrade of the company's information technology platform on which its products operate.

NCB says it continues to hold the biggest market share in loans and deposits. Insurance and pension fund management contributed operating profits of $2.1 billion over the nine-month period, the card segment recorded contributed J$1.4 billion, and the wealth management segment contributed J$3.2 billion. Contri-butions from the latter segment, however, was down 3.8 per cent.

The bank executives also continued to acknowledge the drag on the business from lower yields on its investment portfolio and a large non-performing loan that impacted the performance of the corporate banking segment but sounded optimistic.

"We recognise the difficulties but feel good about the future prospects," said Hylton.

"There have been some changes in term of reduced margins, reduced fee earnings in some areas, but once we change and adapt, we will overcome," he said.

"It is a time for learning and transformation and we are investing heavily in the transformation," Hylton said.

A decade of NCB profits
2002 J$1.48 billion
2003 J$2.83 billion
2004 J$2.98 billion
2005 J$4.47 billion
2006 J$5.49 billion
2007 J$6.60 billion
2008 J$8.70 billion
2009 J$10.25 billion
2010 J$11.07 billion
2011 J$13.03 billion
2012 - 9 mth J$7.36 billion


Source:
Jamaica Gleaner
business@gleanerjm.com
Sunday July 29, 2012

http://jamaica-gleaner.com/gleaner/20120729/business/business4.html