Jun 2008 Financial News
NCB Wealth Division - the best deal-makers in town - Part II
Jun 13, 2008
Last week, the managing director of NCB's Wealth Division Christopher Williams pointed out that his team had worked inordinately hard to bring deals to the table including the latest IPOs (the REIT and Jamaica Stock Exchange), thus setting his organisation apart from the other players on the block. He also cited the introduction of preference shares to the market and Principal Protected Notes, NCB initiatives which have spawned a slew of imitators.
What is clear is that NCB Capital Markets is a major revenue contributor to the NCB group. For fiscal year 2007, NCB Capital Markets profits grew by 27 per cent to J$1.57 billion and operating income grew by 12 per cent to J$2.8 billion.
NCB Capita; Markets recorded a bet profit of J$1.02 billion for the six months ended March 31, 2008, compared to J$844.58 million for the corresponding period of the previous year, an increase of J$176.1 million or 20.85 per cent. For the six months ending March 31, 2008, NCB Capital Market's contribution to the group's profit was 22.65 per cent.
"We started our journey five years ago and were the first to recognise the opportunities in the wealth management industry and go after it," declared Williams during an exclusive interview with Caribbean Business Report earlier this month.
There has long been a need in Jamaica for an entity that provides first-class private banking services akin to that offered by Coutts of London. Many individuals and not just those of high net worth would pay a premium for such services. Williams sees merit in such a service and will be targeting individuals of high net worth with a view to offering them a suite of personalised services through a dedicated team of wealth advisors. Caribbean Business Report understands that Najah Peterkin, formerly of Dehring, Bunting & Golding (DB&G), will join NCB as head of its private clients services.
"Unlike most of the other brokerages out there, we at NCB Wealth Division are not a boutique so we want clients to feel us. Clients in Jamaica want to hear about the investment opportunities out there. We have to make the most of our distribution strengths.
"Having strengthened the team, we don't want to rely on just Government of Jamaica Repos and Jamaica Stock Exchange instruments. We will be offering an entire suite of new products, which will whet the investor's appetite. We want to give our clients options right across the world, hence, we have AIC Mutual Funds," said Williams.
In keeping with this thinking, NCB Wealth Division has recently launched a campaign asking the investor what is his or her appetite for risk. Many investors in Jamaica are demonstrating an appetite for risk on a portion of their portfolio with the opportunity to get a bigger upside, which may explain the popularity of the likes of Olint, Cash Plus and World Wise.
"What we are saying is let us help you define your style, having defined your style we can help you build a portfolio around it. We can show you the various options out there and depending on your appetite for risk you can make some informed decisions.
"One must always bear in mind that all investments have some level of risk," said Williams.
What is clear is that a healthy investment climate already exists in Jamaica as exemplified by the popularity of the unregulated financial organisations that currently proliferate. People are calling on the legitimate financial institutions to offer more attractive rates of return. What is not clear at this time, however, is with the demise of many of the cowboy outfits, will finance houses heed the public's cry and will investors be looking at more practical investment instruments which are far less risky?
Williams responded: "We are not positioning ourselves to take advantage of the demise of many of the unregulated schemes though we are getting many more calls. What we are saying is that we recognise that investors want to be shown more options. We have properly regulated and approved products that carry risks, but once investors are prudent there should be no problem but you have to know your own investment style."
NCB Insurance
Earlier this year, NCB did away with Ingrid Chambers, who headed Omni Insurance, replacing her with Christopher Williams, who now heads the Wealth Creation Division, which comprises NCB Capital Markets and NCB Insurance. This move demonstrates much faith in Williams' abilities to generate income.
For the first three months of this year NCB Insurance increased its profits from J$90 million to J$132 million. For the fiscal year ended September 30, 2007, this insurance subsidiary brought in profit after tax of J$452 million, a seven per cent jump on the previous year's earnings. Its premium income grew from J$416 million in 2006 to J$552 million in 2007.
With Chambers at the helm, NCB Insurance sold over 15,000 new policies during the fiscal year ended September 30, 2007. This is a 48 per cent increase over the policies sold in 2006.
So how does Williams intend to top that?
"Well, we are bringing to the table our number one competence, which is investment management. We will be delivering a mix of insurance coverage and investment management. When clients buy an Omni policy they will have an opportunity to work with the NCB wealth management team and enhance their wealth. We will be introducing some adjustments to the core Omni product.
"Our main competitor in the insurance business has a head start on us but with the competences NCB Capital Markets brings to the table, we see ourselves as being able to deliver a better product to the client, which hopefully will translate well into sales."
Small Businesses
Small and medium enterprises have long bemoaned the lack of support for their ventures by local banks, citing this as the number one impediment to growth. Will NCB address their pleas?
"Recently we launched a new facility for small businesses where clients don't have to pay fees. In fact, I was rather surprised that both the Jamaica Manufacturers Association and the Jamaica Exporters Association were blithely unaware of our facility for small and medium enterprises. I guess we have to do a better job in communicating what we have to offer," surmised the NCB wealth management division boss.
He also took the opportunity to note that not enough Jamaicans are buying stocks. He pointed out that if people had bought Lascelles and Carreras last year they would have made a handsome return today, but the opportunity for many went a-begging.
"We all heard that NCB is making so much money (J$6.6 billion last year) and doesn't want to see the little man make money. Well, if that is the case then people should buy NCB shares.
GraceKennedy is a great Jamaican copy and Grace Foods is doing tremendously well. Grace is a very good buy and people should jump all over it. The way one creates wealth is by investing, not necessarily by saving. Now there is a portion of your portfolio that you don't risk. We want to see more Jamaicans becoming investors rather than savers.
"At the retail level we are strengthening Omni and at the high net worth level we are giving them more products with more aggression. For the corporates we are going regional. We are going abroad and bringing deals back home. As a 170-year-old brand, NCB is not just sitting back in contentment. We are aggressively out there looking to book new business and bring new deals to the table. No other securities dealer has put more capital on the table. We are serious about wealth," declared Williams at the NCB high command.
Source:
Al Edwards
The Jamaica Observer
Friday, June 13, 2008
http://www.jamaicaobserver.com/magazines/Business/html/20080612T220000-0500_136681_OBS_NCB_WEALTH_DIVISION___THE_BEST_DEAL_MAKERS_IN_TOWN___PART_II_.asp