Aug 2008 Financial News

NCBJ Releases Nine Months Results

Aug 04, 2008

National Commercial Bank Jamaica Limited
Results for the Nine Months Ended June 30, 2008

All figures quoted in Jamaica Dollars unless otherwise stated

Earnings Per Share
National Commercial Bank Jamaica Limited (NCBJ) had a commendable Third Quarter performance with a reported Earnings Per Share (EPS) of 91 cents, which was up a significant 26.4 per cent or 19 cents on Q307. For the Nine Months Ended June 30, 2008, the Group’s EPS grew an outstanding 38.4 per cent or 76 cents from $1.98 (NM07) to $2.74 (NM08). The results for the Nine Month period, however, included a one-off gain of $517 million that was earned in the Second Quarter. Excluding this gain, the Bank’s EPS was still up an admirable 27.8 per cent from $1.98 (NM07) to $2.53 (NM08).

Financial Highlights:
• Total Interest Income, up 16 per cent or $3 billion to $21.4 billion. Interest Income from Loans increased 24.8 per cent due to continued growth in the loan portfolio
• Net Interest Income, up 22.3 per cent or $2.1 billion to $11.6 billion
• Net Fee and Commission Income, up 21.1 per cent or $585.2 million to $3.4 billion
• Operating Revenue, up 17.8 per cent or $2.7 billion to $18.1 billion
• Operating Expenses, up 4.4 per cent or $404.1 million to $9.5 billion
• Operating Profit, up a noteworthy 37.5 per cent or $2.3 billion to $8.6 billion
• Net Profit, up an exceptional 38.4 per cent or $1.9 billion to $6.8 billion. Excluding the one-off gain, Net Profit was up 27.8 per cent from $4.9 billion to $6.2 billion.

The total assets of the Group ended the Nine Month period at $279.9 billion representing an increase of $36.0 billion or 14.8 per cent on NM07. The two major contributors to this growth were Investment Securities, up 4.4 per cent to $149.8 billion and Loans and Advances (net of provision for credit losses), up 34.9 per cent to $71.1 billion. Return on Equity and Return on Assets was 29.5 per cent (NM07: 24.9 per cent) and 3.4 per cent (NM07: 2.8 per cent) respectively.

Dividends
The Board declared an Interim Dividend of $0.30 per share payable on August 27, 2008 for stockholders on record as at August 14, 2008.

Recommendation
The shares of NCBJ are currently trading at a price of TT$2.05 on the local exchange. At our forecasted EPS of TT$0.28 and the current price, NCBJ is trading at a price to earnings multiple of 7.3 times. Additionally using a multiple of 9 times and the forecasted EPS of TT$0.28, NCBJ has an expected return of approximately 23 per cent or a Target Price of TT$2.52. We continue to recommend a BUY on this share.


Nancy Chen
WISE Equity Research Team