Feb 2006 Financial News

Special loan scheme for NCB card merchants

Feb 14, 2006

National Commercial Bank (Jamaica) debit card merchants will be able to borrow up to $5 million under a new scheme where the limit on the loan will be based on the monthly value of the card transactions at their business.

The scheme, called NCB Merchant Advance, will allow companies that accept NCB debit card transactions, to borrow up to nine times their monthly card sales, up to a maximum of $5 million, and a minimum of $200,000.

NCB says that merchants must have debit card sales of at least $2 million for each of the last two years to benefit from this programme. Merchants will have the option of securing the funding by way of a loan or overdraft at interest rate 24.25 per cent per annum, or through an NCB credit card at a rate 49 per cent per annum. They will have up to 18 months to repay the amount taken as a loan.

NCB says that the scheme - that was formally announced last month - was part of its plan to its small and medium sized customers. "In the bank's continued drive to grow its loan portfolio and meet the needs of Small and Medium Enterprises (SME) customers by improving access to credit, this facility is one of several products that will make a meaningful contribution to increased income from loans" says Bernadette Barrow, manager of the SME division at NCB.

NCB anticipates that for the first year, 30 per cent of its qualified merchant base will take up the offer. An estimated 70 per cent of merchants across Jamaica uses NCB terminals to process cards.

Barrow expects this new service to become an important part of the bank's diverse revenue stream.

Loans and advances at NCB reached $39.8 billion at December 31, 2005, an increase of $4 billion or 11 per cent within three months. For the three months to December 31, 2005, loan income increased by $200.3 million or 13 per cent above the comparative quarter the prior year.

The bank attributes the improvement in its loan portfolio over the past few years to aggressive risk management, and a more effective collection drive. The provision for credit losses for the three months ended 31, December 2005 fell to $46.2 million, from $165 million for the corresponding period in 2004.

NCB Group posted net profit of $1.1 billion for the quarter to December 31, 2005, up from $971.1 million for the corresponding quarter in 2004.


Sunday Finance reporter
The Jamaica Observer
Sunday, February 12, 2006
http://www.jamaicaobserver.com/magazines/Business/html/20060211T180000-0500_98491_OBS_SPECIAL_LOAN_SCHEME_FOR_NCB_CARD_MERCHANTS_.asp