May 2012 Financial News

NCB to list in New York for US$225m

May 23, 2012

NATIONAL Commercial Bank (NCB) has filed with the US Securities and Exchange Commission (SEC) for an initial public offering of US$225 million ($19.5 billion) on the New York Stock Exchange (NYSE).

The Jamaican financial institution said it intends to use the net proceeds for general corporate purposes, including income-generating activities such as expanding loan volume and portfolio investments, infrastructure development and acquisitions.

NCB has been authorised to list for trading on the NYSE under the symbol "NCJ". The firm's listing will be made up of American depository shares (ADSs) — a vehicle for foreign companies to list US dollar denominated equities — consisting of a yet-to-be-determined multiple of underlying NCB shares which will be issued to its US depository, JP Morgan Chase.

The company added in an advisory to the Jamaica Stock Exchange (JSE) yesterday that while the offering size is "contemplated" to be US$225 million, its underwriters have an overallotment option, which could result in the increase of its share capital being higher if the offer is successful.

NCB is yet to determine pricing of its IPO. The company did not respond to queries by the Jamaica Observer up to press time.

John Jackson, financial analyst and publisher of the Investor's Choice magazine, said the Price Earnings (PE) ratio "will possibly be around 10 or 11 times earnings" but "may well go up to 14 or 15 times current year's earnings".

"It depends on when they come to the market," Jackson said, adding that RBC and Scotia are currently selling for about 11 or 12 times earnings on the NYSE.

The company could present an attractive value proposition to American investors, he said. "If you look at the growth rate of NCB's profit, taking out the extraordinary bad debt this year, it has been in the region of 10 to 20 per cent for a while. If the Jamaican economy stabilises, the potential is that it could grow faster than that.

NCB is already cross-listed on the JSE and the Trinidad and Tobago Stock Exchange (TTSE). The closing price of its ordinary shares on the JSE yesterday was $23.58 or US$0.27, and TT$1.93 or US$0.30 on the TTSE.

Purchasers of ADSs on the NYSE get physical certificates called American Depositary Receipts (ADRs).

Jackson speculated that around 10 NCB shares could make up an ADR.

NCB posted net profits of $4.8 billion for the six months to March 31, 2012. The earnings represented a 22.1 per cent decline from the comparative period in 2011, largely due to a one-time exposure that resulted in the company incurring account loan and impairment losses of $926 million after-tax.

NCB is the largest and most profitable banking group in Jamaica, offering a wide range of products and services to the consumer and SME markets, and Jamaican government agencies. The company said in its prospectus that it has 38 full-service branches, four agencies and 173 automated teller machines across the island.

NCB claims that it had the largest commercial bank branch network in Jamaica at March 31, 2012 while its ATMs accounted for 35 per cent and 34.7 cent of all ATM transactions in Jamaica for fiscal year 2011 and the six months ended March 31, 2012.


Source:
BY JULIAN RICHARDSON Assistant business co-ordinator richardsonj@jamaicaobserver.com
Jamaica Observer
Wednesday May 23, 2012

http://www.jamaicaobserver.com/business/NCB-to-list-in-New-York-for-US-225m_11524889#ixzz1vhBlrX3E