Nov 2012 Financial News

Profit streak broken

Nov 19, 2012

For 10 years, since 2002, National Commercial Bank Jamaica has reported growth in net profit. That growth streak was broken in 2012.

Jamaica's largest bank disclosed that it made net profit of J$10.04 billion at year-end September, a substantial drop of 27.7 per cent from the restated J$13.9 billion record profit made in 2011.

NCB will pay out dividends amounting to J$1.58 billion, or 64 cents per share, on December 13.

The bank's broken streak, as its numbers indicate, is linked to a thorny non-performing debt portfolio. Provisions for credit losses tripled to J$2.46 billion from J$769 million. The bank also booked close to half-billion of impairment losses on securities.

Still, Group Managing Director Patrick Hylton was upbeat about the bank's prospects as he briefed investors and journalists on the bank's current performance on Friday.

"We feel we have a good strategy that will not only spur growth, but ensure that our organisation continues to perform in the future, and from our perspective, we have done a lot of work - analytical work in the area of risk," said Hylton.

"We have also had discussion with customers and employees to better understand where are some of the areas we need to improve and I can say to you that notwithstanding the difficulties, our view is that our business has significant opportunities and all we have to do and is committed to doing, is to execute efficiently and effectively on those opportunities," he said.

"So when we look at it, we feel we have a good foundation from the point of view of our capital, liquidity and risk, and with an effective strategy we will deliver. So our expectation is that we have had a good year and that going forward we will have several more good years," he said.

Lost premium income

NCB improved on interest income and fees and commissions at year-end September 2012, but paid out half-billion more in salaries, lost some of its premium income due largely to lower sales of annuities by its insurance subsidiary, reported substantially lower gains from foreign exchange and investments, tripled its credit provisions, and took a hit on its book of securities in which impairment losses grew by 78.5 per cent to J$467.8 million.

The net result was marginally lower revenue of J$34.55 billion, down from J$34.67 billion.

Operating profit fell by J$3.22 billion to J$12.26 billion.

The banking group grew its loan portfolio by 22 per cent to J$112 billion, and laid claim to the largest market share at 38 per cent. Its capital base also grew from J$62 billion to J$66 billion.


Source:
Sabrina Gordon, Business Reporter
sabrina.gordon @gleanerjm.com
Jamaica Gleaner
Sunday November 18, 2012

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