Jul 2006 Financial News

NCBJ Releases Nine Months Results

Jul 28, 2006

All figures are quoted in Jamaican Dollars unless otherwise stated.


For the nine months ended June 30, 2006 National Commercial Bank of Jamaica (NCBJ) recorded a Net Profit of $4 billion which is an outstanding increase of 62% over the corresponding period in 2005. Quarter on quarter this was an increase of 80%, moving from $8.6 million to $1.6 billion. The EPS for the third quarter was $0.63, which translates into a nine months EPS of $1.58.

Quarter on Quarter the Revenue increased by 19% to $7.7 billion fueled by higher loan income in addition to fee and commission income. The resulting Revenue figure for the nine months was $21.4 billion which is a 10% increase on the comparable nine month period in 2005. Operating Expenses for the quarter increased by 13% to $5.8 billion and included a provision of $199 million for the impairment of the investment in Supreme Ventures Limited (SVL). However, the increase on the nine month period was only 2%, moving from $16.2 billion to $16.4 billion. It should also be noted that the comparative nine month period also included an impairment loss on the investment in Dyoll Group Limited of $535.8 million.

The SVL impairment loss had little impact on Operating Profit in the quarter as the Company recorded an increase of 43 per cent over the comparable quarter in 2005, to end the nine months at $5.1 billion. Profit before Tax also had a large increase of 45% over the same nine month period last year, moving from $3.5 billion to $5.7 billion. Quarter on Quarter the percentage increase was more or less the same, up 41% from $1.4 billion to $1.9 billion.

The Effective Tax rate for the period was 23% which was considerably lower than the prior comparable period in 2005, where the rate stood at 31%.

At our current forecasted EPS of TT 20.3 cents and current price of TT$1.40, the shares of NCBJ are trading at a relatively low multiple of 6.90 times. This share usually trades in the band of 8 to 12 times, as such based on fundamental analysis we recommend a BUY on this share.


Gia Singh
WISE Research Team