Aug 2016 Financial News

NCB hits the $10-billion profit mark in nine months

Aug 02, 2016

National Commercial Bank Jamaica Ltd (NCBJ) and its subsidiaries recorded net profit of $9.94 billion for the nine months ended June 30, 2016 – an increase over the $8.55 billion earned for the similar period last year. Earnings per stock unit were $4.31, an increase of $0.83 cents.

Third-quarter performance saw net profit of $3.9 billion, an increase of 25 per cent or $789 million over the similar period in 2015.

The group has declared an interim dividend of $0.50 per share, payable on August 29 for stockholders on record as at August 15.

The bank in its report to shareholders said the best performer over nine months was the commercial banking segment, comprising the retail & SME, payments services, corporate banking, and treasury & correspondent banking segments, producing combined operating profits of $8.1 billion – an increase of 15.9 per cent or $1.1 billion, when compared to the nine months ended June 30, 2015.

Within the segment, treasury and correspondent banking contributed 26 per cent to profit, making the largest impact.

Directors said group performance was driven by the execution of the initiatives under strategic pillars, management of net interest margins and proactive delinquency management procedures.

Overall, the group’s cost to income ratio increased to 65.4 per cent, up from 63.9 per cent. Total assets of $584.8 billion grew by 15 per cent, or $76.1 billion.

For the nine-month period, operating income increased by 8.8 per cent, or $3.1 billion, primarily resulting from net interest income increasing by 8.8 per cent, or $1.7 billion, due to growth in the net loans and investment securities portfolios and a reduction in interest expenses driven by a decline in funding costs, NCB indicated.

Additionally, net fee and commission income increased by 10 per cent, or $743 million, mainly due to credit-related fees from the growth in the loan portfolio, higher volumes of point of sale (POS) transactions and unit trust commissions arising from growth in those portfolios.

Over the period, premium income grew by $388 million, or 6.8 per cent, due to higher levels of life insurance (individual and group) and annuity contracts, NCB noted.

Gains on foreign currency and investment activities increased by 10.8 per cent, or $305 million, primarily due to net foreign exchange gains arising from the devaluation of the Jamaican dollar against its major trading counterparts.

NCB said operating expenses increased by 8.2 per cent, or $2.0 billion, over the nine months ended June 30, 2015, mainly due to staff costs and technical, consultancy and professional charges, licensing and processing fees, and credit card rebates.

Additionally, policy holders’ and annuitants’ benefits and reserves were up by $412 million, or 12.7 per cent, due to increased actuarial reserves related to life insurance and annuity contracts sold, the finance house outlined.

Customer deposits were $256 billion, up 17.9 per cent or $38.9 billion over the prior year. This was driven by growth in the savings, current accounts and fixed deposit portfolios, which increased by 21.1 per cent, 23.9 per cent and 6.6 per cent respectively, over the prior year.

Loans and advances, which totalled $180.1 billion (net of provision for credit losses) as at June 30, 2016, grew by 11 per cent, or $17.8 billion, compared to the loan portfolio as at June 30, 2015.

Non-performing loans also improved – totalling $8.8 billion as at June 30, 2016 ($8.5 billion as at June 30, 2015) – and represented 4.8 per cent of the gross loans compared to 5.1 per cent as at June 30, 2015.

Stockholders’ equity was $96.5 billion as at June 30, 2016, up 10.5 per cent over the prior year.

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter
Jamaica Observer
Sunday July 31, 2016

http://www.jamaicaobserver.com/business/NCB-hits-the--10-billion-profit-mark-in-nine-months_68781