Jan 2008 Financial News

NCBJ Releases First Quarter Results (Q108)

Jan 25, 2008

Results for the Three Months Ended December 31, 2007

All figures quoted in Jamaican Dollars unless otherwise stated

National Commercial Bank (Jamaica) Limited (NCBJ) has once again produced commendable results, with Earnings Per Share (EPS) growing by a significant 25 per cent from $0.61 in Q107 to $0.76 in Q108. The Group has attributed the improved performance to its continued focus on core business which has resulted in higher earnings from the major income streams.

Gross Revenue for the quarter stood at $9.1 billion, up $1.0 billion or 13 per cent on the corresponding period in fiscal 2007. The Banking and Wealth Management Businesses contributed 73 per cent and 20 per cent respectively to the overall Group Revenue.

Revenue Highlights:
• Total Interest Income up 11 per cent or $695.2 million, due to continued growth in the loan and investment portfolios.
• Net Fee and Commission Income increased by 28 per cent or $248.9 million. This was mainly attributable to fees generated from card and other retail banking related products.
• Premium Income from the Insurance segment increased by $38.5 million or 58 per cent over the prior year due to increased sales of both retail and group life insurance products.

Operating Expenses (excluding interest and fee and commission expense) for the quarter totaled $3.2 billion, up 10 per cent or $286.5 million on the corresponding period in fiscal 2007. Staff costs were up by 11 per cent or $176.0 million mainly due to negotiated increases in salary and allowances for the current financial year. Provision for credit losses stood at $129.7 million, up a significant 186 per cent or $84.4 million over comparable quarter in the last financial year. This increase was attributable to the 34 per cent growth in the loan portfolio.

The total assets of the group ended the period at $259.3 billion representing an increase of $24.6 billion or 10 per cent on Q107.

On January 24, 2008 the Board declared an interim dividend in respect of 2008 of $0.15 per ordinary stock unit. The dividend is payable on February 22, 2008 for stockholders on record as at February 11, 2008.

NCBJ last closed at a price of TT$2.10 on the local exchange. We have forecasted an EPS of TT$0.28 for fiscal 2008 and at this forecast and the current price this share is trading at an attractive multiple of 7.5 times. Additionally, using a multiple of 9 times and the forecasted EPS of TT$0.28, NCBJ has an expected return of 20 per cent or a target price of TT$2.52. Thus, we continue to recommend a BUY on this share.


Gia Singh
WISE Equity Research Team