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NCB Financial Group's headquarters on Trafalgar Road in New Kingston, Jamaica (Photo: Denis Brown)

Dividend disappointment: NCB Group withholds payout

NCB Financial Group's headquarters on Trafalgar Road in New Kingston, Jamaica (Photo: Denis Brown)

Large shareholders in the NCB Financial Group who were expecting a windfall from dividends owing for part of financial year 2020 to present will have to wait longer to receive their payments.

On April 6, 2021, the Bank of Jamaica (BOJ) announced that it had reached an agreement with deposit-taking institutions and financial holding companies to declare and distribute dividends to shareholders owning more than one per cent of issued shares.

A view of the Noel Nethersole statue standing in front of Bank of Jamaica in downtown Kingston, Jamaica. (Photo: Miami Herald)

However, in a notice a day after, NCB noted that the central bank also advised caution.

The group stated that “against the background of still significant uncertainties associated with the COVID-19 pandemic”, the Bank of Jamaica “continues to urge financial institutions to remain prudent in their decisions to declare and distribute dividends”.

“NCB Financial Group Limited refers to its announcement on April 1, 2021, of a board meeting scheduled for April 29, 2021, and confirms that it is not intended to recommend the declaration of a dividend at this time,” the notice further read.

The largest financial services group in Jamaica, NCB Financial Group comprises National Commercial Bank Jamaica, NCB Capital Markets Limited and its subsidiaries in Barbados and Cayman, NCB Insurance Agency and Fund Managers Limited, NCB (Cayman) Limited, Clarien Group Limited and its subsidiaries in Bermuda, Guardian Holdings Limited and its subsidiaries, as well as NCB Global Finance Limited in Trinidad and Tobago. 

Guardian Holdings Limited’s headquarters in Trinidad and Tobago, a member of the NCB Financial Group. (File photo)

Bank of Jamaica (BOJ) said on Monday, April 5, 2021, that with immediate effect, FHCs and DTIs, via their boards, could choose to resume the distributions of dividends declared for financial years 2019 and 2020 to shareholders owning more than one per cent of issued shares.

The BOJ also stated that for 2021, companies could declare and distribute dividends to shareholders owning more than one per cent of issued shares.

NCB Financial Group’s performance

NCB Financial Group Limited, for the year ended September 2020, reported net income of JM$26.9 billion, a 14 per cent decline from the previous year. Profit attributable to stockholders of the parent decreased 36 per cent or JM$10.8 billion to JM$19.1 billion when compared to 2019.

NCB Financial Group’s headquarters on Trafalgar Road in New Kingston, Jamaica (File photo)

For the quarter ended December 31, 2020, the group saw a hike in staff costs which, along with lower revenues for the period, resulted in lower profit.

Staff costs, the single-largest operating expense of the group, was the main contributor to increased expenses. It grew by JM$1.7 billion or 16 per cent over the prior year primarily due to the annual increases in salaries, wages and allowances; as well as incentive payments within the current period related to the prior financial year, the group reported. 

Overall, operating expenses totalled JM$25.6 billion, increasing by JM$2.2 billion or 9.0 per cent over the prior year.

Net results from banking and investment increased from JM$17.99 billion at 2019 year end to JM$25.19 billion. Net results from the insurance segment fell to JM$8.59 billion, compared to JM$9.11 billion in 2019.

The flat revenues and increased costs resulted in a cost to income ratio of 73.13  per cent.