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

Jamaica and Bermuda portfolios drag down NCB commercial and consumer banking segment

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

The Jamaican and Bermudan portfolios dragged down National Commercial Bank’s (NCB) Commercial and Consumer Banking segment in 2019.

In fact the segment lost heavily, declining by J$3.2 billion or 278 per cent, where the losses came mainly from NCB’s Jamaican and Bermudan portfolios. In its just approved 2018/2019 Annual Report, NCB said the credit impairment losses on both the Jamaican and Bermudian portfolios impaired the commercial and consumer banking segment performance.

Impairment charges grew by J$3.1 billion. The Commercial and Consumer Banking segment was the only business line that recorded a loss.

The segment, which carries the largest costs given infrastructure and staffing requirements, recorded a net operating loss of J$414 million, a decline of J$3.2 billion from the prior year. All the other six business segments; Payment Services, Corporate Banking, Treasury and Correspondent Banking, Wealth, Asset  Management and Investment Banking, Life Insurance and Pension Fund Management and General Insurance  were profitable in 2019.

However, there was an increase in external revenue of $2.6 billion or 10 per cent, which was driven by improved net interest income. Operating expenses increased by J$628 million to J$15.7 billion, up four per cent. During the year this segment focussed on strengthening relationship management and reach with the Small & Medium Sized Enterprises, while targeting other business customers that were previously underserved or unserved. Commercial and Consumer Banking segment

The Commercial and Consumer Banking segment lost $3.2 billion primarily due to its portfolios in Jamaica and Bermuda.

The business line with the biggest jump in profits for 2019 was Insurance and Pension Fund Management, which registered a 97 per cent increase to J$18.7 billion, up by J$9.2 billion. The five months of profits from Guardian Holdings, which was acquired last year by NCB contributed significant to the improvement in the bottom line.

NCB Insurance had a good year benefitting from improved spread performance and reserve releases. External revenues earner for the year totalled 52.2 billion, an increase of 274 per cent as a result of the consolidation of Guardian financials. 

Corporate banking was the second best earner with J$5.2 billion in operating profit, an increase of 53 per cent or J$1.8 billion. This area of business offers banking services, including loans and other credit products to large corporate clients. 

During the year the corporate banking segment strategically focussed its effort on growing the loan portfolio regionally, whilst capitalising on the improved Jamaican economy. This resulted in net interest income growing by J$1.9 billion or 51 per cent.