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

NCB ends year with JM$26.9-billion profit

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

NCB Financial Group Limited (NCBFG) and its subsidiaries (the Group), for the year ended September 30, 2020, reported a net profit of JM$26.9 billion, a 14 per cent decline from the restated profit in the year prior.

Profit attributable to stockholders of the parent was JM$19.1 billion, a 36 per cent or JM$10.8 billion decrease from the prior year.

Directors noted in remarks attached to the results that the prior year’s profit included a number of one-off gains totalling JM$8.2 billion — JM$3.3 billion from the disposal of an associate, JM$2.3 billion from the revaluation of the company’s interest in Guardian Holdings Limited (GHL) and JM$2.6 billion from the disposal of a subsidiary.

Guardian Holdings Limited’s headquarters in Trinidad and Tobago (File photo)

NCB indicated that, excluding these gains, the key results profit would have declined by JM$2.5 billion or 12 per cent from the prior year.

It also noted that the 2020 financial performance includes a full year of GHL’s results as opposed to only five months in the prior year.

The COVID-19 effect

The directors stated that the decline in economic activity from the effects of COVID-19 contributed to the decline in the profitability of the group.

The effects included reduced securities trading activity; a decline in the equity markets; depreciation of the Jamaican currency, which resulted in reduced gains on foreign currency and investment activities; and increased credit impairment provisions.

Chairman of Guardian Holdings Limited and President and CEO of NCB Financial Group Patrick Hylton (File photo)

“In spite of the weakened economic conditions, the group is committed to relentlessly pursuing our aspiration of becoming the region’s leading financial ecosystem. We continue to focus on enhancing customer experience, improving operational efficiency and developing our digital capabilities,” the directors said.

They added that the acceleration of digital strategies — which included migrating certain transactions to digital channels and promoting the use of these channels by waiving or reducing certain user fees — enabled the group to earn operating profit of JM$27.3 billion, an increase of JM$817 million over the prior year.

Segment breakdown

The net result from banking and investment activities of JM$76.4 billion was relatively flat with the prior year’s performance of JM$76.7 billion.

“In spite of the weakened economic conditions, the group is committed to relentlessly pursuing our aspiration of becoming the region’s leading financial ecosystem.”

Insurance activities totalled JM$32.5 billion, an increase of JM$18.0 billion or 125 per cent, due to the consolidation of a full year of GHL’s results compared to five months in the prior period.

The group’s loans and advances, net of credit impairment losses, totalled JM$453.0 billion, an increase of JM$29.9 billion or seven per cent over the prior year.

NCBFG’s directors pointed out, however, that they will continue to closely monitor the group’s non-performing loans, which totaled $24.7 billion as at September 30, 2020, an increase of $1.9 billion or eight per cent over the prior year.

This represented 5.3 per cent of the gross loans which remained unchanged from the prior year.

Deposits, the group’s largest source of funding, totalled JM$559.6 billion, an increase of JM$54.9 billion or 11 per cent over the prior year. In this regard, management said the strong growth “demonstrates our customers’ confidence in the group”.

National Commercial Bank in Half-Way-Tree, St Andrew, Jamaica (Photo: SSL Invest)

Capital and liquidity equity attributable to stockholders of the parent increased by six per cent or $8.5 billion to $156.1 billion as at September 30, 2020.

Directors indicated that the growth in equity was mainly attributable to increased retained earnings and that all the group’s regulated entities have met the applicable capital and liquidity regulatory requirements.

The board of directors, at its meeting on November 12, 2020, did not, however, declare an interim dividend.