NCB Group profit down 31 per cent

NCB Financial Group Limited (NCBFG) and its subsidiaries (the Group) reported a 31 per cent decline for the six months ended March 31, 2021.  

For the period, the group’s consolidated net profit fell by JM$4.1 billion below the figures for the corresponding period in the prior year to JM$9.2 billion.

Improved operations but weak economic climate

Patrick Hylton, president and group CEO, said that the performance reflects the impact of the reduced economic activity caused by the pandemic. 

President and CEO of NCB Financial Group Patrick Hylton
(File photo)

The group’s banking, investment and insurance activities yielded operating income of JM$59.8 billion, representing an increase of 9.0 per cent or JM$5.0 billion over the prior year. 

The improved revenue was, however, offset by a JM$5.5 billion or 13 per cent increase in operating expenses. The net result from banking and investment activities of JM$46.6 billion represented a 17 per cent or JM$6.6 billion increase when compared to the prior year’s results. 

Hylton noted that performance was primarily driven by improved gains from investment activities, which rebounded to JM$8.4 billion for the six-month period, due to more favourable market conditions and improving securities prices.

Managing credit

He added that credit impairment provisions also benefited from an improved economic outlook compared to the previous financial year and prudent delinquency management strategies, resulting in a JM$684 million or 21 per cent reduction in expected credit losses. 

NCB credit cards (Photo courtesy jncb.com)

During the period, a continued downward trend in loan rates caused a tightening of interest spreads, resulting in net interest income reducing slightly, in spite of the increases in loans, securities and funding balances. 

Reduced retail and corporate activity also significantly impacted fee income, specifically card issuing and acquiring, which is heavily dependent on travel, entertainment and restaurant activities. 

The net result from insurance activities totaled $13.2 billion, a decrease of 11 per cent or $1.6 billion from the comparative prior year period. Net underwriting income increased by $3.9 billion or 8  per cent over the prior year.

Climbing operating costs

National Commercial Bank Half-Way-Tree branch in St Andrew, Jamaica. NCB Financial Group’s banking, investment and insurance activities yielded operating income of JM$59.8 billion for the six months ending March 31, 2021 (Photo: SSL Invest)

Group  operating expenses totaled $47.1 billion, an increase of $5.5 billion or 13 per cent over the prior year. 

Staff costs of $23.4 billion, increased by $2.4 billion or 12 per cent over the prior year primarily due to the annual increases in salaries, wages and allowances coupled with incentive payments within the current period related to the prior financial year. 

Other operating expenses increased by $2.1 billion due to the increased technology costs required to enhance  digital platforms

 Equity attributable to stockholders of the parent increased by 22 per cent or $28.8 billion to $162.7 billion as at March 31, 2021. 

The board of directors, at its meeting on April 29, 2021, declared an interim dividend of JM$0.50 per ordinary stock unit. The dividend is payable on May 31, 2021, to stockholders on record as at May 14, 2021.