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

Profit slips 29% at National Commercial Bank

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

NCB Financial Group Limited (NCBFG) and its subsidiaries (the Group) for the nine months ended June 30, reported net profit of JM$20.3 billion.

National Commercial Bank saw profit decline 29% for the nine-month period ended June 30 when compared to 2019.

Net profit attributable to stockholders of the parent was JM$14.8 billion, a 29 per cent or JM$6.0 billion decline from the prior year. However, directors said this was due to last year’s one off gains.

The company indicates that the prior year’s results included one off-gain of JM$3.3 billion from the disposal of interest in an associate company and $2.3 billion from the revaluation of interest in Guardian Holdings Limited (GHL).

“We continue to closely monitor the Group’s non-performing loans, which totalled $22.8 billion as at June 30, 2020.”

– Directors of National Commercial Bank

Excluding these gains, net profit attributable to stockholders would have decreased JM$350 million or two per cent from the prior year, it was noted.
Directors in their comments on the results said a substantial contributor to the 2020 financial performance was the inclusion of nine months of GHL’s results compared to only two months in the prior year.

In the third quarter, directors say the economic downturn stemming from COVID-19 continued to influence the performance of the Group

The impact primarily resulted in reduced securities trading activity coupled with the depreciation of the Jamaican currency resulting in reduced gains on foreign currency and investment activities.

It has also caused increased credit impairment provisions and the waiver of certain digital and self-service channel user fees.

Directors state that the company’s on advancing its digital capabilities should enable the Group to adjust operations to mitigate any disruption in business.

Operating profit for the nine months increased by 28 per cent or JM$4.9 billion over the prior year.

The net result from banking and investment activities, JM$58.3 billion, represented growth of 12 per cent or JM$6.2 billion.

There were reductions in fees experienced by National Commercial Bank Jamaica Limited, which was mainly due to its drive to have customers use digital channels along with the temporary waiver of some transaction fees to assist our customers during the pandemic.

A major contributor to the Group’s performance was Guardian Holdings, whose performance only registered for two months in the corresponding period based on acquisition date.

The reduction in gain on foreign currency and investment activities of 72 per cent or JM$6.3 billion partially offset those improvements in revenues.
Credit impairment losses increased by JM$2.0 billion or 55 per cent due to expected credit losses from the impact of COVID-19.
The net result from insurance activities totalled JM$23.4 billion, an increase of JM$16.1 billion or 222 per cent due to the consolidation of GHL.

The group said that as a result of the slowdown in the economy, it has offered moratoriums to customers.

It has also introduced new interest-free short-term loans/facilities and encouraged customers requiring additional assistance to avail of a Pay Day Loan facility.

It was noted, “We continue to closely monitor the Group’s non-performing loans, which totalled $22.8 billion as at June 30, 2020, an increase of JM$3.8 billion over the prior year.

Customer deposits, the group’s largest source of funding, totalled JM$545.7 billion, an increase of JM$36.7 billion or seven per cent over the prior year.

Total assets increased by JM$121.8 billion or eight per cent to JM$1.7 trillion, mainly due to expansion of our investment securities and loan portfolios. Customer deposits, repurchase agreements and investment contract liabilities primarily funded the growth.