Jul 2014 Financial News

NCB reports 2Q $2.9b net profit

Jul 30, 2014

National Commercial Bank (NCB) made $2.9 billion in net profit for its second quarter ending March or three-quarters more year on year, led by foreign currency gains and investment activities.

Foreign currency and investment activities skyrocketed to $344 million from a loss of $728 million in the quarter ending March 2013. The bank blamed the hit it took on the National Debt Exchange (NDX) last year for the losses recorded.

"Gain on foreign currency and investment activities increased by $440 million; the prior year included extraordinary losses of $1.5 billion related to the debt exchange programmes implemented in February and March 2013," stated NCB.

Core activity at the bank also showed growth of $6 billion from $5 billion a year earlier.

"Our performance for the six months ended March 31, 2014 reflects strong growth in key areas such as loans, deposits, net interest income as well as improvement in key performance ratios such as return on average assets, return on average equity and earnings per share," the financials stated.

During the year, the group's operating income saw an increase of 17 per cent or $3 billion when compared to the same period last year. This resulted from gains on foreign exchange and investment activities, in addition to the group's acquisition of Advantage General Insurance Company (AGIC) in 2013, which doubled premium income.

Net interest income also saw an increase year over year, with a growth of $12.3 billion moving from $11.7 billion in 2013.

While revenues saw growth, operating expenses also increased 14 per cent, or $1.7 billion, compared to the financial year 2013. According to NCB, the growth in expense was primarily due to increased property, vehicle and ABM maintenance, utility and advertising costs.

Staff costs also increased by eight per cent from NCB's acquisition of AGIC, as well as an increase of 68 per cent or $891 million in policyholders' and annuitants' benefits and reserves related to the acquisition.

Loans and advances, which totalled $150.6 billion (net of provision for credit losses) as at March 31, 2014, grew by 17 per cent, or $21.7 billion, compared to the loan portfolio a year earlier. Non-performing loans, which totalled $7.6 billion as at March 31, 2014, represented 4.9 per cent of the gross loans, compared to 5.7 per cent as at March 31, 2013.

"Our activities to ensure delinquency management remain robust and we continue to proactively respond to changes in the environment. The regulatory provision coverage at March 31, 2014 was 119.8 per cent of non-performing loans, compared to 117.3 per cent at March 31, 2013," the bank stated.

Customer deposits were $198.4 billion, up 16 per cent, or $27.2 billion over the prior year. The increase, according to NCB, was driven by increases in deposit types; fixed deposits, savings and demand balances were up by 38 per cent, 12 per cent and four per cent, respectively, over the prior year.

Meanwhile, the group's stockholders' equity was $76.1 billion at the end of the financial quarter, up from 12 per cent over the prior year.

"NCB's capital position remains strong and our individual companies continue to meet their respective regulatory capital requirements," the bank said.

Source:
Karena Bennett
Jamaica Observer
Wednesday July 30, 2014   

http://www.jamaicaobserver.com/business/NCB-reports-2Q--2-9b-net-profit_17260372