By: Kimberly Ramkhalawan
August 5, 2022
NCB Financial Group is reporting an unaudited consolidated net profit of $25.9bn for the nine months ended June 30th, representing a $12bn increase or 86 percent over the prior year. The group, which is parent company to the National Commercial Bank of Jamaica, and majority shareholder of Guardian Holdings Limited attributed this large growth to its consolidated net profit attributable to stockholders of the parent company totaling $18.6bn.
This marks an improvement by $8.7bn or 88 percent over the $9.9bn earned for the corresponding period of the prior year.
According to the group report, the latest figures represent a strong performance for the second consecutive quarter which it attributes to improvement in net operating income, largely driven by increased net revenues from the consumer and small and medium sized enterprises (SME), life & health insurance, treasury and payment services segments.
It added that deposits totaled $712.2bn, an increase of 11 percent or $71.2bn over the prior year, reflecting what it describes as its “banking customers’ confidence in the Group and its largest source of funding”.
Meanwhile, its equity attributable to stockholders of the parent totaled $146.6bn, a decrease of $9.8bn or 6 percent compared to the prior year. It says this decline was mainly attributable to a $35.1bn decline in fair value reserves as a result of unrealized mark-to-market losses in the investment portfolio due to the rise in interest rates. This was partially offset by increased retained earnings due to improved profitability.
The group says it remains optimistic for growth this year with “more widespread economic reopening”, with its banking sector is expected to realize higher net interest and higher fee and commission income.
It is however concerned that higher interest rates could cause loan demand to slow and act as a deterrent to some borrowers, as debt is now seen as more expensive. It adds the current rising interest rate environment should reduce life insurers’ assets and liabilities, but the net effect is expected to be positive as the impact on the value of liabilities is expected to be greater.
Additionally the group anticipates to see an uptick in the sector as it seeks to benefit from increased IPOs, APOs, cross-listings on the Jamaican Stock Exchange, and improvements in corporate earnings as sectors continue to recover supporting investor confidence.
Other concerns the group cites, include whether the size of these transactions will be constrained by lower Jamaican Dollar liquidity, as its central bank uses it as a tool to stem inflation. And while it anticipates fresh headwinds, the Group says it intends to take advantage of emerging opportunities, all while trying to mitigate the existing and emerging risks. In its recent meeting on August 4, the Board of Directors added that it did not decide to pay an interim dividend.
As for going forward, the NCB Financial Group says its investment in strategic initiatives will continue focused on its digitizing and optimizing its operations while broadening revenue streams.