November 13, 2020
Net Interest Income increased by 18%, relative to 2019, to total $52.49 billion (2019: $44.60 billion). While, for the quarter, net interest income closed at $14.85 billion (2019: $14.34 billion).
Net Fees and Commission Income amounted to $21.37 billion, an increase of 11% on 2019’s $19.18 billion. NCBFG indicated, “improvements in net interest and fee & commission income stemming from the consolidation of a full year of GHL’s results and growth in the loans and investments portfolios offset the decline in gains from foreign exchange and investment activities and the increase in credit provisions.”
Dividend income increased by 49% to a total of $1.90 billion (2019: $1.27 billion). Other Operating Income increased 89% to $2.10 billion (2019: $1.11 billion) while Credit impairment losses increased 113% to $10.28 billion in contrast to $4.82 billion recorded for 2019. Lastly, the Company’s Gain on foreign currency and investment activities declined 43% to $8.79 billion compared to $15.41 billion reported in 2019.
Consequently, NCBFG’s Net results from Banking and Investment Activities marginally fell by 0.49% to a total of $76.37 billion (2019: $76.75 billion).
Net results from insurance activities for the year increased 125% to $32.46 billion (2019: $14.43 billion). According to NCBFG, “this increase was due to the consolidation of a full year of GHL’s results compared to five months in the prior period. GHL recorded a strong performance despite the challenges arising due to COVID. Underwriting performance was mainly due to improvements in GHL’s Life, Health and Pension business. The Property and Casualty segment also recorded increased net income having been spared from major catastrophic events coupled with the growth in business experienced in the Dutch Caribbean markets. the growth was attributable to the consolidation of GHL’s insurance activities which contributed $7.1 billion to net insurance revenues, coupled with the improved performance of NCB Insurance Company Limited’s life insurance business which benefited from improved spread performance and reserve releases.” Of this, Insurance premium income rose 123% to $135.20 billion (2019: $60.62 billion), while reinsurance commission income advanced 136% to $8.47 billion (2018:$3.59 billion). Insurance premium ceded to insurers and policyholders and annuitants benefits and reserves amounted to $42 billion (2019: $16.06 billion) and $63.22 billion (2019: $35.68 billion) respectively. Commission and other selling expenses surged to $13.01 billion compared to $6.42 billion in 2019.
Total Operating Expenses for the year amounted to $81.57 billion, an increase of 26% compared to the $64.74 billion reported for the year ended September 30, 2019. According to NCBFG, “the increase was primarily due to the consolidation of GHL.” Of these expenses:
- Staff costs increased 26% to $40.53 billion relative to $32.12 billion in 2019.
- Other operating expenses grew by 21% to $31.10 billion (2019: $25.67 billion).
- Depreciation and amortization grew 23% to $8.53 billion (2019: $6.94 billion).
Consequently, operating profit increased 3% to total $27.26 billion (2019: $26.44 billion).
‘Share of profit of associate and gain on dilution’ amounted to $312.39 million, down from 2019’s $2.90 billion.
No Gain on disposal of associate was recorded (2019: $3.29 billion).
No Gain on disposal of subsidiary was recorded (2019: $2.63 billion).
No Gain on revaluation of associate was recorded (2019: $2.33 billion).
Consequently, profit before taxation decreased 27% to $27.57 billion relative to $37.59 billion in 2019. Following taxation of $690.06 million (2019: $6.42 billion), year-end net profit totalled $26.88 billion, a decrease of 14% compared to $31.16 billion for the corresponding period of 2019. Net profit for the quarter closed at $6.58 billion (2019: $9.86 billion).
Net profit attributable to shareholders closed at $19.09 billion for the year relative to $29.87 billion in 2019. Net profit attributable to shareholders for the quarter amounted to $4.31 billion (2019: $9.12 billion).
Earnings per share (EPS) for the year totalled $7.74 relative to $12.11 booked for the comparable period of 2019. The EPS for the fourth quarter amounted to $1.75 (2019: $3.70). The number of shares used in our calculations amounted to 2,466,762,828 units. NCBFG stock price closed the trading period at a price of $133.99 on November 12, 2020.
Management noted, “Within the context of the pandemic’s devastating impact on the global and regional economies, the Group recorded a commendable performance for the financial year. Our business segments began experiencing the impact in March 2020 as market conditions worsened resulting in reduced security prices and trading volumes and a reduction in consumer and business activities exacerbated by government imposed restrictions to limit the spread of the virus. We responded by accelerating our digital strategies, which included migrating certain transactions to digital channels.”
Balance Sheet at a glance:
Total Assets increased to $1.79 trillion as at September 30, 2020 from $1.62 trillion a year ago. This increase stemmed mainly from the growth in ‘Investment securities’, Loan and advances, net of credit impairment losses’ and ‘Pledged assets’. Investment securities and Loan and Advances, net of credit impairment losses closed at $456.08 billion (2019: $386.19 billion) and $452.95 billion (2019: $423.10 billion) respectively. Pledged assets increased from $378.99 billion in 2019 to $401.77 billion. ‘Due from banks’ also contributed to the increase in the asset base with a 17% growth to $165.24 billion (2019: $141.36 billion).
‘Equity attributable to shareholders of the parent’ as at September 30, 2020 stood at $156.11 billion relative to $147.59 billion a year ago. This resulted in book value per share of $63.29 (2019: $59.83).
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