January 31, 2020

For three months ended December 31, 2019, NCB Financial Group Limited (NCBFG) net interest income increased by 41%, relative to 2018, to total $13.92 billion (2018: $9.85 billion). NCB noted, “The core performance of the Group has improved and was strengthened by the consolidation of Guardian Holdings Limited (GHL). This was demonstrated through increased operating profit of $9.9 billion, our highest quarter’s performance to date. Operating profit was $5.1 billion or 105% ahead of the December 2018 quarter and $1.2 billion or 14% above the September 2019 quarter which also included GHL’s results. The higher operating profit was supported by strong growth in operating income, which totalled $33.3 billion, a 76% or $14.4 billion improvement over the prior year, primarily driven by the consolidation of GHL. Operating income for the quarter was $1.9 billion or 6% above the prior quarter which included a full quarter’s performance for GHL.”

Net fees and commission income amounted to $6.41 billion, an increase of 49% on 2018’s $4.30 billion. NCBFG stated that, “this was primarily driven by the consolidation of GHL coupled with growth in transactions in our payment services (card acquiring and issuing) business segment.” Of this, ‘Fee and commission income’ totalled $7.68 billon (2018: $5.50 billion), while ‘Fee and commission expense’ amounted to $1.26 billon (2018: $1.20 billion). Dividend income increased by 277% to a total of $693.38 million (2018: $184.16 million). Other Operating Income increased 1650% to $836.90 million (2018: $47.82 million) while Credit impairment losses increased 36% to $1.57 billion in contrast to $1.16 billion recorded for 2018. Lastly, the Company’s Gain on foreign currency and investment activities rose 19% to $4.98 billion compared to $4.17 billion reported in 2018. The Group highlighted that, “this was mainly as a result of the consolidation of GHL.” Consequently, NCBFG’s Net results from Banking and Investment Activities climbed 45% to a total of $25.28 billion (2018: $17.40 billion).

Net results from insurance activities, for the three months ended December 31, 2019, increased 434% to $8 billion (2018: $1.50 billion). NCBFG noted that, “the growth was due to the consolidation of GHL’s insurance activities which contributed $7.5 billion to net insurance revenues.” Of this, Insurance premium income rose 1386% to $33.64 billion (2018: $2.26 billion), while reinsurance commission income advanced 5950% to $1.94 billion (2018: $32.11 million). Insurance premium ceded to insurers amounted to $9.93 billion (2018: $119.65 million). Commission and other selling expenses surged to $458.93 million compared to $60.74 million in 2018.

As such, net operating income amounted to $33.28 billion for the three months ended December 31, 2019 compared to $18.90 billion booked the prior corresponding period.

Total Operating Expenses for the first quarter amounted to $23.34 billion, an increase of 66% compared to the $14.05 billion reported for the three months ended December 31, 2018. “The consolidation of GHL contributed to the rise in expenses,” Management stated. Of these expenses:

• • Staff costs increased 57% to $10.65 billion relative to $6.78 billion in 2018.
  • Other operating expenses grew by 78% to $10.62 billion (2018: $5.97 billion).
  • Depreciation and amortization grew 59% to $2.07 billion (2018: $1.30 billion).

Consequently, operating profit increased 105% to total $9.95 billion (2018: $4.85 billion).

‘Share of loss of associate’ amounted to $201.68 million compared to a ‘share of profit of associate’ in 2018 of $818.86 million. The Group mentioned that, “For the current quarter we reported share of loss of associates related to associate companies of GHL which incurred losses. This is in comparison to the December 2018 quarter share of profit of associates which included GHL when it was accounted for as an associate company, at that time NCBFG owned 29.99% of its outstanding shares.” The company reported a gain on disposal of associate of $3.29 billion for the quarter ended December 31, 2018 relative to nil in 2019.

Consequently, profit before taxation increased 9% to $9.74 billion relative to $8.96 billion in 2018. Following taxation of $1.97 billion (2018: $1.56 billion), the net profit for the three months ended December 31, 2019 totalled $7.77 billion, an increase of 5% compared to $7.40 billion for the corresponding period of 2018.

Net profit attributable to shareholders for the quarter ended December 31, 2019 closed at $5.90 billion relative to $7.45 billion in 2018. Management noted that, “The prior year’s results included a one off-gain of $3.3 billion from the disposal of our interest in an associate company.”

Earnings per share (EPS) for the three months period totalled $2.39 relative to $3.02 booked in 2018. The trailing twelve-month EPS amounted to $11.36.  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 $189.84 on January 30, 2020.

Balance Sheet at a glance:

Total Assets increased by 71% to $1.60 trillion as at December 31, 2019 from $940.91 billion a year ago. This increase stemmed mainly from the growth in ‘Investment securities’ which moved from $206.82 billion in 2018 to $386.81 billion in 2019, an 87% increase. Other notable contributors to the increase in the asset base were ‘Pledged Assets’ which rose from $179.69 billion as at December 31, 2018 to $397.56 billion as at December 31, 2019. ‘Due from other banks’ which closed the period at $128.30 billion (2018: $28.09 billion).

Shareholders’ Equity as at December 31, 2019 closed at $190.03 billion relative to $140.64 billion a year ago. This resulted in a book value per share of $77.04 (2018: $57.01).

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