Date: May 01, 2020
NCB Financial Group Limited (NCBFG), for the six months ended March 31, 2020, booked a 40% increase in net interest income to total $27.98 billion relative to the $19.99 billion booked the corresponding period in 2019. NCBFG noted that this increase was “primarily due to the consolidation of GHL’s results. There was also growth in our loan portfolio, which accounted for 15% of the increase in interest income.” For the second quarter ended March 31, 2020, net interest income improved 39% to close at $14.07 billion (2019: $10.15 billion). Interest income, rose 38% year over year for the six months to $40.10 billion compared to $28.99 billion in 2019, while interest expense amounted to $12.12 billion relative to $9 billion for the corresponding period in 2019.
Net fees and commission income amounted to $11.43 billion, an increase of 39% compared with the $8.25 billion booked for the six months ended March 31, 2019, NCBFG stated, “approximately half of this increase was attributable to the consolidation of GHL with the balance due to increased transaction volumes.” For the quarter, net fees and commission income improved 27% to close at $5.01 billion (2019: $3.94 billion). Dividend income increased by 368% to a total of $1.39 billion (2019: $297.21 million). Other operating income increased 1086% to $1.34 billion (2019: $113.03 million), while credit impairment losses increased 71% to $3.22 billion in contrast to $1.88 billion recorded for 2019. Lastly, the Company’s gain on foreign currency and investment activities declined 82% to $1.05 billion compared to $5.95 billion reported in the corresponding period in 2019 which was, “primarily due to losses on equity securities and reduced foreign exchange income compared to the prior year,” as per Management.
Consequently, NCBFG’s net results from banking and investment activities, for the six months ended March 31, 2020, climbed 22% to a total of $39.97 billion (2019: $32.72 billion). Meanwhile, for the second quarter ended March 31, 2020, Net results from banking and investment activities declined 4% to a total of $14.69 billion (2019: $15.32 billion).
Net results from insurance activities for the six months ended March 31, 2020 increased 294% to $14.77 billion (2019: $3.75 billion). According to NCBFG, the growth was attributable to, “the consolidation of GHL.” Of this, insurance premium income rose 1311% to $67.20 billion (2019: $4.76 billion), while reinsurance commission income surged to $3.94 billion (2019: $64.57 million). Insurance premium ceded to insurers amounted to $19.37 billion (2019: $481.55 million), while policyholders and annuitants benefits and reserves amounted to $31.65 billion (2019: $473.54 million) respectively. Commission and other selling expenses surged to $5.36 billion compared to $123.64 million in 2019. Net results from insurance activities for the second quarter ended March 31, 2020 increased 200% to $6.76 billion (2019: $2.25 billion).
Total operating expenses for the six months amounted to $41.60 billion, an increase of 61% compared to the $25.83 billion reported for the six months ended March 31, 2019, as a direct result of the consolidation of GHL, according to Management. Expenses for the quarter rose 55% to close at $18.26 billion compared to $11.78 billion in 2019. Of these expenses, for the six months ended March 31, 2020:
Staff costs increased 61% to $20.91 billion relative to $13.01 billion in 2019.
Other operating expenses grew by 59% to $16.21 billion (2019: $16.21 billion).
Depreciation and amortization grew 71% to $4.48 billion (2019: $2.61 billion).
Consequently, operating profit for the six months ended March 31, 2020, increased 24% to total $13.14 billion (2019: $10.64 billion). Meanwhile, for the quarter ended March 31, 2020, operating profit decreased 45% to total $3.20 billion (2019: $5.79 billion). Management noted, the increase in operating profit year to date, “was significantly due to the inclusion of six months of Guardian Holdings Limited’s (GHL’s) results in the current period with no comparable results in the prior year; given that the majority stake in GHL was acquired in May 2019.”
Share of profit of associate, for the six months ended March 31, 2020, amounted to $13.22 million, down from 2019’s $1.63 billion. There was no gain on disposal of associate for the six months ended March 31, 2020 compared to a gain of $3.29 billion in 2019.
Consequently, profit before taxation for the six months ended March 31, 2020, decreased 15% to $13.15 billion relative to $15.56 billion in 2019. The Group booked a taxation credit of $203.86 million for the six months ended March 31, 2020 relative to a taxation charge of $3.15 billion in the corresponding period of 2019. Management noted, “the tax credit was due to certain entities within the Group having significant amounts of income that was not subject to income tax compared to taxable income in the March quarter.” As such, net profit for the six months ended March 31, 2020, increased by approximately 8% to $13.36 billion (2019: $12.41 billion). Tax credits for the second quarter amounted to $2.18 billion compared to an expense of $1.59 billion in 2019. Net profit for the quarter closed at $5.59 billion (2019: $5.01 billion).
Net profit attributable to shareholders closed at $9.57 billion for the six months ended March 31, 2020 relative to $12.46 billion in 2019. Net profit attributable to shareholders for the quarter amounted to $3.67 billion (2019: $5.01 billion).
Total Comprehensive loss year to date amounted to $4.21 billion relative to an income of $12.58 billion for the same period in 2019. For the quarter, total comprehensive loss closed at $10.99 billion versus an income of $5.29 billion for the corresponding quarter of 2019.
Earnings per share (EPS) for the six months totaled $3.88 relative to $5.05 booked for the comparable period of 2019. The EPS for the second quarter amounted to $1.49 (2019: $2.03). The twelve months earnings per share amounted to $10.82. 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 $143.52 on April 30, 2020.
Balance Sheet at a glance:
Total Assets increased to $1.61 trillion as at March 31, 2020 from $970.83 billion a six months ago. This increase stemmed mainly from the growth in ‘Investment securities’ and ‘Pledged assets’ which closed at $373.65 billion (2019: $207.68 billion) and $394.38 billion (2019: $185.44 billion) respectively. ‘Due from banks’ also contributed to the increase in the asset base with a 168% growth to $121.72 billion (2019: $45.34 billion).
‘Equity attributable to shareholders of the parent’ as at March 31, 2020 stood at $133.61 billion relative to $136.62 billion as at March 31, 2019. This resulted in book value per share of $54.16 (2019: $55.38).
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.