November 8, 2018
For the year ended September 30, 2018, NCB Financial Group’s (NCBFG) net interest income increased by 18%, relative to 2017, to total $35.14 billion (2017: $29.76 billion), resulting from, “the consolidation of Clarien’s results and growth in the Jamaican loan portfolio”, Management noted. For the quarter, net interest income improved 29% to close at $9.73 billion (2017: $7.57 billion). Interest income for the year rose 22% year over year to $52.24 billion compared to $42.84 billion in 2017, while interest expense amounted to $17.09 billion relative to $13.08 billion for the prior year.
Net Fees and Commission Income amounted to $15.96 billion, an increase of 15% on 2017’s $13.89 billion. The company highlighted that, “the increase was due to the consolidation of Clarien. The improved fees earned by our Jamaican entities were driven by an increase in the number of corporate finance, investment and financing solutions offered by NCBCM. There was also growth in fees earned by our payment services, retail and SME segments stemming from increased e-commerce and credit transactions.”
The bank also reported a gain on foreign currency and investment activities of $15.61 billion, a growth of 102% relative to $7.73 billion in 2017. The Company noted the improvement resulted from, “an improving macro-economic environment coupled with high levels of JMD liquidity and declining interest rates generating a high demand for debt securities.” Insurance premium income for the year increased 14% to $8.66 billion (2017: $7.57 billion), while dividend income increased by 87% to a total of $553.31 million (2017: $295.12 million).
Other operating income climbed by 164% to $605.45 million (2017: $229.07 million). Consequently, total operating income increased 29% to a total of $76.54 billion (2017: $59.47 billion). Total operating income for the fourth quarter recorded a 35% growth to $20.59 billion (2017: $15.26 billion).
Total Operating Expenses for the year amounted to $50.35 billion, an increase of 31% compared to the $38.32 billion reported for the previous year. Expenses for the quarter rose 30% to close at $13.37 billion compared to $10.31 billion in 2017. According to NCBFG, “These increases were primarily due to our investments in digitization and the implementation of the agile methodology across the organization. These initiatives along with our cost optimisation strategies will result in the lowering of the cost to serve our customers and provide a better experience through our various channels.” Of these expenses:
- Staff costs increased 44% to $23.78 billion relative to $16.46 billion in 2017
- Other operating expenses grew by 13% to $16.41 billion (2017: $14.59 billion).
Provision for credit losses increased 130% to $1.68 billion (2017: $729.23 million), while depreciation and amortization grew by 47% to $3.47 billion (2017: $2.36 billion). Policyholders’ and annuitants’ benefits and reserves increased by 13% to $4.73 billion relative to $4.18 billion for the prior year’s corresponding period. Impairment losses on securities amounted to $283.88 million relative to nil in 2017. This according to NCBFG was, “related entirely to debt securities classified as available-for-sale and loans and receivables.”
Consequently, operating profit increased 24% to total $26.19 billion (2017: $21.16 billion). ‘Share of profit of associates’ declined by 10% to total $2.57 billion compared to $2.85 billion in 2017. The Bank also reported negative goodwill on acquisition of subsidiary of $4.39 billion relative to a nil in 2017. This was as related to, “the acquisition of Clarien”.
Gain on partial disposal of associate amounted to $837.48 million (2017: Nil). Management noted, “during the fourth quarter, we divested a portion of our investment in JMMB Group Limited, reducing our stake to 20.01% from 26.30%.”
Consequently, profit before taxation increased 42% to $33.99 billion relative to $24.01 billion in 2017.
After taxation of $5.41 billion (2017: $4.90 billion), net profit for the year totalled $28.58 billion, an increase of 50% compared to $19.11 billion in 2017. Net profit attributable to shareholders closed at $27.96 billion relative to $19.11 billion in 2017.
Earnings per share (EPS) for year totalled $11.33 relative to $7.75 booked in 2017. The EPS for the fourth quarter amounted to $2.96 (2017: $1.78). 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 $130.50 on November 08, 2018.
Balance Sheet at a glance:
Total Assets increased by 14% to $978.58 billion as at September 30, 2018 from $693.72 billion a year ago. This increase stemmed mainly from the growth in ‘Loans & Advances, Net of Provision for Credit Losses’ which moved from $218.62 billion to $372.63 billion, a 16% increase. Other notable contributors to the increase in the asset base were ‘Cash in Hand and Balances at Central Banks’ and ‘Investment Securities’ which both grew 14% to $74.71 billion (2017: $65.31 billion) and $210.35 billion (2017: $189.07 billion) respectively.
Shareholder’s Equity as at September 30, 2018 stood at $139.58 billion relative to $115.99 billion a year ago. This resulted in book value per share of $56.59 (2017: $47.02).
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