April 30, 2021
NCB Financial Group Limited (NCBFG), for the six months ended March 31, 2021, booked a 3% decrease in net interest income to total $27.10 billion relative to the $28 billion booked the corresponding period in 2020. For the second quarter ended March 31, 2021, net interest income fell 6% to close at $13.29 billion (2020: $14.07 billion). Interest income, rose to $40.22 billion compared to $40.10 billion in 2020, while interest expense amounted to $13.11 billion relative to $12.10 billion for the corresponding period in 2020.
Net fees and commission income amounted to $11.31 billion, a decrease of 1% compared with the $11.43 billion booked for the six months ended March 31, 2020. For the quarter, net fees and commission income improved 9% to close at $5.44 billion (2020: $5.01 billion).
Dividend income decreased by 28% to a total of $993.81 million (2020: $1.39 billion). Other operating income decreased 3% to $1.30 billion (2020: $1.34 billion), while credit impairment losses decreased 21% to $2.53 billion in contrast to $3.22 billion recorded for 2020. Lastly, the Company’s gain on foreign currency and investment activities surged 704% to $8.42 billion compared to $1.05 billion reported in the corresponding period in 2020.
Consequently, NCBFG’s net results from banking and investment activities, for the six months ended March 31, 2021, climbed 17% to a total of $46.60 billion (2020: $39.97 billion). NCBFG noted, “This performance was primarily driven by improved gains from investment activities, which rebounded to $8.4 billion for the current six-month period. This was due to more favourable market conditions and improving securities prices.” Meanwhile, for the second quarter ended March 31, 2021, Net results from banking and investment activities climbed 46% to a total of $21.40 billion (2020: $14.70 billion).
Net results from insurance activities for the six months ended March 31, 2021 decreased 11% to $13.16 billion (2020: $14.77 billion). Of this, insurance premium income rose 9% to $73.56 billion (2020: $67.20 billion), while reinsurance commission income surged to $6.09 billion (2020: $3.94 billion). Insurance premium ceded to insurers amounted to $23.94 billion (2020: $19.37 billion), while insurance benefits and claims amounted to $36.73 billion (2020: $34.27 billion), respectively. Commission and other selling expenses surged to $8.71 billion compared to $5.36 billion in 2020. Net results from insurance activities for the second quarter ended March 31, 2021 decreased 32% to $4.57 billion (2020: $6.76 billion).
Total operating expenses for the six months amounted to $47.13 billion, an increase of 13% compared to the $41.62 billion reported for the six months ended March 31, 2020, primarily due to “the annual increases in salaries, wages and allowances coupled with incentive payments within the current period related to the prior financial year,” according to Management. Expenses for the quarter rose 18% to close at $21.57 billion compared to $18.27 billion in 2020. Of these expenses, for the six months ended March 31, 2021:
- Staff costs increased 12% to $23.36 billion relative to $20.91 billion in 2020.
- Other operating expenses grew by 13% to $18.31 billion (2020: $16.21 billion). Management stated that this was, “due to the increased technology costs required to enhance our digital platforms coupled with additional marketing expenditure as we sought to improve our customers’ experience and educate them on the use of our digital channels.”
- Finance cost amounted to $850.89 million (2020: $168.60 million).
- Depreciation and amortization grew 7% to $4.62 billion (2020: $4.33 billion).
Consequently, operating profit for the six months ended March 31, 2021, decreased 4% to total $12.63 billion (2020: $13.14 billion). Meanwhile, for the quarter ended March 31, 2021, operating profit increased 38% to total $4.41 billion (2020: $3.20 billion).
Share of profit of associate, for the six months ended March 31, 2021, amounted to $50.71 million, up from 2020’s $13.22 million.
Consequently, profit before taxation for the six months ended March 31, 2021, decreased 4% to $12.68 billion relative to $13.15 billion in 2020. The Group booked a taxation charge of $3.44 billion for the six months ended March 31, 2021 relative to a taxation credit of $203.86 million in the corresponding period of 2020. As such, net profit for the six months ended March 31, 2021, decreased by approximately 31% to $9.24 billion (2020: $13.36 billion). Tax charge for the second quarter amounted to $1.14 billion compared to a credit of $2.18 billion in 2020. Net profit for the quarter closed at $3.39 billion (2020: $5.59 billion).
Net profit attributable to shareholders closed at $5.89 billion for the six months ended March 31, 2021 relative to $9.57 billion in 2020. Net profit attributable to shareholders for the quarter amounted to $1.97 billion (2020: $3.67 billion).
Total Comprehensive income year to date amounted to $9.61 billion relative to a loss of $4.21 billion for the same period in 2020. For the quarter, total comprehensive loss closed at $3.57 billion versus a loss of $10.99 billion for the corresponding quarter of 2020.
Earnings per share (EPS) for the six months totaled $2.39 relative to $3.88 booked for the comparable period of 2020. The EPS for the second quarter amounted to $0.80 (2020: $1.49). The twelve months earnings per share amounted to $6.25. 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 $139.63 on April 29, 2021 with a corresponding P/E of 22.35x.
The Group mentioned that, “the performance reflects the impact of the reduced economic activity caused by the pandemic. However, the challenges posed by the pandemic re-enforces the importance of our bold aspirations to continuously transform the Group. As we continue to pursue opportunities and execute strategic initiatives, we are poised to strengthen our regional position and remain optimistic that we will be able to thrive in the shifting economic environment.”
Balance Sheet at a glance:
Total Assets increased to $1.85 trillion as at March 31, 2021 relative to $1.62 trillion booked as at March 31, 2020. The Group highlighted that, “the growth was mainly due to increased investment securities, amounts due from banks and net loans. This was funded by growth in our major funding sources, including deposits, repurchase agreements, securitization arrangements and insurance contract liabilities.” This increase stemmed mainly from the growth in ‘Investment securities’ and ‘Loans and Advances’ which closed at $639.37 billion (2020: $373.65 billion) and $477.06 billion (2020: $430.84 billion), respectively. ‘Due from banks’ also contributed to the increase in the asset base closing at $170.51 billion (2020: $121.72 billion).
‘Equity attributable to shareholders of the parent’ as at March 31, 2021 stood at $162.70 billion relative to $133.90 billion as at March 31, 2020. This resulted in book value per share of $65.96 (2020: $54.28).
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.