$350 billion revenues in sight at NCB

Gross revenues at Jamaica’s largest financial entity, NCB Financial Group, could hit $350 billion in 2020 data from the 2019 full year results suggests and would represent a significant rise from total revenues of $167 billion generated in 2019.
Total revenues jumped 128 percent in the September quarter to $81.3 billion, helped by the acquisition of a majority stake in Guardian Holdings and climbed 30 percent to $166.7 billion.  Guardian also contributed $580 billion to the Group’s total assets of $1.6 trillion.
NCB produced record profit in the twelve months to September, this year with profit attributable to NCB shareholders, growing 6 percent to $29.6 billion from $27.96 billion in 2018 with growth of 21 percent from $8.8 billion in the September quarter from $7.3 billion in 2018 quarter.
More importantly, profit from ongoing operations rose marginally from $28.69 billion for the year to September 2018, to $28.73 billion in 2019 and for the quarter, it rose 12 percent from $7.98 billion in 2018 to $8.97 billion. As impressive as the numbers suggest, not all things went well for the group. It suffered a significant loss from the loan portfolio having to book $4 billion in loan loss provision up 104 percent over $1.96 billion booked in 2018.
While the focus by many investors is on profit before other comprehensive profit, a closer look indicates that profit from normal operations does not tell the full story. Total profit for the year ended at $37.5 billion, up from $21.4 billion in 2018 with earnings per share of $15 for 2019.
Commercial and consumer division reported a loss of $414 million, compared with a profit of $2.75 billion, as a result of credit impairment losses moving from $1.1 billion to $4.1 billion in 2019. Payment services contributed $3.6 billion to profits from $2.9 billion in 2018. Corporate banking delivered $5.2 billion to earnings in 2019 from $3.4 billion to in 2018. Treasury and correspondent banking made the most significant impact on profit for 2019 with a profit of $9.9 billion but rose just a mere 3.6 percent from $9.55 billion in 2018. The group’s investment arm profits grew 8 percent to $9.9 billion from $9.2 billion, life insurance contributed $18.7 billion, up from $9.5 billion and general insurance saw profit more than doubling to $2.33 billion from $1 billion.
Interest income in the September quarter rose 43 percent to $20.5 billion from $14 billion and 28.6 percent for the year ended September to $67 billion from $52 billion in 2018. Interest expense increased 34 percent to $6 billion in the quarter, compared to a 20 percent increase for the year to $20.5 billion. Net interest income in the year was 33 percent higher than 2018, climbing to $46.7 billion from $35 billion and 47 percent in the quarter to $14.3 billion from $9.7 billion in 2018, resulting from an increase in the local loan portfolio and the 5 months results of GHL.
Fees and commission income grew 28.6 percent in the quarter to $7 billion from $5 billion in 2018 and 20 percent for the year, to $24 billion from $20 billion. Net fees and commission income ended the year at $19 billion, after increasing 21 percent from $16 billion in the prior year, with the September 2019 quarter climbing 39 percent from $4.2 billion to $5.8 billion.
For the quarter, insurance premium income skyrocketed to $33.5 billion from $2 billion and 539 percent for the year to $61 billion from $9 billion, which was due mainly to the consolidation of GHL results. Net insurance income in the year jumped 280 percent to $14.4 billion from $3.8 billion and 334 percent in the September quarter from $1.7 billion to $7.3 billion, of which GHL contributed $7 billion. Operating expenses rose 84 percent to $22.6 billion in the quarter and increased 49 percent in the twelve months to $64.7 billion and includes was staff cost which increased 45 percent in the quarter to $10 billion from $7 million in 2018 and for the year, 35 percent from $24 billion to $32 billion.
At the end of the year, shareholders’ equity stood at $146.6 billion, customers’ deposits and other funds placed by customers with the group rose to $731 billion from 697 billion in 2018. Total assets ended the period at $ 1.6 trillion inclusive of loans and advances of $423 billion, compared to 4373 billion in 2018. Investment securities rose to $760 billion from $391 billion. The group while acquiring additional shares in GHL taking its holdings to a majority of 61.97 percent, Advantage General Insurance was sold at the end of the fourth quarter, resulting in a gain of $2.6 billion. Additionally, $3.3 billion was realised from the disposal of its associated interest in JMMB in the first quarter of the financial year.
An interim dividend of 90 cents per share will be paid on December 6 to shareholders on record on November 22.
Earnings per share came out at $3.69 for the quarter and $8.49 for the nine months and ended the financial year at $12.18, but excluding the one-time capital gains earnings per share would have been closer to $10. The stock last traded at $205 on the Jamaica Stock Exchange and at TT$10.85 on the Trinidad and Tobago Stock Exchange at 14 times 2020 estimated earnings.