NCB profit in a stunning 42% rise

NCB Financial Group blasted off its 2020 results with a stunning 42 percent increase in profit attributable to shareholders of the group. Shareholders were only rewarded, with a mere 11 percent increase in the quarterly dividend to $1.

NCB Financial Group Q1 profit surges.

Operating income for the group’s shareholders surged 42 percent from $4.15 billion to $5.9 billion in the first quarter to December.
Net interest income jumped from $9.8 billion to $13.9 billion, net fee and commission income rose from $4.3 billion to $6.4 billion. Other income, net of credit impairment losses, climbed to $4.9 billion from $3.3 billion in 2018, even as credit impairment losses rose from $1.16 billion to $1.57 billion. Net results from banking and investment activities climbed from $17.4 billion to $25.3 billion, while results from insurance activities surged from $1.5 billion to $8 billion. The consolidation of Guardian Holdings (GHL) impacted the segment in a significant way and resulted in net operating income jumping from $18.9 billion in 2018 to $33.3 billion. Operating expenses rose from $14 billion to $23.3 billion and resulted in an operating profit of $9.95 billion compared with $4.85 billion in 2018.
Segment results show progress in most areas and stagnation in others. The Consumer Banking reflects flat results with revenues coming in at just over $8 billion and profit before internal charges of $1.8 billion in both the 2019 and 2018 quarters. Payment Services enjoyed a bounce in both revenues and profit, with the former rising from $4 billion to $4.56 billion in 2019, with profit rising from $1.2 billion to $1.68 billion. Corporate and Commercial Banking saw revenues rising from $2.67 to $3.1 billion in 2019, with profit rising from $1.25 billion to $1.86 billion. Revenues in the Treasury and Correspondent Banking segment slipped from $4.87 billion to $4.44 billion in 2019, with profit easing from $1.87 billion to $1.8 billion.

Guardian Holdings contributed to NCB Financial growth in the December quarter.

Income at Wealth, Asset Management and Investment Banking segment moved from $4.26 billion to $5.4 billion in 2019, with profit increasing from $1.69 billion to $2.67 billion.  Revenues for the Life Insurance and Pension segment jumped sharply to $28 billion, from $2.58 billion in 2018, while profit ended at $5.9 billion from just $1.69 billion in 2018, with the acquisition of majority ownership of Guardian Holdings playing a major role in the increase. The General Insurance segment jumped sharply to $16 billion from $1.47 billion in 2018, with profit rising to $1.5 billion from just $227 million in 2018. Other operations generated revenues of $1.57 billion in 2018 and saw a big jump to $14.7 billion in the December 2019 quarter, with profit falling from $319 million to a loss of $1.2 billion.
The group experienced a 17.4 percent increase in its loan portfolio to $438.4 billion from $373.5 billion in 2018, with growth since September, of 3.6 percent, or 14.5 percent annualized. Customer deposits grew from $461 billion to $499 billion, year over year. NCB now boasts total assets of $1.6 billion up from $941 billion in 2018, with shareholders’ equity of $148 billion.
Earnings for the quarter ended at $2.46 and is distorted by booking the asset tax of more than $1.8 billion for the year, in the quarter. Earnings for the full year to September should end at around $13 per share and put the share price over $250 by the end of the year. The stock remains a good long-term buy with growth coming from normal operations driven by strong loan demand and increased efficiency to flow from a restructuring of the group to eliminate areas of duplication. The group last traded on the Jamaica Stock Exchange on Thursday before the results at $189.55 at a PE ratio of 14.6 and on the Trinidad and Tobago Stock Exchange at TT$11.29 for a PE of 18.

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