NCB Financial had some good news to report to investors, but story it is not all sunshine. Net operating income reached $33.78 billion slightly up from $33.3 billion generated for the 2020 fiscal year first quarter, but nearly 25 percent above the September 2020 quarter.
The group could not translate the relatively good news on the revenue front into a positive development in net profit. The group saw a drop in profit attributable to shareholders falling 34 percent to $3.9 billion from $5.9 billion in December 2019 quarter and down from $4.3 billion in September quarter. The fall in profits is directly related to a jump in staff cost of $1.7 billion to $12.3 billion and increased tax on profit.
Loans net of provision for losses crawled by 5 percent to $461 billion from $438 billion at the end of December, in both years and from $453 billion at the end of September 2020. The growth is well down on the double-digit increase that was taking place in prior years, with the March 2020 report showing a 12 percent increase over the previous year. Investment securities rose from $784 billion at the end of 2019 to $855 billion.
Total comprehensive income rose by $7.3 billion to end at $13 billion, up from $6.8 billion in the December 2019 quarter.
The group’s various segment had mixed results. Consumer Banking segment recorded flat operating revenues of $6 billion but suffered a greater loss than in 2019 of $629 million versus $329 million. Payment Services delivered segment profit of $660 million down from $1,096 billion in 2019, from operating revenues that slipped from $2.9 billion to $2.6 billion. Corporate and Commercial banking operating revenues rose to $2.45 billion from $2.26 billion with profit declining modestly from $1.3 billion to $1.23 billion while Treasury and Correspondent Banking suffered a reduction in operating revenues to $2.55 billion from $2.67 billion but enjoyed a bounce in profit from $1.66 billion to $1.77 billion.
NCB Financial Montego Bay branch
Wealth, Asset Management and Investment Banking delivered a 21 percent rise in operating revenues to $5.14 billion from $4.23 billion and contributed a 36 percent jump in profit to $3.6 billion from $2.67 billion. Life and Health Insurance and Pension Fund Management had operating revenues of $11.97 billion down from $12.27 billion but enjoyed a slight pickup in profit from $5.9 billion to $6.3 billion. Operating revenues jumped 26.6 percent in the General Insurance segment to $5.35 billion with profit rising 45 percent to $2.2 billion.
Earnings per share amounted $1.66 down from $2.46 at the end of the December 2019 quarter and $1.82 for the September quarter. The latest quarter contains the full cost of asset tax. At the same time, September does not, in addition there was a tax credit of $1.1 billion for the September quarter and a tax charge of $2.3 billion for the 2020 December quarter and June 2020 coming in at $6.7 billion.
For profit to grow meaningfully, the group needs to be generating double-digit increases in the loan portfolio while maintaining loan losses to acceptable levels. In the 2020 fiscal year, the group incurred a major increase in provision for loan losses. The latest results show this line item to have returned to more normal levels with a provision of $1.17 billion versus $1.57 billion in December 2019 and $4.6 in the September quarter. Other operating cost which came in at $10.5 billion appears to reflect a much higher cost than for the other quarters. In March 2020 the cost was $5.6 billion compared to $$10.6 in December 2019.
The stock is listed on the Jamaica Stock Exchange, with the price now trading around $136.
