NCB to face $500m wages hit in 2014

National Commercial Bank (NCBJ) advised that the Industrial Disputes Tribunal made an award in respect of salaries and benefits for most of the clerical employees of NCBJ and its subsidiaries (NCB Group).
The award included an increase in salaries of 8 percent per annum for each of the financial years ending September 2013 and 2014. The increases for those years will now have to be paid retroactively. NCB Group said they make provision for salaries to be increased once the award was received, but the increases awarded exceed the amounts provided. The extent to which the retroactive payments for those two financial years exceed the provisions that had been made will be taken into account in the income statement for the financial year ended September 30, 2014. Union leaders for the staff association claimed that the bank offered five percent for 2013 and four percent for the current year. Such an offer would mean that the group would need to book an additional 7 percent to the wage bill. The groups wage bill was approximately $11 billion for the 2013 fiscal year to September and would place the additional charge, somewhere in the $800 million region. The net effect would be closer to $500 million or around 20 cents per share after tax. The bank’s wage bill for the 2013 financial year was $9.5 billion.
IC Insider originally projected earnings of $4.80 per share for the 2014 fiscal year. The adjustment to be reflected in the 2014 accounts will most likely results in a lower out turn.