Net profit for the Group for the nine months ended June 30, 2004 was J$2.87 billion compared to J$1.56 billion for the corresponding period in the previous year, an increase of $1.31 billion, or 85%, in spite of the fact that our tax charge has changed substantially (higher) during the current period. This positive net profit performance was mainly attributable to the continued growth in our core revenues, resulting in a net interest income of $7.47 billion, an increase of J$4.25 billion or 133% when compared to the $3.22 billion for the same period in the previous year.

PERFORMANCE AT A GLANCE

	Jun. 2004	Jun. 2003
Return on Avg. Equity	26.7%	16.7%
Return on Avg. Assets	2.4%	1.7%
Growth in Revenue	34.5%	25.0%
Cost Income Ratio	62.6%	79.2%
Net Asset Value per Share	$6.46	$5.20

REVENUES
Total revenues for the Group increased by J$4.9 billion or 34% compared to the corresponding nine months of the previous year. The increase in revenues is attributable to the following.

• Growth in income from loans of J$1.7 billion or 84%.
• Growth in income from securities of J$4.7 billion or 57%.

LOAN PORTFOLIO
One of the major revenue drivers for the Group is loans and advances which increased by J$6.7 billion or 25% during the nine months ended June 30 2004. The quality of the loan portfolio has improved despite the significant increase in loans and advances. The aggregate amount of non-performing loans amounted to J$1.47 billion compared to J$1.503 billion as at September 30 2003. Non-performing loans now represent 4.2% of gross loans compared to 5.3% at September 2003.

As at June 30 2004 provision for credit losses of J$2.1 billion was 144% of non-performing loans, the same percentage as at September 2003. Provisions for credit losses that exceed the amounts required by International Financial Reporting Standards (IFRS) are credited to a non-distributable reserve - Loan Loss Reserve. As at June 30 2004 the balance in the Loan Loss Reserve was J$98.2 million. The Bank's provisioning policy is in compliance with the Bank of Jamaica regulations.

BALANCE SHEET
The Group's total assets as at the end of the period under review was J$167.7 billion, J$22 billion or 15% in excess of the balance as at September 30 2003. This increase in assets is attributable to growth in the following earning assets:

• Loans and advances - J$6.7 billion or 25%
• Reverse repurchase agreements - J$14.2 billion or 243%

CAPITAL
As at June 30 2004 total stockholders equity was J$15.9 billion, an increase of J$4.3 billion or 38% when compared to June 2003. National Commercial Bank is one of the best capitalized banks in Jamaica as evidenced by the international benchmark of capital adequacy, the Risk-based Capital Ratio was 20.99% at June 30, 2004 (21.01% at Sept. 30, 2003).

DIVIDENDS
At the Board of Directors meeting held 22 July 2004, an interim dividend of 9 cents per share (total cost J$222,008,654.52) was approved for the quarter ended 30 June 2004. The dividend is payable on 17 August 2004 for shareholders on record as at 9 August 2004.

BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention as modified by the revaluation of available-for-sale investment securities, investment securities held for trading, derivative contracts, investment property and certain fixed assets.

There have been no changes in accounting policies since the most recent annual accounts as at 30 September 2003.

COMMUNITY RELATIONS
In keeping with our commitment to participate in building a better Jamaica, NCB continues to combine a strong social purpose with its business objectives, through our focus on areas such as Education, Social Welfare and Community Development.

As part of the NCB Jamaican Education Initiative (JEI), which provides funding for education-related causes by contributing 1% of purchases using the NCB KEYCARD, an initial funding of $25M was made towards the Education Grant for the Omni Educator product, offered by NCB Insurance Services Limited. The funding will be used to give Omni Educator beneficiaries a grant equivalent to 20% of the policy's accumulated contractual premium value plus interest, upon enrolment at an accredited local or overseas tertiary institution

In June, NCB was proud to announce the award of Two Hundred (200) scholarships tenable at the University of the West Indies, the University of Technology, Jamaica and the Edna Manley College of the Visual & Performing Arts. These scholarships will provide additional opportunities and resources for Jamaicans to attain tertiary level education

During the period under review, NCB visibly demonstrated its continued support of the "Buy Jamaican, Build Jamaica" campaign through major sponsorship of the JMA/JEA Expo held at the National Arena from May 28th to 30th, 2004. The show, which was being held for the first time in eight years, was a major success and created a high level of awareness for local manufacturers and exporters in the Jamaican economy.

In our continued effort to expose Jamaica's young talent to the best in the world, a cheque for $1.5M was presented to the Sports Development Foundation for the sponsorship of the Boys & Girls 4x100 Relay Events at the recent International Track & Field Meet held at the National Stadium.

In April 2004, NCB was the title sponsor of Jamaica's first official Wellness Exposition held at Eden Gardens. The Bank has also recently launched its own in-house wellness program, which will include the establishment of a fully equipped Employee Wellness Centre.

NCB has embraced a clear vision of nation building and continues to pursue its corporate relations activities around helping to build a better Jamaica.