The Group is reporting record net profits of $3.9 billion for the nine months ended 30 June 2006, an increase of $1.5 billion or 62% compared to June 2005. The result is driven by higher operating revenue (revenue less interest expenses) of $13.2 billion, reflecting an increase of $1.5 billion or 13% and a reduction of operating expenses (excluding interest expenses) by $98.1 million or 1%. The overall revenue growth was fueled by the continued focus on our core banking business which has resulted in higher loan income as well as fee and commission income. Net interest income (gross interest income less interest expense) for the nine months, was higher than the same period last year by $1.2 billion or 16%, while fee and commission income were up by $567 million or 32%.

Operating expenses (excluding interest expense) for the nine months of $8.2 billion fell by 1% compared to the same period last year. A provision of $199 million was made in the third quarter for impairment of the investment in Supreme Ventures Limited (SVL). These SVL shares were acquired in February 2006 by a subsidiary of the Bank under an underwriting commitment, due to the undersubscription of the public offer in January 2006. The results for the comparative prior year period, also includes an impairment loss on the investment in Dyoll Group Limited of $535.8 million.

Staff costs for the nine months increased by $425 million or 10%, however, the group was able to reduce other operating expenses by $351 million or 12% compared to the corresponding prior period.

PERFORMANCE AT A GLANCE

	YTD Jun. 2006	Restated YTD Jun. 2005
Return on Avg. Equity	23.69%	17.47%
Return on Avg. Assets	2.53%	1.76%
Growth in Revenue	9.5%	2.1%
Cost Income Ratio	59.2%	66.3%
Net Asset Value per Share	$9.23	$7.98

ASSET BASE
The total asset base of the Group increased by $24.7 billion or 13%, up from $193.8 billion as at 30 September 2005 to $218.5 billion as at 30 June 2006. The major increases in the Group’s asset base were accounted for by investment securities which grew by $24 billion or 27% and loans and advances by $5.8 billion or 8%. Reverse repurchase agreements fell by $5.9 billion or 16%.

LOAN PORTFOLIO
The banking segment continues to grow loans and advances which totaled $41.6 billion (net of provision for credit losses) as at 30 June 2006 compared to $35.7 billion as at 30 September 2005. The aggregate amount of non-performing loans amounted to $1.64 billion and represented 3.9% of the gross loans compared to 4.3% as at 30 September 2005 and 3.6% as at 30 June 2005.

As at 30 June 2006 the accumulated provision for credit losses of $2.3 billion represented an overall coverage of 138% of non-performing loans. Provisions for credit losses that exceed the amounts required by International Financial Reporting Standards (IFRS) are credited to a non-distributable Loan Loss Reserve. As at 30 June 2006 the balance in the Loan Loss Reserve was $235.3 million. The Bank’s provisioning policy is in compliance with Bank of Jamaica regulations.

FUNDING
The increase in the asset base over the past nine months was mainly funded as follows:

	INCREASE
	$B	%
Customer Deposits	7.8	9
Repurchase Agreements	6.5	13
Securitisation Arrangements	5.1	48
Policyholders' Liability	2.1	23

On 22 March 2006 the Bank raised US$100 million in structured financing backed by the securitization of existing and future U.S dollar Payment Advice and Payment Orders (MT 100 Series) and U.S dollar Remittance Diversified Payment Rights. Interest is due and payable on a quarterly basis at three month LIBOR plus 180 basis points beginning 15 June 2006. Principal repayments will commence 15 June 2008 on a quarterly basis until maturity 15 March 2013.

CAPITAL
The Group’s total stockholders’ equity as at 30 June 2006 was $22.8 billion, an increase of $1.5 billion or 7% when compared to 30 September 2005 mainly due to the continued increase in the Group’s retained earnings. As at 30 June 2006, the Risk-based Capital Ratio was 15.2% which exceeds the minimum requirement of 10% by the Bank of Jamaica.

DIVIDENDS
At the Board of Directors’ meeting held on 27 July 2006, an interim dividend of 14 cents per share (total payout J$345,346,795.92) was approved. The dividend is payable on 29 August 2006 for shareholders on record as at 15 August 2006.

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, trading securities, derivative contracts and investment property.

As of 1 October 2005, the Group adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and are effective for accounting periods beginning on or after 1 October 2005. The adoption of these new accounting standards and interpretations has resulted in changes to the Group's accounting policies in the following areas and have affected the amounts reported for the current and prior periods:

IAS 39: Originated debt securities traded in an active market, which were previously carried at amortised cost, are now carried at fair value.

IFRS 3: Negative goodwill arising from the acquisition of an associate was derecognised as at 1 October 2004, by crediting retained earnings at that date. Under the previous accounting policy, negative goodwill would have been amortised over its expected economic life. Positive goodwill is no longer amortised but assessed annually for impairment.

IFRS 4: Certain policy contracts issued by the Bank's life insurance subsidiary in 2004 which were previously accounted for as insurance contracts did not meet the definition of insurance contracts under IFRS 4 (Insurance Contracts), as they transferred primarily financial risk and did not contain significant insurance risk. In 2004 these contracts were treated as financial instruments in accordance with IAS 39 (Financial Instruments: Recognition and Measurement). The contracts were revised during 2005 and are now treated as insurance contracts under IFRS 4.

Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current period.

All amounts are stated in Jamaican dollars unless otherwise indicated.

COMMUNITY RELATIONS
During the third quarter, NCB’s corporate citizenship activities were varied as the Organization continued to demonstrate its commitment to the nation and all Jamaicans.

In its efforts to encourage the economic development of our customers and small and medium businesses throughout the nation, NCB contributed towards the staging of the JMA/JEA Expo. The Expo showcased products and services from Jamaica’s manufacturing and productive sector to buyers from the Caribbean, China, United Kingdom, Australia, Japan and North America, as well as, thousands of Jamaicans.

NCB remained a strong supporter of Education in this quarter, as we gave donations to the Queen’s School and Glenmuir High School in support of their efforts to provide the nation’s children with an exceptional educational experience. The Hope Valley Experimental School also received a donation from NCB to support their ‘Talks and Tours ‘programme, which allow their students to experience different cultures and visit historical landmarks.

The Organization also renewed its sponsorship of the High School Relays at the Jamaica International Invitational Meet which was held at the National Stadium in April. Our sponsorship provided exposure for young athletes and prepared them for the rigours of international competition. NCB also supported the Bike Ride Against Drug Abuse which seeks to promote positive lifestyle choices and bring awareness to the scourge of drug abuse.

The NCB Foundation has currently begun preparatory work for an initiative to restore the Holy Trinity Cathedral, one of Kingston’s most enduring landmarks and mother church to the Catholic community, to its former glory. The Foundation also supported the arts by sponsoring Moses Encore, a stirring musical which is the major fund-raising activity of the Missionaries of the Poor. Thousands of Jamaicans were able to view this spectacular presentation, which promoted positive value and philanthropy.

A contribution was also made to the Hopie Fund, which provides health services to diabetics who may not have access to, or cannot afford medical supplies and services, to assure them of a more fulfilled life.

NCB’s employees were also lauded by the Pan-America Health Organization for their consistent support of efforts to shore up supplies at the Blood Bank. NCB employees have also contributed their efforts to ‘building a better Jamaica’ by volunteering with community organizations and service clubs throughout the island.