Net Profit of the Banking Group for the year ended September 30 2002 was J$1.9 billion compared to J$370 million for the previous year. The strong performance of the Group is due to increased earnings from loans coupled with improvement in the quality of the loan portfolio and continued reduction in expenses.

Highlights are as follows:

• Return on average equity was 20% compared to 4.3% in the previous year.
• The ratio of non-interest expenses to operating income was 68% compared to 92% in the previous year.
• Dividend per share was 16 cents at the end of the fiscal year compared to 10 cents in the previous year.

REVENUES
During the year the Group's total revenue increased from J$14.0 billion to J$14.5 billion an increase of 3% due mainly to:

• Growth in income from loans of 22% or J$323 million
• Growth in income from foreign exchange operations of 102% or J$376 million
• Growth in fee and commissions of 3% or J$40 million

NET INTEREST INCOME
Net interest income of J$4.7 billion increased by J$249 million or 5.5% due to a 4% reduction in interest expenses. The growth in net interest income is in spite of a reduction of J$392 million in income from securities.

NON-INTEREST EXPENSES
The control of expenses contributed significantly to the Group's improved performance in 2002. Total non-interest expenses were J$4.7 billion compared to J$5.7 billion for the previous year, a reduction of 17.4%. Non-interest expenses were 68% of operating income, a significant improvement over the previous year's ratio of 92%.

Non-interest expenses excluding provision for non-performing loans were J$5.2 billion compared to J$6.4 billion in the previous year, a decrease of 19.5% or J$1.2 billion. This was due to reductions in the following items of expenditure:

• Provision for decline in value of fixed rate investments.
• Up front cost of credit card and cash advance securitization
• Provision for restructuring costs.

LOAN PORTFOLIO
Loan volume increased by J$6.9 billion or 84% compared to the previous year while the non-performing portfolio decreased from J$1.9 billion to J$1.6 billion a reduction of J$367 million or 19%. Non-performing loans represent 9% of gross loans compared to 18% in the previous year.

As at September 30 2002 total loan loss provision was J$2.1 billion or 132% of non-performing loans. The Bank's provisioning policy is in compliance with the Bank of Jamaica regulations.

BALANCE SHEET
During the year the Group's assets increased by J$10.2 billion or 9.7% to J$115 billion. This increase is mainly attributable to growth in loans and securities purchased under agreements to resell J$6.9 billion and J$1.8 billion respectively. The growth in assets was funded by increases in customers' deposits of J$5.0 billion, credit card and cash advance securitization of J$.950 billion and Omni's policyholders' liabilities of J$1.0 billion.

CAPITAL
National Commercial Bank continues to be one of the best capitalized banks in Jamaica. At the end of the year stockholders' equity stood at J$10.8 billion an increase of J$1.7 billion or 19% over the previous year.

The Directors have approved the payment of an interim dividend (out of Retained Earnings) of 5 cents per stock unit. This will be paid on December 23 2002 to stockholders on the register as at December 13 2002.