Sep. 2004	Sep. 2003
Return on Avg. Equity	22.1%	22.6%
Return on Avg. Assets	2.0%	2.2%
Growth in Revenue	14.1%	52.4%
Cost Income Ratio	67.6%	66.7%
Net Asset Value per Share	$6.61	$5.22

Net profit for the Group for the year ended September 30, 2004 was J$3.2 billion compared to J$2.8 billion for the previous year, an increase of $412.3 million or 15%, despite the substantial one-off gains on the sale of equities in the prior year. Excluding the one-off gains in the previous year, the core profits for this year reflect an increase of $1.2 billion or 57%. This positive net profit performance was mainly attributable to the continued growth in our core revenues, resulting in a net interest income of $9.7 billion, an increase of J$2.9 billion or 44% when compared to the $6.8 billion for the previous year.

REVENUES
Revenues for the Group increased by J$3.1 billion or 14% compared to the corresponding twelve months of the previous year. The increase in revenues is attributable to the following.

• Growth in income from loans of J$1.98 billion or 66%.
• Growth in income from securities of J$2.1 billion or 14%.
• Growth in net fee and commission income J$464.6 million or 36%

LOAN PORTFOLIO
One of the major revenue drivers for the Group is loans and advances which increased by J$7.6 billion or 29% during the twelve months ended September 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 4.1% of gross loans compared to 5.3% at September 30, 2003.

As at September 30, 2004 provision for credit losses of J$2.28 billion was 154% of non-performing loans, compared to 149% as at September 30, 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 September 30, 2004 the balance in the Loan Loss Reserve was J$111.6 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 year was J$175.9 billion, J$30 billion or 21% in excess of the balance sheet as at September 30, 2003. This increase in assets is attributable to growth in the following earning assets:

• Loans and advances - J$7.6 billion or 29%
• Reverse repurchase agreements - J$15.5 billion or 266%

CAPITAL
As at September 30, 2004 total stockholders equity was J$16.3 billion, an increase of J$3.4 billion or 27% when compared to September 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 21.55% at September 30, 2004 (21.01% at Sept. 30, 2003).

During the year two transfers ($1.3B in January 2004 and $0.6B in September 2004) were made from undistributed profits to the retained earnings reserve. The transfers to the reserve, which in effect increased the capital base, were approved by the Bank of Jamaica.

DIVIDENDS
At the Board of Directors meeting held 9 December 2004, a final interim dividend of 21 cents per share (total cost J$518,020,194) was approved for the year ended 30 September 2004. The dividend is payable on 7 January 2005 for shareholders on record as at 23 December 2004.

COMMUNITY RELATIONS
In 2003/4, NCB remained focused on its commitment to participate in building a better Jamaica. By combining a strong social purpose with our business objectives, the organization's corporate activities were evident in areas such as Education, Social Welfare, Arts & Culture, Health and Sports.

The 1st Anniversary of the NCB Jamaican Education Initiative (JEI) was celebrated in May 2004. This program continued to provide funding for education-related causes from the contribution of 1% of all NCB Keycard purchases. In the 2003/4 financial year, an initial funding of $25M was made towards the Education Grant for the Omni Educator product, offered by the NCB Insurance Company Limited. In June 2004, NCB was proud to announce the award of Two Hundred (200) JEI scholarships tenable at the University of the West Indies, University of Technology Jamaica and the Edna Manley College of the Visual and Performing Arts. The JEI also facilitated the hosting of motivational talks and seminars for students sitting CXC examinations. The JEI co-ordinators were able to cover schools in the parishes of St. Mary, St. Ann, Portland, Kingston and St. Andrew offering important tips and giving study guide techniques. NCB employees also commenced a programme of reading in schools to promote early literacy and role model talks for high school students.

NCB collaborated with the Jamaica Manufacturers' Association in the launch of the "Buy Jamaican, Build Jamaica" campaign, which promotes support for local goods and services This, in addition to being a major sponsor of the 2004 JMA/JEA Expo, represented a $16.25M commitment by NCB. During the financial year, a $2M donation was also made to the Private Sector Organisation of Jamaica in support of their Partnership for Progress Initiative aimed at fostering sustained economic growth for our country. The May Pen Cemetery Restoration Fund received a $5M contribution from NCB and an account at the Duke & Barry Sts. branch was opened to receive donations from the public towards restoring this historical site.

NCB was also pleased to present His Excellency, Sir Howard Cooke, Governor General of Jamaica with a fully furnished office complex at 14 ˝ Half Way Tree Road, Kingston. The local chapter of Hands Across Jamaica for Righteousness (HANDS), of which the Governor General is patron, will used the facility as its secretariat.

The island's security force will stand to benefit from the announcement by NCB of its financial commitment to build a convalescent home in Black River, St. Elizabeth valued at $15M. Through an AMCHAM initiative, a $50M project to build a model police station in the Grants Pen community of St. Andrew is also being funded by NCB.

In the area of Performing Arts, NCB was pleased to sponsor the ASHE ensemble's trip to Thailand for performances at the Jamaican Consulate. In recognition of the 150th anniversary of the Chinese population in Jamaica, donations were made towards the celebrations, which included the Yang Zhou Puppet Troupe which visited from China to stage concerts across the island.

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 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 also launched its own in-house wellness program for employees. An enhancement to St. Elizabeth's health services was made when the Black River Hospital received wheelchairs through the financial assistance of NCB.

During the period under review, tribute was made to the memory of former Prime Minister of Jamaica, the Right Honourable Hugh Lawson Shearer when an NCB scholarship valued at US$25,000 was awarded to Hopeton Dias, a young man who rose above dire circumstances on the streets of Kingston and is now completing a Bachelor's Degree in the USA. NCB Chairman Michael Lee-Chin created the scholarship in his honour as the former Prime Minister made it possible for Mr. Lee Chin to receive a scholarship to complete his Bachelor's degree in 1971.

Our country suffered serious damage from the onslaught of Hurricane Ivan in September. NCB quickly responded to the nation's need for re-building and restoration with the announcement of the launch of the NCB Hurricane Ivan Matching Fund on Monday, September 13th, 2004. A $100M pledge was given by Chairman Michael Lee-Chin, representing NCB's maximum contribution for every dollar that it received in the Fund by October 31st, 2004. Through this initiative, a total of $212M is now being disbursed by the CVSS/United Way of Jamaica for relief aid to schools, farms, hospitals, churches, businesses, families and individuals across the island.

Our employees continued to give of time and effort in the communities in which they operate and we are thankful for their exemplary efforts to serve our customers well in the past financial year.

SUBSEQUENT EVENTS
The Board of Directors of NCB accepted the resignation of the Group Managing Director, Mr. Aubyn Hill, which was effective November 30, 2004. Mr. Patrick Hylton assumed the position of Group Managing Director on December 1, 2004.