LOAN PORTFOLIO
Loans and advances totaled $38.9 billion as at March 2005, an increase of $4.9 billion or 14.3% over the six month period. As at the end of the quarter the growth in loans and advances represented a $5.6 billion or 17% increase over March 2004.

The aggregate amount of non-performing loans amounted to $1.6 billion compared to $1.47 billion as at 30 September 2004. Provision for credit losses for the six months to date is $80.6 million compared to $229.5 million for the corresponding period of the prior year, a decrease of 65%. During the second quarter, recoveries of $139.9M resulted in the net reduction of provision by $84.4 million. The results for the first quarter included a net charge to profit of $165 million.

As at 31 March 2005 the accumulated provision for credit losses of $2.24 billion was 140% 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 31 March 2005 the balance in the Loan Loss Reserve was $125.8 million. The Bank's provisioning policy is in compliance with the Bank of Jamaica regulations.

BALANCE SHEET
The Group's total assets as at 31 March 2005 was $188.5 billion, a growth of $12.6 billion or 7% compared to 30 September 2004. The increase in the asset base is mainly attributable to the growth in the loans and advances and reverse repurchase agreements of 14% and 17% respectively.

The growth in the asset base over the six month period was mainly funded as follows:

	INCREASE
	$B	%
Customer Deposits	2.7	3.4
Repurchase Agreements	3.3	8.8
Securitisation Arrangements	2.2	23.0
Policyholders Funds	1.2	17.0

CAPITAL
As at 31 March 2005 the Group's total stockholders equity was $18.3 billion, an increase of $2.01 billion or 12.4% when compared to September 2004. National Commercial Bank is one of the best capitalised banks in Jamaica as evidenced by the international benchmark of capital adequacy. As at 31 March 2005 the Risk-based Capital Ratio was 19.82% compared to 21.55% as at 30 September 2004 which is in compliance with the minimum requirement of 10% by the Bank of Jamaica.

PROVISION FOR IMPAIRMENT OF INVESTMENTS IN ASSOCIATE
As at reporting date, the results for Dyoll Group Limited for year ended 31 December 2004 were not released. Trading in Dyoll shares was suspended on 15 February 2005 because of its failure to provide material information to the Jamaica Stock Exchange in keeping with the Exchange's Policy Statement on Timely Disclosure.

As a result of the claims arising from the devastating impact of Hurricane Ivan on the Cayman Islands, the company has suffered material losses. The Financial Services Commission appointed a temporary manager for Dyoll Insurance Company Limited on 7 March 2005. Based on the temporary manager's first interim report to the Financial Services Commission, the Dyoll Insurance Company's deficit is approximately $1.146 billion and liquidation of the company was proposed. Therefore, a full impairment provision has been made for this investment.

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, investment property and certain property, plant and equipment

As at 1 October 2004, the bank has adopted IFRS 3 (Business Combinations). This has resulted in the transfer of the negative goodwill arising on acquisition of associates to retained earnings. Positive goodwill is assessed annually for impairment and is no longer amortised.

One of the bank's subsidiaries, NCB Insurance Company Limited, has not opted for the early adoption of IFRS 4 (Insurance Contracts).

All amounts are stated in Jamaican dollars unless otherwise indicated

COMMUNITY RELATIONS
As NCB continues to live up to its promise to build a better Jamaica, the Bank concentrated its activities in supporting events which promoted economic development in the first quarter of 2005. NCB supported the Hague Agricultural Show in Trelawny, the China Caribbean Trade Forum, the inaugural Annatto Festival held in St. Mary and the National Spelling Bee competition among others.

NCB Chairman, Michael Lee-Chin pledged, on behalf of the Bank, $2M to the Rotary Club's efforts to develop the area beside the Dunrobin Primary School into a Park. Crime Stop also received a donation of $100,000 in support of their efforts to fight crime.

As a part of its continuing efforts to support education, the NCB Jamaican Education Initiative (JEI) hosted a workshop in February to help teachers to prepare students for success in the CXC Examinations.

In addition to these events, our branches have been working within their communities to promote nation building.