Net profit for the six months ended 31 March 2007 rose by 32% to $3.12 billion from $2.36 billion for the corresponding period of the previous year. The net profit for the second quarter of $1.62 billion, increased by 8% compared to the first quarter and 33% compared to the similar period of 2006. The resulting earnings per ordinary stock unit for the six month period was $1.27, compared to $0.96 for the same period last year. Return on average shareholders equity for the six months was 23.97%, up from 21.52% for the comparative prior year period.

Total revenue for the six months was $16.55 billion, representing an increase of $2.51 billion or 18%, when compared $14.04 billion a year earlier. The banking segment contributed 68% of the overall revenue of the Group, while the next largest segment was Wealth Management with 24%.

The major revenue highlights for the six months were as follows:

• Loan income and securities income increased by $253 million or 7% and $924.9 million or 12% respectively, as the Group focuses on growing earning assets quarter over quarter.
• Net interest income increased by $426.4 million or 7% due mainly to the continued portfolio growth in a lower interest rate environment.
• Net fee and commission income increased by $359.8 million or 26% which was mainly attributable to growth in card and other retail banking related fees.
• Net trading income, which includes foreign exchange gains, fixed income and equity trading, increased by $562.4 million or 55%.
• Other operating income increased by $360 million over the prior year due mainly to annuity premiums earned by the insurance segment since the commencement of this product in September 2006.

NON-INTEREST EXPENSES

Operating expenses (excluding interest and fee expense) for the six months totalled $6.1 billion, $788.4 million or 15% above the comparative prior year period. Staff costs increased by $452.5 million or 15% mainly due to negotiated salary and allowances for the current financial year. Actuarial reserves, in relation to policyholder's liabilities in the insurance segment, reflected an overall increase of $164.4 million.

ASSET BASE

Total assets as at 31 March 2007 stood at $233.8 billion, reflecting an increase of $31.9 billion or 16%, compared to 31 March 2006. Investment securities and loans and advances accounted for the increase in assets with growth of $29.3 billion or 28% and $9.8 billion or 25% respectively. Reverse repurchase agreements declined by $9.2 billion or 36%. The growth in assets was mainly funded by increases in core customer deposits of $17.1 billion or 20% and additional funding from securitisation arrangements of $5.6 billion or 34%.

LOAN PORTFOLIO

The sustained focus of the banking segment in growing the loan portfolio resulted in an increase of $9.8 billion compared to March 2006. Loans and advances, net of provision, totalled $48.6 billion as at 31 March 2007 compared to $38.8 billion as at 31 March 2006. The aggregate amount of non-performing loans amounted to $1.7 billion and represented 3.49% of the gross loans compared to 3.66% as at 30 September 2006 and 4% as at 31 March 2006.

As at 31 March 2007 the accumulated provision for credit losses determined under Bank of Jamaica regulatory requirements of $2.31 billion, represented an overall coverage of 132% 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 2007 the balance in the Loan Loss Reserve was $251.3 million. The Bank’s provisioning policy is in compliance with Bank of Jamaica regulations.

CAPITAL

The Group’s total stockholders’ equity as at 31 March 2007 was $27.5 billion, an increase of $4.8 billion or 21% when compared to 31 March 2006, and this increase can be mainly attributed to the continued increase in the Group’s retained earnings. As at 31 March 2007, the Risk-based Capital Ratio was 16.35% which exceeds the minimum requirement of 10% set by the Bank of Jamaica.

DIVIDENDS

The Bank made two dividend payments totalling $0.35 per ordinary stock unit for the six months ended 31 March 2007 (March 2006 - $0.43, three payments). At the Board of Directors meeting on 26 April 2007, an interim dividend of $0.29 per ordinary stock unit was declared. The dividend is payable on 25 May 2007 for shareholders on record as at 11 May 2007. The financial statements for the quarter ended 31 March 2007 do not reflect this resolution, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the quarter ended 30 June 2007.

PERFORMANCE AT A GLANCE

	Mar. 2007	Mar. 2006
Return on Avg. Equity	23.97%	21.52%
Return on Avg. Total Assets	2.73%	2.40%
Growth in Revenue	17.89%	7.23%
Cost Income Ratio	59.16%	62.54%
Net Asset Value per Share	$11.16	$9.19

COMMUNITY RELATIONS

National Commercial Bank throughout the second quarter of the 2007 Financial Year, continued to fulfill its corporate and social responsibilities towards a long term vision of building a better Jamaica by directing its support towards activities that foster positive social and economic development.

Education

The N.C.B. Foundation, through the Jamaican Education Initiative (JEI), concentrated on empowering young Jamaicans through ardent support and funding. To this end $650,000 was contributed towards the staging of a three-day Mathematics Examinations Workshop for one hundred and twenty students based in the St. Ann and St. Mary area. The students who are preparing to sit upcoming CXC/CSEC examinations, benefited from the workshop that focused on the development of arithmetic skills and concepts.

The N.C.B Foundation also endorsed the Jamaica Environment Trust’s Schools Environment Programme (SEP), with a commitment of $1,000,000 over the next four years. Under this initiative, the Foundation selected the Churchill Primary School in Hanover for the funding of the school’s SEP. These funds will be used to equip teachers with the necessary tools to teach children about the importance of their environment.

Throughout this quarter several educational institutions benefited from contributions toward computers and improvement to their infrastructure. Students from the Papine area and surrounding communities who utilize the Mona Baptist Church Home Work Centre now have access to a new computer donated by the N.C.B Foundation. Additionally, the Bank funded the critical network upgrade of Titchfield High School’s computer lab. Further afield, Montego Bay High School received a donation from the N.C.B Foundation towards the renovation of their dilapidated Biology and Chemistry Labs.

Health

During the quarter, the N.C.B. Foundation, made a donation towards the construction of the Intermediate Care Unit and the renovation of Ward 7 at the University Hospital of the West Indies. Once operational, the Intermediate Care Unit will facilitate the treatment of those patients who no longer require the services of the Intensive Care Unit, but still need special treatment in order to achieve full recovery.

Sports

The Bank continued to promote the development of Sports throughout the country, as it sought to foster the talent that exists among our young athletes. At the 31st Annual Gibson Relays recently held at the National Stadium, NCB demonstrated its commitment to young Jamaican athletes as a sponsor. Following the superb performances at this sporting event, NCB is convinced that the exposure gained at this level will help to give these young athletes the confidence they need to compete on the world stage.

Community Development

The Bank remains focused on supporting strategic initiatives that help to strengthen our communities and transform them into more encouraging areas to live, work and conduct business. Over three hundred member's of the island's police force based at the St Catherine North Police Station in Spanish Town are now the beneficiaries of improved facilities following the N.C.B. Foundation's recent contribution. The fund went toward renovation efforts, which will enhance the working environment and bolster the existing benefits for the police officers.

NCB thanks its employees and customers for their ongoing support as the group contines to embrace its commitment to not only do well, but to do good and relentlessly practice good corporate citizenship.