The wealth management segment contributed $518.3 million or 48.4% to the overall net profit of the Group, mainly from the principal activities of primary dealings, stock brokerage and pension fund management. Benefits were obtained from the record increases in the Stock Exchange Index, appreciation in the value of debt securities and the overall growth in managed funds. As at 31 December 2004 the total assets under management within this segment, was approximately $73.7 billion, a growth of $16.1 billion or 28% compared to 31 December 2003.

COMPARISON OF KEY RATIOS

	Dec. 2004	Dec. 2003
Return on Avg. Equity	24.7%	22.7%
Return on Avg. Total Assets	2.4%	2.0%
Growth in Revenue	4.5%	56.2%
Cost Income Ratio	61.8%	68.4%
Net Asset Value per Share	$7.44	$5.44

REVENUES
Total revenues for the Group increased by $284.6 million or 4.5% compared to the corresponding three months of the previous year. Interest income from securities declined by $877.6 million or 19% due to the reduction in interest rates, but this decrease was offset by continued growth in loan income and non-interest income as follows

• Income from loans increased by $380 million or 34%.
• Non-interest income increased by $782.2 million or 125%.

LOAN PORTFOLIO
One of the major revenue drivers for the Group is loans and advances which increased by J$3.4 billion or 10.1% to $37.5 billion as at 31 December 2004 compared to September 2004. Loans and advances as at the end of the current quarter represent a $7.3 billion or 24.4% increase over December 2003.

The aggregate amount of non-performing loans amounted to J$1.55 billion compared to J$1.47 billion as at 30 September 2004. Non-performing loans now represent 3.9% of gross loans compared to 4.1% at September 2004. Provision for credit losses increased by $130.2 million or 374% over the prior year quarter of December 2003. Subsequent to Hurricane Ivan in September 2004, there was a deterioration in credit card delinquency, however as a result of an increased collection drive there has been an improvement in the quality of credit card receivables and no further deterioration is expected.

As at 31 December 2004 provision for credit losses of J$2.4 billion was 152% 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 reserve - Loan Loss Reserve. As at 31 December 2004 the balance in the Loan Loss Reserve was J$109.5 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 period under review was J$184.2 billion, J$8.4 billion or 5% in excess of the balance as at 30 September 2004. This increase in assets is attributable mainly to the growth in the loans and advances.

The Group's property, plant and equipment decreased by $71.3 million or 1.6% compared to September 2004. The depreciation charge for the quarter ended December 2004 was $251.6 million and no major fluctuation in this quarterly charge is expected for the remainder of the financial year.

Customer deposits grew by $1.7 billion or 2% over the three month period under review.

CAPITAL
As at 31 December 2004 total stockholders equity was J$18.3 billion, an increase of J$2.05 billion or 12.6% 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; the Risk-based Capital Ratio was 19.42% at 31 December 2004 compared to 21.55% as at 30 September 2004.

INVESTMENTS IN ASSOCIATES
The consolidated profits of the Bank include the third quarter (30 September 2004) results for the associated companies, which is consistent with our practice of maintaining a three month lag. The third quarter results of Dyoll Group Limited did not include the impact of Hurricane Ivan, as they were not able to fully assess all claims as at 30 September 2004. Dyoll Insurance Company Limited has insurance liabilities in both Jamaica and the Cayman Islands and is therefore likely to be impacted negatively.

DIVIDENDS
At the Board of Directors meeting held 27 January 2005, an interim dividend of 6 cents per share (total cost J$148,005,769.68) was approved for the quarter ended 31 December 2004. The dividend is payable on 21 February 2005 for shareholders on record as at 14 February 2005.

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

The Bank's accounting policy has been amended subsequent to the adoption of IFRS 3 as at 1 October 2004. 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.

COMMUNITY RELATIONS
During the first quarter of the 2004/5 financial year, NCB was pleased to report the results of the NCB Hurricane Ivan Disaster Relief Initiative which ended on October 31, 2004 with a total of $112M in donations received from businesses, groups and individuals locally and overseas. This amount was matched by a $100M contribution by NCB and the sum of $212M pledged to the CVSS/United Way. The voluntary charitable organisation partnered with NCB in this initiative and is now disbursing funds to schools, farms, hospitals, churches, businesses, families and individuals that were affected by the hurricane.

Under the NCB Jamaican Education Initiative (JEI), examination fees totalling $15.2M were paid to the Caribbean Examination Council (CXC) in November, ensuring that over 13,000 students across the island may pursue academic qualifications in Principles of Accounts and Principles of Business. NCB thanks its Keycard holders for their continued support which facilitates 1% of their purchases being donated to the JEI for the funding of education programmes such as the sponsorship of CXC examinations.

The NCB Foundation also announced the establishment of a $7M CXC Math Programme in November. This programme is aimed at improving teaching skills and student proficiency in the subject of Mathematics. Six high schools have been selected for the pilot project, which is headed by Mr. Radley Reid, noted educator.

Our branches and employees continued to support their local communities in various activities and initiatives geared towards "building a better Jamaica".