The Group recorded a net profit of $1.5 billion for the quarter ended 31 December 2006, compared to $1.1 billion for the corresponding period of the previous year; an increase of $363.6 million or 32%. Operating revenue (revenue less interest and fee expense) for the three months was $4.8 billion, an increase of $586.5 million or 14% when compared to the quarter ended 31 December 2005. The Group continues to grow revenue in all the major business segments which has resulted in higher net interest income, net fees and commissions and net trading income for the period as follows:

• Net interest income (gross interest income less interest expense) for the quarter was higher than the same period last year by $147.1 million or 5%.
• Loan income and securities income increased by $167.1 million or 10% and $410.3 million or 10% respectively, due mainly to the sustained growth in loans and advances and investment securities.
• Net fee and commission income grew by $180.5 million or 25%.
• Net trading income increased by $229.5 million or 48%.

Operating expenses (excluding interest and fee expense) was $2.9 billion for the quarter, $149 million or 5% above the comparative prior year period.

PERFORMANCE AT A GLANCE

Comparison of Key Ratios

	YTD Dec. 2006	YTD Dec. 2005
Return on Avg. Equity	23.61%	21.53%
Return on Avg. Total Assets	2.62%	2.34%
Growth in Revenue	14.9%	6.4%
Cost Income Ratio	57.6%	64.1%
Net Asset Value per Share	$10.68	$8.57

ASSET BASE

The total asset base of the Group of $234.6 billion, reflects an increase of $11.5 billion or 5%, compared to 30 September 2006. The major increases in the Group’s asset base were accounted for by investment securities which grew by $9 billion or 7% and loans and advances and cash and balances at Bank of Jamaica which grew by $2.7 billion or 6% and $2.5 billion or 21% respectively. Reverse repurchase agreements fell by $4.9 billion or 21%. The growth in the asset base over the three month period was mainly funded by an increase in customer deposits of $9.7 billion or 10%.

LOAN PORTFOLIO

The banking segment continues to grow loans and advances which totaled $44.9 billion (net of provision for credit losses) as at 31 December 2006 compared to $42.2 billion as at 30 September 2006. The aggregate amount of non-performing loans amounted to $1.7 billion and represented 3.73% of the gross loans compared to 3.66% as at 30 September 2006.

As at 31 December 2006 the accumulated provision for credit losses determined under Bank of Jamaica regulatory requirements of $2.24 billion represented an overall coverage of 130% 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 December 2006 the balance in the Loan Loss Reserve was $222.6 million. The Bank’s provisioning policy is in compliance with Bank of Jamaica regulations.

CAPITAL

The Group’s total stockholders’ equity as at 31 December 2006 was $26.3 billion, an increase of $1.7 billion or 7% when compared to 30 September 2006, and this increase can be mainly attributed to the continued increase in the Group’s retained earnings. As at 31 December 2006, the Risk-based Capital Ratio was 16.5% which exceeds the minimum requirement of 10% set by the Bank of Jamaica.

DIVIDENDS

The Board of Directors has approved an interim dividend of 13 cents per share. The dividend is payable on 23 February 2007 for shareholders on record as at 9 February 2007.

BASIS OF PREPARATION

These financial statements have been prepared in accordance with and comply 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, investment securities at fair value through profit and loss, derivative contracts and investment property.

There have been no changes in accounting policies since the most recent audited accounts as at 30 September 2006.

Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current period.

All amounts are stated in Jamaican dollars unless otherwise indicated.

COMMUNITY RELATIONS

Throughout the first quarter of the 2007 Financial Year, NCB continued its drive towards building a better Jamaica by concentrating its support on activities which promote positive social and economic development.

Education
In the area of Education, the NCB Foundation, through the Jamaican Education Initiative (JEI), remained focused on uplifting young Jamaicans through consistent support and funding. Throughout this quarter numerous educational institutions benefited from contributions towards computers and workshops as well as funds to assist with planned improvements to existing infrastructure on school grounds. Some of these schools include, Knox College, Vere Technical High School, Denham Town High School, Dunrobin Primary School, Dupoint Primary and Infant School and Kingston College.

The Bank, in fulfillment of its $15M matching commitment to the development of a Science Block at the Ardenne High School, made its first donation of approximately $4.4million in December.

Health
Through the NCB Foundation, $500,000 was donated towards securing a much-needed blood gas machine for the Kingston Public Hospital. This initiative helped to enhance access to better health facilities for a number of patients from within as well as outside of the corporate area. The Jamaica Medical Foundation and The Lupus Foundation of Jamaica also benefited as a result of donations made by the Bank throughout the quarter.

Sports
NCB’s continuing effort to support the development of sports throughout the island was marked by the announcement of its sponsorship of the National Football Programme in November 2006. The Jamaica Football Federation (JFF) has initiated plans to help position the Reggae Boyz to qualify for the World Cup Football Competition in South Africa in 2010. Joining other commitments made by the Government and corporate entities, NCB contributed US$100,000 to the Jamaica Football Federation (JFF) for the new Technical Director’s remuneration package. In addition the Bank will be donating US$50,000 per annum until 2010.

NCB continues to maintain its financial support to the MVP Track & Field Club, training ground of outstanding Jamaican athletes including Asafa Powell and Sherone Simpson.

The Bank was also pleased to support the Wolmer’s Boys School with a donation to facilitate students attendance at a regional Basketball tournament. As a proactive corporate leader, NCB continues to honour its commitment to practice good corporate citizenship and thanks its employees and customers for their ongoing support.