Friday, January 29, 2010
Flexibility, agility result in impressive Quarter 1 profits
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| (l-r) Patrick Hylton,Group Managing Director, Dennis Cohen, Deputy Group Managing Director, Yvonne Clarke, Group Chief Financial Officer,and Ann-Marie Hamilton, General Manager, NCBIC at today's Investors Briefing. |
Amidst the uncertainties permeating the Jamaican economy, National Commercial Bank Jamaica Limited (NCB) announced a net profit of $2.77 billion for the Quarter ended 31 December 2009 at a press conference held at its head office recently. This represents an increase of $388 million or 16.3% when compared to the corresponding period.
Patrick Hylton, NCB Group Managing Director, remains upbeat that despite the difficult financial environment Jamaica’s premier banking institution will continue to post impressive results. Mr. Hylton indicated that the Bank’s focus continues to be on building a financial fortress that is underpinned by strong capital, strong liquidity, and strong management.
“Our focus is unwavering and is particularly relevant in the context of Jamaica’s challenges with the recent tax package, the Jamaican Debt Exchange (JDX) Programme as well as the management of State enterprises,” he noted. He also stressed the fact that the Bank has extensively assessed the impact of the JDX programme on the future prospects of NCB. “While we expect that the instruments handed over represent a significant portion of our assets, it will have a negative impact on our income. Given the initiatives and strategies being pursued by the organization we expect that the Bank will remain profitable.” Hylton stated. He highlighted revenue enhancement strategies, efficiencies in operating costs and new product offerings in the securities business as the initiatives being pursued.
NCB's strength continues to be reflected in the Bank's capital position which continues to be well in excess of the minimum required by its regulators:
· Risk-Based Capital Ratio for NCBJ - 15.3% which exceeds the minimum requirement of 10%
· Capital to Risk Weighted Assets Ratio for NCBCM - 62.8% which exceeds the minimum requirement of 10%
· Solvency Ratio for NCBIC - 25.5% which exceeds the minimum requirement of 10%
The Wealth Management arm of the Bank contributed 24% of the Group’s operating profits. NCB Capital Markets, the main contributor to this segment, achieved a net profit of $622 million. NCB Insurance Company recorded a net profit of $472.8 million which was mainly a result of net investment income.
Dennis Cohen, Deputy Group Managing Director reiterated that the Bank will not be daunted by the change in the country’s macro-economic environment but believes that this shift will create new opportunities for innovative product development and significant diversification. “The success of this institution is not dependent on the condition of the environment; we pride ourselves in having the flexibility and the agility to adjust to the circumstances presented.”
This agility was most recently demonstrated by the Board of Director’s decision not to declare an interim dividend this quarter due to the “current uncertainties and challenges in the Jamaican economy”. The Bank however commits to reviewing this position in the coming months. “We will review our position and make the appropriate decision on dividends at the end of the next quarter by which time the full impact of the issues mentioned before will be better appreciated,” assured Hylton.
This cautious approach in an uncertain environment is, in the Bank’s view, among some of the tough decisions that have to be made in order to successfully weather the turbulent period for the economy and realize significant return on investment for shareholders in the long term.
NCB remains the largest commercial bank when measured by profit, assets and branch network.
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