NCB posts $5.5-billion year-end profit
At a press conference, held at the company's headquarters on Trafalgar Road, to announce the year-end results, NCB group managing director, Patrick Hylton, highlighted that the results was buoyed by efficient cost management across the company's very diversified line of business. Overall operating expenses increased by a mere six per cent or $638 million over the corresponding period last year. Operating profit of $6.8 billion represented a 13 per cent or $807 million increase over the prior period's financials.
The operating profit, according to the company report, was catalysed by prudent management of its core banking business which resulted in higher net interest income, increased fee and commission income. The group's net interest income increased by 10 per cent or $1.1 billion over last year. Net fee and commission income increased by 29 per cent or $722 million.
Interest income from loans increased by 15 per cent or $980 million while interest income from securities increased by six per cent or $895 million despite declining interest rates which the company says "was mainly due to an increase in the group's total earning assets." The group's overall cost/income ratio improved by 2.5 percentage points to 59.9 per cent.
"Cost management is an important part of our business but we still focus on customer needs," said Hylton. "We continue to innovate and continue to remain relevant to our customer needs as the economy develops."
NCB continues to attract an abundance of savers, and this is reflected in an impressive 16 per cent increase in customer deposits from $85 billion in 2005 to $99 billion in the period under review.
The bank also continues to grow its loans and advances book which total $42.2 billion net of credit losses as at 30 September 2006 compared to $36.1 billion as at September 30, 2005. Risk management at the bank also improved as the amount of non-performing loans ($1.6 billion) to gross loans was reduced by .6 percentage points. The aggregate amount of non-performing loans amounted to $1.6 billion and represented 3.7 per cent of gross loans compared to 4.3 per cent as at September 30, 2005.
Hylton said that he was confident that NCB will be able to sustain its robust numbers next year, as there were many areas which the bank could improve upon.
"Why do I think it's sustainable?." said Hylton. "While there has been improvement in a number of key areas, there is still room for improvement."
NCB's managing director also briefly addressed the assumed 'threat' of informal foreign exchange trading, which has seen many Jamaicans flock to various investment schemes which promises much bigger returns on investments than what is typically offered from local financial institutions. He believes these schemes have not affected NCB.
"We are not particularly concerned. Look at the results," he proclaims. "I won't suggest to you that we don't have customers who don't (engage in these activities)...the important thing is to make sure that the majority of their business is with us.