NCB's net profits increase by 62 per cent for the 9 month period. But wealth management arm takes a beating


Overall the NCB group, which includes NCB Insurance, pension fund manager WITCO and NCB Capital Markets, earned a net profit of J$3.9 billion, a 62 per cent increase from the same nine-month period in 2005. This translated into an earnings per stock unit of J$1.58 for the nine months ending June 2006 compared to J$0.98 in the September 2005 nine month period.
Retail Banking

NCBJ attracted savers to its doors with a barrage of advertising campaigns during the period under review. The result was a nine per cent increase in customer deposits from $84.4 billion in 2005 to $92.2 billion in the 2006 period under review.

The Bank was also able to grow its loans and advances book which total $41.6 billion net of credit losses as at June 30, 2006 compared to $35.7 billion as at September 30, 2005.

But the real star of the show was the Ingrid Chambers lead NCB Insurance arm which grew its policy holder base by double digits. Apparently, during a downward trend of the Jamaica Stock Exchange, persons sought the safe haven of Omni with its tax fee guaranteed interest rates. Additionally, NCB Insurance came out with the Pro Care series of traditional insurance products which clearly appealed to the market. Policyholder liabilities leaped from a meager $92 million in 2005 to a whooping $550.1 million by the nine months ended June 30, 2006.

Wealth Management

However, as the 'safe haven' insurance arm rode the tidal wave, the wealth management arm, which focuses on stocks, bonds and other corporate investment instruments, didn't fare so well during the nine months under review.
While NCBCM made J$1.1 billion in the nine- month period in 2005, profits pulled back in 2006 to $804.8 million, a 27 per cent drop. This can be partly attributed to the Supreme Ventures initial public offer. According to the NCB results, "A provision of J$199 million was made in the third quarter for impairment of the investment in Supreme Ventures Limited (SVL). These SVL shares were acquired in February 2006 by a subsidiary of the Bank under an underwriting commitment, due to the undersubscription of the public offer in January 2006".

Another possible reason for the not so impressive results by NCBCM is the fact that there were lower stock trading volumes and subsequent lower fee income as skittish investors stayed away from the JSE.
Share Price Movement

NCBJ started the July trading month at J$14, but hit a high of J$15 on July 21 as investors began to feel more confident about the forward prospects of the company. However, the stock price did pull back a little and closed yesterday's trading at J$14.51.

Incidentally, the board of directors approved an interim
dividend of J$0.14 per share to be paid on August 29th to shareholders on record as at August 15th. This represents a total payout of J$345 million.