Home' Trinidad and Tobago Guardian : August 2nd 2015 Contents SBG6 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt AUGUST 02 • 2015
Although National Com-
mercial Bank Jamaica
(NCBJ) continues to make
positive strides in many
areas of its operations, the
Jamaican government s
application of the asset
tax continues to negatively impact its opera-
At the start of its fiscal year on October 1,
2014, the full tax was expensed to its non-
insurance businesses; subsequently, on January
1, 2015, this tax was charged to its insurance
We will now review NCBJ s performance for
the nine months ended June 30, 2015.
Changes in Financial Position
Total assets rose by a modest 1.9 per cent
to J$508.7 billion from J$499.3 billion as at
year-end September 2014.
Net loans and advances increased to J$162.3
billion from J$157.6 billion last September,
reflecting an improvement of 2.9 per cent.
Available-for-sale investment securities and
loans and receivables advanced by a strong
39.8 per cent to J$147.5 billion from J$105.6
Pledged assets contracted to J$109.1 billion
from J$159.5 billion, reflecting a decline of 31.6
Amounts due from banks climbed to J$34.4
billion; this reflected a 68.7 per cent increase
from the year-end figure of J$20.4 billion.
Total liabilities increased to J$421.3 billion
from J$417.5 billion, or by 0.9 per cent.
The main component, customers deposits,
ended June at J$217 billion; this reflected an
increase of 7.4 per cent over last September s
On the other hand, repurchase agreements
declined to J$93.2 billion from J$134.7 billion;
this represented a contraction of J$41.4 billion
or 30.8 per cent.
Obligations under securitisation arrange-
ments climbed strongly by 212 per cent to end
at J$43.3 billion from J$13.9 billion last Sep-
tember. As part of the securitization of its mer-
chant voucher receivables (Visa and Master-
Card), the bank transferred those rights to an
offshore special purpose company (SPC). In
mid-May, it raised 7-year financing of US$250
million (J$29 billion) at 5.875 per cent interest.
The cash flows from the merchant voucher
receivables will be used by the SPC to service
the new debt.
Annuity and insurance contract liabilities
rose to J$35.1 billion from J$34.2 billion or by
2.6 per cent.
The sums due to other banks increased from
J$6.3 billion to J$8.6 billion last June. This rise
was not as robust as the change in the sums
due from other banks.
Stockholders equity advanced to J$87.39
billion from the year-end level of J$81.85 bil-
The opening figure for retained earnings was
increased by J$1.23 billion following the adoption
of IFRIC 21 (Levies). In addition, total com-
prehensive income boosted the figure by J$8.48
billion. Deductions from this column included
dividends of J$4.58 billion, transfer to loan loss
reserve of J$204 million and a J$880 million
transfer to the retained earnings reserve. These
changes saw retained earnings end at J$44.47
The other major movement was the fair
value and capital reserves component, which
was enhanced by a credit of J$1.65 billion from
comprehensive income to end at J$4.06 billion.
This change mostly reflected the excess of
unrealised gains on available-for sale invest-
ments (J$2.37 billion) over the realised gains
on the sale and maturity of other investments
NCBJ has 35,151 shareholders holding a total
of 2,466,762,828 shares. Consequently, each
share had a June 2015 book value of J$35.43
(September 2014: J$33.18).
Income and Profits
Total operating income advanced by 10.8
per cent to J$35.3 billion from the restated 2014
figure of J$31.9 billion.
The major component, net interest income,
rose by 4.5 per cent. Interestingly, interest
expense was, at J$8.8 billion, almost identical
for both periods. Significant expansion occurred
with interest income, which was 3.1 per cent
greater at J$28.1 billion (2014: J$27.3 billion).
This was fuelled by growth in the loan port-
When compared with the 2.9 per cent
increase in loan balances, this suggests that
interest rates were trending higher.
Net fee and commission income rose by 15.2
per cent to J$7.24 billion from J$6.28 billion
in the comparative 2014 period.
A significant source of variability is gains
on foreign currency and investment activities.
This income stream climbed by 72.3 per cent,
moving from J$1.64 billion last year to J$2.82
billion in the nine months to June 2015.
Another sizeable contributor, premium
income, rose by 9.5 per cent to J$5.7 billion
from J$5.2 billion previously.
Total operating expenses rose from J$21.56
billion to J$24.08 billion; this movement reflects
an increase of 11.7 per cent.
Staff costs, which account for 37.5 per cent
of total operating costs, rose nominally to J$9.03
billion from J$8.93 billion in the nine months
ending June 2014. On the other hand, policy-
holders and annuitants benefits and reserves
declined marginally to J$3.23 billion from J$3.32
Provision for credit losses rose by almost 14
per cent to J$1.14 billion from J$1.24 billion.
This increase exceeds the 2.9 per cent growth
in net loan balances.
Other operating expenses climbed by J$2.03
billion to J$9.17 billion from J$7.15 billion.
Included in this figure is a one-off charge of
J$1.233 billion, which related to the adoption
of the IFRIC 21, Levies for the asset tax. Other
expenses, such as, media and marketing, tech-
nical, consultancy and professional fees also
While intangible assets and plant, property
and equipment rose by less than 7 per cent,
the amortisation and depreciation charges
associated with those assets climbed by 23.2
per cent to J$1.14 billion (2014: J$0.925 billion).
This was probably due to higher charges on
newer items in the first year of acquisition.
A new line item, impairment losses on secu-
rities, consumed J$88.6 million (2014: NIL).
These changes allowed NCBJ to report an
operating profit of J$11.24 billion; this reflects
an improvement of 8.9 per cent over the J$10.32
billion earned for the 2014 period.
Last year, NCBJ was able to include negative
goodwill on the acquisition of Trinidad-based
AIC Securities Limited (now, NCB Capital
Markets Ltd) of J$301.11 million. In addition,
its share of profits of associates amounted to
J$722.6 million. Those additions boosted the
2014 pre-tax figure to J$11.34 billion.
Last September, NCBJ sold its 32.59 per cent
stake in Kingston Wharves Limited. Conse-
quently, in the current period, the share of
profits from associates contracted to a modest
This item helped expand its pre-tax figure
to J$11.55 billion; this reflects a minute increase
over the previous year s J$11.34 billion.
Taxes clawed back almost J$3 billion in the
current period versus J$2.37 billion in 2014.
This change, in particular, restrained NCBJ s
current period s profit to J$8.55 billion from
J$8.97 billion in the 2014 period.
These results translated into 2015 EPS of
J$3.48 versus J$3.64 for nine months to June
Almost J$5.2 billion in net fees and com-
mission income boosted the total operating
income of the consumer and SME segment.
Similarly, the gains on foreign currency and
investment activities are concentrated under
the treasury and correspondent banking seg-
ment (J$1.4 billion) and wealth, asset man-
agement and investment banking segment
Naturally, premium income only occurs under
the life insurance and pension fund manage-
ment segment (J$1.96 billion) and general insur-
ance segment (J$3.95 billion). All these com-
ponents boost operating income for the
On the expense side, provision for credit
losses is entirely concentrated under the con-
sumer and SME segment; within this grouping,
payment services was allocated J$719 million
while retail and SME consumed J$662 million.
The major increase over 2014 was concentrated
under payment services, which utilised J$560
million in that period.
In the case of its insurance operations, pol-
icyholders and annuitants benefits and reserves
were concentrated in the general insurance
segment (J$2.42 billion) and less so in the life
insurance unit (J$816.1 million).
Dividends and share price
During the current 2014/15 fiscal period,
NCBJ paid a final dividend with respect to its
2013/14 year of J$0.96 on December 11, 2014.
Then, in both February and May, it paid interim
dividends of J$0.45. Now, based on its current
results, another interim dividend will be paid
to shareholders on August 21, 2015. Thus, its
trailing dividend payment totals J$2.31.
Over the last year or so, its share price on
the local exchange has ranged from a low of
TT$0.97 attained on September 11, 2014 to a
high of TT$1.95 on May 28, 2015. It recently
closed at TT$1.65.
Similar price movements were evident on
the JSE. NCBJ closed on December 31, 2014
at J$18.50 from which level it slowly recovered
before peaking at J$30.54 on May14, 2015. On
July 28, 2015 it was quoted at J$29.50.
Based on the annual dividend of J$2.31, the
yield in its home market is 7.83 per cent.
Using an exchange rate of TT$1.00 = J$18.50,
the annual dividend of J$2.31 is equivalent to
TT$0.125. At the recent price of TT$1.65, this
dividend gives local investors a yield of 7.6 per
cent, which is very close to the Jamaican yield.
NCBJ's third quarter results
Links Archive August 1st 2015 Aug 3rd 2015 Navigation Previous Page Next Page