Home' Trinidad and Tobago Guardian : May 16th 2013 Contents Today, we highlight the half-
year results of two banks.
National Commercial Bank of
For the six months ended March 2013, NCBJ
reported higher revenue under almost all major
headings, however, the negative impact of the
Government of Jamaica s debt exchange pro-
gramme (NDX) in the second quarter, pulled
down profits at both the operating and net
Net loan balances grew from J$112 billion
as at last September to J$128.8 billion at the
end of March 2013. This 15 per cent growth
helped generate an additional J$1.28 billion in
interest income for the first six months, which
closed at J$16.33 billion (2012: J$15.05 billion).
On the other hand, customer deposits moved
from J$162.9 billion as at last September to
J$171.2 billion at the close of business in March
2013. This 5.1 per cent increase resulted in a
5.3 per cent growth in interest expense, which
reached $4.54 billion from last year s J$4.32
Overall, net interest income came in at
J$11.79 billion from the comparative result of
J$10.74 billion recorded for the six months
ending March 2012; this represents a healthy
increase of 9.8 per cent. While the bulk of
this change related to increased loan disburse-
ments, growth in investments also contributed
to the result.
Net fee and commission income rose from
J$3.52 billion in 2012 to J$3.92 billion in the
2013 period or by 11.6 per cent. This improve-
ment was attributed to higher loan transactions
but more particularly to increased card trans-
The gain on foreign currency and investment
activities declined by a huge 97.2 per cent, or
from J$2.4 billion last year to a very small
J$67.6 million in the 2013 half-year. This con-
traction was primarily attributed to the negative
effects to the bank as a result of it exchanging
an aggregate of J$125 billion in debt (J$118
billion public and J$7 billion in private debt)
for which it received lower coupon rates and
NCBJ recorded a notable increase in pre-
mium income, which came in at J$1.77 billion
from the comparative 2012 figure of J$1.02
billion. J$910 million of this increase was due
to general insurance contracts, obtained from
the purchase of Advantage General Insurance
Company Limited. Another significant change
was the decline in the premiums from annuity
contracts, which fell from J$660 million in
the 2012 period to J$420.9 million in the cur-
On the other hand, life insurance premiums
rose by more than 21 per cent to J$437.6 million
from last period s J$361.3 million.
The net effects of these changes saw total
income for the first six months of 2013 of
J$17.76 billion; this represents a minute decline
from the J$17.79 billion recorded for the 2012
Total staff costs for the 2013 period were
J$5.59 billion and represented a 4.9 per cent
increase over the J$5.33 billion recorded for
2012. On the other hand, provision for credit
losses saw a welcome fall by J$470 million,
or from J$1.527 billion last year to J$1.057
billion in the current period. In the 2012 period,
there was a huge provision of J$926 million
relating to a single exposure.
Other operating expenses rose by J$990
million to J$5.33 billion from last half-year s
J$4.34 billion. The primary movement was
related to the acquisition of Advantage General
Insurance Company Limited, which included
insurance benefits and reserving expenses. In
addition, the purchases of new information
technology equipment pushed up depreciation
and amortisation costs by another J$179 mil-
These changes resulted in total operating
expenses moving from J$11.88 billion in 2012
to J$12.53 billion in the six months to March
2013. Subsequently, operating profit declined
to J$5.24 billion from last period s J$5.91 billion.
Despite a higher share of associates profits
and a lower tax charge, the net profit attrib-
utable to shareholders closed at J$4.53 billion,
down by 5.1 per cent from last period s J$4.77
This profit translates into current earnings
per share of J$1.84 versus J$1.93 for the 2012
comparative period. In May 2013, an interim
dividend of J$0.16 will be paid. On the Jamaican
Stock Exchange the price was recently quoted
at J$18.23 per share, while on the Trinidad
Stock Exchange one NCBJ share could be
bought for TT$1.20 (approximately J$18.60).
A significant risk for the Trinidad-based
investor would be accessing the likelihood of
the Jamaican dollar further declining from its
current level of about J$100.00 to US$1.00.
Retail and SME (small and medium enter-
prises) is the largest segment in term of rev-
enue. For the 2013 half-year, total operating
income came in at J$7.18 billion, which was
10.1 per cent more than the J$6.52 billion deliv-
ered in 2012.
Meanwhile, operating profit was J$342.3
million, or 11.2 per cent greater than 2012 s
result of J$307.9 million.
For 2013, payment services delivered oper-
ating income of J$2.31 billion and operating
profit of J$985 million. This compares with
their 2012 results of operating income of J$1.85
billion and operating profit of J$893 million.
While income improved by a margin of 24.5
per cent, profit rose by only 10.3 per cent.
Corporate banking saw a decline in operating
income accompanied by an increase in oper-
Operating income fell to J$1.09 billion from
2012 s J$1.37 billion. Meanwhile, operating
profit improved from a loss of J$60.7 million
to a profit of J$531.4 million. We recall that
in 2012 this unit had a provision for credit
loss of J$926 million. The absence of this pro-
vision enabled it to return to profit in the cur-
The treasury and correspondent banking
unit saw huge declines at both the income
and profit levels.
Operating income contracted to J$1.06 billion
from last period s J$2.46 billion while operating
profit was compressed down to J$519.4 million
from 2012 s J$1.99 billion. The debt exchange
programme was the chief culprit that con-
tributed to these lower results. For example,
operating income was reduced by J$865.8 mil-
lion in 2013 by losses on foreign currencies
and investments; in 2012, the figure for this
line item was a positive J$1.07 billion
A small decline in operating income was
insufficient to prevent the wealth management
division from recording a modest improvement
in operating profit.
Operating income slowed from J$2.95 billion
in 2012 to J$2.84 billion in the current half-
year. Even so, operating profit rose modestly
to J$2.29 billion from 2012 s J$2.16 billion.
Higher net interest income and dividends
accounted for this result.
Newly acquired Advantage General Insurance
Company Ltd is now included under the Insur-
ance & Pension Fund Management division.
AGIL s inclusion did much to lift total operating
income, which rose to J$3.44 billion from
2012 s J$2.76 billion.
However, AGIL s results were insufficient
to boost operating profit, which fell to J$1.4
billion from the J$1.46 billion reported for
2012. Reduced gains on foreign currency and
investment activities combined with higher
other operating expenses in the current period
restrained profit growth.
NCBJ s subsidiary, NCB Capital Markets
Ltd proposes to acquire Trinidad-based AIC
Finance Ltd from AIC (Barbados) td. Approval
from regulators for this acquisition is still
Republic Bank Ltd
Despite incurring impairment charges of
$49 million, which relates to a Government
of Grenada bond, Republic Bank Ltd was able
to report higher profit attributable to its share-
holders for the six months to March 2013.
For the first six months of the current year
RBL increased its loan portfolio by almost $1.4
billion to reach $24.7 billion. Its holdings of
customers deposits continued to grow as this
balance stood at $43.4 billion as at March
2013, up by $3.6 billion from the figure of
$39.8 billion as at September 2012.
These changes translated into higher net
interest income, which was recorded at $1.08
billion for the six-month period and compares
favourably with the $1.04 billion shown for
the 2012 half-year.
Other income registered a 10.8 per cent
improvement, moving from $532 million in
the March 2012 period to almost $590 million
in the current period. This brought total income
for the current period up to $1.67 billion, rep-
resenting an improvement of 6.3 per cent over
the $1.571 billion reported for 2012.
Operating expenses increased by 12.1 per
cent or, from $794 million in 2012 to $890
million in the current period. The current
figure presumably includes the $49 million
referred to earlier.
The share of profit from associated com-
panies declined to $3.8 million from last peri-
od s $10.9 million. These changes resulted in
an operating profit for the current period of
$784 million, representing a decline of $4.40
million from the $788.4 million reported for
the period to March 2012.
After deducting $45 million for loan impair-
ment expenses, RBL reported a pre-tax profit
of $739 million (2012: $744.4 million). Despite
marginally lower pre-tax income, the tax charge
has increased from $162.5 million in the last
period to $178.3 million in the current period.
Thus, after tax profit declined to $560.8 million
from 2012 s $581.9 million.
Here comes the crucial change. The profit
attributable to non-controlling interests falls
from $31.8 million to $8.3 million in the current
period. This is mainly because RBL now has
almost full control (99.97 per cent) of its Bar-
bados subsidiary; this was not the case six or
12 months ago.
Minority interests at the Guyana and Grena-
da subsidiaries would also have affected the
result. Because of this, profit attributable to
shareholders now increases to $552.5 million
from $550.1 million in the prior period. These
results translate into unchanged diluted earn-
ings per share of $3.44.
In terms of country performance, T&T was
the leader in both absolute and relative terms.
Operating income rose by 9.6 per cent to $1.34
billion from last period s $1.22 billion. Also,
pre-tax profit in T&T increased by 6.8 per
cent or, from $674 million for the last period
to $720 million currently.
Unfortunately, the Barbados subsidiary suf-
fered a fall in profit by a factor of 28.4 per
cent, moving from $67.7 million in the prior
period to $48.5 million in the current period.
Though less pronounced than Barbados, the
Cayman, Guyana and Eastern Caribbean units
delivered 5.4 per cent less profit than for the
In dollar terms, the profit for the current
period was $102.4 million while it was $118.9
million for the six months to March 2012.
(Explanations for these declines were not
(Financial reports (including interim ones)
from Jamaican and foreign jurisdictions offer
readers a high level of detail and explanatory
narrative that can be used to make informed
investment decisions. Unfortunately, especially
in their interim reporting, many local com-
panies are excessively economical with both
words and figures. A notable local exception
is Guardian Holdings Ltd.)
MAY 2013 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
results for NCBJ
and Republic Bank
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