Home' Trinidad and Tobago Guardian : March 6th 2014 Contents Despite a challenging home
market NCBJ continues to
forge ahead and seek new
opportunities to expand its
portfolio of financial services.
In February 2013, it acquired
Advantage General Insurance Ltd (AGIL) for
J$3.2 billion. For the year ended September
2013, this subsidiary contributed J$3.95 billion
to revenues and J$322.7 million to profits.
In contrast, the national and private debt
exchange programmes during February and
March cost the group J$1.53 billion. Let us see
how the group fared in 2013.
Assets growth and profile
Total assets grew from the restated 2012
base of J$379.4 billion to J$443.6 billion as at
September 30 2013. Almost 32 per cent of
this total or J$141.2 billion is represented by
loans and advances. This figure showed an
improvement of 26 per cent over the 2012
balance of J$112 billion.
With respect to the 2013 figures, 54 per cent
or J$76.7 billion represented balances due from
retail and SME customers while J$53.4 billion
(38 per cent) was due from corporate customers
with the remaining J$11.1 billion denoted by
credit card and other balances.
Pledged assets at J$134.5 billion make up
the next highest balance and represents 30
per cent of the total assets. This line item grew
by 11.7 per cent over the 2012 figure of J$120.4
billion. Primarily, this represents investment
assets pledged as collateral for repurchase
Available-for-sale investment securities and
loans and receivables mostly comprise of Bank
of Jamaica and Government of Jamaica bonds
and loans and include smaller sums of cor-
porate and foreign government bonds and
some equities. The total sum is J$234 billion,
however, when we deduct the pledged assets
(as shown above), the net value is reduced to
J$101 billion, representing 22.6 per cent of the
Liability and equity movements
Total liabilities closed 2013 at J$374.1 billion,
an increase of 19.5 per cent over the restated
2012 figure of J$313.1 billion. Almost 48 per
cent of this total is represented by customers
deposits of J$178.4 billion.
Deposits on which no interest was paid
comprised 19.5 per cent of the total or J$34.8
billion. Current accounts on which interest
was paid were valued at J$15 billion and made
up 8.4 per cent of total deposits. The largest
portion was concentrated in saving accounts
valued at J$82.8 billion, accounting for 46 per
cent of the total. Balances in time deposits
were J$45.8 billion, corresponding to 26.1 per
cent of the total.
Balances under repurchase agreements
increased by 15.2 per cent to J$117.4 billion
from the 2012 balance of J$101.9 billion.
Liabilities under annuity and insurance con-
tracts increased from J$25.2 billion in 2012 to
J$33.9 billion last year; the major reason for
this increase was due to the inclusion of general
insurance contract liabilities of J$7.5 billion
resulting from the acquisition of AGIL.
Obligations under securitisation arrange-
ments increased from J$2.59 billion at Sep-
tember 2012 to J$10.1 billion as at last Sep-
tember. This increase was due to the rise in
the value of outstanding principal of diversified
payment rights from US$28.97 million as at
year-end 2012 to US$100 million as at last
September. The devaluation of the Jamaican
dollar by almost 13.2 per cent over the one-
year period worsened the magnitude of the
Total equity moved up to J$72.5 billion from
J$66.3 billion a year earlier. The largest increase
was recorded under the retained earnings
reserve, which advanced to J$18.1 billion from
J$14 billion as at year-end 2012.
The bank has exceeded the mandatory sums
required to be transferred to the banking reserve
fund. By transferring discretionary portions
of its retained earnings to the retained earnings
reserve NCBJ boosts its ability both to accept
new deposits and build its book of loans.
With 2,466,762,828 shares outstanding,
each share has a book value of J$29.37.
Income and profit
Both interest income and interest expense
exhibited increases during 2013. Interest income
advanced to J$32.8 billion from J$30.5 billion
in 2012 or by 7.7 per cent. The largest com-
ponent, interest on loans and advances,
increased by 17.9 per cent to J$16.6 billion
from J$14.1 billion in the prior period. All other
components exhibited declines.
Interest expenses rose by only 6.4 per cent
to reach J$9.25 billion from J$8.69 billion in
2012. Interest on customers deposits and pol-
icyholders benefits showed declines while
those for repurchase agreements, securitisation
arrangements and other borrowed funds exhib-
The net effect of these changes saw net
interest income advance by 8.1 per cent to
J$23.56 billion from J$21.78 billion a year ear-
lier.Net fee and commission income advanced
to J$8 billion from J$7.1 billion in 2012, or by
12.5 per cent. The greatest source of these fees
was from retail and SMEs, which rose from
J$2.95 billion in 2012 to J$3.35 billion last year.
Another significant contributor was net pay-
ment service fees; this item increased from
J$2.35 billion in 2012 to J$2.79 billion last year.
Other notable income movements saw gain
on foreign currency and investment activities
decline to J$1 billion from J$3.73 billion in
2012. Here we see the full effects of the debt
exchange programmes of J$1.53 billion being
In addition, gains on other debt securities
declined to J$1.15 billion from J$2.65 billion in
2012. In contrast, premium income improved
by 197 per cent to J$5 billion from J$1.69 billion
a year earlier. This later improvement was due
almost entirely to the acquisition of AGIL.
In summary, total income improved by
almost 10 per cent to J$38 billion from J$34.55
billion in 2012.
Total operating expenses soared by 24.4 per
cent reaching J$27.8 billion in 2013 from J$22.4
billion in the prior period. Significantly, staff
cost, which now accounts for 40.5 per cent
of total expenses, rose by 15.5 per cent in 2013
to reach J$11.27 billion from J$9.76 billion in
Two other costs exhibited significant increas-
es. Policyholders and annuitants benefits and
reserves rose by 158.3 per cent to J$3.8 billion
from the 2012 figure of J$1.5 billion. The major
increase was due to J$2.4 billion relating to
AGIL s general insurance contracts.
Other operating expenses advanced by 26.8
per cent to J$9.4 billion from last session s
J$7.4 billion. Included in this figure was J$680
million, which related to the USA IPO, which
was eventually deferred.
Operating profit for 2013 registered at J$10.2
billion; this was 16.7 per cent lower than the
J$12.2 billion recorded for 2012. After including
profits from its associates and allowing for
taxes, NCBJ recorded an after-tax profit of
J$8.55 billion for 2013 (2012: J$10 billion). The
EPS came in at J$3.47 for the current year
versus J$4.08 for 2012.
NCBJ structures its business along six major
lines. The following table illustrates these seg-
mental results for both 2012 and 2013. Despite
its slightly lower contribution level, the wealth
management segment continues to be the
group s star performer in terms of profit.
Note: The operating profit in the totals col-
umn is before unallocated corporate expenses
and the share of profit of associates. Also, in
2012, there was no General Insurance seg-
Recent developments and Q1 results
On December 12, 2013, NCBJ closed the
purchase of Trinidad-based AIC Finance Ltd
for J$309.9 million (approximately TT$19.4
million). The assets acquired were valued at
J$611.3 million, thus allowing NCBJ to report
a gain on acquisition of J$301.4 million in its
first quarter results. This acquisition would
begin to impact its results starting in the second
quarter of the current fiscal period.
For the first quarter ending on December
31, 2013, NCBJ reported EPS of J$1.16 versus
J$1.13 for 2102. The 2013 result was helped by
the transaction reported above.
In its efforts to control costs, on January
31, 2014, the group announced the laying off
of 54 staff members. The cost of this action
will impact the current quarter s results.
Recent share price
As at the end of its fiscal year in September
2013, NCBJ s share price was J$19.00 in its
home market and TT$1.13 on our local
exchange. Last Thursday, the date of the com-
pany s AGM, the share price closed at TT$1.18
in Trinidad and J$19.02 in Jamaica.
MARCH 2014 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG11
In its efforts to control
costs, on January 31,
2014, the group
announced the laying off
of 54 staff members.
The cost of this action
will impact the current
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