Thursday 5 December, 2019

NCB poised to grow in 21 markets; posts $30.7 billion profit

NCB Financial Group Limited managing director Patrick Hylton addresses journalists at an investor briefing in Kingston. (File photo)

NCB Financial Group Limited managing director Patrick Hylton addresses journalists at an investor briefing in Kingston. (File photo)

NCB Financial Group Limited (NCBFG) posted a net profit of J$30.7 billion for the financial year ended September 30, 2019, and asset growth of 65 per cent or J$632 billion over the prior year to J$1.6 trillion.

Using historic values for the Jamaican dollar vs the US dollar (US$135.16 to J$1 on September 30, 2019), assets in September were US$11.83 billion.

The company has grown steadily and currently serves markets in 21 countries across the English and Dutch Caribbean, including Trinidad & Tobago, Barbados, Jamaica, Curacao, Aruba, St Maarten and Bonaire.

The growth in the asset base at year end was primarily due to the consolidation of Guardian Holdings Limited (GHL), with total assets of J$580 billion. About half of group assets are now outside of Jamaica.

NCBFG is now battling for the position of largest financial group within the Caribbean. It is contending for the position with Republic Financial Holding Company Limited, which acquired the operations of Scotiabank in seven markets this year; and GNB Financial Group Limited, which is set to take a controlling stake in FirstCaribbean International Bank (FCIB) via a 66.73 per cent of the shares in the banking group, leaving parent company CIBC with the remaining shares.

Previous to the GNB/CIBC announcement on November 8, CIBC ranked second in size as a financial group in the Caribbean. It had US$11.5 billion in assets and market capitalization of US$2.1 billion, as at July 31, 2019.

GNB, a group wholly owned by Starmites Corporation S.ar.L, the financial holding company of the Gilinski Group, aims to add CIBC’s 16 Caribbean markets to its own operation in Colombia, Peru, Paraguay, Panama, and Cayman Islands.

GNB’s existing assets, as reported on Friday, are valued at  approximately US$15 billion in combined assets. 

While up to date information is unavailable, as at September, the banking group holding the Caribbean region’s largest asset base was Republic Financial Holdings.

In September, RFHC secured the approval of the Eastern Caribbean Central Bank (ECCB) for the transfer of the assets and liabilities of the Bank of Nova Scotia (BNS) to RFHL in Anguilla, the Commonwealth of Dominica, Grenada, St Kitts and Nevis, Saint Lucia and St Vincent and the Grenadines.

RFHL is thereby expected to add to an asset base of US$12 billion.

For NCB Financial group, the results were historic, with net profit attributable to stockholders at J$29.6 billion, an improvement of six per cent or $1.6 billion over the prior year.

The company leaped several regulatory hurdles to conclude acquisition of a majority stake in GHL, a major financial services group providing life, health, property and casualty insurance, coupled with pensions and asset management services.

Performance was also bolstered by the divestment of a stake held in JMMB in the first quarter resulting in a $3.3 billion gain from the disposal;  a $2.3 billion provisional gain on the revaluation of the associate interest in GHL following the acquisition of the majority interest in the third quarter; and the sale of Advantage General Insurance Company Limited (AGIC) at the end of the fourth quarter, realising a gain of $2.6 billion.

Banking and investment activities grew - despite credit impairment provisions - by 16 per cent, or $10.3 billion, to $76.1 billion with net interest income increasing by $11.6 billion or 33 per cent. Net fee and commission income grew by 21 per cent or $3.3 billion.

Customer deposits ticked past the $500 billion mark, meanwhile. Some $22 billion in non-performing loans were attributed to consolidation with Clarien Bank and Guardian Holdings.

Insurance results climbed by $10.6 billion to $14.4 billion with the  growth attributed to the consolidation of GHL’s insurance activities which contributed $7.1 billion to net insurance revenues.

Directors said in the company’s published financials that they are eyeing further regional expansion as a driver for further growth, applying technology and further consolidation to increase efficiencies.

The company’s stock value has climbed 36 per cent year to date to $204 per unit as at Friday, November 8. Board members declared an interim dividend of $0.90 per ordinary stock unit. The dividend is payable on December 6, 2019 to stockholders on record as at November 22, 2019.

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