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PERFORMANCE HIGHLIGHTS
Year ended September 2011 compared with year ended September 2011
- Net profit of $13.0 billion, an increase of $2.0 billion or 17.69%.
- Gain on the acquisition of associates of $1.0 billion has been included in net profit.
- Earnings per stock unit of $5.30 grew by $0.80 or 17.69%.
- Cost to income ratio increased to 52.36% from 51.53%.
- Return on average total assets increased to 3.76% from 3.41%.
- Total assets of $358.8 billion, increased by 7.10% or $23.8 billion.
- Net Loans of $91.7 billion, grew by 6.67% or $5.7 billion.
- Customer Deposits of $155.8 billion, increased by 7.98% or $11.5 billion.
- Return on average stockholders' equity decreased to 23.71% from 24.66%.
- Risk-based capital adequacy ratio decreased to 15.13% from 16.47%.
During the year, the Group acquired 29.30% of the shares of Jamaica Money Market Brokers Limited (JMMB). This acquisition, as well as the Group’s 25.17% share of Kingston Properties Limited have been accounted for as associated companies.
FINANCIAL PERFORMANCE
Operating income increased by $5.2 billion or 17.84%, for the financial year ended September 30, 2011 over the financial year ended September 30, 2010 mainly as a result of:
- Premium income, which increased by $2.4 billion, or 492.6%, due to annuities booked.
- Gain on foreign currency and investment activities, which increased by $2.1 billion, or 105.6%, due to gains from fixed income trading and foreign exchange gains from translation and trading.
- Net fee and commission income, which increased by $464 million or 7.79%, mainly due to increased fees from growth in loans and transactions carried out at branches in the Retail and SME segment.
Operating expenses increased by $3.1 billion or 18.89%, for the financial year ended September 30, 2011 over the financial year ended September 30, 2010 mainly as a result of:
- Increased costs associated with the new annuity contracts. The expenses related to the annuities increased by $2.2 billion over the year ended September 30, 2010.
- Impairment losses on equity securities of $262 million, an increase of $234 million over the prior year.
- Depreciation and amortisation which increased by $52 million, or 9.80%, due to the increased capital expenditures on information technology equipment associated with our infrastructure upgrade project.
SEGMENT PERFORMANCE
The Consumer & SME, Corporate Banking, and Treasury & Correspondent Banking segments which comprise the commercial banking activities, reported combined operating results of $9.7 billion for the financial year ended September 30, 2011; this represents an increase of $771 million or 8.65% over the prior
year.
The Consumer & SME segment reported increased operating profits of $3.2 billion, up by 22.37% or $589 million over the year ended September 30, 2010. The improved results were driven mainly by growth in the loan portfolio and a change in the mix of funding.
Corporate Banking recorded a decline of $826 million or 28.25% in its segment result when compared to the year ended September 30, 2010 and the reduction is attributed to a reduction in net interest income due to lower loan balances, as well as a reduction in interest earning loans consequent on a large loan being classified as non-performing during the year.
Our Treasury & Correspondent Banking segment achieved an increase in operating profits of $1.0 billion or 30.07% when compared to the previous financial year, which was mainly due to an increase in gains on foreign currency and investment activities. Impairment losses on securities of $264 million are included in this segment.
Loans and advances, which totalled $91.7 billion (net of provision for credit losses) as at September 30, 2011, grew by $5.7 billion or 6.67% compared to the loan portfolio as at September 30, 2010. Non-performing loans totalled $6.7 billion as at September 30, 2011 ($3.0 billion as at September 30, 2010) and represented 7.16% of the gross loans compared to 3.45% as at September 30, 2010. Our regulatory provision coverage as at September 30, 2011 was 115.91% of non-performing loans compared to 136.14% at September 30, 2010.
NCBJ remains the largest commercial bank in Jamaica when measured by profit, assets, branch network and capital base.
Our Wealth Management segment contributed operating profits of $4.7 billion for the year ended September 30, 2011, representing an increase of $1.1 billion or 31.48% over the prior September 2010 period. The growth over the prior year’s results is due mainly to an increase in gains from investment activities.
Our Insurance and Pension Fund Management segment reported operating profits of $2.4 billion for the year ended September 30, 2011; this result reflects growth of $406 million or 20.44% over the prior year’s results, due mainly to increased income from annuity premiums.
CAPITAL
The Group’s stockholders’ equity of $61.1 billion increased by $12.3 billion or 25.24% when compared to 30 September 2010.
• The risk-based capital adequacy ratio (risk assessed assets as a percentage of qualifying capital) for NCBJ was 15.13% which exceeds the minimum requirement of 10% stipulated by the Bank of Jamaica (30 September 2010 – 16.47%).
• The capital to risk weighted assets ratio (risk assessed assets as a percentage of qualifying capital) for NCBCM was 35.71% which exceeds the minimum requirement of 10% stipulated by the Financial Services Commission (FSC) (30 September 2010 – 97.82%). During the year, the FSC amended the methodology for the computation of this ratio.
• The solvency ratio (stockholders’ equity as a percentage of total liabilities) for NCBIC was 34.73% which exceeds the minimum requirement of 10% stipulated by the Financial Services Commission (30 September 2010 – 27.10%).
DIVIDENDS
On 03 November 2011, the Board declared an interim dividend of $0.34 per ordinary stock unit. The dividend is payable on 01 December 2011 for stockholders on record as at 18 November 2011.
AWARDS
Our Bank was named among the world’s top performing banks by The Banker Magazine. This announcement supplements the Bank’s growing list of accolades, having received three other international awards in the last quarter – The Banker’s Award for Best Bank of the Year – Caricom; Euromoney’s Award for Excellence and the Global Banking and Finance Award for Best Bank in Jamaica 2011.
The Banker Magazine also named NCB as the best in the Central America region, in its return on capital and return on assets categories. NCB also ranked 3rd and 14th, respectively, in the world, in return on capital and assets.
COMMUNITY RELATIONS
In pursuit of our mantra “Building a Better Jamaica”, we contributed $20 million to a number of initiatives during the quarter. Our main areas of focus were Education, Community Development, Youth Leadership and Entrepreneurship. Our contributions for the year ended 30 September 2011 totalled $59 million and was allocated to: Education - $36 million; Community Development - $10 million; Youth Leadership and
Entrepreneurship - $13 million.
Education
During the fourth quarter, we provided grants and scholarships totaling $17 million to over 200 students to pursue tertiary education. In partnership with Bookophilia and in recognition of Literacy Day, we donated books to 20 primary schools.
Community Development
In the area of community development, we contributed to the St. Patrick's Foundation's Educational Fund which is used to assist hundreds of children from the inner-city with their back to school needs. We also provided funding and support for a number of summer camps, both educational and sporting , and other community-based organisations.
Youth Leadership & Entrepreneurship
We also supported the initiatives of the Dispute Resolution Foundation, The Institute of Jamaica, the Jamaica Chamber of Commerce, Hanover Police Department and the Donald Quarrie High School. These organisations led programmes that were geared at youth development, behavioural modification, skills training, computer training, conflict resolution and leadership programmes.
Our staff members continue to be heavily involved in the activities of the NCB Foundation and we wish to express out deep appreciation to them for enthusiastic support of these activities, as well as their continued contribution to our organization’s success.
To our customers, we say thank you for your continued loyalty, confidence and support; together, We Make It Happen.
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