Financials 2009

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PERFORMANCE HIGHLIGHTS
Year Ended September 2009 compared with Year Ended September 2008

• Net Profit of $10,248 million, increased by $1,547 million or 18% .
• Earnings per Stock Unit of $4.16 grew by $0.62 or 18% .
• Operating Revenue of $27,141 million, an increase of 10%.
• Cost to Income Ratio of 47.7% vs. 50.1%.
• Risk-Based Capital Ratio of 14.63% vs. 14.63%.
• Total Assets of $315.1 billion, improved by 8%.
• Net Loans of $88.2 billion, grew by 7%.
• Investment Securities of $167.7 billion, up by $13,147 million or 9%.
• Customer Deposits of $130.3 billion, increased by 3%.
• Return on Average Equity was 28.34% vs. 29.07%.
• Return on Average Assets was 3.38% vs. 3.19%.

Quarter ended September 2009 compared with Quarter ended September 2008

• Net Profit of $2,908 million, increased by 50% or $964 million.
• Earnings per Stock Unit of $1.18 grew by $0.38 or 50%.
• Operating Revenue increased by $730 million or 11%.
• Return on Average Equity was 29.56% vs. 24.39%.
• Return on Average Assets was 3.71% vs. 2.72%.

SEGMENT PERFORMANCE

Banking
The Banking segment’s results for the financial year ended 30 September 2009 represent a decrease of $143 million or 1% from the September 2008 period. However, when the one-off gain of $1,059 million on the sale of Visa Incorporated shares gain is excluded from the 2008 results, the Banking segment shows an increase of $916 million or 10%. The results reflect growth in the Corporate and Retail loan portfolios, which were responsible for a 25% increase in interest income from loans, and growth in the investment portfolio which accounted for 18% growth in interest income for securities.

Loans and advances totalled $88.2 billion (net of provision for credit losses) as at 30 September 2009 growing by J$6,009 million over the balances as at 30 September 2008. Based on the latest Bank of Jamaica Commercial Banking Industry review (June 2009), NCBJ had the largest market share of net loans, recording growth of 25% over the prior year, exceeding the industry growth of 20%.

Non-performing loans totalled $2.3 billion as at September 2009 which represented 2.61% of the gross loans compared to 2.34% as at 30 September 2008. We have enhanced our delinquency management and loan origination processes to proactively and aggressively monitor our loan portfolio in the current economic environment. Our provision coverage as at September 2009 was 147.3% compared to 152.9% at September 2008.

For the financial year ended 30 September 2009, provision for credit losses totalled $1,028 million compared with $468 million for the period ended 30 September 2008, mainly due to the impact of the challenging economic environment on our customers. We have responded to the challenges by implementing a number of measures to assist customers.

NCBJ remains the largest commercial bank when measured by profit, assets and branch network, and we believe that these advantages provide significant opportunities for continued growth.

Wealth Management
Our wealth and asset management segment contributed operating profits of $2.5 billion for the financial year ended 30 September 2009. NCB Capital Markets Limited (NCBCM) the main contributor to this segment provided 88% of the operating profits. The result for this segment reflects a $1.6 billion increase over the 2008 financial year. The 2008 results included a provision for impairment losses made on amounts due from Lehman Brothers Group. NCBCM continues to strategically position itself to capitalise on market opportunities, while making other internal adjustments to minimise the negative impact of the current economic environment on its operations.

Insurance
Our insurance segment contributed operating profits of $1.8 billion for the financial year ended 30 September 2009, representing an increase of 138% or $1.1 billion over the corresponding period of the previous financial year. NCB Insurance Company Limited (NCBIC), the major contributor to this segment achieved a net profit of $1.7 billion, increasing by $981 million when compared to 30 September 2008.

Overall, our segment results reflect the careful and strategic management of customer relationships and needs, expert management of interest rate spreads and liquidity and proactive and effective management of our risks and costs.

We remain committed to and continue to pursue our strategic objectives and most importantly to keeping our organisation strong for all our stakeholders. This strength is reflected in our capital position as follows:

CAPITAL
The Group’s Stockholders’ Equity of $41.0 billion increased by $9.7 billion or 31% when compared to 30 September 2008.

• The Risk-Based Capital Ratio for NCBJ was 14.63% which exceeds the minimum requirement of 10% stipulated by the Bank of Jamaica.
• The Capital to Risk Weighted Assets Ratio for NCBCM was 60.75% which exceeds the minimum requirement of 10% stipulated by the Financial Services Commission.
• The Solvency Ratio for NCBIC was 23.2% which exceeds the minimum requirement of 10% stipulated by the Financial Services Commission.

DIVIDENDS
On 05 July 2009, the Board declared an interim dividend of $0.89 per ordinary stock unit. The dividend is payable on 03 December 2009 for stockholders on record as at 20 November 2009.

COMMUNITY RELATIONS
In pursuit of our objective of Engaging in Nation Building, we donated over $21 million during the quarter in support of projects in the areas of Education, Health, Sports, Entrepreneurship and Community Development.

Education
During this quarter, we committed $18 million in scholarships to 408 students at the tertiary, secondary and primary school levels. The scholarships assisted the students with tuition, books and other school supplies. In addition, we made donations towards school upgrading projects including the purchase of computers for skills training programmes. Among the schools that received assistance in these areas, were the Paul Bogle High School located in St. Thomas and the Loving Care Christian Academy located in Hanover.

Community Development
We also assisted in funding community development initiatives affiliated to the Jamaica Red Cross Organization, the Jamaica Fire Brigade Self- Help Project and the Hargreaves Memorial Hospital received assistance during the quarter. We continued the ‘Be the Change’ initiative and donations were made to 19 charities across the island. Among the charities that received assistance were the Cancer Society, Jamaica Redevelopment Project, Guiding Light, Jamaica Special Olympics, Buff Bay Hospital, the Intensive Care Units of the Port Antonio and UHWI Hospitals, and the Grace Kennedy Education Fund.

Sports Development
With our extended focus on developing our youths through sports commitments were made towards sports programmes in schools which included the purchasing of gear and equipment. The Foundation also supported community sports initiatives such as the Tivoli Gardens Football Club, St. Elizabeth Football Association and the Real Mona Football Club.

Overall, during the quarter, we contributed to 62 projects in the areas of Training, Art and Culture, Health, and Community Outreach across the island.

We wish to express our deep appreciation to our staff members for their committment and dedication to excellence in their work and for their enthusiastic involvement in the Group's philanthropic pursuits. We also wish to express our sincere gratitude to our customers for their loyalty, confidence and continued support during these challenging times.

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