NCBFG reports dip in third quarter profits

Business

NCBFG reports dip in third quarter profits

BY KELLARAY MILES
Business reporter
milesk@jamaicaobserver.com

Wednesday, August 12, 2020

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The National Commercial Bank Financial Group (NCBFG) has reported a 29 per cent or $6 billion dip in profits attributable to shareholders for its third quarter or nine-month period ended June 30, when compared to a similar period last year.

In an investor's briefing held last week, Dennis Cohen, group chief financial officer (CFO) and deputy chief executive officer (CEO), said that the effects of the COVID-19 pandemic, coupled with some increased expenses to the business, was attributable to this decline.

“Our profit attributable to shareholders of $14.8 billion represents a $6-billion decline from the prior year and has led to a decline in some of our key metrics namely return on assets and return on equity, which are now 1.64 and 13.2 down from 2.2 and 20.7, respectively, in the prior year,” he said.

“The pandemic has tempered the year-over -year growth by reducing security trading activity and earnings on foreign currency and investment activities. It has also led to increase in crediting payment provisions and lower fees and commissions,” he added.

For the period, operating expenses increased by $17.4 billion or 41 per cent due to the nine months result from Guardian Holdings Limited, which the CFO said resulted from increases in staff costs which totalled $29.9 billion up by some 38.3 per cent among other operational costs including the implementation of COVID-19 restriction protocols and digital transformation capabilities.

Some segment performance reflected marginal increases such as general insurance in which results improved by $5.5 billion from the consolidation of Guardian, payment services also increased by two per cent or $45 million due to growth in the credit card business.

“However, five of our seven segments recorded decreased performance from the prior year due to the economic conditions and reduced securities trading activity— our wealth and treasury segments recorded reduced operating profits down by $555 million and $546 million or eight and nine per cent, respectively. Commercial and consumer segment also recorded a decline of $356 million from the prior year—credit impairment provisions coupled with increased cost of investment in technology and real estate infrastructure adversely impacted the results of these segments,” the CFO outlined.

Despite the fall-offs in profit, the chief financial entity for the quarter managed to secure record net operating income of $81.6 billion while total assets for the period stood at $1.7 trillion representing an increase of $122 billion or eight per cent growth and equity up 10 per cent totalling $151 billion.

“In spite of the unprecedented challenges, we have nonetheless been able to deliver significant net income to our shareholders,” Cohen said.

During the briefing it was also noted that the company's board, in keeping with the central bank's recommendation and as a result of the uncertainties brought on by the COVID-19 pandemic, made a decision to not declare a dividend payment to shareholders. The move, they said, was also reflective of other global financial institutions given the prevailing circumstances arising from the pandemic and was in order to secure liquidity.

President and CEO Patrick Hylton, in commenting on the group's performance, added that despite the ongoing challenges, the group will continue to adapt and looks forward to future growth and new investment opportunities.

“We remain opportunistic and are constantly scanning the environment so we can respond to the opportunities that continue to arise even in the crisis. We are transforming at speed and at scale.

"As we continue on the journey to become a world-class Caribbean financial ecosystem, this aspiration is anchored by four strategic pillars [namely]: strong financial performance, delighted customers, inspired people and culture and [becoming] digital to the core,” he said.

OPPORTUNITIES IN GUYANA

NCB Financial — like several other businesses rushing to undertake ventures in a booming Guyanese economy — has also said that through NCB Capital Markets (NCBCM) it is currently seeking to exploit and take advantage of emerging opportunities in that region.

“We would like to participate in the development of that economy in providing some of the financial solutions for the people of Guyana and for companies invested, we've been looking at a number of ways to accomplish that. We are still in the early stages of developing what the operating model will look like,” Hylton said while noting that though still early days, it is an initiative that is being pursued.


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