NCB lost heavily on its commercial and consumer banking segment in 2019
National Commercial Bank (NCB) is reporting heavy losses on its commercial and consumer banking segment last year, which declined by $3.2 billion or 278%.
The losses came mainly from NCB’s Jamaican and Bermudan portfolios.
In it’s just-approved 2018-2019 annual report, NCB explained that the credit impairment losses on both the Jamaican and Bermudian portfolios have affected the commercial and consumer banking segment performance. Impairment charges grew by $3.1 billion. The commercial and consumer banking segment was the only business line that recorded a loss. All the other six business segments — payment services, corporate banking, treasury and correspondent banking, wealth, asset management and investment banking, life insurance and pension fund management and general insurance — were profitable in 2019.
The segment, which carries the largest costs, given infrastructure and staffing requirements, recorded a net operating loss of $414 million, a decline of $3.2 billion from the prior year, despite an increase in external revenue of $2.6 billion or 10 per cent driven by improved net interest income. Operating expenses increased by $628 million to $15.7 billion, up four per cent.
During the year this segment focused on strengthening relationship management and reach with the small & medium-sized enterprises, while targeting other business customers who were previously underserved or unserved.
INSURANCE AND PENSION FUND MANAGEMENT
The business line with the biggest jump in profits for 2019 was insurance and pension fund management, which registered a 97 per cent increase to $18.7 billion, up by $9.2 billion.
The five months of profits from Guardian Holdings, which was acquired last year by NCB, contributed significantly to the improvement in the bottom line.
NCB Insurance had a good year, benefiting from improved spread performance and reserve releases. External revenues earned for the year totalled 52.2 billion, an increase of 274 per cent as a result of the consolidation of Guardian financials.
Corporate banking was the second-best earner with $5.2 billion in operating profit, an increase of 53 per cent or $1.8 billion. This area of business offers banking services, including loans and other credit products, to large corporate clients.
During the year the corporate banking segment strategically focused its effort on growing the loan portfolio regionally, whilst capitalising on the improved Jamaican economy. This resulted in net interest income growing by $1.9 billion or 51 per cent.