During this past week I couldn’t help but read the media reports surrounding two bank executives claiming compensation of $13.6 billion. Whether this massive sum was actual or not, I was shocked because I had only heard of someone earning those salary scales within transnational financial corporations with branches worldwide.

Furthermore, given the fact that the entity the executives were claiming from was one whose share price had fallen from $208.79 to $73.53 (as at July 21, 2023) and had failed to pay its shareholders a dividend in the last two years, I was confused.

Subsequently, I listened to the Group CEO of the National Commercial Financial Group Patrick Hylton give his side of the story in what, perhaps, was one of the most unprofessional interviews by a journalist I had heard in a long time.

For the record, Hylton is someone I have liked over the years — a quiet, unflashy gentleman whose early beginnings rooted him in Glenmuir High School. I love to see individuals from humble beginnings rise to lead. So what I am about to say has nothing to do with my admiration of his character, but whether commercial banks and financial institutions are building and adding value to our country as they should.

The 2022 published audited accounts for the National Commercial Financial Group Limited, which includes the National Commercial Bank (NCB), Guardian Holdings and Clarien Bank (Bermuda), show revenue of $56.47 billion in net interest income from loans, $26.13 billion from net fees and commissions, $5.99 billion in foreign exchange gains, and $9.4 billion from other investment activities, and $42.3 billion in net insurance operations. Overall, the NCB Group generated a net company profit of $39.92 billion.

I want to focus on the commercial bank, which generates the majority of the group’s income and made its money from interest income, fees, commissions, gains on foreign exchange, and other investment activities.

Having looked closely at the group’s balance sheet and income statement, I surmise that there was no real rocket science or creative management behind how most of the company’s income was earned. In the case of foreign exchange gains, all the bank did was establish a differential percentage on what they sold the foreign exchange for. Similarly, the fees, commissions and insurance income would need only a set algorithm to churn them out.

These three areas alone accounted for $74 billion, representing 49.5 per cent of the banks operating income. In other words, approximately half of the bank’s earnings were primarily administrative functions, which in today’s world could see artificial intelligence (AI) managing.

As I delved deeper into the bank’s portfolio, it was clear that 48.85 per cent or $288.7 billion of the banks loans had been categorised as personal; that is car purchases, home improvement, or individual needs. Moreover, the Government borrowed $34.3 billion from them (directly), representing 5.8 per cent of their loan portfolio. An additional $11.15 billion was loaned to utility companies and, finally, $16.2 billion to other financial institutions — a total of $350.35 billion, representing 59.28 per cent (nearly 60 per cent) of their loan portfolio.

What was glaring from how NCB’s loans were structured was that the management or board of directors decided to have very little risk exposure and were not doing anything tremendously innovative.

So I wanted to determine where the remaining 40.78 per cent of their loan portfolio went. How was it allocated? See the table for the breakdown.

For any economy to grow it needs the best public policies for the private sector to create jobs for its citizenry. For the private sector to thrive it requires money and capital investment. On the national front, the Government should set the priorities for our local economy. I have repeatedly said that export-agriculture, manufacturing, culture, and entertainment give us the most significant global competitive advantage to grow our economy. However, when we honestly evaluate how a person accesses capital from our commercial banks in Jamaica, regrettably, agriculture, manufacturing, culture, and entertainment simply cannot and will not grow.

NCB, our largest bank, allocates 1.28 per cent for agricultural loans, while the second largest bank, Scotiabank Jamaica, distributed a paltry 0.31 per cent to this sector.

Manufacturing does not fear any better, seeing only 1.47 per cent from NCB and 5.52 per cent from Scotia.

I recall my doctor telling me, two years ago, that when she was trying to get a commercial bank loan to expand her practice and buy modern equipment to enter the medical tourism market it was the worst experience she had encountered. The banks were not prepared to take the risk. Instead, it was much easier for her to qualify for a motor vehicle loan.

The same was true for another friend who owns and operates one of Jamaica’s thriving export manufacturing businesses employing hundreds of Jamaicans. She said she stopped trying to raise capital through our commercial banks and resorted to other creative ways to grow her company.

Given these circumstances, our small farmers clearly stand no real chance to succeed at scale or compete internationally.

No doubt, the primary responsibility of a manager within any corporation is to grow the assets for which they have responsibility. Those managers who achieve such a growth rate are rewarded accordingly. In NCB’s case, its loan portfolio of $581 billion is even less than that of the $959.48 billion it invested in securities — the vast majority of which is in government paper. So, for the most part, the bank is taking almost $1 trillion of your deposits and lending them to Government (the most inefficient producers) at a higher rate while it gives you only a fraction of the rate of return on your money.

Other than making massive profits for themselves using our money, charging us fees for simple things, like withdrawing our money, selling us foreign exchange at much higher margins than what they buy it for, and not passing through the actual Bank of Jamaica interest rates to our loans, let us ask ourselves, what have commercial banks really done for Jamaicans lately?

Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member.