DESPITE the company’s additional public offering (APO) coming up short, NCB Financial Group Limited (NCBFG) would consider taking another swing at the equity markets if market conditions were to significantly improve over the next year.

NCBFG executed an APO between April to June where it sought $5.097 billion but was only able to secure $2.48 billion during the period. The shares that were made available in the offer were only a fraction of the 350-450 million shares that NCBFG can issue to raise new capital.

Now, with NCBFG continuing on its capital reallocation journey, Group Chief Executive Officer (CEO) Robert Almeida has indicated that while they don’t have any plans to do a follow-up offer now, if market conditions were to change, management would re-evaluate the opportunity again.

“We don’t have any plans to do another follow on APO right now but if markets changed, and the equity capital markets were much more hospitable, and interest rates were a lot lower so people were reallocating capital from debt to equity, we would take a look at that point and take a look in the context of what’s best for shareholder value, return on equity, and earnings per share. We’d make the decision that way. I wouldn’t rule it out,” Almeida said at NCBFG’s virtual investor briefing on Friday.

The proceeds from that APO were directed to help cut NCBFG’s debt balance, which stood at $93.51 billion in September 2023 for the standalone holding company. A total $36.84 billion in debt was due within the current financial year (FY) which has been addressed through different announced sales of certain subsidiaries and refinancing debt. NCBFG currently has a $15-billion bond set to close on August 29, which is expected to add an extra $925 million in interest expense.

Almeida also confirmed that the sale of NCB (Cayman) Limited and 30.20 per cent sale of Clarien Group Limited would go towards reducing debt. Those announced transactions are currently subject to regulatory approval, with Almeida noting that while NCBFG will retain board seats in Clarien Group, it doesn’t expect to recognise the business as an associate with its remaining 19.90 per cent stake.

NCBFG’s moves come in light of Hurricane Beryl’s passage across the Caribbean which has left an estimated US$500 million in damage, according to Guardian Holdings Limited (GHL) CEO Ian Chinapoo. Although GHL doesn’t have final estimates of claims from its clients, Chinapoo noted that the GHL’s gross exposure is US$48 million before reinsurance, which is expected to bring down the potential maximum loss to US$10 million.

“We’re working very hard to get the claims settled very quickly, given the impact on our customers and their countries. So, we are expecting that to be concluded within the months of August and September, but those are the numbers,” Chinapoo added.

Beryl’s impact remains quite pronounced on the southern belt of Jamaica, where most of the material damage occurred. Different commercial banks have extended forbearance or debt restructuring opportunities to affected customers in Westmoreland and St Elizabeth, where numerous areas still remain without electricity.

When asked about the potential impact for National Commercial Bank Jamaica Limited (NCBJ), CEO Bruce Bowen responded, “Overall, percentage wise, the largest of our clients that are in the communities that were hardest hit did have insurance. Where we’re seeing the biggest impact is more on the small, micro customers, and many of them that are non-borrowing — but we’ve been looking at how we can support them through this. Some of those is where the relative impact is higher, but that is not a significant percentage of our portfolio. So, as we’re looking forward into the next few quarters, we don’t think Hurricane Beryl is going to have an impact on our non-performing loans or our provisions.”

NCBJ Vice-President for Payments Danielle Cameron-Duncan also noted that 68 automated banking machines (ABMs) went down due to Beryl, and they’re working to get 15 remaining ABMs back online. She noted this against the backdrop of ABM availability being around 97 per cent for its 304 machines islandwide.

These improvements by NCBJ come in light of fraud being cut by more than 70 per cent in the last nine months, following changes made to transaction limits and elimination of SMS notifications. Bowen mentioned that NCBJ will be planning to add two-factor authentication (2FA) to certain debit and credit card transactions online which would require users to input a one-time password to confirm the transaction.

While NCBFG has made all these major changes in recent times, net revenues from banking and investment activities were down 14 per cent to $18.50 billion in the third quarter due to higher credit impairment provisions, lower foreign exchange and fair value gains, and higher fees and commission expenses. However, the net revenues from insurance activities from GHL improved by 51 per cent to $10.44 billion, which resulted in net operating income of $28.93 billion.

A relative reduction in expenses and lower tax charges pushed consolidated net profit up 52 per cent to $7.39 billion, with $5.02 billion attributable to stockholders. The earnings per share for Q3 was $2.11.

Total assets for the period were up two per cent over the nine months to $2.27 trillion, with loans rising to $637.38 billion, investment securities at $856.38 billion, and cash at $88.88 billion. Total liabilities and equity attributable to shareholders were $2.06 trillion and $161.12 billion, respectively. NCBJ’s capital adequacy was 14.5 per cent, 18.4 per cent for NCB Capital Markets, with Guardian Life Limited at 259.4 per cent.

NCBFG’s stock price closed Friday at $50.93/TT$3, which leaves both stocks down by more than 11 per cent in 2024 with the company having a market capitalisation of $131.59 billion. NCBFG will consider a dividend on Friday, a week after its originally scheduled date. Its subsidiary GHL declared a TT$0.23 dividend, totalling 53.37 million, to be paid on August 29 to shareholders on record as of August 16. NCB Global Holdings will receive TT$32.97 million.

“Over the last three quarters we were stabilising the business. Now, we’re in growth mode. Growth is going to come from unleashing the full potential of the scale that we have, the full potential of the fact [that] under one roof we have a major insurance company and a major banking institution. We’re on our way to become the lowest cost producer, and wealth management will be the huge value add to individual, corporate customers, and the region. Our progressive improvements over the last three quarters will be tangible evidence that the retooling efforts that we have embarked on is taking root,” said NCBFG Chairman Michael Lee-Chin in his closing remarks.