FITCH Ratings removed National Commercial Bank Jamaica Limited (NCBJ) from Rating Watch Negative, saying the economic fallout from Hurricane Melissa is unlikely to materially impair the bank’s credit profile.

In a rating action issued Thursday, Fitch affirmed NCBJ’s long-term issuer default rating at ‘BB-’ with a Stable Outlook — placing the bank below investment grade but signalling stability at the current rating level. Its parent, NCB Financial Group (NCBFG) Limited, was affirmed at ‘B+’, one notch lower on the same rating scale, also below investment grade, with a Stable Outlook.

Fitch placed NCBJ on a downgrade watch late last year amid concerns that hurricane-related disruption in 2026 and 2027 could pressure asset quality, profitability and capital buffers.

The agency said the bank’s size and dominant position in Jamaica are the main reasons the rating remains at its current level. The bank accounts for roughly 35 per cent of system assets and 31 per cent of deposits as at December 2025, giving it scale and a stable funding base. That position underpins its ‘BB-’ viability rating — the standalone strength assessment that supports the overall issuer rating.

It expects slower economic activity and higher reconstruction costs to pressure borrowers and loan performance in the near term, even as the bank’s 90-day non-performing loan ratio improved to 3.9 per cent in the first quarter of the 2026 financial year from 4.2 per cent at the end of 2025.

Fitch also noted that NCBJ’s profitability has moderated, with operating profit to average assets declining to 0.8 per cent in the first quarter from a four-year average of 1.2 per cent — roughly one-third lower than its recent norm. The decline reflects higher impairment charges and operating costs. The rating agency does not expect earnings to weaken materially from current levels.

Fitch said capital levels remain supportive of the current rating. Tangible common equity, which represents shareholder capital available to absorb losses, stood at 10.8 per cent of tangible assets, while the capital adequacy ratio, a measure of the bank’s regulatory buffer against risk-weighted assets, was 15.2 per cent — comfortably above minimum requirements. A sustained fall in tangible common equity below 10 per cent could trigger negative rating action.

Liquidity strengthened during the period, with the gross loans-to-customer deposits ratio declining to 69.2 per cent from 72.7 per cent at year-end 2025, indicating a more conservative funding position supported by a broad deposit base. Fitch noted that it had initially anticipated sizeable deposit outflows following the hurricane, but the bank’s liquidity position instead improved.

At the holding company level, NCBFG’s ratings remain one notch below those of the bank, reflecting elevated double leverage — where the parent uses debt to finance its investment in subsidiaries — which has averaged above 120 per cent. That structure increases financial risk at the group level, even though the core banking subsidiary remains the primary earnings engine. Fitch indicated that a sustained rise in double leverage beyond 150 per cent could exert downward pressure on the rating, while continued deleveraging could narrow the differential between the holding company and the bank. Both entities also remain closely aligned with Jamaica’s sovereign rating.