Despite an overall decline in its loan portfolio this year, the National Commercial Bank (NCB) has made more Jamaican dollar denominated loans and has increased its provision for loan losses by 12 per cent.

The bank is number one in loan market share as at June 2010 for which the most current data is available, with 34.6 per cent of the share of loans but has also borne heavy losses for that accomplishment.

At an investors’ briefing recently to announce the firm’s end of year results, NCB group chief financial officer Yvonne Clarke disclosed that the bank has endured significant loan losses.

“Over the last two years, we have had approximately $1 billion per year in terms of loan losses. Despite the fact that that figure is particularly large we have put a lot of energy and we do believe that we have seen success,” she said.

Clarke said among the measures employed by the bank to stem the loan losses were improved underwriting of loans, early problem resolution and proactive delinquency management. NCB’s loan loss provisions increased from $255 million at the end of September 2009, to $289 million at the September 2010 period.

“We have improved underwriting we are reviewing the profile of our portfolio to make sure that we do deal with the problem early and ensure that we contact customers and make arrangements for them where we need to,” Clarke said.

She noted that one of the problems with delinquency management was that it had been particularly difficult on the staff assigned to make contact with delinquent clients. “And one of the challenges we also have in the loan loss area is the issue of keeping the staff motivated because …the person on the other end of the call can be particularly hostile. So its not only an issue of ensuring that our customers do pay and want to pay but we also ensuring that our staff are in fact motivated,” she said.

NCB’s net loans this year fell just over two per cent to $2.18 billion as its US dollar denominated loans declined from US$49.6 million to US$42.8 million at end September 2010.

However, at the end of its financial year, September 2010, the Bank’s Jamaican dollar denominated loans grew 11 per cent to $43.2 million. Clarke said the growth in Jamaican dollar loans are mainly in the corporate banking area.

Bernadette Barrow, assistant general manager, small and medium enterprises at NCB noted the increased uptake of loans in the productive sector following the introduction of NCB’s nine per cent reduced rate loan facilities to the sector.

“We have had a good year with the SMEs. Certainly in terms of loan demand and loan growth it has actually been one of our better years for loan growth,” Barrow said. She argued that the pricing of the loans, as well as the capacity building efforts undertaken by the Bank and other stakeholders have helped to mobilise the productive sector in accessing more loans. “Its a combination of pricing, product as well as helping those businesses to become stronger,” she said.

The NCB Nation Builder facility offered companies loans up to $15 million, with seven years to repay and was targeted to support capital expansion and working capital for start-up companies, businesses owned by women and companies in the agricultural and manufacturing sector. NCB’s FARM loan, launched in March following the completion of the Jamaica Debt Exchange, was targeted at agricultural business and offered up to $2,000,000 in financing.