NCB Group year-end earnings up 99% Loop Jamaica

The content originally appeared on: Jamaica News Loop News

The NCB Financial Group is reporting consolidated net profits of $39.9 billion for its financial year ending September 30, 2022.

The increased earnings represent a $19.8 billion or a 99 per cent increase over the group’s performance in the previous year.

While addressing an investor briefing held on Friday, chief financial officer (CFO) and Deputy CEO of NCB Financial Group, Dennis Cohen said the company also posted a 24 per cent increase in operating revenues, closing the year at $149.6 billion or $28.5 billion more than the previous year, led by insurance activities.

Net profits attributable to shareholders stood at $27.3 billion “which is $13.1 or 92 per cent higher than last year and translates to a 17.6 per cent return on equity,” Cohen told the meeting adding that the result was driven by growth in the company’s key business lines.

Net revenues from insurance activities grew by $19.4 billion or 84 per cent with the improved performance due mainly to actuarial reserve releases from adjustments to investment returns and expense assumptions.

“These life, health and pension positives were partially offset by increased lapses and surrenders. The property and casualty increase was mainly due to lower claims, benefits from the nonrenewal of a reinsurance portfolio and increased reinsurance commissions on property,” Cohen told the meeting.

The life, health and pension segment continued to be the largest contributor to the group’s operating profits closing the year at $37 billion, an 89 per cent improvement or $17.5 billion more than the comparative period.

On the banking and investment side of the operations, there was a $9.1 Billion or nine per cent growth, which saw the group closing the year at $107.3 billion.

“The growth reflected higher net interest and also fee and commission income driven by growth in loan and investment securities and increase card transactions,” Cohen said.

Corporate and commercial banking stood at $6.7 billion, an increase of $1.1 billion or 19 per cent over the previous year. Growth in this segment was mainly due to a reduction in allocated expenses, the Group CFO said.

“We are encouraged by the financial outturn as well as the fact that we have been able to maintain our leading market position in Jamaica and in the region,” Cohen said.

He said despite the positive results, the group continues to be mindful of “a number of market and other developments that present potential headwinds for our business.”

The company opted not to declare a dividend to shareholders, citing the Russia/Ukraine war, “central bank rate increases – which could impact our capital – along with new insurance accounting rules and the implementation of Basel III.”

“In light, of these concerns, the board of directors thought it fit…and prudent to continue bolting our capital and not pay a dividend this quarter,” Cohen told investors and shareholders.

Pressed by a shareholder on whether the company would consider specie dividend – adividend which is satisfied in assets other than cash – through its subsidiaries, Cohen emphasised the company’s decision to decline a payout to shareholders at this time, given what he described as the “strong heads” in the future.

“We have had a number of conversations about specie before. These are things that we have in fact looked at. The issue is, I think our focus has been on bolstering our capital base… because we see still anticipate strong headwinds in the year ahead of us,” he said.

“And while the concept of specie [dividend] will allow us to pay a benefit without the cash flow going out, the fact is it still results in a depletion of the capital base, which is against our core objective based on the decisions we have been making over the past few quarters…I think it is a good proposal to put forward but it would not be consistent with the thinking of the board at this time,” he stressed.