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Open letter to the Chairman and Board

Dear Mr. Chairman and Members of the Board,

Introduction and Purpose

As a long‑term observer of NCB Financial Group Limited (“NCBFG” or “the Group”), and as a Jamaican by heritage who has admired this institution for decades, this letter is written with a mix of respect, concern, and urgency. 

It is not a hostile manifesto, nor the opening salvo of a formal activist campaign. Rather, it is an open appeal to the Board and management of one of Jamaica’s most systemically important financial institutions to acknowledge candidly where NCBFG now stands, to confront the disconnect between its potential and its current market standing, and to recommit to the standards of performance and governance that once made NCB a benchmark of excellence in the region.

The goal is simple: to help catalyse a proactive, self‑driven response by the Board and management – before external pressures, regulatory intervention, or more confrontational activism become inevitable.

Honouring NCB’s Historic Achievements

NCB’s modern history is, in many ways, the story of contemporary Jamaican finance. Under strong leadership, the Group survived and then helped repair the damage of past financial crises, rebuilt trust in domestic banking, and emerged as a flagship institution for the wider Caribbean. Through bold strategic choices – including the transformation into a universal financial group and the acquisition of a controlling stake in Guardian Holdings Limited – NCBFG positioned itself as a regional champion with meaningful scale in banking, insurance, payments, and wealth management.

There were periods when NCB’s stock symbolised what was possible for Jamaican enterprise: disciplined growth, innovation in products and services, strong governance, and returns that consistently rewarded shareholders, employees, and the broader economy. Those were the years when the market saw NCBFG as a “must‑own” name, when its performance enhanced confidence in the Jamaica Stock Exchange and attracted local and international capital into our markets.

It is precisely because of that legacy – and because of the Group’s systemic importance to households, businesses, and the state – that the current situation is so troubling.

The current state of affairs: a strategic and market disconnect.

NCBFG today remains a large, diversified financial conglomerate with significant franchise value: dominant in Jamaican retail and corporate banking, present in key regional markets, and owning a valuable regional insurance and asset‑management platform. The income statement shows that profitability has rebounded from more difficult years, with net operating income growing and net profit recovering to levels consistent with mid‑teens returns on equity.

Yet, the equity market is sending a very different message. Over the past five years, the share price has collapsed from its prior highs, destroying substantial shareholder value and erasing years of wealth creation. The stock trades at a deeply discounted multiple of earnings and book value, more akin to a distressed or structurally impaired institution than to a growing regional leader. This is not a short‑term market mispricing; it is a verdict on strategy, governance, communication, and capital allocation.

Put bluntly, there is a growing perception – among investors, market commentators, and the wider public – that NCBFG is a complex, under‑governed conglomerate in disarray, whose leadership has lost the confidence of the market even as the underlying franchises remain fundamentally sound. That gap between potential and realised value is not just a financial issue; it is a reputational and systemic risk for Jamaica.

Key Areas of Concern

1. Valuation and shareholder value destruction

The most obvious and visible concern is the severe de‑rating of NCBFG’s shares. The Group has moved from being one of the premier equities on the Jamaica Stock Exchange to one that trades at a steep discount on virtually every conventional metric, despite the restoration of profitability.

This is not simply about stock market “sentiment”. When a systemically important bank and financial group trades at a single‑digit price‑earnings multiple and at a material discount to book value, it signals that the market has low confidence in the durability of earnings, the clarity of strategy, the quality of governance, or some combination of all three. Over time, such a discount:

• Raises the cost of equity capital for the Group.
• Makes it harder to use shares as a credible currency for acquisitions or employee incentives.
• Undermines public confidence in the stewardship of a national champion.

The Board must treat this prolonged value destruction as an urgent strategic issue, not as an incidental by‑product of external conditions.

2. Group complexity and lack of transparency

NCBFG has, over the years, constructed a sophisticated but highly complex structure:

• A large banking operation anchored in Jamaica with regional extensions.
• A significant insurance and asset‑management business through Guardian Holdings and related entities.
• Various investment, securities, and support entities across jurisdictions.

Some complexity is inevitable in a multi‑line regional financial group. However, from the outside, the current structure appears opaque. External stakeholders struggle to clearly see:

• The true economic contribution of each major segment (Banking, Insurance, Wealth/Investment).
• The allocation of capital and risk across those segments.
• The governance, funding and encumbrance structures around key assets, particularly the Guardian stake.

This opacity invites a valuation discount and raises legitimate questions about whether the Group is optimally structured to serve depositors, policyholders, employees, and shareholders over the long term.

3. The Guardian stake and look‑through leverage

The acquisition and build‑up of a controlling stake in Guardian Holdings was, at its core, a bold and rational strategic move. It diversified NCBFG’s earnings, expanded its regional footprint, and created an insurance platform with meaningful scale.

However, the subsequent use of the Guardian stake as collateral for substantial funding – including recent high‑profile transactions where a majority of Guardian shares have been pledged to secure sizeable obligations – has fundamentally changed the risk profile of the Group. While such structures can be defensible in certain contexts, they present material concerns:

• They introduce structural leverage at the holding‑company level that is not always transparent to minority shareholders.
• They create encumbrance over a “crown jewel” asset that underpins the Group’s diversification story.
• They may constrain future strategic options around Guardian, particularly if markets or regulators turn adverse.

The Board must ask whether the current degree of leverage and encumbrance tied to Guardian is consistent with NCBFG’s long‑term risk appetite and systemic responsibilities.

4. Capital allocation and payout discipline

Despite improved profitability, shareholders have not seen a coherent, predictable capital‑allocation framework. The Group has oscillated between periods of investment, balance‑sheet expansion, and portfolio reshaping, with limited clarity on:

• Target ranges for capital ratios across banking and insurance entities.
• A sustainable, through‑cycle dividend policy.
• The circumstances under which excess capital will be returned to shareholders versus re‑invested or used to pursue acquisitions.

Without a transparent capital framework, investors are left to assume that capital will be consumed by complexity, legacy issues, or future opaque transactions. This is a key reason why earnings recovery has not translated into a commensurate recovery in valuation.

5. Cost efficiency and operational discipline

While there have been efforts to improve cost‑to‑income ratios, the Group’s efficiency metrics still suggest meaningful room for improvement. Benchmarked against regional and global peers, NCBFG appears to carry higher structural overhead relative to its income base, especially given its diversified model.

In a world where digital transformation and operational excellence are critical to competitiveness, the market needs to see a credible, quantified, time‑bound plan to further reduce structural costs, rationalise overlapping functions across entities, and re‑invest savings into technology and customer‑facing innovation.

6. Governance, alignment, and communication

NCBFG is effectively a controlled company, with a significant stake held through Portland‑associated entities. This reality is not, by itself, negative; controlled structures can be effective when the controlling shareholder aligns with minority investors, fosters strong independent governance, and communicates clearly.

However, the current state of the share price, the perceived complexity of related‑party and financing structures, and the sense of strategic drift suggest that this alignment has frayed. There is growing concern that:

• Independent directors have limited practical influence over major strategic and capital decisions.
• The market is not being given sufficiently clear, candid, and forward‑looking communication about risks and strategic trade‑offs.
• Board and management incentives are not transparently tied to value creation for all shareholders over time.

For a systemically important institution, such a perception is dangerous. Governance must not only be sound; it must be seen to be sound.

Recommendations for a Constructive Path Forward

The concerns above are not presented as accusations, but as a diagnosis of why NCBFG’s market standing has deteriorated and why public confidence has been shaken. The good news is that the underlying franchise remains strong, and the situation is eminently fixable – if the Board chooses to act decisively. Below are concrete recommendations that can be implemented without waiting for an external activist or crisis.

1. Commission and publish a strategic review

The Board should undertake a formal, independent strategic review of NCBFG’s structure, capital, and portfolio, and commit to sharing the key conclusions publicly. That review should address, at a minimum:

• The long‑term strategic role of Guardian within NCBFG: what degree of ownership is optimal, and under what conditions might partial monetisation, spin‑off, or a more arm’s‑length relationship create more value for all stakeholders.
• The appropriate level and form of leverage at the holding‑company level, including the future of any pledge or encumbrance over Guardian shares.
• The optimal group structure to balance diversification benefits against complexity and governance risks.

By owning this process and communicating its results proactively, the Board can begin to reset market expectations and rebuild credibility.

2. Clarify and strengthen capital and payout policy

NCBFG should articulate a clear capital framework and dividend policy that investors can underwrite through the cycle. Key elements would include:

• Target capital ratios and buffers for the banking and insurance entities, consistent with regulatory expectations and stress‑tested scenarios.
• A baseline payout ratio range (e.g., a percentage of normalised net income) with explicit guidance on conditions that would drive temporary deviations.
• Principles for the use of excess capital: debt reduction, inorganic growth, or enhanced shareholder distributions, with an emphasis on transparency and discipline.

A predictable, well‑communicated capital policy would help narrow the valuation discount and demonstrate respect for all shareholders, not just the controlling interests.

3. De‑risk and rationalise the Guardian financing structure

Given the centrality of Guardian to NCBFG’s story and the systemic importance of both organisations, the Board should set a firm objective to:

• Reduce structural leverage tied to Guardian over a defined time horizon.
• Limit encumbrance on the Guardian stake to levels that regulators and markets would view as conservative.
• Explore opportunities to crystallise some of Guardian’s value at attractive multiples – whether via strategic placements, public market transactions, or other structures – while preserving the industrial logic and synergies of the relationship.

Such steps would materially improve the Group’s risk profile, enhance strategic flexibility, and support a re‑rating of the equity.

4. Commit to a multi‑year cost and efficiency programme

The Board should mandate, and publicly support, a multi‑year operational excellence programme with clear targets and timelines. This programme should:

• Set explicit cost‑to‑income ratio targets for the Group and major segments over a 3–5 year horizon.
• Rationalise overlapping support functions across entities, leverage shared services, and accelerate digital transformation.
• Link senior management compensation directly to achieving these efficiency goals alongside customer‑service and risk metrics, not just top‑line growth.

Investors and regulators alike need to see that NCBFG is determined to operate as an efficient, modern financial institution, not a bloated conglomerate reliant on complexity for earnings.

5. Enhance segment disclosure and investor communication

NCBFG’s public reporting should be enhanced to give shareholders a clearer view of the drivers of value within the Group. This includes:

• More granular segment reporting for Banking, Insurance, and Wealth/Investment, including ROE, capital allocation, and risk metrics by segment.
• Transparent disclosure of key financing arrangements, especially those involving major assets like Guardian.
• Regular, candid investor briefings where the Group addresses not only financial results, but also progress against the strategic, capital, and governance commitments set out above.

A more open, data‑driven dialogue with investors will help rebuild trust and reduce speculation.

6. Reinforce independence and accountability at the Board level

Finally, the Board must look inward and ask whether its composition, committees, and processes are truly fit for the complexity and systemic role of NCBFG today. Constructive steps could include:

• Strengthening the role of independent directors, including the Lead Independent Director, in capital allocation, related‑party transactions, and risk oversight.
• Ensuring that Board committees – especially Audit, Risk, and Corporate Governance & Nomination – have both the independence and the expertise to challenge management and controlling shareholders when necessary.
• Disclosing more clearly how Board and executive compensation are linked to long‑term value creation, risk management, and stakeholder outcomes.

Taking visible steps to reinforce independence and accountability will help counter the narrative that NCBFG is run for the benefit of a few, rather than for the broad community of stakeholders it serves.

A Call to Stewardship; Not Confrontation

This letter is written from the perspective of someone who remembers – and still believes in – the days when NCB was a symbol of what Jamaican finance could be at its best: innovative, well‑run, respected at home and abroad, and a source of pride and opportunity for ordinary Jamaicans.

The current situation, in which the Group’s shares languish at depressed levels and its reputation is increasingly questioned, is not worthy of that legacy. Nor is it acceptable for an institution that plays such a critical role in our financial system, our capital markets, and the everyday lives of citizens.

The Board has a choice. It can wait for more adversarial forms of pressure – from activists, regulators, or the market itself – to force change under less favourable conditions. Or it can seize this moment to lead a transparent, ambitious, and self‑directed transformation that restores NCBFG to the position of prominence it once held.

The recommendations in this letter are offered in that spirit: as a roadmap for constructive action that balances the legitimate interests of all stakeholders – shareholders, employees, customers, regulators, and the wider Jamaican public. Implemented with sincerity and discipline, they offer a path back to sustainable outperformance and renewed confidence.

Jamaica needs a strong, trusted, and well‑valued NCB. The region needs a leading Caribbean financial champion worthy of its history. The Group’s own investors and employees deserve nothing less.

Respectfully,

D’Andre Simpson, Long‑term investor and concerned citizen.