Posts net profits of $6 billion for Q1

Last time we were at NCB’s headquarters at the Atrium on Trafalgar Road, for the release of its financial results, there was a funereal vibe as the numbers looked far from impressive.

At that time, there wasn’t too much to sing about.

Come a new year, a restructured NCB with chairman Michael Lee-Chin’s hands on the wheel, and NCB is making comforting progress.

Last year, interim Group CEO Robert Almieda described the regional conglomerate as attempting to “retool and renovate a 747 airplane while it was in flight. We had all the expenses of restructuring plus all the expenses of that year weighing upon us. There was $8 billion of expenses in there plus $5 billion in restructuring costs. With adjustments you are looking at around $20 billion going out of the door. Those numbers for 2023 are a one off.”

For the first quarter ended December 31, 2023, NCB Group reported an unaudited consolidated net profit of $5.97 billion, a $3.76 billion increase over the prior year. This net profit figure is a vast improvement on the net profit of $1.57 billion reported in the fourth quarter of the last financial year.

Net profit attributable to stockholders for the period under review came in at J$3.08 billion.

For Q1, the group posted operating income of J$34.5 billion an increase of J$7.6 billion mainly derived from net revenues from insurance services.

Net revenues from banking and investment activities of J$19.5 billion spelt an increase of four per cent ($719 million) over the same period last year.

Net interest income and net fee commission income rose by J$262 million and J$510 million respectively. Higher transaction volumes resulted in the increased interest and fee and commission income respectively.

Gains on foreign currency and investment activities declined by $607 million, as a result of unrealised fair losses in the current quarter.

The group’s insurance business was the star performer riding in like Gandalf to save the day.

Net revenues from insurance activities contributed J$15 billion, $6.9 billion more than the prior year. The stand out segments here were “property and casualty”, and “general insurance.” The property business line contributed the lion’s share.

Operating expenses for the group have been particularly concerning and for Q1 came to $26.2 billion, a 14 per cent increase over the previous year. This was due in the main to depreciation and amortisation expenses due to policy changes.

Staff costs went up by six per cent due to annual negotiated salary increases which to some extent was offset by a reduction in staff numbers after restructuring (biding goodbye to Hylton, Cohen and many other senior executives).

NCB is now honed in on its cost-to-income ratio and has put in place rigourous cost control measures.

Deposits form the largest source of funding for NCB and this revenue line increased by six per cent to J$756.6 billion as at December 2023.

Equity attributable to stockholders of the NCB Group totalled J$160 billion, an increase of $27 billion over last year’s figures. The growth in equity was mainly attributable to increased retained earnings and a reduction in unrealised fair value losses.

Speaking at yesterday’s (February 9) annual general meeting, Almieda said: “ Looking at the first quarter, we are seeing the benefits of the changes made and it will not be long before we get back to our normal profitability. We are in line with where we expected to be. We are looking at around $25 billion in net profit after tax by the end of the year with a $10 EPS.

“ If interest rates start to go down we will benefit but we don’t plan for that. Everyone is calling for interest rates to go down but whether they go up or down, we are going to hit our numbers. Given what is behind us in the last few years, interest rates have gone up so we are not banking on those rates going down.We intend on hitting our targets.”