NCB execs says half-year results validate APO
NCB Financial Group’s (NCBFG) top brass defended the company’s return to market to raise funds through an additional public offer (APO), pointing to the financial conglomerate’s half-year results.
The group reported net profit of $13.7 billion for the six months ended March 31, 2024, in unaudited reports, reflecting a 98 per cent improvement over the same period in the prevous financial year.
The figure was $1.65 billion short of the $15.34 billion earned for financial year 2022/23, the lowest full-year profit in seven years for the company.
Head of the group’s banking subsidiary Malcolm Sadler shared that the half-year results is testament to the work the company has done within the last year in “resetting”.
“Dealing with uncertainties and resetting is a part of our DNA. We do what we need to do and we succeed and become stronger,” he stated, adding: “Resilience is the word.”
“We made a commitment to reset after September 2023, and we’re on track. We’re off to a good start for this year with improvements in key financial metrics for the six months to date.”
One of NCB’s priorities has been to improve its efficiency ratio – cost as percentage of revenues.
With an improvement from 82.54 per cent last year end to 73.9 per cent in the first quarter ended December 2023, and a further reduction to 66.68 per cent in the period under review, Sadler noted that the improvement was a “measure of the progress we have made” in increasing revenues and reducing cost.
The National Commercial Bank head also pointed out that the improvement is also a sign of the company’s capital recalibration and capital efficiency initiatives.
“Four of seven business segments reported improved results, with the Life, Health and Pensions segment accounting for the largest increase…Net revenues from banking and investment activities of $40 billion experienced a modest increase of $817 million or 2 per cent over the prior year,” Sadler revealed in his presentation.
The banking operation saw both growth in deposits and its loan book. However, Sadler noted that the group’s income growth was tempered by high credit impairment losses and lower gains on foreign currency and investment activities.
“We continue to assess our immediate addressable spend to optimise and drive efficiency across all business lines,” he stated.
An area that NCBFG has experienced increased efficiency is in the management of the mobile wallet Lynk, which is now the purview of the group’s commercial banking segment.
Group Chief Executive Officer Robert Almeida also pointed out that the rebound has been due to NCBFG’s EGC initiative, which focuses on improving efficiency, governance and customer experience. These, he said, were broken down into targets with a view to “unlock the value of the platform to create wealth”.
While noting the improvements in the group’s performance in the first quarter and half year, he said, “The number are telling us that we’re on the right track.”
In terms of governance, Almeida pointed out that the changes in the group’s board structures should result in optimisation across all markets and better alignment to realise synergies in the group.
The Group CEO further pointed out that in creating wealth for NCB’s customers, the group has embarked on a capital raise through an APO. Proceeds of the fund-raising will be used to reduce debt and fund growth.
Combined with improved profitability, divestment of assets, and capital reallocation, the APO will “increase our financial flexibility to take advantage of opportunities that will present themselves so that we can continue to fund growth”, Almeida said.
For investors, the APO “provides an opportunity for Jamaicans to participate in the profitability of NCBFG and capitalise on a subdued equities market and low NCBFG stock price”.
When asked if the group’s half-year performance is an invitation for participation in the APO, Almeida said considering the symbiotic relationship between the NCB Group and Jamaica’s economy, he said when the financial conglomerate does well the country does well.
Sadler added: “This APO will catalyse the equities market in Jamaica.”
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