NCB claims top spot in re­gional mar­ket af­ter $28b record profit

Jamaica Gleaner - - BUSINESS - steven.jack­son@glean­erjm.com Steven Jack­son Se­nior Busi­ness Re­porter

NCB FI­NAN­CIAL Group has been solidly en­sconced at the top of Ja­maica’s com­mer­cial bank­ing mar­ket for sev­eral years, but hav­ing just hit an­other profit mile­stone and with nearly $980 bil­lion in as­sets, its man­agers be­lieve they are well placed to dom­i­nate the re­gion.

In fact, NCB al­ready claims the ti­tle as the largest, most prof­itable group in the English-speak­ing Caribbean, hav­ing wrapped up an­other year of record prof­its, $28.6 bil­lion af­ter taxes, for the pe­riod end­ing Septem­ber 2018.

“To­day, in a real sense, we are there,” de­clared NCB Fi­nan­cial Pres­i­dent and CEO Patrick Hyl­ton at the bank­ing con­glom­er­ate’s quar­terly in­vestors brief­ing at the NCB Well­ness Cen­tre in Kingston on Fri­day.

NCB grew its bot­tom line by 50 per cent for the year, up from $19.1 bil­lion. Earn­ings equated to $11.39 per share ver­sus $7.76 a year ago. Six of the group’s seven op­er­at­ing seg­ments grew in rev­enue and prof­itabil­ity, ex­cept the gen­eral in­sur­ance arm, which was hurt by re­duced mar­gins and com­pe­ti­tion.

Other fi­nan­cial in­sti­tu­tions in the re­gion are still to re­port their fourth-quar­ter re­sults, but Hyl­ton said that NCB’s per­for­mance up to the third quar­ter had al­ready topped other in­sti­tu­tions in the an­glo­phone Caribbean.

“Our per­for­mance over nine months made us the most prof­itable fi­nan­cial in­sti­tu­tion in the English-speak­ing Caribbean,” he said.

Two years ago, NCB as­pired to rank within the top five in the re­gion. In Jan­uary of this year, the bank ranked it­self at No. 4, based on its first-quar­ter pre­tax profit. Its pre-tax earn­ings re­ported af­ter mar­ket close on Thurs­day was just shy of $34 bil­lion for the full year.

“Ladies and gentle­men, it has been a re­mark­able jour­ney from be­com­ing the largest fi­nan­cial in­sti­tu­tion in Ja­maica and from there to the po­si­tion we now hold in the re­gion,” Hyl­ton said.

NCB Fi­nan­cial made sub­stan­tial progress on its build-out into a re­gional fi­nan­cial op­er­a­tion three years ago when it ac­quired a 29.99 per cent stake in Guardian Hold­ing Lim­ited of Trinidad & Tobago. It fol­lowed up that in­vest­ment with a 50 per cent stake in Clar­ien Bank in Ber­muda.

Guardian is one of the most prof­itable groups in the re­gion, along with Sagi­cor Fi­nan­cial Cor­po­ra­tion of Bar­ba­dos, CIBC First Caribbean In­ter­na­tional Bank, and the Caribbean hold­ings of Sco­tia­bank Canada.

But­tressed by its ac­qui­si­tions, NCB Fi­nan­cial’s as­set topped $978 bil­lion in Septem­ber, up from $694 bil­lion – putting an­other mile­stone of $1 tril­lion in as­sets within sight. Its equity base, or net worth, climbed 12 per cent to $130 bil­lion.

The Ja­maican bank still aims to ac­quire con­trol of Guardian – it wants to in­crease its stake from 29.999 per cent to 62 per cent – but gave no ad­di­tional in­for­ma­tion on progress made in the talks with the Trinida­dian reg­u­la­tor and mi­nor­ity share­hold­ers who have con­tested the takeover price. Ne­go­ti­a­tions con­tinue, Hyl­ton said. Mean­while, NCB Fi­nan­cial’s Deputy CEO and chief fi­nan­cial of­fi­cer, Den­nis Co­hen, says that the group ex­pects its per­for­mance to con­tinue im­prov­ing in the year ahead.

“The growth came from core ac­tiv­ity. I am very con­fi­dent that this mo­men­tum will con­tinue go­ing for­ward,” said Co­hen.

He panned the idea of split­ting the bank’s stock, which traded above $132 on Fri­day, say­ing that while a split would cre­ate op­por­tu­ni­ties for short-term traders, it would have lit­tle ef­fect on hold­ers of the stock over time. He added that it would also im­pact the way the stock is per­ceived in its other trad­ing ju­ris­dic­tion, Trinidad & Tobago, where it closed trad­ing on Fri­day at TT$6.50, the equiv­a­lent of $123 per share in Ja­maican cur­rency.

“While the stock trades at a nom­i­nal value of over $130 in Ja­maica, you also have to be aware that it trades at a nom­i­nal value in Trinidad. Do we want to do a split and risk it be­ing seen as a penny stock?” Co­hen re­torted. “There re­ally is no ben­e­fit for a split,” he said.

Patrick Hyl­ton, pres­i­dent and CEO of NCB Fi­nan­cial Group.

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