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However, insurance activities for the year decreased 29% to $22.95 billion

Jamaica’s largest financial group, NCB Financial Group has seen a rise in banking and investment activities for its financial year, which ended on September 30, 2021.

At the same time, the net results from insurance activities for the year decreased 29 per cent to $22.95 billion coming from the 2020 posting of $32.46 billion. The net results from Banking and Investment activities rose by 29 per cent to a total of $98.15 billion, up from $76.37 billion in 2020. 

The company reported that, “during the year, securities’ prices and investment activities improved compared to the prior financial year when prices declined due mainly to the onset of the pandemic in the Caribbean”.

It also cited the favourable price movements resulted in increased gains from the sale of debt securities and mark to market valuations. 

Credit impairment provisions continued to benefit from the improving environment and more positive economic outlook, as the improving scenarios are no longer significantly weighted to the worst case. Credit impairment losses declined by $6.9 billion or 67 per cent from the prior year, reflecting the expected economic recovery in a number of sectors.

Insurance was a drag on NCB’s finances

In commenting on the decline from insurance activities for the year, NCB Financial Group reports that “this resulted from reduced activities, due to COVID-19 restrictions and lockdowns in Trinidad and Tobago during the year”.

Of this, Insurance premium income rose 11 per cent to $150.04 billion (2020: $135.20 billion), while reinsurance commission income advanced 37 per cent to $11.57 billion (2020:$ 8.47 billion).

Insurance premium ceded to insurers and policyholders and annuitants benefits and reserves amounted to $51.38 billion (2020: $42 billion) and $77.28 billion (2020: $63.22 billion) respectively. Commission and other selling expenses increased to $16.71 billion compared to $13.01 billion in 2020.

Net Interest Income decreased by seven per cent, relative to 2020, to total $48.63 billion, down from $52.49 billion posted in 2020. Net Fees and Commission Income amounted to $22.49 billion, an increase of five per cent on 2020’s $21.37 billion.

Dividend income jumped by 22 per cent to $2.32 billion, up from $1.90 billion booked in 2020. Other Operating Income increased 151 per cent to $5.28 billion, up from the 2020 booking of $2.10 billion, while credit impairment losses decreased 67 per cent to $3.39 billion in contrast to $10.28 billion recorded for 2020.

NCB Financial Group gains on foreign currency and investment activities rose 160 per cent to $22.83 billion compared to $8.79 billion reported in 2020.

Increase in operating expenses

Total operating expenses for the year amounted to $94.85 billion, an increase of 16 per cent compared to the $81.57 billion reported for the year ended September 30, 2020. Of these expenses, staff costs increased 10 per cent to $44.50 billion relative to $40.53 billion in 2020.

This was primarily due to the annual increases in salaries, wages and allowances coupled with incentive payments within the current period related to the prior financial year. Other operating expenses grew by 26 per cent to $39.20 billion, coming from $31.10 billion in 2020.

NCB Financial Group has explained that, “during the year, significant investments in technology and digital channel enhancements were made to transform our business to a more customer centric, digitally enabled business. Increased technical, consultancy and professional fees as well as infrastructure maintenance costs were associated with these investments.”

·      Depreciation and amortization grew nine per cent to $9.31 billion (2020: $8.52 billion).

·      Finance Cost grew 30 per cent to $1.84 billion (2020: $1.42 billion).

·      Consequently, operating profit decreased four per cent to total $26.26 billion (2020: $27.26 billion).

·      Share of profit of associate amounted to $340.29 million, down from 2020’s $312.39 million.

Marked decline in profits

Consequently, profit before taxation decreased four per cent to $26.60 billion relative to $27.57 billion in 2020. Following tax charge of $6.52 billion, year-end net profit totalled $20.08 billion, representing a 25 per cent decline when compared to $26.88 billion for the corresponding period of 2020.  Net profit for the quarter closed at $6.16 billion which is a six per cent decrease.

Net profit attributable to shareholders closed at $14.23 billion for the year relative to $19.09 billion in 2020. Net profit attributable to shareholders for the September quarter amounted to $4.32 billion slightly up from the $4.31 billion recorded in 2020.