Group Managing Director of NCB, Patrick Hylton. - File

National Commercial Bank (NCB), Jamaica's second largest banking group, has recorded its largest net profit yet, a solid $6.6 billion or $2.68 per share in a year when deposits also grew despite competition from high-yield investment schemes.

NCB's profit grew $1.1 billion or 20 per cent over its financial year ending September 30, but, even at that level, its performance fell just short of the $6.8 billion record profits booked by its big rival Scotiabank Jamaica a year ago.

On Tuesday, NCB's top managers hailed the results as testimony to the strength of the banking group and its growth potential.

Group Chief Financial Officer Yvonne Clarke said direct access to internet banking both in the retail and corporate banking divisions added to a strong focus on customer service helped to lift profits.

"We are also focussed on ensuring that we are at the cutting edge of innovation in this market," said group managing director Patrick Hylton.

The board has declared dividends of 17 cents per share payable December 12. Payouts should total $419.3 million on issued shares of 2.47 billion.

Outside of Jamaica, NCB has copped LatinFinance's bank of the year award for 2007 for its strong performance.

Stocks flat

But, so far, the news of its profit growth has failed to excite the market. The NCB stock traded flat Monday, and actually declined by 50 cents Tuesday to close at $23.

Revenues for the year rose by under four billion to $33.7 billion, with banking contributing 70 per cent and wealth management 23 per cent.

Pre-tax profits were up by $1.66 billion to $8.6 billion, which included $170.6 million from associated companies.

Loan growth of 34 per cent year on year pushed the portfolio to $56.5 billion, up from $42 billion, while deposits ran ahead by $19.5 billion to $118.5 billion.

Added weight

Those developments have given added weight to the company's balance sheet, which grew by $31 billion to $254 billion. More than half of those assets, $141.9 billion, were in the form of investment securities.

An additional $4 billion added to retained earnings gave NCB a broader capital base of $28.5 billion.

The bank also recorded improvements in its key performance indices, including return on total assets, which moved from 2.65 per cent to 2.77 per cent. And its cost to income ratio which moved from 60 per cent a year ago to 57.3 per cent in the current period.

Hylton said he plans to bring the ratio down to 50 per cent in the next three to five years. Total expenses crested $25 billion, compared to $23 billion in the previous period.

Big increases were recorded in interest expense which rose by under $1 billion to $12.2 billion, and staff costs which also rose by $1 billion to $6.99 billion.

NCB linked the 17 per cent increase in staff costs to negotiated salary packages and allowances to profit-sharing arrangements.

business@gleanerjm.com