National Commercial Bank (NCB) of Jamaica grew profit in its half year ending March 31, 2009, but indicative of the economy, the performance was a mere shadow of recent periods - an anaemic three per cent.

Earnings in the March quarter were also down by $400 million.

In the 2008 half-year period, for example, NCB grew net profit by 45 per cent, or 15-fold its current outturn.

As he announced the $4.6 billion of net profit for the current six-month period (HY2008: $4.5 billion), NCB Group Managing Director Patrick Hylton said he was proud of the bank's performance but he and his chief financial officer warned that NCB would be tightening up on expenses in the period ahead.

"Our financial results demonstrate a very strong and credible performance in a difficult environment, which is underscored by our net-interest income," said Hylton.

"The fact that we were able to maintain a key financial performance ratio notwithstanding the current environment ... but notwithstanding the environment we are committed to improving upon this level of performance next quarter."

Grew profit

The bank did grow profit by 28 per cent in the December 2008 quarter, but experienced a drop in bottom-line income by 15 per cent in the March period. In the same period, the bank's provisions for credit losses more than tripled, quarter on quarter, to $270 million.

Operating expenses for the NCB Group totalled $7.2 billion, up from $6.3 billion in the similar period last year.

Staff costs accounted for the bulk of the expenses, at $4.1 billion.

"There has been an operating-expense focus to make sure expenses don't overtake revenue gained," said Yvonne Clarke, chief financial officer.

"We have demonstrated excellent cost management in order to report and deliver these results," she added.

Net-interest income at the end of March contributed $8.8 billion to operating income, an increase of 19 per cent, while net fee and commission income moved marginally, by four per cent to $2.4 billion.

Gains on foreign currency and investment activities were, however, down, moving to $1.5 billion from $2 billion in the same period last year, bringing overall operating income for the six-month period to $12.9 billion.

Net profit decline

In line with declines in gains in foreign currency and investment activities, NCB Capital Market net profit fell by a drastic 36 per cent, moving to $653 million against $1 billion recorded at the end of March 2008.

"There was very little trading and this is being reflected in market losses," said Clarke.

"We are taking steps to deal with this area of business, seeing what can be controlled and to better manage our costs," she added.

The bank also grew its balance-sheet assets to $303 billion, and reported a net worth of $33 billion. NCB was also able to grow its loan portfolio over the review period by approximately 40 per cent.

"We have changed our portfolio loan mix," said Clarke. She said 55 per cent of the $88 billion portfolio was now US dollar-denominated, comprising mainly corporate loans.

sabrina.gordon@gleanerjm.com