1 day Ago By [email protected] (Verdel Bishop)
For more than a decade, NCB Financial Group Ltd (NCBFG)-the owner of Jamaica’s largest bank-has won award after award for performance and quality of its products. But NCB Financial Group chairman Michael Lee-Chin believes that while profits have been good, they can be much better and return to, as well as exceed pre-Covid levels. The Group includes NCBJ, NCB Capital Markets Ltd and its subsidiaries in Barbados and Cayman, NCB Insurance Agency & Fund Managers Ltd, NCB (Cayman) Ltd, Clarien Group Ltd and its subsidiaries in Bermuda, Guardian Holdings Ltd and its subsidiaries as well as NCB Merchant Bank (Trinidad and Tobago) Ltd.
Speaking at a virtual investors briefing last Friday, Lee-Chin said: “To build a better Jamaica we have to recognise our profits, the people who are doing things, the people who are creative, energetic, hardworking, and we have to recognise those at home and uplift them. We have to praise them and encourage them to be greater.” NCBFG has embarked on a turnaround journey which has seen a boost in areas such as efficiency, governance and customer service.
Lee-Chin said one of the most focused metrics NCB looked at was cost to income ratio. He said in 2023 NCBFG’s cost to income ratio was 86.3 which now is 71.
6. “At 86.3 our margin is 13.
7 per cent. At 71.6 our margins are 28 per cent.
To go from 13.6 per cent to 28 per cent, that is a 107 per cent turnaround,” he said. “Net profits in 2023 last year were (JCA)$8.
5 billion (TT$363 million). This year it is at (JCA)$23.5 billion.
Net profit attributable to shareholders last year was $3.29 billion, this year $15.02 billion.
Is that evidence of a true turnaround? Total assets went from $2.2 trillion this year to $2.32 trillion.
..Equity attributed to shareholders was 142.
9 billion. This year it is $174 billion. These are the evidence of a strong turnaround.
Earnings per share last year were $1.39 cents. This year $6.
33 cents. Returning assets last year was $0.4 this year $1.
03 and returning equity was $2.54 last year. This year $9.
47. Is that the evidence of a true turnaround?” he asked. But there is still room for improvement, he said.
“Efficiency has increased significantly but we are not happy with a 71 per cent efficiency. We are not happy with a return on equity of $9.47.
That’s not good. Coming from $2.54, it is directionally fine but we need to get to 20 per cent return on equity.
That is where we are going,” he said. He continued, “We recognised for a turnaround to be successful we have to imbue the entire organisation with three things- a global perspective and standards, better critical thinkers and imbue the entire organisation with all 5,000 members with a problem-solving attitude. In terms of customer experience, they have come a long way with still far to go.
We have been rewarded by customers over the last year. Our deposits from customers went from $447.9 billion to $784 billion, 5 per cent increase, which signals a resounding vote of confidence,” Lee-Chin said.
Boost profit, reduce debt The goal moving forward is to improve profit while reducing debt going forward and for shareholders to receive an increase in dividends, Lee-Chan said. “Our focus now is singular but the financial focus is to pay down debt aggressively so that it will pave the way for shareholders to get increasing dividends. That’s our primary financial objective.
Operationally we continue to do the things that we have been doing for the last year with even more energy, and even more passion because we are energised by the results that we have seen, but still not there yet. It’s a work in progress and the 5,000 staff members are taking on the challenge,” he said. Lee-Chin continued, “We are pleased with what we have accomplished.
Wish we could have made more progress as we are not where we ought to be but we are on the right track. We started the fiscal year with some major changes. Over the course of the year, we have worked hard to address operational and customer service issues, to clean up the balance sheet, to monetise non-core and underperforming assets, to reduce and refinance maturing debt all while strengthening our capital base and restoring stakeholder confidence.
By closely monitoring our key performance indicators we have successfully navigated high inflation and rising interest rates.” He said inflation has had a considerable impact across the Caribbean, including utility costs. “We took decisive steps consolidating expenses to decrease by over $11 billion even adjusting in the prior year.
Operating expenses declined by about $3 billion, notwithstanding inflation. Just as households have had to adapt, NCBFG has implemented proactive financial controls to safeguard our operations and meet our customer’s needs. Nonetheless we need to do more to improve our productivity,” Lee-Chin concluded.
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