Ashford W. Meikle, Staff Reporter
Chairman of NCB, Michael Lee Chin (right), makes a point to managing director of NCB Insurance, Ingrid Chambers, at yesterday's Investor Forum at NCB's headquarters at the Atrium. Joining in the discussion are group chief relationship officer, Dennis Cohen (left), NCB's group managing director, Patrick Hylton, and general manager for international business development, Chris Stokes.
IN A major shift in its operations strategy in Jamaica, the National Commercial Bank (NCB) will concentrate on growing its loan portfolio, according to its managing director, Patrick Hylton.
At yesterday's investor briefing at the bank's headquarters in New Kingston, Mr. Hylton said, "We believe the size of our loan portfolio presents an opportunity to bolster income."
As at the end of its 2005 financial year, NCB's loan portfolio stood at $35.7 billion to September 30. The bank controls about 30 per cent of the loans in the retail-banking sector.
Income from loans contributed to 24 per cent to the NCB group's gross revenue, which accounted for 53 per cent.
Flanked by NCB chairman, Michael Lee Chin, and executives upbeat due to the bank's 2005 results, Mr. Hylton said, "One of the strengths [of NCB] is in the nature of the diversity that exists in that we are so diverse and we are so structured that we are able to do well in spite of the circumstances."
One of those circumstances is the gradual decline in rates on open market instruments from the Bank of Jamaica which, ultimately, affects the securities portfolio of the bank, a point repeatedly emphasised by group chief relationship officer, Dennis Cohen, at yesterday's briefing.
"We plan to reduce our reliance on [investment income]. With the fall in interest rates, our reliance on securities income is far more vulnerable. There is a lot more potential for growth in the loan portfolio as we have demonstrated significantly in 2005 and we expect to continue that trend," said Mr. Cohen.
STABILITY
Nevertheless, he noted, "There is relative stability in the performance of the group. We are making good strides in reducing volatility."
With a deposit base of $84.3 billion, NCB is well positioned to build its loan portfolio.
In August this year, the bank benefited from a US$38 million ($2.4 billion) loan from the International Finance Corporation (IFC). According to the bank, the funds - which will be used to grow the bank's loan portfolio - will be added to NCB's pool of existing pool of funds.
RETAIL BANKING
In reviewing the past year, Mr. Hylton noted that the performance of the bank (which saw net profit increased by 33 per cent to $4.29 billion), was driven by a number of factors, such as improvement in core banking areas such like retail banking.
Retail banking, he noted, "has been an area in which [NCB] tried to focus during the past year to tried and drive greater efficiency." He emphasised that the bank would continue its focus, "because we believe that we can exert greater efficiency and even greater performance from retail banking."
Strong loan growth in both corporate and retail credit also contributed to the bank's performance.
Other factors, as pointed out by the managing director, included, "a much stronger credit administration [which has] paid great dividends," as well as the contribution of NCB Capital Markets and NCB Insurance Company Limited. The latter's income stream should be diversified with the investment in Blue Cross.
And to tap into the Jamaican diaspora, NCB recently appointed Nelson Christian Stokes as general manager for international business development. Mr. Hylton said that NCB's presence in the overseas market is limited now.
