National Commercial Bank (NCB) has reported improved profits of $7.3 billion for the nine-month period ending June 30, reflecting what bank executives say careful planning and management in a stifled economy.

Profits grew seven per cent over the comparative 2008 period when the bank made $6.8 billion.

Profits for the third quarter were also up by 17.39 per cent on the back of a 15 per cent rise in net interest income to $4.8 billion.

The improved earnings card resulted from initiatives, which, said group managing director Patrick Hylton, "we feel, based on our assessment of the environment, are critical to ensuring our continued sustainable success".

But Hylton refused to say what were the specific initiatives put in place when questioned by analysts at Friday's investor briefing at NCB headquarters, The Atrium, in New Kingston.

"I can't say the specific initiatives are, for example, new technology implemented to drive it or whether there has been major strategic change in terms of how we execute," Hylton remarked.

"But it has been driven by increments and putting all these increments together to get a positive change."

The bank is not satisfied with its cost-to-income ratio, though it was down marginally to 48.9 per cent in the reporting period from just over 50 per cent.

New strategies are being devised, but Hylton said that remains work in progress.

18.5 per cent PAY RAISE

Expenses for the quarter were reported as flat, but over the nine-month period they rose 10.5 per cent, pushed largely by staff costs which grew from $5.4 billion to $6 billion.

A portion of the increase, said chief financial officer, Yvonne Clarke, is attributable to an 18.5 per cent pay hike in the period.

NCB's pay raise comes at a time when other companies have frozen salaries and cut staff to remain profitable in the current recession.

The effect of the economic downturn is also manifested in lost jobs nationally - 15,700 since October 2008 to present - and increasingly an inability by some borrowers to service their loans.

So NCB's credit losses hit $294 million in the third quarter, and $772 million year to date June 30.

NCB said the increase reflected both growth in its loan portfolio, which rose 25 per cent to total $89 billion, as well as prevailing economic conditions.

Non-performing loans, which totalled $2.2 billion at June 30, reflected only marginal increase and came in below expectations, Hylton said.

"We are effectively curtailing the impact of the economic conditions," he said at the briefing.

"When you look at the extent of growth in the provisioning and non-performing loans, it is not anywhere near what some of us may have anticipated."

NCBCAPM PROFITS DOWN

Segment results for the period came out mixed with wealth management subsidiary, NCB Capital Markets Limited (NCBCapM) still reflecting a decline in net profit by 14 per cent to $1.5 billion.

CFO Clarke said, however, that NCBCapM was back on the upswing, saying the brokerage reported higher net interest income of $593 million for the quarter and $1.4 billion over the nine-month period.

Added NCBCapM's managing director, Christopher Williams: "We are making progress."

The entire back-office operation has been strengthened "so that there is no more mistakes in terms of investment decisions," Williams said, "seen from the very little provision for operational exposure."

The team has also been strengthened, with the addition of Steven Gooden, added Williams, who was recruited from Pan Caribbean Financial Services.

NCB's insurance segment, which structurally is answerable to Williams, contributed $1.3 billion to group profit.

sabrina.gordon@gleanerjm.com