Financials 2004

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 PERFORMANCE HIGHLIGHTS

HIGHLIGHTS FOR QUARTER ENDED MARCH 2004
Net profit for the Group for the six months ended March 31, 2004 was J$1.89 billion compared to J$1.67 billion for the corresponding period in the previous year, an increase of $219.6 million, or 13%. This positive performance was mainly attributable to the growth in our core revenues resulting in a J$2.5 billion increase in net interest income when compared to the same period in the previous year. The growth is also significant, in light of the fact that the results of the six months ended March 31, 2003 included capital gain of J$752.8 million from the sale of equity investments. This means the Group's net profit excluding the capital gain was $923.2 million in the prior period, compared to $1.89 billion for the current year, a positive variance of $972.3 million, or 106%.

PERFORMANCE AT A GLANCE

REVENUES
Total revenues for the Group increased by J$3.8 billion or 42% compared to the corresponding six months of the previous year. The increase in revenues is attributable to the following.

• Growth in income from loans of J$1.1 billion or 93%.
• Growth in income from securities of J$3.6 billion or 68%.
• Growth in net fees and commissions of J$322.1 million or 51%.

Operating income (net interest income and non interest income) of J$6.6 billion exceeded the amount for the corresponding period of the previous year of J$5.02 billion by J$1.58 billion or 31%.

LOAN PORTFOLIO
One of the major revenue drivers for the Group is loans and advances which increased by J$6.8 billion or 26% during the six months ended March 31 2004. The quality of the loan portfolio has improved despite the significant increase in loans and advances. The aggregate amount of non-performing loans amounted to J$1.46 billion compared to J$1.503 billion as at September 30 2003. Non-performing loans now represent 4.2% of gross loans compared to 5.3% at September 2003 and 7% as at March 31 2003.

As at March 31 2004 provision for credit losses of J$2.1 billion was 144% of non-performing loans, the same percentage as at September 2003. Provisions for credit losses that exceed the amounts required by International Financial Reporting Standards (IFRS) are credited to a non-distributable reserve - Loan Loss Reserve. As at March 31 2004 the balance in the Loan Loss Reserve was J$165.4 million. The Bank's provisioning policy is in compliance with the Bank of Jamaica regulations.

BALANCE SHEET

The Group's total assets as at the end of the period under review was J$161.3 billion, J$15.4 billion or 10.5% in excess of the balance as at September 30 2003. This increase in assets is attributable to growth in the following earning assets:

• Loans and advances - J$6.8 billion
• Reverse repurchase agreements - J$9.7 billion

The asset growth was funded mainly by increases in customers' deposits and repurchase agreements.

CAPITAL
As at March 31 2004 total stockholders equity was J$14.99 billion, an increase of J$2.1 billion or 16.5% when compared to the previous financial year. National Commercial Bank is one of the best capitalized banks in Jamaica as evidenced by the international benchmark of capital adequacy, the Risk-based Capital Ratio which was 19.2% at March 31, 2004 (23.6% at March 31, 2003).

DIVIDENDS
At the Board of Directors meeting held 22 April 2004, an interim dividend of 9 cents per share (total cost J$222,008,654.52) was approved for the quarter ended 31 March 2004. The dividend is payable on 21 May 2004 for shareholders on record as at 7 May 2004.

BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention as modified by the revaluation of available-for-sale investment securities, investment securities held for trading, derivative contracts, investment property and certain fixed assets.

There have been no changes in accounting policies since the most recent annual accounts as at 30 September 2003.

COMMUNITY RELATIONS
NCB continues to give to the community as we fulfill our stated objective of building a better Jamaica. We hold steadfast to this and are committed and focused to the extent that we have collaborated with the Jamaica Manufacturers' Association and have pledged to match 'dollar for dollar' an education campaign aimed at sensitizing Jamaicans on the consequences of not supporting local goods and services. In addition to this, we have committed to sponsoring the JMA/JEA Expo that will be held at the National Arena in early May by contributing $16.25 Million.

During the period under review we presented His Excellency, Sir Howard Cooke, Governor General of Jamaica, with a fully furnished office complex located at 14 1/2 Half Way Tree Road, Kingston. The local chapter of Hands Across Jamaica For Righteousness (HANDS), of which the Governor General is patron, will use the facility as a secretariat.

NCB has made a contribution of $5 million to the May Pen Cemetery Restoration Fund and has opened an account at our Duke & Barry Streets Branch to receive contributions from the general public.

The Jamaican Education Initiative, through its administrator, hosted motivational talks and seminars for students sitting the CXC examinations in June 2004. The co-coordinators were able to cover schools in the parishes of St. Mary, St. Ann, Portland, Kingston and St. Andrew, offering important tips and giving study guide techniques.

Our branches and staff continue to give of time and effort to the communities in which they operate and we are thankful for their exemplary efforts and clear commitment to serve our customers excellently.

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