With talks of a potential recession looming amid rising interest rates and heightened global uncertainty, the principals of NCB Financial Group Limited (NCBFG) believe that the Caribbean financial conglomerate is sufficiently prepared to withstand any downturn in the various 21 markets they operate in.

The questions surrounding NCBFG’s financial resilience came at the company’s investor briefing last Friday on its third-quarter performance. While other local and regional financial conglomerates continue to pay dividends, NCBFG’s board decided at its board meeting on August 4 to not declare a dividend. This would make it the first time, since chairman and principal owner of NCBFG Michael Lee Chin acquired National Commercial Bank Jamaica Limited (NCBJ) in March 2002, that a dividend has not been paid in an entire financial year. NCBFG last paid a dividend in May 2021 totalling $1.23 billion. Its subsidiary Guardian Holdings Limited (GHL) declared a TT$0.20 dividend to be paid on August 29 to shareholders on record as of August 12. This payment totals TT$46.40 million ($1.06 billion).

“I think we all accept that these are unusual times. We keep talking about the idea of the pandemic, the crises that face us and at the end of it all, our most important role is to ensure the viability, sustainability and strength of the organisation. Our primary role is the protection of our depositors and our policyholders and secure their deposits in the context of the banks. What’s happening here is that, given the uncertainty looking ahead, we continue to see it prudent to focus on maintaining capital levels. At the end of it all, I see capital almost as insurance protection for policyholders. Certainly, as the CFO, it is almost the primary basic role that I actually play here,” said Group Chief Financial Officer and Deputy Chief Executive Officer Dennis Cohen on the matter of dividend payments.

Cohen also spoke against the possibility of a share buyback to support NCBFG, whose stock price is down 21 per cent on the Jamaica Stock Exchange (JSE) to $98.19 and 34 per cent on the Trinidad and Tobago Stock Exchange (TTSE) to TT$5.29. This comes against the backdrop of NCBFG reporting a 13 per cent improvement in net operating revenue to $36.28 billion and 104 per cent rise in net profit attributable to shareholders of $8.21 billion.

“Whilst the interest earning portfolios have grown, current market conditions continue to decline causing a reduction in sales of debt securities and losses in equities during the current period,” Cohen said in relation to the 58 per cent decline in gains on foreign currency and investment activities. NCBFG’s equity attributable to shareholders shrunk six per cent to $146.64 billion largely as a result of the $29.95 billion fair value losses on its bond portfolio which is measured under fair value through other comprehensive income.

NCBFG’s total assets are up seven per cent to $2.02 trillion which largely comprises of a $558.74 billion in net loans and advances and $724.84 billion in investment securities. Total liabilities increased eight per cent to $1.83 trillion with deposits totalling $712.21 billion and $443.93 million in liabilities under annuity and insurance contracts.