RATING DRIVERS
Supporting Factors
- Dominant presence in the Jamaican financial services sector
- Sustained profitability notwithstanding lowered revenue and deterioration in asset quality due to the effects of COVID-19
- Funding base characterized by continued growth and low cost
- Comfortable capitalization reflected in good coverage of total assets
- Sound risk management practices continue to support strategic objectives
Constraining Factors
- High reliance on the performance of the Jamaican economy
Rating Sensitivity Factors
Factors that could, individually or collectively, lead to an improvement in the ratings and/or outlook include:
- Improvement in the GOJ’s credit rating leading to an improved credit risk profile of NCBJ
Factors that could, individually or collectively, lead to a lowering of the ratings and/or outlook include:
- The occurrence of any factors that may contribute to the deterioration of the CAR below the 12.5% minimum requirement for the Bank
- The deterioration of the gross NPLs to gross loans ratio to 7.5% or more leading to reduced earnings and increased provisioning, thereby affecting profitability
COMPANY BACKGROUND
Established in 1837, the Colonial Bank of London was renamed the National Commercial Bank Jamaica Limited (NCBJ or the Bank) in 1977. NCBJ has 8 active subsidiaries that operate in the commercial banking and securities industries. The Bank offers an extensive product and service range including commercial banking, stock brokerage, wealth & asset management, and pension fund management & administration.
In March 2017, NCBJ and its subsidiaries completed its corporate restructuring forming a holding company called NCB Financial Group Limited (NCBFG or the Group). This re-organisation created a corporate structure that better facilitates the Group’s regional aspiration of becoming a leading financial services conglomerate in the Caribbean. As a result of the new structure, NCBJ is now a wholly-owned subsidiary of NCBFG. NCBFG is majority-owned by AIC (Barbados) Limited (51.73% as at June 2021).
In September 2020, NCBJ disposed of 100% of the insurance and annuities portfolio of NCB Insurance Company Limited (NCBIC), its last remaining subsidiary in the insurance industry, which was acquired by Guardian Holdings Limited (GHL), a subsidiary of NCBFG. The execution of this transaction allows NCBFG to streamline its insurance business segment and extract synergies and efficiencies where possible.
Analytical Contacts:
Megan Dass
Tel: 1-868-627-8879 Ext. 239
E-mail: [email protected]
Keith Hamlet
Tel: 1-868-627-8879 Ext. 244
Cell: 1-868-487-8356
E-mail: [email protected]
Website: www.caricris.com
E-mail: [email protected]
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