RATING DRIVERS
Supporting Factors
- Strong market position in Jamaica and an emerging player in the Caribbean with strong support from the NCB Financial Group
- Comfortable capitalization reflected by adequate capital adequacy ratios and good coverage of total assets
- Continued good financial performance characterized by good profitability and asset quality metrics
Constraining Factors
- Continued short-term liquidity risk because of asset/liability mismatch
- Prevailing macroeconomic challenges in key territories could impact revenue growth
Rating Sensitivity Factors
Factors that could, individually, or collectively lead to an improvement in the ratings and/ or Outlook include:
- Improving profitability as a result of higher income earned from its asset management and investment banking segments
- 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:
- Worsening of NCBCML’s short-term J$ liquidity measures over a 24-month period
- A downgrade in the GoJ’s credit rating leading to a deteriorated credit risk profile of NCBJ
- A reduction in NCBCML’s capital adequacy ratio to below the Systematically Important Financial Institution (SIFI) regulatory minimum of 14%
COMPANY BACKGROUND
NCB Capital Markets Limited (NCBCML or the Company) is a full-service securities company, licensed by the Financial Services Commission of Jamaica (FSC) and is the wealth and asset management arm of National Commercial Bank Jamaica Limited (NCBJ).
In 2002, the Company became a wholly owned subsidiary of NCBJ when the latter acquired Edward Gayle and Company Limited, later rebranding it as NCBCML in 2003. The Company’s products and services include debt and equity securities brokerage, investment advisory and management, investment banking solutions, and other financial services for individual and institutional investors. NCBCML is one of the largest stockbrokers in Jamaica consisting of 19 branches, with 2 being added over the last year, and has 3 active subsidiaries: 1 in Trinidad and Tobago, 1 in the Cayman Islands, and 1 in Barbados[1].
In March 2017, NCBJ and its subsidiaries completed its corporate restructuring forming a holding company called NCB Financial Group Limited (NCBFG or the Group or the NCB Group). This re-organization better facilitated the Group’s regional aspiration of becoming a leading financial services group in the Caribbean. NCBCML and its subsidiaries remain a subsidiary of NCBJ and as such, the formation of NCBFG did not impact NCBCML’s commercial operations.
In July 2020, NCBCML incorporated Stratus Alternative Funds SCC[2] (Stratus) as a segregated cell company under the Barbados Companies Act. It was created to facilitate the establishment of a variety of alternative portfolios for investments in the Caribbean and Latin America. The objective of Stratus is to provide above average returns while making non-traditional types of investments more accessible to institutional and retail investors across the range of the risk spectrum.
[1] The subsidiaries are NCB Capital Markets (Cayman) Ltd, NCB Capital Markets (Barbados) Limited and NCB Merchant Bank (T&T) Limited. Notably, the consolidated financial statements used in CariCRIS’ analysis relate directly to the company’s wealth management segment and includes NCB (Cayman) Limited.
[2] Stratus has established four funds in its first phase: Infrastructure Fund, Caribbean Mezzanine Fund II, Regional Opportunity Fund and Tourism Response Impact Portfolio. The Directors of Stratus include: Robert Bermudez – chairman of Massy Holdings Limited, Patrick Hylton – President and Group Chief Executive Officer of NCB Financial Group Ltd, and Dennis Cohen – Group Chief Financial Officer and Deputy Chief Executive Officer of NCB Financial Group Ltd.
Analytical Contacts:
Keith Hamlet
Tel: 1-868-627-8879 Ext. 229
E-mail: [email protected]
Maxwell Gooding
Tel: 1-868-627-8879 Ext. 229
E-mail: [email protected]
Website: www.caricris.com
E-mail: [email protected]
Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this product.