NCB Financial : 10 Aug 2023 – NCB Financial Group Limited – Unaudited Financial Statements for the nine months ended June 30th, 2023

Financial Results

For The Nine Months Ended June 30, 2023

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KEY RESULTS -
NINE MONTHS	$9.7B	$2.2T	$184B
ENDED
JUNE 30, 2023
	Net Profit	Total Assets	Equity
KEY RESULTS -
QUARTER
ENDED	$5.5B	$2.2T	$184B
JUNE 30, 2023
	Net Profit	Total Assets	Equity

Third Quarter 2023

Report to Shareholders

Kingston, Jamaica - August 9, 2023

The Board of Directors approved the release of the following financial results for NCB Financial Group Limited (NCBFG) and its subsidiaries for the nine months ended June 30, 2023.

NCBFG reports unaudited consolidated net profit of $13.7 billion for the nine months ended June 30, 2023, a 47% or $12.2 billion reduction from the prior year. Consolidated net profit attributable to stockholders of the parent totalled $9.7 billion, a decline of $8.9 billion or 48% from the prior year. For the quarter ended June 30, 2023, the Group reported net profit of $7.4 billion, a $2.4 billion or 48% improvement over

$4.22	0.85%	7.76%
Earnings per Share	Return on Assets	Return on Equity

$2.38	1.36%	12.18%
Earnings per Share	Return on Assets	Return on Equity

the prior quarter ended March 2023. Net profit attributable to stockholders of the parent for the June 2023 quarter was $5.5 billion, an increase of $2.1 billion or 62% over the March 2023 quarter.

The Group's diversified business model and strong financial position continues to facilitate commendable financial benefits despite the challenging economic environment. This underpins the importance of our strategic transformation journey as we continue to digitally enable the organisation while placing a strong emphasis on customer centricity. We are well equipped to successfully execute our strategy and will create long-term shareholder value.

The Group's objective of building a Caribbean financial ecosystem to deliver high quality service to our customers remains unchanged and we will continue to execute on a range of growth and transformation initiatives. We are increasing our focus on efficiency and cost management while being uncompromising in the delivery of service for an exceptional customer experience.

For more information, contact:

INVESTOR RELATIONS

Jacqueline De Lisser

Head

Group Investor Relations & Financial Advisory

Email: [e-mail]

MEDIA RELATIONS

Nicole Campbell

Head

Group Marketing & Corporate Communications

Email: [e-mail]

Financial Results	2
For The Nine Months Ended June 30, 2023

Net Profit of $9.7 billion (attributable to stockholders of the parent)

Group Performance

There was a rebound in the performance during the third quarter mainly due to improved gains from investment activities in our Wealth, Asset Management and Investment Banking segment. This contributed to operating income of $35.6 billion for the quarter ended June 30, 2023, reflecting an increase of 13% or $4.0 billion over the March 2023 quarter.

Return on assets (ROA) and return on equity (ROE) for the June 2023 quarter improved to 1.36% up from 0.94% and 12.18% up from 7.79%, respectively. The rolling twelve-month ROA and ROE were 1.31% and 11.12%, respectively. The cost to income ratio for the June 2023 quarter declined to 74.09% down from 76.12% in the prior March 2023 quarter. We are committed to continuing our expense management efforts to reduce our cost to income ratio.

Banking and Investment Activities

Net revenues from banking and investment activities totalled $31.4 billion for the June 2023 quarter, which increased by 18% or $4.9 billion over the prior quarter. The improved performance was mainly attributable to gains from foreign exchange and investment activities, which included fair value gains from equity investments, increasing by 162% or $3.9 billion over the March 2023 quarter. During the quarter, net fee and commission income benefitted from the continued growth in our loan portfolio coupled with increased card transaction volumes, reflecting an increase of $793 million or 12% over the March 2023 quarter. Net interest income increased marginally by 1%, also due to portfolio growth and improved net margins for loans and investment securities. These increases were partially offset by a 7% increase in credit impairment provisions; the quarterly performance continues to reflect normal expected credit losses based on the portfolio composition and size.

Insurance Activities

Net revenues from insurance activities for the June 2023 quarter totalled $4.2 billion, a 16% or $813 million decline from the March 2023 quarter. The segment recorded marginal improvement in net underwriting income; however, this was eroded by increased net insurance costs. Our insurance business experienced higher net claims mainly from our Life, Health and Pensions segment. The increased claims were primarily in relation to health and some additional general insurance claims.

Operating Expenses

Operating expenses for the June quarter totalled $27.5 billion, increasing by $2.4 billion or 10% over the March 2023 quarter. The main factor in the June quarter's lower staff costs was the inclusion of additional incentive payments in the March 2023 quarter. In contrast, professional fees increased in the current quarter. The increase in the cost to income ratio over the past few years is unacceptable and steps have been, and will continue to be taken to quickly and materially reduce this ratio going into the next fiscal year.

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National Commercial Bank Jamaica Limited | Clarien Group Limited | Guardian Holdings Limited | TFOB (2021) Limited

Financial Results	3
For The Nine Months Ended June 30, 2023

Net Profit of $9.7 billion (attributable to stockholders of the parent)

Consolidated Statement of Financial Position

Total assets at June 2023 was $2.22 trillion, an increase of 10% or $206.0 billion over the prior year. The growth in the asset base was mainly due to increased loans and investment securities. The growth was primarily funded by increased obligations under securitisation arrangements, repurchase agreements, deposits, liabilities under annuity and insurance contracts and other borrowed funds.

Investment Securities and Reverse Repurchase Agreements

Investment securities, including pledged assets and reverse repurchase agreements, totalled $1.12 trillion, an increase of 19% or $181.5 billion over the prior year. The increase was due to improving asset prices, portfolio growth and the expansion of the Hold to Collect business model in our Jamaican bank.

Loans and Advances

The Group's loans and advances, net of credit impairment losses, totalled $604.6 billion, an increase of 8% or $45.9 billion over the prior year. Non-performing loans totalled $24.9 billion as at June 30, 2023, declining by $5.5 billion or 18% from the prior year. The reduction in non-performing loans led to an improvement in our non-performing loan ratio, decreasing to 4.0%, from 5.3% in the prior year.

Deposits

Banking customers' continued confidence in the Group is demonstrated by a 4% or $26.9 billion increase in deposits, to $739.1 billion, which is our main source of funding.

Policyholders' Liabilities

Liabilities under annuity and insurance contracts increased to $465.3 billion, up 5% or $21.3 billion over the prior year.

Capital and Liquidity

Equity attributable to stockholders of the parent totalled $183.9 billion, an increase of $37.3 billion or 25% over the prior year, improving due to retained earnings and lower unrealised fair value losses.

All our regulated entities continue to meet the applicable capital and liquidity regulatory requirements.

Dividends

The Board of Directors, at its meeting on August 9, 2023, decided not to pay an interim dividend. Conserving capital is prudent to ensure the organisation is most resilient in a world of change. However, the continued absence of dividends to our shareholders is not aligned with our commitment to fulfilling the needs of all our stakeholders. Through an intense focus on operating efficiency and capital efficiency, as well as other strategies, we intend to return to the pattern of regular

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National Commercial Bank Jamaica Limited | Clarien Group Limited | Guardian Holdings Limited | TFOB (2021) Limited

Unaudited Financial Results

Consolidated Income Statement

Nine Months Ended June 30, 2023

(expressed in Jamaican dollars unless otherwise indicated)

			CURRENT YEAR			PRIOR YEAR
	Quarter ended	Quarter ended	Year to date		Quarter ended		Year to date
		June 30	March 31	June 30		June 30		June 30
		2023				2023			2023	2022	2022
		$'000				$'000			$'000		$'000		$'000
Operating income
Banking and investment activities
Interest income	27,419,715				26,100,776			79,402,197	23,069,529	67,582,436
Interest expense	(9,934,129)				(8,753,641)			(27,531,699)	(6,885,639)	(19,016,000)
Net interest income	17,485,586				17,347,135			51,870,498	16,183,890	48,566,436
Fee and commission income	10,361,295				9,664,413			29,485,016	8,546,236	25,730,183
Fee and commission expense	(2,823,374)				(2,919,413)			(8,207,419)	(2,355,113)	(6,584,692)
Net fee and commission income	7,537,921				6,745,000			21,277,597	6,191,123	19,145,491
Gain on foreign currency and investment activities	6,314,505				2,410,543			10,860,478	1,621,000	7,022,660
Credit impairment losses	(1,533,557)				(1,427,541)			(4,788,675)	429,111	(1,868,676)
Dividend income	701,793				488,019			2,039,155	657,163	2,023,044
Other operating income	873,275				957,177			3,628,882	1,647,087	5,251,292
		6,356,016				2,428,198			11,739,840	4,354,361	12,428,320
Net revenues from banking and investment activities	31,379,523				26,520,333			84,887,935	26,729,374	80,140,247
Insurance activities
Premium income	42,459,753				41,022,772			125,127,273	37,002,118	121,055,810
Insurance premium ceded to insurers	(14,843,448)				(13,268,940)			(42,446,735)	(13,428,899)	(39,642,783)
Reinsurance commission income	3,584,108				2,611,289			9,019,268	3,301,328	9,010,756
Net underwriting income	31,200,413				30,365,121			91,699,806	26,874,547	90,423,783
Net insurance benefits and claims	(22,679,387)				(20,818,162)			(65,706,686)	(13,462,333)	(52,360,216)
Commission and other selling expenses		(4,296,892)				(4,509,801)			(14,072,249)		(3,859,528)		(12,585,059)
Net revenues from insurance activities		4,224,134				5,037,158			11,920,871		9,552,686		25,478,508
Net operating income		35,603,657				31,557,491			96,808,806		36,282,060		105,618,755
Operating expenses
Staff costs	13,100,977				14,201,858			40,334,234	12,961,578	37,520,582
Depreciation and amortisation	2,224,661				2,193,563			5,633,325	1,360,447	6,208,611
Finance cost	513,496				553,376			1,633,850	582,693	1,532,420
Other operating expenses	11,676,559				8,160,709			31,302,544	10,612,494	31,985,956
		27,515,693				25,109,506			78,903,953		25,517,212		77,247,569
Operating profit	8,087,964				6,447,985			17,904,853	10,764,848	28,371,186
Share of profit/(loss) of associates	75,872				166,060			232,809	154,332	642,741
Profit before taxation	8,163,836				6,614,045			18,137,662	10,919,180	29,013,927
Taxation	(776,290)				(1,630,023)			(4,411,613)	(325,042)	(3,134,310)
NET PROFIT		7,387,546				4,984,022			13,726,049		10,594,138		25,879,617
Attributable to:
Stockholders of parent	5,481,754				3,391,449			9,708,994	8,208,253	18,642,766
Non-controlling interest		1,905,792				1,592,573			4,017,055		2,385,885		7,236,851
		7,387,546				4,984,022			13,726,049		10,594,138		25,879,617
Earnings per stock unit	2.38				1.48			4.22	3.57	8.11
Basic and diluted (expressed in $)
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National Commercial Bank Jamaica Limited	| Clarien Group Limited |	Guardian Holdings Limited | TFOB (2021) Limited

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