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NATIONAL COMMERCIAL BANK JAMAICA LIMITED
FINANCIAL HIGHLIGHTS
2003 2002 2001 2000
Restated Restated
(J$'000) (J$'000) (J$'000) (J$'000)
Net Profit 2,804,391 1,478,407 369,914 1,514,946
Net Interest Income 6,757,882 4,282,614 4,492,754 5,544,421
Other Operating Income 4,271,679 2,349,312 1,672,925 1,998,121
Total Operating Income 11,029,561 6,631,926 6,165,679 7,542,542
Operating Expenses 7,566,311 4,920,249 5,686,071 5,937,963
Total Assets 145,886,165 115,220,390 105,770,654 94,835,223
Net Loans 26,400,147 15,282,721 8,639,839 7,249,634
Customer Deposits 69,688,968 63,365,179 58,351,974 51,638,190
Paid Up Capital 2,466,763 2,466,763 1,973,410 5,701,000
Net Worth 12,871,832 11,971,477 10,889,979 9,301,508
Net Worth - BIS * (Bank only) 8,697,900 8,292,696 7,503,376 7,762,912
PROFITABILITY RATIOS
Return on Average Equity 22.58% 12.93% 3.66% 17.77%
Return on Average Capital 113.69% 66.59% 9.64% 26.57%
Return On Average Total Assets 2.15% 1.34% 0.37% 2.97%
Cost to Income Ratio 66.73% 76.79% 104.00% 60.30%
CAPITAL RATIOS
BIS * Capital Adequacy Ratio (Bank only) 21.01% 29.64% 41.28% 45.22%
Net Worth to Total Assets 8.82% 10.39% 10.30% 9.81%
ASSET QUALITY RATIOS
Net Loans to Total Assets 18.10% 13.26% 8.17% 7.64%
Non-Perf. Loans to Total Loans 5.26% 8.84% 17.00% 24.53%
Provision Coverage 148.77% 134.74% 138.45% 130.24%
LIQUIDITY RATIOS
Net Loans to Customer Deposit Ratio 37.88% 24.12% 14.81% 14.04%
Net Loans to Borrowed Funds 63.48% 74.45% 49.93% 62.01%
Liquid Assets to Total Deposits 27.56% 22.82% 40.14% 50.79%
MARKET STATISTICS
Share Price $13.30 $5.70 $4.90 $3.00
Earnings per Share $1.14 $0.60 $0.15 $0.77
Price Earnings Ratio 11.67 9.50 32.67 3.90
* BIS - Bank for International Settlements. Switzerland
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 1
Ayear ago we made a promise to help re-build NCB and to actively participate in
building a better Jamaica. Our record profitability in 2003 indicates that we are
well on the way to fulfilling this commitment and to delivering even more than
we promised. Public confidence in this great institution is being
restored through our focus on activities that are mutually
beneficial to institution building and to nation building. All our
profits have been re-invested in capacity building for both
NCB and Jamaica.
Helping to build a better Jamaica is a purpose that
transcends the business of banking, insurance, stock-
brokerage and investment. This objective is
underpinned by my belief that for a business to
prosper in a community in the long run, the
community itself must be prosperous. For NCB to
prosper, Jamaica must be prosperous; it must be
wealthy. The model we have implemented at NCB -
conjoining a business purpose with a social purpose - is
recognized by advanced academicians and some opinion
leaders as the business model of the future.
CHAIRMAN’S STATEMENT
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 2
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 3
At NCB, we are committed to doing whatever we
can, within our means, to assist the people of
Jamaica in building their intellectual capital.
Ladies and Gentlemen, in the summer
of 2003, I was visited by former
President Bill Clinton. President
Clinton told me that he was most
impressed with NCB’s explicit purpose
of helping to build a better Jamaica.
He indicated to me that, in his view,
there is no other institution that has so
clear a focus in combining a business
purpose with a social purpose. He
humbled me by asking me to join him
on a world-wide tour to speak about
what we are doing in Jamaica. You
cannot imagine the emotions I
experienced sitting at my home with
the former President. Imagine me,
coming from Port Antonio, being at the
place where a world leader of the
stature of President Clinton would
want to hold up NCB as a role model
for companies around the world! And
to think that we are just getting started!
As one who owes his success in no
small part to the education I received
because of the people and
Government of Jamaica, I understand
the value of education and have a
deep debt of gratitude to this country.
We all have an obligation to steward
out intellectual and financial capital.
Intellectual capital is God given;
financial capital typically is a direct
result of the development and
utilization of that gift from God. And,
Jamaica will only suffer in the long-run
if the opportunity to create financial
capital from our intellectual capital is
not harnessed. At NCB, we are
committed to doing whatever we can,
within our means, to assist the people
of Jamaica in building their intellectual
capital.
Based on our belief that the foundation
of wealth for a community is its
intellectual capital, we launched the
Jamaican Education Initiative (JEI) .
This Programme focuses on
developments that positively impact
the process of building a strong
educational foundation for Jamaica.
In introducing the JEI, we established
a link between a product, the NCB
KeyCard, and a community-giving
programme. NCB contributes one
percent (1%) of all purchases made
using the KeyCard to education in
Jamaica. As shareholders, you are
ambassadors of this programme every
time you use your KeyCard to make
purchases. It is the easiest and most
convenient way for all of us to
contribute to the effort to build a better
Jamaica.
We at NCB have so much joy in
knowing that we play a part in
ensuring that education is within the
realm of opportunity for every
Jamaican youngster. We have so
much joy in knowing that, in some
small part, we have contributed to the
effort to renovate Downtown Kingston.
Michael Lee-Chin interacting with customers outside NCB Half Way Tree Branch
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 4
We are fortunate to have surrounded ourselves with Directors,
Executives and Staff who share that joy. We have found over
the years that people are more productive when they are
motivated, and we have spent a large part of our business
careers motivating our staff, our clients and others in some way
or another.
My own personal success has also taken me on a journey of
introspection, and I have noticed that the more successful I am,
the more I am motivated by things other than “just money”.
My fellow shareholders, NCB is not just about money; NCB is
also about making a difference in the lives of the people in our
community. We are committed to playing a significant role in
helping to build a better Jamaica. Every member of the NCB
family realizes that the way we can best fulfill this purpose is to
drive our businesses to maximum efficiency and effectiveness.
The more profitable we are, the more we are able to help
Jamaica.
We are relentless in our focus on increasing the revenues of
our businesses, and on decreasing the costs of generating
those revenues. For example, in 2004, we will focus on
extracting the benefits of the IT Platform both in cutting costs
and in increasing revenues. We have a number of initiatives
aimed at revenue-enhancement and others at cost reduction.
You will see some of the results in 2004, but the true bottom-
line impact will be in 2005 and onwards.
Your NCB employees are committed to playing a significant
role in helping to build a better Jamaica. This is a long-term
commitment; a journey which we have just begun. Now, you,
as fellow shareholders, have the opportunity to participate in
this process; to share the journey with us.
We are fortunate to have surrounded ourselves with Directors, Executives and Staff who share that joy. We
have found over the years that people are more productive when they are motivated, and we have spent a
large part of our business careers motivating our staff, our clients and others in some way or another.
Every member of the NCB family realizes that the way we can best fulfill this
purpose is to drive our businesses to maximum efficiency and effectiveness. The
more profitable we are, the more we are able to help Jamaica.
Michael Lee-Chin
Chairman
Board of Directors
ALVIN WINT
DONOVAN LEWIS
MICHAEL LEE-CHINCHAIRMANTHALIA LYN PATRICK HYLTON
WAYNE CHISTOPHER CHEN
HON. NOEL HYLTON
Seated (left to right)
Standing (left to right)
DR. NIGEL CLARKE KRIS ASTAPHAN AUBYN R. HILL DESMOND BLADES SANDRA GLASGOW HERB I. PHILLIPPS, JR.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 5
Michael Lee-Chin, B.Sc.Chairman
Michael Lee-Chin is Chairman and Chief Executive Officer ofAIC Limited and Chairman of National Commercial BankJamaica Limited.
He is a graduate of McMaster University and holds a degreein Civil Engineering. He is the founder of AIC Limited, thelargest privately owned Canadian Mutual Fund ManagementCompany. His experience in Canada's financial servicesindustry spans over 20 years.
Mr. Lee-Chin is the recipient of several national awards forbusiness and community service and he is listed in the mostrecent Forbes Magazine Billionaire List as one of the world's500 wealthiest people.
Kris S.A.C. Astaphan, B.Sc., M.B.A., J.D.Deputy Chairman
Kris Astaphan is Executive Vice-President of AIC Limited,Deputy Chairman of National Commercial Bank JamaicaLimited, Chairman of NCB (Cayman), Chairman of EdwardGayle and Company Limited, and sits on the Board ofDirectors of NCB Insurance Company Limited, West IndiesTrust Company and Jamaica Promotions Corporation Limited.
He has spent the past ten years in various executive positionsin a number of companies in the AIC Group of Companiesprior to which he was a Corporate and International Taxlawyer with one of Canada's largest laws firms for some eightyears. The recipient of several academic awards, Mr. Astaphan holds degrees in Science, Business and Law.
Aubyn Hill, B.A., M.B.A.Managing Director
Aubyn Hill holds a B.A. in Business Administration from theUniversity of Miami and an M.B.A. from Harvard BusinessSchool. Mr. Hill has over 30 years of banking experience.His career began with American Express InternationalBanking Corporation (AEIBC) where he served in seniorcapacities in Italy, India, Sri Lanka and Bahrain. He was theChief Executive Officer at the National Bank of Oman for 11years before being appointed Managing Director of NationalCommercial Bank in 2002.
Mr. Hill presently serves on the University Council (UWI) andis chairman of the Finance Committee of the Kingston CityCentre Improvement Company Limited.
Patrick Hylton, A.C.I.B., B.B.A., C.D.Deputy Managing DirectorActing Managing Director, Edward Gayle & Company Limited
Patrick Hylton is an associate of the Chartered Institute ofBankers (London) and holds a BBA (Upper 2nd Class Hons.)
in Management from the University of Technology, Jamaica.
He boasts an illustrious banking career. As Managing Directorof Financial Institutions Services Limited and Finsac, between1993 and 2002 he successfully led the intervention,rehabilitation and divestment of the indigenous banking andinsurance industry. He was recognized nationally for thissterling achievement with the Order of Distinction in the rankof Commander.
Aylmer Desmond Blades
Desmond Blades is Chairman and Managing Director ofMusson (Jamaica) Limited. He also chairs several othercompanies including T. Geddes Grant (Distributors) Limited,Lannaman's Holdings Limited, Stanley Motta Limited, SeprodLimited, Industrial Sales and Jamaica Detergents Limited. Mr. Blades is a past president of the Jamaica Chamber ofCommerce. He is a graduate of Harrison College in Barbadosand began his career as a clerk with the Royal Bank ofCanada.
Mr. Blades chairs NCB's Credit Committee.
Nigel Clarke, B.Sc., M.Sc., D. Phil.
Nigel Clarke is Chief Operating Officer of the Musson Group.He holds a B.Sc. in Mathematics and Computer Science fromthe University of the West Indies, a M.Sc. in Applied Statisticsfrom Oxford University and a D.Phil. in Numerical Analysis,also from Oxford University.
He has received various awards, including the RhodesScholarship and the Commonwealth Scholarship, and hasauthored several publications. Dr. Clarke is a director of othercompanies including Edward Gayle and Company Limited,Red Stripe, Seprod and Jamaica Broilers.
Wayne Chen, LL.B. (Hons.)
Wayne Chen is Chief Executive Officer of Super Plus FoodStores, Jamaica's largest retailer. He is also a director ofseveral companies including - AIC (Barbados) Limited, NCB(Cayman) Limited, West Indies Trust Company Limited andNCB Insurance Company Limited.
He holds a LL.B. (Hons.) degree from the University of theWest Indies and is the recipient of several national awardsincluding Jamaica Observer Business Leader of the Year(1998) and the Jamaican Institute of Management YoungEntrepreneur Award (1997).
BOARD OF DIRECTORS
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 6
Sandra Glasgow, B.Sc., M.B.A.
Sandra Glasgow is Jamaica's 2000 Eisenhower ExchangeFellow and she is currently the Senior Director of theTechnology Innovation Centre of the University ofTechnology, Jamaica.
She holds a B.Sc. in Applied Zoology and Applied Botanyand an MBA from the University of the West Indies, whereshe now lecturers part-time.
Mrs. Glasgow is a member of the Board of Directors ofseveral companies including World Association forCooperative Education, the National Import-Export Bankand Grace Kennedy Foundation.
Hon. Noel Hylton, O.J., Hon. LL.D., C.D., J.P.
Noel Hylton is the President and CEO of The Port Authorityof Jamaica. He began his career as an accountant. Hehas contributed significantly to the local and overseasshipping industry. Mr. Hylton was appointed by the BritishGovernment to sit on a Royal Commission of Inquiry intothe ports of the Fiji Islands. He also served for 10 years invarious administrative posts with the Eastern RegionalGovernment of Nigeria.
Mr. Hylton chairs and serves on several boards including:the Jamaica Urban Transport Company, JamaicaPromotions Corporation, The Port Authority of Jamaica, theMaritime Authority of Jamaica and the Police ServiceCommission. He is the recipient of two national honours:Commander of the Order of Distinction (C.D.) and the Orderof Jamaica (O.J.) for services to the growth anddevelopment of the shipping industry.
Donovan Lewis
Donovan Lewis is the founder of the Ideal Group ofCompanies which include: Ideal Finance CorporationLimited, Ideal Portfolio Services Company Limited, IdealBetting Company Limited and Donwis Limited.
He holds directorships in United General InsuranceCompany Limited, Central Finance Corporation Limited andPowerSun Corporation Limited (operators of Golden SeasBeach Resorts).
A director of AIC (Barbados) Limited, Mr. Lewis is also amember of the Board of NCB (Cayman) Limited and serveson NCB’s Audit Committee.
Thalia Lyn, B.A
Thalia Lyn began her career as a teacher and holds a B.Afrom Manhattanville College in New York, U.S.A. As alicensed stockbroker she marketed mutual funds for one ofthe largest companies in Canada.
Mrs. Lyn is a founder and CEO of the popular Island Grillchain of fast food restaurants for which she has receivedmany awards including the Business Leader of the YearAward from the Florida International University MSBA Classof 2002 and Best Fast Food Award (1988).
She serves on the boards of several companies includingJamaica Macaroni Company Limited, Consolidated BakersLimited and Telegens Limited.
Herb Phillipps Jnr., B.C., M.B.A., C.M.A.
Herb Phillipps Jnr. has over 30 years experience in bankingin Canada and the United States with Canada's largestbank, Royal Bank, where he held several executivepositions in finance, auditing and electronic productdevelopment. He is a Certified Management Accountantwho has also held the position of CIO in the mutual fundsmanagement industry.
Mr. Phillipps holds a Bachelor of Commerce from SirGeorge Williams University and an MBA from the ConcordiaUniversity in Montreal, Canada.
A consultant to the AIC Group in Canada, he has extensiveexperience in Business Transformation by developingbusiness strategies and integrated computer systemsfocused on delighting customers. Mr. Phillipps is Founderand CEO of HIPNET INC.
Professor Alvin Wint, B.A., M.B.A., D.B.A
Alvin Wint is a former auditor and financial analyst whoholds an MBA in Finance. He also holds a Doctorate inInternational Business from Harvard Business School.
He is Professor of International Business in the Departmentof Management Studies at the University of the WestIndies, Mona campus. He has also served as a consultantto the World Bank and is an expert resource person for theUnited Nations.
Professor Wint sits on the board of several companiesincluding Jamaica Producers Group, NCB InsuranceCompany Limited, Jamaica Promotions Corporation,Jamaica Exporters Association and Technological SolutionsLimited. He chairs the Audit Committees of NCB and NCBInsurance Company Limited.
BOARD OF DIRECTORS
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 7
MANAGING DIRECTOR’S REPORT
By almost every relevant criterion, the 2003
Financial Year was an exceptional one for the
NCB Group. Our financial achievements were
impressive because of our uncompromising focus on
customer-centricity, that is, adding value to our
customers by putting them at the centre of all our
activities. To this end, the Financial Year was one of
continuous improvement across every aspect of our
business. We made major gains in operational
efficiency, product innovation and service delivery, staff
development, and significant contributions to efforts to
build our nation.
FINANCIALS
We closed the Financial Year with a net profit after-tax (NPAT) of J$2.8
Billion, which was the highest in our history. This total included the sale
of investments totalling J$848.9 Million. The Group’s profits increased by
J$1.3B (an improvement of 86.7% over the previous year) and our return
on average equity was 22.57% compared to 14.05% at the end of
September 2002. The other numbers were equally impressive.
Revenues of the Group were up 53.18% (compared a mere 3.02% in the
year ended September 30 2002) and return on average earning assets
was up significantly at 2.56% compared to 1.58% for the previous year.
Total assets increased by 26.6% during the year and stood at the
J$145.9B as at September 30, 2003. The increase was due almost
entirely to the growth in earning assets including loans and advances,
investment in securities and deposits from other banks. Shareholders’
equity increased by 7.5% to a total of J$12.8B.
We paid out J$0.51 in dividends for the Financial Year - a substantial
increase of 300% over the J$0.17 paid in 2002.
Our growing creditworthy asset book as well as the improving capital
base of the Group, suggest a financial strength that places us in a very
strong and competitive position in our marketplace.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 8
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 9
OPERATIONS
We started the calendar year by
installing the new Finacle Core Banking
System across our 52 service centres
island-wide. The experts in our
Information Technology Division worked
round-the-clock to achieve the
successful implementation of the
System.
Our commitment to building the service
culture manifested itself in, what was up
to then, uncommon alliances between
divisions in the Bank. When an
important process of the new Core
Banking System proved to be a
challenge to a high volume transaction
businesses in the fast food industry or
public utility, or to a government entity
with a large amount of salaries to be
paid, the related divisions partnered to
forge a solution for these clients in
these different business sectors of the
economy. The result invariably was a
greater understanding between the
clients and the Bank. And, because of
the very positive attitude of the
divisional heads and their teams, in
difficult circumstances, our clients
extended understanding and the
business relationships strengthened.
Many years up to the second half of
2002 NCB was largely out of the
corporate lending business. Since its
inception our Corporate Banking
Division has initiated a set of skillful
financial structuring arrangements that
many big contractors, telecom
operators, quasi-government
institutions and big hotel-owning
companies found to be very beneficial
and fit agreeably with their financing
requirements. Corporate clients are
again experiencing a high level of
professionalism and improved
responsiveness that encouraged many
of them to “come back home” .
During the year we commenced the
refurbishment of several of our
branches, the most significant of which
was the move to a new location for the
Matilda’s Corner branch. We have
worked assiduously to ensure our
customers are serviced at all 106 ABMs
and are pleased with our track record of
an over 99.5% uptime for all our
machines. This commitment to
consistently excellent service across
the NCB network is a managerial and
organisational imperative about which
our enthusiasm will not wane.
MANAGING COSTS
In spite of the very good financial
performance, we are still challenged by
a higher than acceptable cost structure.
All officers, especially those in the
Purchasing Division, have been given a
mandate to effect cost efficiencies in the
procurement of all goods and services.
PRODUCTS AND SERVICES
Our commitment to serving our
customers led to development of a
number of new products. In an
environment where investors can make
very high returns on government paper,
considered to be the best risk in the
country, the NCB Savings Bonanza
caught the imagination of many savers.
Since its launch, the Bank has
increased its local savings pool
substantially and more and more
customers continue to use this product
as a savings vehicle.
Towards the end of the Financial Year,
we launched a loan product that is
extremely popular with employers and
employees, NCB Payroll Plus .
Employees telescope their future
salaries into a facility that helps them
pay school fees, undertake home
improvements and even start their own
small businesses. We are very pleased
with the market response to this
product.
Senvia Money Services (formerly Zip
Cash Money Transfer) launched in
2003, facilitate remittances between the
United Kingdom, Canada, the Cayman
Islands, and Jamaica. The service has
recorded impressive growth since its
launch.
During the year we introduced e-
FINANCIAL SERVICES , a 4-channel
We paid out J$0.51 in dividends for the Financial Year - a
substantial increase of 300% over the J$0.17 paid in 2002.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 10
24-hour electronic gateway that includes an expanded
Telephone Banking Service, Internet Banking, Short
Messaging Services, and the Customer Care Centre, a state-
of-the-art customer contact facility.
Prompt Service Delivery is an integral component of the
service culture we are building in the Bank. The NCB
Personal Banker is now quite a legend. So many of our
customers make the effort to point out to me how very
pleased they are that they have someone in ‘their branch’
who they consider as ‘family’. Customers are at pains to
complement one personal banker after another whether I
visit a branch in Morant Bay, Ocho Rios, Savanna-La-Mar,
Montego Bay or Mandeville. Our clients are most pleased
with this special group of NCB customer service agents. The
only request they have is that they want more ñ and more are
on the way.
The NCB Team is working assiduously to ensure that
transactions are accurate and are processed in a timely
fashion, and that courtesy is the hallmark of all contact with
customers. Branch managers, operations managers,
customer service representatives, credit officers have all
contributed to the new service culture. Tellers are upfront
day-after-day, and especially during high traffic periods at the
end of the month, carrying the NCB standard to where it
really counts - where service meets the customer.
STAFF DEVELOPMENT
While the customer, corporate or retail, is undoubtedly the
focus of our attention and the recipient of the improvements
in the NCB service culture, the place where the ethos of what
we want to achieve with our customers is crafted and
enhanced, is in our human capital. In 2003, most of our
2,700 employees participated in 4,640 training sessions (in
250 training modules) designed to build their technical skills
as well as advance the customer-friendly service culture in
our Bank.
We firmly believe that for NCB to succeed in perpetuity, we
must select good people, train them continuously, stretch
them, and recognise and reward them in order to keep
building the motivation to serve and succeed in a very
competitive marketplace. Through the new NCB
Management Training Programme, we have recruited scores
of university graduates who are participating in an intensive
classroom and in-branch training programme before being
assigned to permanent positions in the Bank.
We continue to train and retrain our staff to give them every
opportunity to achieve their career goals at NCB. As we
centralise our operations and build efficiencies, those who
have been employed in operational functions have the
opportunity to be retrained as part of an effective selling and
service-providing team. Our aim is to build a multi-skilled
cadre of employees who are prepared to embrace the
challenges of new, different, and creative tasks in a dynamic
and evolving financial services industry.
SOCIAL RESPONSIBILITY
During the Year we continued to focus on three broad areas
of social responsibility: education, health, and social welfare.
Our commitments contributions were significant and, and
included:
• $150 million towards education through the Jamaican
Education Initiative
• $15 million to the Kingston City Centre Improvement
Company
• $3.5 million to the University Hospital of the West
Indies
• 1/4 million to Kingston College Breakfast
Feeding Programme
• 1/4 million to the Jamaica Constabulary Force
Marvia Blair, Manager, NCB Black River,winner of the Branch of the Year Award, 2003
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 11
GROWING REVENUES
The three divisions in the Bank that have the primary
responsibility to increase our revenues - Corporate Banking,
Retail Banking and the Treasury and Correspondent Banking
Divisions - are poised for growth. We will seek new
creditworthy clients and increase market share to grow our
revenues even as we give strong focus to cutting our costs.
We will seek to improve revenues from our loans and
advances as well as investment products. Our Treasury will
work even more closely with our corporate clients to get
increased off-balance sheet business from them.
OUTLOOK
On behalf of the Board of Directors and the management
team, I wish to extend my sincere appreciation to the staff
who have worked extremely hard and conscientiously during
the past year. I am especially pleased that at the last Board
meeting of the calendar year, which happened to be on the
same day of the staff lunch at the Atrium, the Board made the
following decisions:
• To pay a profit to the staff of J$221M which was 6% of
our net income for the year (before profit share).
• Pay J$118M as a performance bonus for the year.
• To continue to make available the holiday houses so
that staff and their families can benefit from these
facilities.
The Chairman, Mr. Michael Lee-Chin, led the Board of
Directors to join the staff for lunch in the canteen and, after
addressing the staff and making the announcements, he
received a standing ovation from the full house which was
clearly surprised by the unexpected announcements and the
size of the payouts.
Armed with this kind of commitment to our staff and our
staff’s clear commitment to serving our customers well, we
enter the 2004 Financial Year with great optimism.
Aubyn R. Hill
Group Managing Director
Aubyn Hill, Managing Director NCB, presents a cheque for J$15Million to Dr. Vincent Lawrence, representing our contribution toKingston City Centre Improvement Company
Senior Executive Team
MARJORIE SEEBERAN
AUBYN R. HILL
MANAGING DIRECTORPATRICK HYLTON INGRID CHAMBERS
RICKERT ALLEN
Seated (left to right)
Standing (left to right)
JANICE MCKENLEY JENNIFER DEWDNEY KELLY LEROY BUCKNOR YVONNE CLARKE COURTNEY CAMPBELL MINISH PARIKH
DOUGLAS PEEBLES DESMOND HANDY SHEREEN JONES
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 12
SENIOR EXECUTIVE TEAM
Aubyn Hill, B.A., M.B.A.
Managing Director
Auybn Hill holds a B.A. in Business Administration from the University of Miami and an M.B.A. from Harvard BusinessSchool. Mr. Hill has over 30 years of banking experience. His career began with American Express International BankingCorporation (AEIBC) where he served in senior capacities in Italy, India, Sri Lanka and Bahrain. He was the Chief Executive
Officer at the National Bank of Oman for 11 years before being appointedManaging Director of NCB in 2002.
While at the National Bank of Oman, he was voted the 'Best ChiefExecutive Officer' for three consecutive years in the Sultanate of Oman.
Mr. Hill presently serves on the University Council (UWI) and is chairmanof the Finance Committee of the Kingston City Centre ImprovementCompany Limited.
Patrick Hylton, A.C.I.B., B.B.A., C.D.
Deputy Managing Director
Acting Managing Director, Edward Gayle and Company Limited
Patrick Hylton is an associate of the Chartered Institute of Bankers (London)and holds a BBA (Upper 2nd Class Hons.) in Management from theUniversity of Technology, Jamaica.
He boasts an illustrious banking career as Managing Director of FinancialInstitutions Services Limited and Finsac, between 1993 and 2002, where hesuccessfully led the intervention, rehabilitation and divestment of theindigenous banking and insurance industry. He was recognized nationallyfor this sterling achievement and received the Order of Distinction in therank of Commander.
Rickert Allen, B.A., M.Sc.
General Manager, Training & Human Resources Division
Rickert Allen holds a B.A. in Personnel Administration and a M.Sc. in HumanResource Management. As head of NCB's Training and Human ResourceDivision, he is also the Group's Business Transformation Stream Leader.Mr. Allen has over 20 years experience in organization design, changemanagement services and negotiation in Jamaica's bauxite industry.
Leroy Bucknor
General Manager, Projects, Administration & Services Division
Leroy Bucknor has had over 30 years experience with NCB in various positions ranging from Clerk, Supervisor, Inspector,Branch Manager, and Credit Officer to Accountant. He has trained extensively in cost control management, internal auditing,management, labour laws, decision-making and industrial relations.
Mr. Bucknor is a member of the Jamaican Institute of Bankers, the Institute of Internal Auditors and the Association of CertifiedFraud Examiners.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 13
Courtney Campbell, B.Sc., A.C.I.B., M.B.A.
Assistant General Manager, Retail Banking Division
Courtney Campbell heads NCB's Retail Banking Division
and brings to the job 18 years experience in the financial
services sector. Starting as a graduate trainee, Mr.
Campbell has worked as a Supervisor, Credit Officer,
Account Manager and Branch Manager, prior to taking up
his present duties. He has an M.B.A. in Finance, a B.Sc.
in Management Studies and is an Associate of the
Chartered Institute of Bankers (London). He is a member
of the Rotary Club of New Kingston, Knox College Board of
Management, the Synodical Committee of the United
Church of Jamaica and the Cayman Islands, and
Chairman, Evangelism & Growth Committee of Webster
Memorial United Church.
Ingrid Chambers, B.Sc., E.M.B.A.
Managing Director, NCB Insurance Services Company Limited
& West Indies Trust Company
Ingrid Chambers holds a M.Sc. in Management Studiesand an Executive Masters in Business Administration. Ms. Chambers is a former General Manager of ScotiaJamaica Life Insurance Company and has over 23 yearsexperience in the sector, including systems, sales, humanresource management, operations and financial andstrategic management. She is widely recognized as one ofthe premier bancassurance experts in the country.
Yvonne Clarke, F.C.C.A., M.B.A.
Chief Internal Auditor
Yvonne Clarke is a Chartered Accountant with 20 yearsexperience in audit and accounting. She worked atPricewaterhouseCoopers where she gained experience inthe Assurance and Business Advisory Services practiceprior to joining NCB in 2000.
Mrs. Clarke received her MBA from the University ofManchester. She is a fellow of the Association ofChartered Certified Accountants (ACCA) and the Instituteof Chartered Accountants of Jamaica (ICAJ). She is also amember of the Accounting Standards Committee of theInstitute of Chartered Accountants of Jamaica and is theChairperson of the Jamaica Fraud AssociationSubcommittee.
Jennifer Dewdney Kelly, B.A (Hons.)
General Counsel and Company Secretary
Jennifer Dewdney Kelly is an Attorney-at-law and holds aB.A. (Hons.) law degree. With over 18 years experience,she worked in a private law practice prior to joining NCB in1989 as an Assistant Legal Officer. She held the positionsof Assistant Company Secretary and Company Secretaryat NCB before being promoted to her current position in2002. She is a member of the Jamaican Bar Association.
Desmond Handy
Senior Assistant General Manager
Credit & Risk Management
Desmond Handy has over 38 years of service withNCB including 30 years experience Credit and RiskManagement. He has served in several otherpositions in the organization ranging from Clerk,Supervisor, Internal Auditor, Senior Credit Officer andBranch Manager.
He has received extensive senior managementtraining in financial services internal auditing andstrategic management.
Shereen Jones, B.Sc., M.Sc.
Senior Assistant General Manager, Information Technology
Shereen Jones holds B.Sc. and M.Sc. degrees inComputer Science and has over 15 years experience inJamaica's Information Technology industry. Mrs. Joneshas worked as a consultant withPricewaterhouseCoopers and is a member of the NovaPowerspeakers Toastmasters Club.
Janice McKenley, B.Sc., M.B.A.
General Manager, Finance Control Division
Janice McKenley is a Chartered Accountant with 14 yearsexperience in Computerized Information Systems RiskManagement (CISRM) at PricewaterhouseCoopers (PWC).She is a former Deputy General Manager of City ofKingston Credit Union and Partner at McKenley &Associates.
SENIOR EXECUTIVE TEAM
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 14
Mrs. McKenley holds a B.Sc. in Computer Science and anMBA in Finance from the University of the West Indies. Sheis a fellow of the Association of Certified CharteredAccountants (ACCA), member of the Accounting StandardsCommittee and Council Member of the Institute ofChartered Accountants of Jamaica (ICAJ).
Minish Parikh, B.Sc, M.Sc.
General Manager, Network Operations Division
Minish Parikh holds a B.Sc. and a M.Sc. in Chemistry and
completed the Senior Executive Programme at London
Business School. His experience spans 16 years at the
State Bank of India and the National Bank of Oman where
his duties included: small business finance, corporate
finance, business process automation, internal controls and
compliance, trade finance, retail banking, defining policies
and procedures and monitoring operating units.
Mr. Parikh is a member of the Indian Institute of Bankers.
Douglas Peebles, LL.B.
General Manager, Treasury & Correspondent Banking Division
A qualified Solicitor, Douglas Peebles is the head ofTreasury and Correspondent Banking Division at NCB,having previously held similar managerial posts with TheBritish Linen Bank and TSB Bank Scotland, PLC in theUnited Kingdom.
Marjorie Seeberan B.Sc., M.B.A.General Manager, Corporate Banking Division
Marjorie Seeberan holds a B.Sc. in Economics and anMBA in Finance. Her banking experience includes over 25years with JP Morgan Chase (formerly Chemical Bank) inthe United States where she served as Senior VicePresident, Corporate Banking and Corporate Finance. Shesubsequently held the position of Executive Director of theBusiness Development Office of the University of the WestIndies (UWI) prior to joining NCB in 2002.
Mrs. Seeberan is a director of Mona Infomatix Limited,American Foundation for the UWI and Television JamaicaLimited.
SENIOR EXECUTIVE TEAM
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 15
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 16
CORPORATE BANKING DIVISION
During the year, the Corporate Banking Division (CBD)consolidated its position and affirmed its presence as aformidable competitor in a marketplace that is served by sixcommercial banks, 13 merchant banks and a number ofnear-bank entities, all competing for deposits and loans. Theappointment of a General Manager and the recruitment ofexperienced staff to handle a specialized portfolio ofcorporate clients marked the beginning of a new era for thelarge corporates. The operations of the Division werecentralized to effect greater efficiency and give added valueto its clients.
The Private Banking Centre was incorporated into the CBDduring the Financial Year and recorded a 70% growth inprofits year over year.
The Division is particularly proud of the inroads made inCorporate Finance products originating, structuring andexecuting US dollar transactions with high profile corporateclients. This opened new avenues for accessing lower costfunding from overseas banks and has set the stage for bridgefinancing, bond issuance, and trade and non-trade financeon a syndicated deal basis.
The CBD exceeded its target for Financial Year 2003.Noteworthy transactions included:
• US$16M for the establishment of the island's first
commercially viable Wind Farm
• US$29M in senior secured credit facilities for the
acquisition and upgrading of a landmark resort
• US$8M bridge financing and the arranging of
US$21.3M in trade financing through the US Exim
Bank for the acquisition of Security and X-ray
equipment
• US$16.2M for the expansion of a Water
Distribution system
The CBD's outputs were based on a recast budget inJanuary 2003 and measured by Total Commitments, LoansOutstanding, Deposits, Gross Income and Profit beforetaxes. The results at 2003 Financial Year are reflected below:
Total Commitments at J$28.1B for year ended September30, 2003 exceeded budget by 15%. Loans Outstanding at aJ$19.9B equivalent exceeded budget by 2.9% with ForeignCurrency loans comprising 76% of the portfolio. The Depositbase was J$4B in January and ended the year at J$9.1B.
Loans Outstanding at a J$19.9B equivalent exceeded budgetby 2.9% with Foreign Currency loans comprising 76% of theportfolio. The Deposit base was J$4B in January and endedthe year at J$9.1B.
IVISIONALREVIEWS
D
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 17
Gross Income at J$1.8B exceeded target by 13.4%. Profitbefore Tax at J$1.33B exceeded target by 14.6%. FeeIncome from Commitments, Indirect Facilities andCorporate Finance also exceeded budget by 3.3% withinan environment that has become increasingly competitive.
DIVISIONAL REVIEWS cont’d
A section of the Hanover toLucea Water Supply Pipeline
E.G. Hunter (centre), President of the National WaterCommission in discussion with Etienne Andre, ProjectManager, Great River to Lucea Water Supply Project andRennie Clarke of NCB’s Corporate Banking Division
Winston Boothe (left), Senior Vice President, ThePort Authority of Jamaica explains to NadineHeywood and Marjorie Seeberan (right) of NCB’sCorporate Banking Division, the function of the soonto be installed X-ray machines
NCB Corporate Banking Division Executives, MarjorieSeeberan and Vandyke McKenzie on a visit to Half
Moon Hotel toured the recently constructed wing withRichard Whitfield, Managing Director and Peter Kellond,
Chief Financial Officer
PROJECTS FINANCED BY NCB’s CORPORATE
BANKING DIVISION
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 18
CREDIT AND RISK MANAGEMENT DIVISION
The year in review was a good one for the Division which saw
the achievement and maintenance of an active, robust credit
portfolio with minimal delinquency. Achievements included:
Increase in the credit portfolio from $17.1 billion as at
September 30, 2002 to $28.5 billion as at September 30,
2003. This is a 66.6% growth in the portfolio, spread over
corporate and retail clients.
Reduction in delinquency ratio from 9% as at 30 September
2003 to 5.3% of the Bank’s active portfolio. This was
accomplished through a combination of booking good quality
credits, active follow-up to minimize the migration of
performing accounts to the delinquent category, and a
sustained collections effort with bad debtors.
FINANCIAL CONTROL DIVISION
The 2003 Financial Year presented both challenges and
opportunities for the Financial Control Division (FCD). A new
budgeting process, the Finacle Core Banking System, the
Oracle Accounts Payable System, and the conversion to
International Financial Reporting Standards were among the
important achievements in the Division. The conversion was
the most important achievement of the FCD for the year.
The Managing Director introduced a new budgeting
process, rigorously bottom-up, to ensure greater accuracy
and accountability from units and divisions. This produced
a first class Business Plan. This effort was repeated
successfully for the Revised Budget, a one year Calendar
Budget, and the Annual Budget and Business Plan for the
2004 Financial Year.
FCD played a vital role in the implementation of the Finacle
Core Banking System. This involved creating the Finacle
General Ledger, developing and designing a new chart of
accounts, establishing a new account number structure, and
creating accounts to facilitate the new Finacle process flow.
FCD’s vision of an enterprise-wide general ledger to solve
accounting problems throughout the Group was realized in
2003 with the implementation of Oracle. This has improved
the process of consolidating the financial position of the
Group, and providing timely management information to
guide decision-making, and has eliminated the manual
process of gathering data. Finacle also facilitated the
automation of some BOJ returns which created improvement
in the efficiency of the process.
A comprehensive expenditure approval policy was
recommended by FCD and approved by the Board. FCD
also assumed responsibility for supplier payments. This
involved the approval of invoices above a specified sum for
all divisions of the Bank and effecting these payments to
suppliers. The Oracle Accounts Payable System was
implemented throughout the branch network to automate the
process. A successful interface between the accounts
payable system and Finacle Core was also created.
FCD, with the assistance of PricewaterhouseCoopers,
arranged for NCB (Cayman) Limited to be designated an
“Approved Overseas Organization”. This allows “Cayman” to
invest/lend funds to certain Jamaican entities without being
subject to withholding tax on interest income.
GENERAL COUNSEL
AND COMPANY SECRETARY DIVISION
The listing of the Bank’s stock on the Trinidad and Tobago
Stock Exchange and the collation of information for the
preparation of the Directors’ Circular, published in connection
with the Mandatory Offer made by AIC (Barbados) Limited to
the Bank’s minority stockholders, were important
achievements for the Division in 2003. We also supervised
the merger of the operations of Edward Gayle and Company
Limited and NCB (Investments) Limited, and the transfer of
our trust services to West Indies Trust Company Limited.
The Division was instrumental in the preparation of
documentation to facilitate the launching of new products
such as Savings Bonanza and Payroll Plus; perfecting other
documents including cash processing contracts, agency
contracts, merchant agreements, cardholder agreements;
and, seeing to the registration of trade marks.
The Division has been liaising with the Stamp
Commissioner’s Department regarding a proposed initiative
for improving the turnaround time for the stamping of
financial documents.
DIVISIONAL REVIEWS cont’d
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 19
DIVISIONAL REVIEWS cont’d
INFORMATION TECHNOLOGY DIVISION
The Division continued to play an important role in achievingthe Bank's objective of implementing, through the effectivedeployment of leading-edge technology, a modern, flexiblebanking system and architecture to help in realizing ourVision of being “operationally, the strongest and mostdominant financial institution in the Caribbean”.
The Financial Year 2003 saw the upgrading of all elements ofthe technological infrastructure in the Bank, including theresolution of many of the post-implementation issuesassociated with the Finacle Core Banking System, and alsowith Prime, our new credit card system. System availabilityincreased significantly by September 2003, and the newenvironment provides the kind of flexibility and extensibilityfrom which the Bank is able to launch new products andservice offerings through a variety of delivery channels.
A new suite of channels has been added to our electronicofferings, including an expanded Telephone Banking facility,Internet Banking, Alert Messaging Services and a state-of-the-art Customer Care Centre. These offerings, under theCustomer Experience Management initiative, have expandedthe services we offer to our customers. Customers are nowable to more conveniently access a much wider variety ofbanking services including account management, billpayment, alerts and a series of ad hoc service requests.
As we move into the 2004 Financial Year, our focus will be onbuilding our internal expertise to decrease reliance onexternal support, effectively managing and monitoring thenew architecture, and leveraging the base infrastructure tosupport initiatives aimed at improving efficiency andincreasing revenue.
NETWORK OPERATIONS DIVISION
The Division, formed during the 2003 Financial Year, isorganized to meet current and future operations and servicechallenges, including raising the operating standards andcontrols across the NCB network to deliver cost-effective,timely and efficient solutions to gain sustainable competitiveadvantage.
Major initiatives undertaken by the Division during the yearput the Bank on a path of consolidation, centralization andautomation. Significant achievements were made in thefollowing areas:
• Consolidation of operational activities across the
NCB network.
• Efficient cash management that resulted in
significant savings and improvement in the bottom-
line of the Bank.
• Centralization of several activities that enabled
branches and other units to focus more on customer
delivery and support, achieve economies of scale,
reduce operating costs, and mange operational risk
more effectively.
(Above) A section of the Network Operations Divisionlocated at NCB’s Corporate Head Office
(Left) NCB Customer Care Centre Agents at work
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 20
PROJECTS, ADMINISTRATION & SERVICES DIVISION
This was an exciting year for the Projects, Administration and
Services Division. This was the year the Bank concentrated
on a broad transformation initiative aimed at improving our
processes and our procedures. The Division met the
challenge and played a vital role in upgrading facilities and
services.
A major undertaking was the provision of equipment to
facilitate the successful implementation and upkeep of
Finacle Core Banking System. Expansion of our network
infrastructure resulted in the establishment of a number of
new outlets as well as the renovation of several branches.
Feedback from our customers has been very positive; they
are very impressed with the new branch layout which is
comparable with first-world standards.
In keeping with the reconfiguration drive, several floors at the
Atrium were also upgraded to provide modern
accommodation for our subsidiaries - NCB Capital Markets
Limited (formerly Edward Gayle and Company Limited) and
NCB Insurance Company Limited - and other divisions.
We also focused on Supply Management, Energy
Management and the implementation of effective sourcing
strategies to reduce the total cost of providing the goods and
services required by the Bank. The procurement of goods
and services, based on the global demands for higher
productivity and tighter controls over costs, has increased in
strategic value to the Bank. Our mission for the coming year
is to continuously apply improved strategies in order to add
value and greater efficiency to the Bank.
RETAIL BANKING DIVISION
The introduction of Internet Banking and the opening of the
Customer Care Centre are two of NCB’s e-FINANCIAL
SERVICES channels which provide customers with 24-hour
customer service support, bill payment services and overall
account management. Additionally, we upgraded 11
agencies to full service branches, refurbished six others and
opened two new units - the Washington Boulevard branch
and the first in-store service outlet at PriceSmart in Kingston.
We continued to aggressively rebuild market share in the
consumer loan market. This was driven by the introduction of
pre-planned consumer loan packages including NCB
Signature Line , a special credit line for professionals and
NCB Payroll Plus - a salary backed loan facility. Our
consumer loan portfolio recorded growth of 129% for the
2003 Financial Year and, very importantly, this growth has
been accompanied by improvements in credit quality.
The introduction of an exciting savings product, NCB
Savings Bonanza contributed to a 10% increase in our
savings base.
Implementation of aggressive marketing programmes, in an
environment of increased competition in the credit card
issuing business resulted in the achievement of the
ambitious targets set for the Year with total receivables
growing by 60%, purchases by 38% and number of accounts
by 36%.
We developed core competencies in understanding the
needs and delivering superior value to NCB First Class
customers through a team of 65 highly trained Personal
Bankers. NCB First Class yielded strong results, highlighted
by growth of over 150% in new business acquired compared
with the 2002 Financial Year when the service was launched.
DIVISIONAL REVIEWS cont’d
Branch Manager, Stuart Reid speaking with a customer at the recentlyreconfigured NCB branch at 1-7 Knutsford Boulevard
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 21
DIVISIONAL REVIEWS cont’d
Recently refurbished NCB branch at St. James Street, Montego Bay
Relationship selling was given increased priority during the
year with Branch Managers, Personal Bankers and other
personnel being trained in sales leadership, customer
relationship management and foundational selling. Our
achievements in 2003 included:
We introduced Senvia Money Services , an affordable
remittance services targeted to international markets with
a high representation of Caribbean nationals. The service
has been expanded to include Grand Cayman, Canada,
and Birmingham in the United Kingdom.
We increased the number of automated banking machines
to 106. The total number of transactions processed
increased by 36.2% over the 2002 Financial Year.
Additionally, NCB owns 65.79% of the Point-Of-Sale
terminals online and continued to out-perform all other
financial institutions in the number of acquiring
transactions, amount paid and the number of customers
served. NCB’s ABM network has consistently been the top
performer in Jamaica’s Multilink network in terms of
revenue, number of acquiring transactions, cash paid to
customers and number of customers served.
For the 2004 Financial Year, emphasis will be placed on
developing innovative products, delivering excellent
customer service, meeting the unique needs of different
customer segments, and improving access and
convenience through our multiple distribution channels.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 22
TRAINING & HUMAN RESOURCES DIVISION
National Commercial Bank’s journey towards reaching its
goal of becoming the Employer of First Choice achieved
several milestones in 2003. Focus was placed on the
creation of an environment that encourages creativity,
increases productivity, improves morale, attracts and
retains intellectual capital, and champions work-life
balance.
Several policies were revised to align our operations with
world-class standards, eliminate bureaucracy and improve
efficiency. Access to policy information was improved
through the implementation of an Intranet which allows
employees to quickly view information on policies, new
developments, and on areas of interest or concern. In
keeping with our increased emphasis on performance, we
redesigned the performance appraisal process to improve
performance management and recruited some key industry
personnel.
As part of our capacity building exercise, a Human Capital
Audit was conducted to help the Division identify the
intellectual and skill-based strengths and weaknesses within
the Bank. The ORACLE Human Resource Management
System was implemented to manage the data and provide
key management information. Analysis of the data continues
and will inform HR strategies aimed at maximization of the
talent pool of our employees.
Our training efforts were focused on
technology and service delivery to
support the strategic direction and
focus of the Bank. Organization-
wide, real time training, intended to
equip our staff with the technical
knowledge needed to perform at
optimal efficiency levels, was
provided in three major computer
systems – Finacle Core Banking,
Finacle CRM and Finacle Treasury.
Also, in keeping with NCB’s
objective of making service
excellence a core value, front-line
employees participated in training
designed to enhance service
delivery.
THRD’s commitment to the
seamless integration of human
relation functions to achieve NCB’s
goal of being a world-class bank will
continue in the 2004 Financial Year.
Emphasis will be placed on job-
specific training and development
opportunities and on providing
employees with resources and
facilities to function efficiently. We
plan to leverage our investments in
the ORACLE HRM system and
expand its operation across the
network through self service,
develop the Business Intelligence
Module of ORACLE HRM, and
DIVISIONAL REVIEWS cont’d
Afew faces of NCB
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 23
launch our Management Training Programme – a companion
to other long-term human development strategies designed
to meet the needs of our dynamic and growing Bank.
TREASURY & CORRESPONDENT BANKING DIVISION
Formed as a separate Division just over 15 months ago,
Treasury and Correspondent Banking has established itself
as a substantial contributor to NCB’s profitability. The
Division has a respectable track record of profitable Treasury
management in a complex environment where there is
volatility in exchange and interest rates.
Foreign Exchange Trading has
grown substantially since the team
came together. At that time, the Bank
was ranked 7th amongst its
competitors, based on total volumes
traded, with a market share of just
over 7.5%. For the last 18 months,
the Bank has led the market in
Jamaica with market share varying
between 17% and 21%.
In Securities Trading, the Division has
strengthened its position as a leading
trader in both primary and secondary
markets for Jamaican and US Dollar
denominated Government of
Jamaica securities. Profitability in
this area has increased despite the
volatile environment and increased
competition on margins.
Market constraints, notwithstanding, the Division has
successfully established and managed relationships with the
Bank’s correspondent banking partners, accessing new
funding sources with some of the world’s leading financial
institutions.
The Bank’s cash resources held to meet statutory reserves
and prudential liquidity targets, stood at J$8.7 Billion as at
September 30, 2003, compared with J$5.6 Billion at the
previous year end. These resources exceed the statutory
minimum for such assets in relation to prescribed liabilities.
The Bank held a portfolio of Government securities of J$5.71
Billion as at September 30, 2003, compared to J$50.1 Billion
at the previous year end.
In the 2004 Financial Year, the Division will install a new
automated Treasury System - Finacle/Treasury - with a view
to improving trading and service delivery.
DIVISIONAL REVIEWS cont’d
EALTH MANAGEMENTREVIEW
W
NCB (CAYMAN) LIMITED
For the 2003 Financial Year, the Company recorded net profit of US$1.1 million or J$66 million, anincrease of 315% over the previous year. The Company also recorded asset growth of 83% toUS$45 million from US$24 million in 2002, while customer deposits increased by 94% to US$31million from US$16 million the previous year.
As of September 30, 2003, the Company recorded an annualized average return on equity of 14%and return on total assets of 2.5%, while maintaining a cost to income ratio of 35% for the period.
Over US$1 million has been sent from Cayman to Jamaica since the launch of Senvia MoneyServices, a low cost remittance service; this services capitalizes on the opportunity presented bythe high concentration of (14,000) Jamaicans working and living in the Cayman Islands and NCB’swide branch network across Jamaica.
NCB (Cayman) Limited was established on September 23,1992 in the Cayman Islands as theBank’s offshore banking subsidiary. The Company operates from Cricket Square, Elgin Avenue inGeorge Town, Grand Cayman. Regulated by the Cayman Islands Monetary Authority, theCompany’s core business lines include banking, investment management services, andincorporation of Cayman Islands exempt companies. NCB (Cayman) Limited is poised forcontinued growth in the coming years.
EDWARD GAYLE AND COMPANY LIMITED
Edward Gayle and Company Limited had a very successful year, indicated by a significantimprovement in profitability.
The acquisition of the assets and liabilities of NCB Investments Limited, under a Scheme ofReconstruction and Amalgamation, substantially increased the Company’s funds undermanagement, which ended the year at $32.8 billion, a 155% increase over the $12.87 billionrecorded in the previous year. There was a 29% increase over 2002’s combined funds undermanagement of $25.37 billion of both Edward Gayle and Company and NCB Investments Limited.At the end of 2003 Financial Year, the Company recorded after-tax profits of $436.3 million, a130% increase over the $189.5 million (restated) posted in the 2002 Financial Year.
A new Back Office sub-ledger system, Bank/X, was fully implemented, giving on-line access toclient information throughout the NCB Branch network. This improvement in operations resultedin a significant reduction in overtime costs, greater workflow efficiencies and a reduction incustomer queries.
Looking forward, the focus is on becoming a leading regional distributor of comprehensive financialservices and building an enviable reputation as the dominant and trusted market leader andinvestment advisor across all asset classes. As a first step to building a stronger financial marketpresence and greater recognition amongst investors, effective October 30, 2003 Edward Gayle andCompany Limited was renamed NCB Capital Markets Limited.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 24
NCB INSURANCE COMPANY LTD.
NCB Insurance Company Limited (NCBIC) experienced unprecedented after-tax profits in 2003 FinancialYear, recording J$154 million or 100% over the previous year. New policies sold for the OMNI producttotaled 10,664, increasing the portfolio by 15%. Gross premium income receipts were $1.1 billion whichhelped grow policyholders’ funds by 34% from J$3.2 billion to J$4.3 billion.
The Company’s improved profitability is a direct result of the successful repositioning of its corporate imageand brand, prudent financial management, and a more effectively run head office operations which createdthe climate for improved customer service delivery throughout the branch network.
In early 2003, a new management team reorganized the Company towards a more customer-centric anddistribution-driven model to better serve the needs of new and existing policyholders. Emphasis was alsoplaced on business retention. An investment management committee was appointed by the NCBIC Boardof Directors with the express responsibility for approving investments and exchange of securities.
The OMNI product was enhanced to improve customization of financial planning. Sales Representativeswere trained to provide more informed investment advice; a direct response to market needs. There wasalso a major re-engineering of technological systems and operational platforms which will continue into2004. This paved the way for a satisfying customer experience through preferred service channels. Clientsand shareholders have already started to experience the positive impact of these changes.
The efficiencies garnered from this re-engineering process are reflected in the Company’s financial well-being at year end. Stakeholders will experience even greater benefits in 2004 with the heightened focusand commitment to NCBIC’s vision of “...a solid reputation for wealth creation and meeting the needs ofstakeholders, ...an endorsement rate for client satisfaction and responsiveness that is the highest in thefinancial services industry...and a highly respected commitment to community service, financialempowerment and nation building”.
NCBIC Financial Highlights - 12 Months to September 30, 2003
$Millions $Millions2003 2002
Investments 4,233 3,297
Shareholders’ Equity 299 262
Policyholders’ Fund 4,288 3,217
Total Assets 4,701 3,516
Net Profit after Tax 154 77
Return on Average Equity (%) 54% 22%
Return on Assets (%) 3% 2%
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 25
NCB JAMAICA (NOMINEES) LIMITED
NCB Jamaica (Nominees) Limited are Registrars and transfer agents for several major companieslisted on the Jamaican stock exchange. The Company is one of the leading Registrars in theisland.
For the 2003 Financial Year, the Company realized a net profit of $17.2 million, up from $6.4million recorded the previous year. The company is well positioned to embrace opportunitiesresulting from the renewed interest shown in the Jamaican and Caribbean stock markets.
WEST INDIES TRUST COMPANY LIMITED
West Indies Trust Company Limited (WITCO), one of the leading Pension and AssetManagement companies in Jamaica, recorded another profitable year for fiscal 2003, with netprofits of $50.03 Million, an increase of 4% over fiscal 2002. This, in spite of significant capitalexpenditure undertaken during the year to upgrade the Company’s Pension Administration andInvestment Management software to enhance and diversify its service offerings and clientdelivery and to prepare for a more regulated and competitive pension industry.
Our Shareholders’ equity increased by 23% moving from $211M to $261M. A return on equity of22% was recorded for the fiscal year.
WITCO manages 36 Pension and other Funds, with a segregated portfolio management policy.Funds under management as at September 30, 2003 totalled $20.48 billion, an increase of 33%over the corresponding year.
The asset mix of the Funds managed is diversified with equities, money market andGovernment of Jamaica (BOJ) securities accounting for the largest portions.
During the year, the Company expanded its offerings to include Trust services.
In anticipation of the impending Pension Reform, WITCO is overhauling its portfoliomanagement and administration systems to take advantage of the opportunities which will bepresented, and to offer a superior product to our valued clients.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 26
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 #
“It is my dream that, one day, every Jamaican
child will have the opportunity to complete tertiary
education - it is my commitment to do all I can to
realize that dream.”
Michael Lee-Chin, Chairman, National Commercial Bank
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 28
On May 20, 2003, Chairman Michael Lee-Chin launched
NCB’s Jamaican Education Initiative (JEI), a J$150 million
commitment through to December 31, 2005 to assist with
the advancement of Jamaica's Education agenda.
Funding for JEI is an accumulation of 1% of purchases made usingthe NCB KeyCard, Jamaica's first and only propriety credit card. JEIis a six-component programme aimed at assisting with thedevelopment of Jamaica's intellectual capital.
• CXC sponsorship
• Computer & Book donations
• Early literacy and mentorship programmme
• Loans for teachers
• Scholarships and grants
• Omni Education Savings Plan
JAMAICAN EDUCATION INITIATIVE
To date, over 570 computers have been donated toschools, libraries and charitable institutions islandwide. Donations of books and school supplieshave also been made to a number of basic andprimary schools.
For academic year 2003/4, approximately 13,000entries (representing over 7,000 students) frompublic and private secondary schools sittingPrinciples of Accounts and Principles of Businesswill have their examination fees paid by JEI.Additionally, regional seminars and workshops willbe held for teachers in the two subject areas tosharpen teaching and marking skills in preparationfor the June 2004 examinations.
Chairman Michael
Lee-Chin with Minister
of Education Maxine
Henry -Wilson at the
launch of NCB’s
Jamaican Education
Initiative
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 29
Another area of JEI under
development is the Music
in Schools programme
through which young
audiences are exposed to
Classical, Jazz and other
music forms
Basic school students having
their first experience on one of
the computers donated by NCB
NOTICE OF ANNUAL
GENERAL MEETING
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 30
NOTICE is hereby given that the Annual General Meeting of National Commercial Bank Jamaica Limited will be heldat The Jamaica Pegasus Hotel, 81 Knutsford Boulevard in the Parish of Saint Andrew, Jamaica on Thursday, February26, 2004 at 4:00 p.m. to consider the following business:
1. Chairman’s Opening Remarks;
2. Statement by the Managing Director;
3. Adoption of the Audited Accounts for the year ended September 30, 2003 and the reports of the Directors andAuditors circulated to the Stockholders;
4. Election of Directors;
5. Remuneration of Directors;
6. Auditors and their remuneration;
7. Any other business which can be transacted at an Annual General Meeting.
A Member of the Company, entitled to attend and vote, is entitled to appoint a Proxy to attend and vote in his stead,and a Proxy need not be a member.
If you are unable to attend the Meeting, a Form of Proxy is enclosed for your convenience. When completed, this Formshould be deposited with the Secretary, at the Registered Office of the Company, at “The Atrium”, 32 Trafalgar Road,Kingston 10, Jamaica, not less than 48 hours before the time appointed for the Meeting. The Proxy Form should bearstamp duty of $100.00, before being signed. The stamp duty may be paid by adhesive stamps, which are to becancelled by the person signing the Proxy.
DATED this 22nd day of DECEMBER 2003
BY ORDER OF THE BOARD
Jennifer Dewdney Kelly (Mrs.)
COMPANY SECRETARY
Financial Statements& Notes to the Financial Statements
DIRECTORS’ REPORT
The directors submit herewith the Consolidated Profit and Loss Account of National Commercial Bank Jamaica Limited
and its subsidiaries for the year ended 30 September 2003, together with the Consolidated Balance Sheet as at that
date:
Operating Results
$’000
Gross operating revenue 21,742,482
Profit before taxation 3,463,250
Taxation (658,859)
Net profit 2,804,391
Dividends
The following dividends were paid during the year :
- Third interim dividend of $0.05 per ordinary stock unit in respect of the year ended 30 September 2002.
- Final dividend of $0.34 per ordinary stock unit in respect of the year ended 30 September 2002 was paidin March 2003.
- First, second and third interim dividends in respect of the year ended 30 September 2003 of $0.06 eachper ordinary stock unit were paid in July, August and November 2003.
Directors
The Board of Directors comprises:
Mr. Michael A. Lee-Chin - Chairman
Mr. Kris S.A.C. Astaphan - Deputy Chairman
Mr. Aubyn R. Hill - Managing Director
Mr. Patrick A.A. Hylton - Deputy Managing Director (Appointed 26 June 2003)
Mr. Aylmer Desmond Blades
Mr.Wayne C. Chen
Dr. Nigel A. L. Clarke
Mrs. Sandra A.C. Glasgow
Mr. Donovan A. Lewis
Mrs.Thalia G. Lyn
Mr. Herbert I. Phillipps
Professor Alvin G.Wint
Hon. Noel A.A. Hylton, OJ, CD, Hon. LL D
Mrs. Jennifer Dewdney Kelly - Secretary
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 32
DIRECTORS’ REPORT (cont’d)
During the financial year, the following directors resigned:
Date of Resignation
Mr. Paul T. A. Stewart 28 November 2002
Mr. Michael Philip HoSue 23 January 2003
Pursuant to Article 97 of the Articles of Association of the Bank, one-third of the Directors other than the Managing
Director will retire at the Annual General Meeting. Pursuant to Article 103, any directors appointed to the Board
subsequent to the last Annual General Meeting will retire at the Annual General Meeting.
Auditors
The auditors, PricewaterhouseCoopers, have indicated their willingness to continue in office and offer themselves for
re-appointment.
On behalf of the Board
Jennifer Dewdney Kelly
Secretary
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 33
18 December 2003
To the Members ofNational Commercial Bank Jamaica Limited
Auditors’ Report
We have audited the financial statements set out on pages 35 to 98, and have received all the information and
explanations which we considered necessary. These financial statements are the responsibility of the Bank’s
management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not
audit the financial statements of certain subsidiaries, which statements reflect assets of $4,999,162,000 and
$3,766,816,000 and revenue of $1,076,986,000 and $703,729,000 as at and for the years ended 30 September 2003
and 2002, respectively. Those statements were audited by other auditors whose reports have been furnished to us,
and our opinion, insofar as it relates to the amounts included for these subsidiaries, is based solely on the reports of
the other auditors.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we
plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us
with reasonable assurance that the financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audit and the reports of the auditors of subsidiaries not audited by us, proper accounting
records have been kept and the financial statements, which are in agreement therewith, give a true and fair view of
the state of affairs of the Group and Bank as at 30 September 2003 and the results of operations, changes in equity
and cash flows of the Group and the Bank for the year then ended, so far as concerns the members of the Bank, and
have been prepared in accordance with International Financial Reporting Standards and comply with the provisions
of the Jamaican Companies Act applicable to banking companies.
Chartered AccountantsKingston, Jamaica
PricewaterhouseCoopersScotiabank CentreDuke StreetBox 372Kingston JamaicaTelephone: (876) 922-6230Facsimile: (876) 922-7581
E.L. McDonald R.L. Downer J.L.M. Bell M.G. Rochester P.W. Pearson E.A.Crawford D.V. BrownJ.W. Lee C.D.W. Maxwell P.E. Williams G.L. Lewars L.A. McKnight L.E. Augier A.K. Jain
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 34
CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 30 September 2003
Restated
Note 2003 2002
$’000 $’000
Operating Income
Interest income from loans 3,000,806 1,816,150
Interest income from securities 14,469,997 10,099,007
Total interest income 17,470,803 11,915,157
Interest expense (10,712,921) (7,632,543)
Net interest income 6,757,882 4,282,614
Net fee and commission income 4 1,308,361 1,171,260
Net trading income 5 2,908,709 1,130,670
Other operating income 54,609 47,382
11,029,561 6,631,926
Operating Expenses
Staff costs 6 4,212,281 2,928,332
Provision for credit losses 16 206,561 (172,499)
Depreciation 494,910 290,997
Other operating expenses 2,652,559 1,873,419
7,566,311 4,920,249
Profit before Taxation and Minority Interests 7 3,463,250 1,711,677
Taxation 8 (658,859) (170,149)
Net Profit before Minority Interests 2,804,391 1,541,528
Minority interests in results of subsidiaries - (63,121)
Net Profit 9 2,804,391 1,478,407
EARNINGS PER STOCK UNIT 11 $1.14 $0.60
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 35
CONSOLIDATED BALANCE SHEET30 September 2003
Restated
Notes 2003 2002
$’000 $’000
ASSETS
Cash and balances at Bank of Jamaica 12 10,641,638 7,499,096
Due from other banks 13 9,117,248 6,412,571
Trading securities 14 1,906,270 -
Reverse repurchase agreements 15 5,832,957 10,405,901
Loans and advances, net of provision for credit losses 16 26,400,147 15,282,721
Investment securities 17 78,538,460 67,293,256
Investment properties 18 28,200 17,442
Property, plant and equipment 19 3,911,816 2,466,039
Deferred tax assets 20 120,426 19,270
Retirement benefit asset 21 6,009 5,284
Income tax recoverable 87,505 -
Other assets 22 6,368,703 3,708,285
Customers’ liability on acceptances, guarantees,
indemnities and credits 2,926,786 2,110,525
Total assets 145,886,165 115,220,390
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 36
CONSOLIDATED BALANCE SHEET30 September 2003
Restated
Notes 2003 2002
$’000 $’000
LIABILITIES
Due to other banks 23 6,257,208 2,217,348
Customer deposits 69,688,968 63,365,179
Derivative financial instruments 24 128,909 139,230
Promissory notes and certificates of participation 10,119,549 11,089,137
Repurchase agreements 29,624,741 11,897,440
Obligations under credit card and cash
advance securitization arrangements 24 4,576,979 4,848,691
Other borrowed funds 25 1,129,249 1,564,085
Income tax payable 234,569 149,339
Deferred tax liabilities 20 437,966 237,411
Policyholders’ liabilities 4,287,658 3,217,521
Other liabilities 26 3,423,494 2,258,450
Retirement benefit obligations 21 178,257 154,557
Liability on acceptances, guarantees,
indemnities and credits 2,926,786 2,110,525
Total liabilities 133,014,333 103,248,913
STOCKHOLDERS’ EQUITY
Share capital 28 2,466,763 2,466,763
Share premium 4,453,752 4,453,752
Fair value and other reserves 29 (270,773) 340,244
Loan loss reserve 30 72,891 83,674
Banking reserve fund 31 1,078,000 759,000
Retained earnings reserve 32 1,218,761 911,897
Retained earnings 3,852,438 2,956,147
Total stockholders’ equity 12,871,832 11,971,477
Total equity and liabilities 145,886,165 115,220,390
Approved for issue by the Board of Directors on 18 December 2003 and signed on its behalf by:
..............................................................................................................Michael Lee-Chin Chairman
..............................................................................................................Aubyn R. Hill Managing Director
..............................................................................................................Kris S.A.C. Astaphan Deputy Chairman
..............................................................................................................Jennifer Dewdney Kelly (Mrs.) Secretary
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 37
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITYYear ended 30 September 2003
Shar
eFa
ir V
alue
Loan
Bank
ing
Ret
aine
d
Shar
e
Shar
eR
edem
ptio
n
and
Oth
er
Loss
R
eser
ve
Ea
rnin
gs
Ret
aine
d N
ote
Cap
ital
Prem
ium
Res
erve
Fun
d
R
eser
ves
R
eser
ve
Fund
R
eser
ve
Earn
ings
Tota
l
$’00
0
$’00
0
$’00
0
$’00
0
$’
000
$’00
0
$’
000
$’00
0
$’
000
Bala
nce
as a
t 1
Oct
ober
200
1,as
res
tate
d43
(a)
1,97
3,41
0
4,
453,
752
45
0,00
0
32
8,96
9
36
0,41
9
53
0,00
0
911,
897
1,88
1,53
210
,889
,979
Cur
renc
y tr
ansla
tion
diffe
renc
es
-
-
-
26,7
08
-
-
-
-
26
,708
Unr
ealis
ed g
ains
/(lo
sses
) on
ava
ilabl
e-fo
r-sal
e
inve
stm
ents
,net
of t
axes
-
-
-
(45,
445)
-
-
-
-
(4
5,44
5)
Recl
assif
ied
and
repo
rted
in p
rofit
-
-
-
(70,
710)
-
-
-
-
(70,
710)
Net
gai
ns/(
loss
es)
not
reco
gnise
d in
Con
solid
ated
Pro
fit a
nd L
oss
Acc
ount
-
-
-(8
9,44
7)
-
-
- -
(8
9,44
7)
Net
pro
fit,a
s re
stat
ed
43(c
)
-
-
-
-
-
-
-1,
478,
407
1,47
8,40
7
Bonu
s iss
ue o
f sha
res
493,
353
-
(4
50,0
00)
-
-
-(4
3,35
3)
-
Div
iden
ds p
aid
-
-
-
-
-
-
(340
,413
)
(3
40,4
13)
Oth
er
-
-
-
32
,951
-
-
-
-
32,9
51
Tran
sfer
from
Loa
n Lo
ss R
eser
ve
-
-
-
-
(276
,745
)
-
-
27
6,74
5
-
Tran
sfer
to
Bank
ing
Rese
rve
Fund
-
-
-
-
-
229,
000
-
(229
,000
)
-
Reta
ined
ear
ning
s ca
pita
lised
-
-
-
67
,771
-
-
-
(6
7,77
1)
-
Bala
nce
at 3
0 Se
ptem
ber
2002
,as
rest
ated
43(b
)
2,
466,
763
4,45
3,75
2
-
340,
244
83,6
74
75
9,00
0
91
1,89
7
2,
956,
147
11
,971
,477
Cur
renc
y tr
ansla
tion
diffe
renc
es
-
-
-
71,7
14
-
-
-
-
71,7
14
Unr
ealis
ed g
ains
/(lo
sses
) on
ava
ilabl
e-fo
r-sal
e
inve
stm
ents
,net
of t
axes
-
-
-
(6
69,6
70)
-
-
-
-
(6
69,6
70)
Recl
assif
ied
and
repo
rted
in p
rofit
-
-
-
(48,
031)
-
-
-
-
(4
8,03
1)
Net
gai
ns/(
loss
es)
not
reco
gnise
d in
Con
solid
ated
Pro
fit a
nd L
oss
Acc
ount
-
-
-
(645
,987
)
-
-
-
-
(6
45,9
87)
Net
pro
fit
-
-
-
-
-
-
-
2,
804,
391
2,80
4,39
1
Div
iden
ds p
aid
-
-
-
-
-
-
-
(1,2
58,0
49)
(1,2
58,0
49)
Bonu
s iss
ue o
f sha
res
in s
ubsid
iary
-
-
-
34
,970
-
-
-
(34,
970)
-
Tran
sfer
from
Loa
n Lo
ss R
eser
ve
-
-
-
-
(10,
783)
-
-
10,7
83
-
Tran
sfer
to
Bank
ing
Rese
rve
Fund
-
-
-
-
-
31
9,00
0
-
(319
,000
)
-
Tran
sfer
to
Reta
ined
Ear
ning
s Re
serv
e
-
-
-
-
-
-
30
6,86
4
(3
06,8
64)
-
Bala
nce
at 3
0 Se
ptem
ber
2003
2,46
6,76
3
4,
453,
752
-
(270
,773
)
72
,891
1,07
8,00
0
1,
218,
761
3,85
2,43
8
12,
871,
832
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 38
CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 30 September 2003
Restated
Note 2003 2002
$’000 $’000
Cash Flows from Operating Activities
Net cash provided by operating activities 33 14,919,932 943,158
Cash Flows from Investing Activities
Acquisition of minority interest in subsidiary - (167,755)
Acquisition of property, plant and equipment (1,939,836) (1,197,760)
Proceeds from disposal of property, plant and equipment 6,257 55,615
Investment securities (12,609,420) (471,477)
Investment properties (8,445) (1,442)
Net cash used in investing activities (14,551,444) (1,782,819)
Cash Flows from Financing Activities
Drawdowns under credit card and cash advance
securitization arrangements - 1,521,582
Repayments under credit card and cash advance
securitization arrangements (1,261,019) (918,446)
Other borrowed funds (441,620) (141,417)
Dividends paid (1,258,049) (340,413)
Net cash (used in)/provided by financing activities (2,960,688) 121,306
Effect of exchange rate changes on cash and cash equivalents 917,506 364,574
Net decrease in cash and cash equivalents (1,674,694) (353,781)
Cash and cash equivalents at beginning of year 7,753,387 8,107,168
Cash and cash equivalents at end of year 6,078,693 7,753,387
Comprising:
Cash and balances at Bank of Jamaica 12 1,943,097 1,880,998
Due from other banks 13 9,117,248 6,412,571
Investment securities 17 1,275,556 1,677,166
Due to other banks 23 (6,257,208) (2,217,348)
6,078,693 7,753,387
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 39
PROFIT AND LOSS ACCOUNTYear ended 30 September 2003
Restated
Note 2003 2002
$’000 $’000
Operating Revenue
Interest income from loans 2,991,444 1,808,081
Interest income from securities 9,488,932 7,326,692
Total interest income 12,480,376 9,134,773
Interest expense (6,981,076) (5,501,750)
Net interest income 5,499,300 3,633,023
Net fee and commission income 4 1,167,725 1,042,152
Net trading income 5 2,776,900 829,528
Other operating income 36,196 67,357
9,480,121 5,572,060
Operating Expenses
Staff costs 6 3,866,189 2,718,962
Provision for credit losses 16 203,749 (193,142)
Depreciation 471,742 270,768
Other operating expenses 2,387,787 1,737,818
6,929,467 4,534,406
Profit before Taxation 7 2,550,654 1,037,654
Taxation 8 (421,119) (59,542)
Net Profit 2,129,535 978,112
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 40
BALANCE SHEET30 September 2003
Restated
Notes 2003 2002
$’000 $’000
ASSETS
Cash and balances at Bank of Jamaica 12 10,577,615 7,431,904
Due from other banks 13 9,441,706 6,391,698
Reverse repurchase agreements 15 570,538 2,528,592
Loans and advances, net of provision for credit losses 16 26,274,740 15,087,629
Investment securities 17 58,366,965 51,055,585
Investments in subsidiaries 1,456,970 1,456,970
Property, plant and equipment 19 3,793,908 2,405,985
Income tax recoverable 87,505 -
Other assets 22 4,505,131 2,766,352
Customers’ liability on acceptances, guarantees,
indemnities and credits 2,926,786 2,283,296
Total Assets 118,001,864 91,408,011
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 41
BALANCE SHEET30 September 2003
RestatedNotes 2003 2002
$’000 $’000
LIABILITIESDue to other banks 23 6,257,208 2,088,944
Customer deposits 70,671,943 63,394,550
Derivative financial instruments 24 128,909 139,230
Repurchase agreements 17,858,101 4,375,871
Obligations under credit card and cash advance
securitization arrangements 24 4,576,979 4,848,691
Other borrowed funds 25 1,165,392 1,376,867
Income tax payable - 139,943
Deferred tax liabilities 20 422,349 163,491
Other liabilities 26 2,371,185 1,472,774
Retirement benefit obligations 21 178,257 154,557
Liability on acceptances, guarantees,
indemnities and credits 2,926,786 2,283,296
Total liabilities 106,557,109 80,438,214
STOCKHOLDERS’ EQUITYShare capital 28 2,466,763 2,466,763
Share premium 3,998,968 3,998,968
Fair value and other reserves 29 41,604 438,132
Loan loss reserve 30 72,891 83,674
Banking reserve fund 31 1,078,000 759,000
Retained earnings reserve 32 1,218,761 911,897
Retained earnings 2,567,768 2,311,363
Total stockholders’ equity 11,444,755 10,969,797
Total equity and liabilities 118,001,864 91,408,011
Approved for issue by the Board of Directors on 18 December 2003 and signed on its behalf by:
..............................................................................................................Michael Lee-Chin Chairman
..............................................................................................................Aubyn R. Hill Managing Director
................................................................................................................Kris S.A.C. Astaphan Deputy Chairman
................................................................................................................Jennifer Dewdney Kelly (Mrs.) Secretary
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 42
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITYYear ended 30 September 2003
Shar
eFa
ir V
alue
Loan
Ba
nkin
g
Ret
aine
d
Shar
e
Shar
eR
edem
ptio
n
and
Oth
er
Loss
R
eser
ve
Ea
rnin
gs
Ret
aine
d N
ote
Cap
ital
Prem
ium
Res
erve
Fun
d
R
eser
ves
R
eser
ve
Fund
R
eser
ve
Earn
ings
Tota
l
$’00
0
$’00
0
$’00
0
$’00
0
$’
000
$’00
0
$’
000
$’00
0
$’
000
Bala
nce
as a
t 1
Oct
ober
200
1,as
res
tate
d43
(a)
1,
973,
410
3,
998,
968
45
0,00
0
50
4,25
9
36
0,41
9
53
0,00
0
911,
897
1,
669,
272
1
0,39
8,22
5
Unr
ealis
ed g
ains
/(lo
sses
) on
ava
ilabl
e-fo
r-sal
e
inve
stm
ents
,net
of t
axes
-
-
-
(29,
328)
-
-
-
-
(2
9,32
8)
Recl
assif
ied
and
repo
rted
in p
rofit
-
-
- (3
6,79
9)
-
-
-
-
(36,
799)
Net
gai
ns/(
loss
es)
not
reco
gnise
d in
Prof
it an
d Lo
ss A
ccou
nt
-
-
-
(6
6,12
7)
-
-
-
-
(6
6,12
7)
Net
pro
fit,a
s re
stat
ed
43
(c)
-
-
-
-
-
-
-
97
8,11
2
978,
112
Bonu
s Iss
ue o
f sha
res
49
3,35
3
-
(450
,000
)
-
-
-
-
(43,
353)
-
Div
iden
ds p
aid
-
-
-
-
-
-
-
(3
40,4
13)
(340
,413
)
Tran
sfer
from
Loa
n Lo
ss R
eser
ve
-
-
-
-
(2
76,7
45)
-
-
27
6,74
5
-
Tran
sfer
to
Bank
ing
Rese
rve
Fund
-
-
-
-
-
22
9,00
0
-
(229
,000
)
-
Bala
nce
at 3
0 Se
ptem
ber
2002
,as
rest
ated
43(b
)
2,46
6,76
3
3,99
8,96
8
-
438,
132
83
,674
759,
000
91
1,89
7
2,31
1,36
3
10,
969,
797
Unr
ealis
ed g
ains
/(lo
sses
) on
ava
ilabl
e-fo
r-sal
e
inve
stm
ents
,net
of t
axes
-
-
-
(3
69,5
09)
-
-
-
-
(3
69,5
09)
Recl
assif
ied
and
repo
rted
in p
rofit
-
-
-
(2
7,01
9)
-
-
-
-
(2
7,01
9)
Net
gai
ns/(
loss
es)
not
reco
gnise
d in
Prof
it an
d Lo
ss A
ccou
nt
-
-
-
(3
96,5
28)
-
-
-
-
(3
96,5
28)
Net
pro
fit
-
-
-
-
-
-
-
2,
129,
535
2,
129,
535
Div
iden
ds p
aid
-
-
-
-
-
-
-
(1,2
58,0
49)
(1
,258
,049
)
Tran
sfer
from
Loa
n Lo
ss R
eser
ve
-
-
-
-
(1
0,78
3)
-
-
10,7
83
-
Tran
sfer
to
Reta
ined
Ear
ning
s Re
serv
e
-
-
-
-
-
306,
864
(3
06,8
64)
-
Tran
sfer
to
Bank
ing
Rese
rve
Fund
-
-
-
-
-
319,
000
-
(3
19,0
00)
-
Bala
nce
at 3
0 Se
ptem
ber
2003
2,46
6,76
3
3,
998,
968
-
41
,604
72,8
91
1,
078,
000
1,21
8,76
1
2,
567,
768
11
,444
,755
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 43
STATEMENT OF CASH FLOWSYear ended 30 September 2003
Restated
Note 2003 2002
$’000 $’000
Cash Flows from Operating Activities
Net cash provided by/(used in) operating activities 33 8,310,635 (2,315,211)
Cash Flows from Investing Activities
Investment in subsidiaries - (167,755)
Acquisition of property, plant and equipment (1,830,552) (1,149,378)
Proceeds from disposal of property, plant and equipment 4,917 23,113
Investment securities (5,977,359) 2,820,440
Net cash (used in)/provided by investing activities (7,802,994) 1,526,420
Cash Flows from Financing Activities
Drawdowns under credit card and cash advance
securitization arrangements - 1,521,582
Repayments under credit card and cash advance
securitization arrangements (1,261,019) (918,446)
Other borrowed funds (218,259) (160,599)
Dividends paid (1,258,049) (340,413)
Net cash (used in)/provided by financing activities (2,737,327) 102,124
Effect of exchange rate changes on cash and cash equivalents 903,483 363,697
Net decrease in cash and cash equivalents (1,326,203) (322,970)
Cash and cash equivalents at beginning of year 7,665,331 7,988,301
Cash and cash equivalents at end of year 6,339,128 7,665,331
Comprising:
Cash and balances at Bank of Jamaica 12 1,879,074 1,813,806
Due from other banks 13 9,441,706 6,391,698
Investment securities 17 1,275,556 1,548,771
Due to other banks 23 (6,257,208) (2,088,944)
6,339,128 7,665,331
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 44
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
1. Identification and Principal Activities
National Commercial Bank Jamaica Limited (“the Bank”) is incorporated in Jamaica and licensed under the BankingAct, 1992. The Bank is a 75% subsidiary of AIC (Barbados) Limited. The ultimate parent company is PortlandHoldings Inc., incorporated in Canada. The Bank’s registered office is located at 32 Trafalgar Road, Kingston 10,Jamaica.
The Bank is listed on the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange.
The Bank’s subsidiaries, which together with the Bank are referred to as “the Group”, are as follows:
Principal Activities Percentage ownership by Bank
30 September 2003
Data-Cap Processing Limited Data Processing 100
NCB Capital Markets Limited Primary Dealer and Stock 100
(formerly Edward Gayle and Company Limited) Broker
Mutual Security Insurance Brokers Limited Insurance Brokers 100
NCB (Cayman) Limited Commercial Banking 100
N.C.B. (Investments) Limited Money Market Trading 100
N.C.B. Jamaica (Nominees) Limited Securities’ Nominee 100
NCB Insurance Company Limited Life Insurance 100
West Indies Trust Company Limited Investment and Pension Fund 100
Management and Trustee Services
Senvia Money Services (UK) Limited Money Remittance 100
(formerly N.C.B. Remittance Services Limited)
All subsidiaries are incorporated in Jamaica with the exception of NCB (Cayman) Limited and Senvia MoneyServices (UK) Limited, which are incorporated in the Cayman Islands and the United Kingdom, respectively.
All amounts are stated in Jamaican dollars unless otherwise indicated.
2. Significant Accounting Policies
(a) Basis of preparationThese financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS), and have been prepared under the historical cost convention as modified by the revaluationof available-for-sale investment securities, investment securities held for trading, derivative contracts,investment property and certain fixed assets.
Jamaica adopted IFRS as its national accounting standards for accounting periods beginning on or after 1 July2002. The financial statements for the year ended 30 September 2003 have therefore been prepared inaccordance with IFRS and comparative information has been restated to conform with the provisions ofIFRS. In particular, the Group has opted for early adoption of IFRS 1, First-time Adoption of InternationalFinancial Reporting Standards and has applied the provisions of that standard in the preparation of thesefinancial statements. The effects of adopting IFRS on the equity and net profit as previously reported aredetailed in Note 43.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 45
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
2. Significant Accounting Policies (Continued)
(a) Basis of preparation (Continued)The preparation of financial statements in conformity with IFRS requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of revenue and expenses duringthe reporting period. Actual results could differ from those estimates.
(b) ConsolidationThe consolidated financial statements comprise those of the Bank and its subsidiaries presented as a singleeconomic entity. Intra-group transactions, balances and unrealised gains and losses are eliminated inpreparing the consolidated financial statements.
(c) Foreign currency translationForeign currency transactions are accounted for at the exchange rates prevailing at the dates of thetransactions. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies aretranslated using the closing exchange rate. These rates represent the weighted average rates at which theBank trades in foreign currencies.
Exchange differences resulting from the settlement of transactions at rates different from those at the datesof the transactions, and unrealised foreign exchange differences on unsettled foreign currency monetaryassets and liabilities are recognised in the profit and loss account.
Exchange differences on non-monetary financial assets are a component of the change in their fair value.Depending on the classification of a non-monetary financial asset, exchange differences are either recognisedin the profit and loss account (applicable for trading securities), or within stockholders’ equity if non-monetary financial assets are classified as available-for-sale.
Assets and liabilities of foreign subsidiaries are translated at exchange rates at the balance sheet date, whileprofit and loss account and cash flow items are translated at average rates over the year. Differences resultingfrom the use of these different exchange rates are reflected in fair value and other reserves withinstockholders’ equity.
(d) Interest and feesInterest income and expense are recognised in the profit and loss account for all interest-bearing instrumentson an accrual basis using the effective yield method based on the actual purchase price. Interest incomeincludes coupons earned on fixed income investments and accrued discount or premium on treasury billsand other discounted instruments.
Jamaican banking regulations stipulate that, where collection of interest income is considered doubtful orpayment is outstanding for 90 days or more, interest should be taken into account on the cash basis. IFRSrequire that when loans become doubtful of collection, they are written down to their recoverable amountsand interest income is thereafter recognised based on the rate of interest that was used to discount thefuture cash flows for the purpose of measuring the recoverable amount. The difference between theregulatory and IFRS bases of interest recognition was assessed to be immaterial.
Fee and commission income is recognised on an accrual basis. Loan origination fees for loans which are likelyto be drawn down are deferred, together with related direct costs, and recognised as an adjustment to theeffective yield on the loan. Fees and commissions arising from negotiating or participating in the negotiationof a transaction for a third party are recognised on completion of the underlying transaction.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 46
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
2. Significant Accounting Policies (Continued)
(e) InvestmentsInvestments are classified into the following categories: trading securities, originated loans, and available-for-sale securities. Management determines the appropriate classification of investments at the time of purchase.
Trading securities are those which were either acquired for generating a profit from short-term fluctuationsin price or dealer’s margin, or are securities included in a portfolio in which a pattern of short-term profit-taking exists. They are initially recognised at cost, which includes transaction costs, and subsequentlyremeasured at fair value based on quoted bid prices. All related realised and unrealised gains and losses areincluded in net trading income.
Originated debt securities include those where money is provided to the issuer, either directly or throughan intermediary, other than those that are originated with the intent to be sold immediately or in the short-term, which are recorded as trading securities. They are initially recorded at cost, which is the cash given tooriginate the debt including any transaction costs, and subsequently measured at amortised cost using theeffective interest rate method.
Available-for-sale securities are those intended to be held for an indefinite period of time and which may besold in response to needs for liquidity or changes in interest rates, foreign exchange rates or market prices.They are initially recognised at cost, which includes transaction costs, and subsequently remeasured at fairvalue based on quoted bid prices or amounts derived from cash flow models. Unrealised gains and lossesarising from changes in fair value of available-for-sale securities are recognised in stockholders’ equity. Whenthe securities are disposed of or impaired, the related accumulated unrealised gains or losses included instockholders’ equity are transferred to the profit and loss account.
A financial asset is considered impaired if its carrying amount exceeds its estimated recoverable amount. Theamount of the impairment loss for assets carried at amortised cost is calculated as the difference betweenthe asset’s carrying amount and the present value of expected future cash flows discounted at the originaleffective interest rate. The recoverable amount of a financial asset carried at fair value is the present valueof expected future cash flows discounted at the current market interest rate for a similar financial asset.
All purchases and sales of investment securities are recognised at settlement date.
(f) Repurchase and reverse repurchase transactionsSecurities sold under agreements to repurchase (repurchase agreements) and securities purchased underagreements to resell (reverse repurchase agreements) are treated as collateralised financing transactions.Thedifference between the sale/purchase and repurchase/resale price is treated as interest and accrued over thelife of the agreements using the effective yield method.
(g) DerivativesDerivative instruments are initially recognised in the balance sheet at cost (including transaction costs) andsubsequently are remeasured at their fair value. Fair values are obtained from quoted market prices,discounted cash flow models and option pricing models as appropriate. All derivatives are carried as assetswhen fair value is positive and as liabilities when fair value is negative.
Changes in the fair value of derivatives held for trading are included in net trading income. Derivativetransactions which, while providing effective economic hedges under the Group’s risk management positions,do not qualify for hedge accounting under the specific rules in IAS 39 are treated as derivatives held fortrading with fair value gains and losses reported in income.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 47
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
2. Significant Accounting Policies (Continued)
(h) Loans and provisions for credit lossesLoans are recognised when cash is advanced to borrowers. They are initially recorded at cost, which is thecash given to originate the loan including any transaction costs and subsequently measured at amortised costusing the effective interest rate method.
A provision for credit losses is established if there is objective evidence that a loan is impaired. A loan isconsidered impaired when management determines that it is probable that all amounts due according to theoriginal contractual terms will not be collected. When a loan has been identified as impaired, the carryingamount of the loan is reduced by recording specific provisions for credit losses to its estimated recoverableamount, which is the present value of expected future cash flows including amounts recoverable fromguarantees and collateral, discounted at the original effective interest rate of the loan.
The provision for credit losses also covers situations where there is objective evidence that probable lossesare present in components of the loan portfolio at the balance sheet date. These have been estimated basedupon historical patterns of losses in each component, the credit ratings allocated to the borrowers andreflecting the current economic climate in which the borrowers operate.
For non-performing and impaired loans the accrual of interest income based on the original terms of theloan is discontinued. Jamaican banking regulations require that interest on non-performing loans be takeninto account on the cash basis. IFRS require the increase in the present value of impaired loans due to thepassage of time to be reported as interest income. The difference between the Jamaican regulatory basisand IFRS was assessed to be immaterial.
Write-offs are made when all or part of a loan is deemed uncollectible or in the case of debt forgiveness.Write-offs are charged against previously established provisions for credit losses and reduce the principalamount of a loan. Recoveries in part or in full of amounts previously written-off are credited to credit lossexpense in the profit and loss account.
Statutory and other regulatory loan loss reserve requirements that exceed these amounts are dealt with ina non-distributable loan loss reserve as an appropriation of retained earnings.
(i) Investment propertyInvestment property is held for long-term rental yields and is not occupied by the Group. Investmentproperty is treated as a long-term investment and is carried at fair value, representing open market valuedetermined annually by external valuers. Changes in fair values are recorded in the profit and loss account.
(j) Investments in subsidiariesInvestments by the Bank in subsidiaries are stated at cost.
(k) Property, plant and equipmentLand and buildings, except for investment property, are shown at deemed cost, less subsequent depreciationfor buildings. Under IFRS1, a first-time adopter may elect to use a previous GAAP revaluation of an item ofproperty, plant and equipment as its deemed cost. The Group has elected to apply this provision. All otherproperty, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses.
Depreciation is calculated on the straight-line basis at annual rates that will write off the carrying value ofeach asset over the period of its expected useful life.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 48
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
2. Significant Accounting Policies (Continued)
(k) Property, plant and equipment (Continued)Annual depreciation rates are as follows:
Freehold buildings 2 - 5%Leasehold improvements Period of leaseComputer equipment and software 20 - 331/3%Office equipment and furniture 20%Other equipment 10%Motor vehicles 20 - 25%Leased assets Shorter of period of lease or useful life of asset
Land is not depreciated.
Property, plant and equipment are periodically reviewed for impairment.Where the carrying amount of anasset is greater than its estimated recoverable amount, it is written down immediately to its recoverableamount.
Gains or losses on disposal of fixed assets are determined by reference to their carrying amount and aretaken into account in determining operating profit. Repairs and renewals are charged to the profit and lossaccount when the expenditure is incurred.
(l) BorrowingsBorrowings including those arising under securitization arrangements are recognised initially at cost, beingtheir issue proceeds, net of transaction costs incurred. Subsequently, borrowings are stated at amortised costand any difference between net proceeds and the redemption value is recognised in the profit and lossaccount over the period of the borrowings using the effective yield method.
(m) Employee benefits (i) Pension asset
The Bank and its subsidiaries operate a number of retirement plans, the assets of which are generallyheld in separate trustee-administered funds. The pension plans are funded by payments fromemployees and by the relevant companies, taking into account the recommendations of independentqualified actuaries.
The asset or liability in respect of defined benefit plans is the difference between the present value ofthe defined benefit obligation at the balance sheet date and the fair value of plan assets, adjusted forunrecognised actuarial gains/losses and past service cost. Where a pension asset arises, the amountrecognised is limited to the net total of any cumulative unrecognised net actuarial losses and pastservice cost and the present value of any economic benefits available in the form of refunds from theplan or reduction in future contributions to the plan. The pension costs are assessed using theprojected unit credit method. Under this method, the cost of providing pensions is charged to theprofit and loss account so as to spread the regular cost over the service lives of the employees inaccordance with the advice of the actuaries, who carry out a full valuation of the plans every year.The pension obligation is measured at the present value of the estimated future cash outflows usingdiscount estimated rates based on market yields on government securities which have terms tomaturity approximating the terms of the related liability.
A portion of actuarial gains and losses is recognised in the profit and loss account if the net cumulativeunrecognised actuarial gains or losses at the end of the previous reporting period exceeded 10percent of the greater of the present value of the gross defined benefit obligation and the fair valueof plan assets at that date. Any excess actuarial gains or losses are recognised in the profit and lossaccount over the average remaining service lives of the participating employees.
Contributions to defined contribution plans are charged to the profit and loss account in the periodto which they relate.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 49
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
2. Significant Accounting Policies (Continued)
(m) Employee benefits (Continued) (ii) Other post-retirement obligations
Group companies provide post-retirement health care benefits to their retirees. The entitlement forthese benefits is usually based on the employee remaining in service up to retirement age and thecompletion of a minimum service period. The expected costs of these benefits are accrued over theperiod of employment, using a methodology similar to that for defined benefit pension plans.Valuations of these obligations are carried out annually by independent qualified actuaries.
(n) Leases(i) As Lessee
Leases of property, plant and equipment where the Group has substantially all the risks and rewardsof ownership are classified as finance leases. Finance leases are capitalised at the inception of the leaseat the lower of the fair value of the leased asset or the present value of minimum lease payments.Each lease payment is allocated between the liability and interest charges so as to produce a constantrate of charge on the lease obligation. The interest element of the lease payments is charged to theprofit and loss account over the lease period.
Leases where a significant portion of the risks and rewards of ownership are retained by the lessorare classified as operating leases. Payments under operating leases are charged to the profit and lossaccount on a straight-line basis over the period of the lease.
(ii) As Lessor When assets are leased out under a finance lease, the present value of the lease payments isrecognised as a receivable. The difference between the gross receivable and the present value of thereceivable is recognised as unearned finance income. Lease income is recognised over the term ofthe lease in a manner which reflects a constant periodic rate of return on the net investment in thelease.
Assets leased out under operating leases are included in property, plant and equipment in the balancesheet. They are depreciated over their expected useful lives on a basis consistent with similar ownedassets. Rental income is recognised on a straight-line basis over the lease term.
(o) Deferred income taxesDeferred tax liabilities are recognised for temporary differences between the carrying amounts of assets andliabilities and their amounts as measured for tax purposes, which will result in taxable amounts in futureperiods. Deferred tax is provided on temporary differences arising from investments in subsidiaries, exceptwhere the timing of reversal of the temporary difference can be controlled and it is probable that thedifference will not reverse in the foreseeable future. Deferred tax assets are recognised for temporarydifferences which will result in deductible amounts in future periods, but only to the extent it is probable thatsufficient taxable profits will be available against which these differences can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period inwhich the asset will be realised or the liability will be settled based on enacted rates.
Current and deferred tax assets and liabilities are offset when they arise from the same taxable entity, relateto the same tax authority and when the legal right of offset exists.
Current and deferred taxes are recognised as income tax expense or benefit in the profit and loss accountexcept, where they relate to items recorded in stockholders’ equity, they are also charged or credited tostockholders’ equity.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 50
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
2. Significant Accounting Policies (Continued)
(p) Policyholders’ liabilitiesPolicyholders’ liabilities are determined annually by an independent actuary using the Policy Premium Methodof valuation. It represents the liability for future benefits payable by the Group based on contracts for thelife assurance business in force at the balance sheet date. These benefits represent the amount which,together with future premiums and investment returns will, in the opinion of the actuary, be sufficient to payfuture benefits relating to contracts of insurance in force, as well as meet the expenses incurred inconnection with such contracts. Allowance is made for interest, mortality and other assumptions consideredto be appropriate to include in the liabilities of the Group under the terms of its policy contracts in force.
(q) ProvisionsProvisions are recognised when there is a present legal or constructive obligation as a result of past events,it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate ofthe amount of the obligation can be made.
(r) Cash and cash equivalentsFor the purpose of the cash flow statement, cash and cash equivalents comprise balances with less than 90days maturity from the date of acquisition including cash and balances at Bank of Jamaica (excluding statutoryreserves), due from other banks, investment securities and due to other banks.
(s) Acceptances, guarantees, indemnities and creditsThe potential liability under acceptances guarantees, indemnities and credits is reported as a liability in thebalance sheet. There are equal and offsetting claims against customers in the event of a call on thesecommitments, which are reported as an asset.
(t) Fiduciary activitiesAssets and income arising thereon together with related undertakings to return such assets to customersare excluded from these financial statements where the Bank or its subsidiaries act in a fiduciary capacitysuch as nominee, trustee or agent.
(u) Comparative informationWhere necessary, comparative figures have been reclassified to conform with changes in presentation in thecurrent year. In particular, comparatives have been adjusted to take into account the requirements of IFRS(Note 43).
3. Segment Reporting
The Group is organised into three main business segments:
(a) Banking - This incorporates retail and corporate banking services.
(b) Wealth management - This incorporates investment management, pension fund management and trusteeservices.
(c) Insurance - This incorporates life insurance and insurance brokerage services.
Other operations of the Group include data processing and money remittance services.
Transactions between the business segments are on normal commercial terms and conditions.
The Group’s operations are located mainly in Jamaica. The operations of subsidiaries located overseas accountfor less than 10 per cent of the Group’s external operating revenue, assets and capital expenditures.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 51
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
3. Segment Reporting (Continued)
Year ended Wealth 30 September 2003 Banking Management Insurance Other Eliminations Consolidated
$’000 $’000 $’000 $’000 $’000 $’000
External operating revenue 16,506,432 4,485,574 745,667 4,809 - 21,742,482
Operating revenue from other segments 59,549 1,634,614 188,115 37,748 (1,920,026) -
Operating revenue 16,565,981 6,120,188 933,782 42,557 (1,920,026) 21,742,482
Segment result 2,615,548 747,688 205,397 (10,436) (94,947) 3,463,250Tax (658,859)Net profit 2,804,391
Segment assets 119,416,086 36,783,329 4,761,732 172,306 (15,247,288) 145,886,165
Segment liabilities 106,037,727 34,749,981 4,426,838 163,031 (12,363,244) 133,014,333
Capital expenditure 1,934,850 62,973 10,371 2,000 - 2,010,194Depreciation 472,497 9,721 8,967 3,725 - 494,910Amortisation 107,342 - - - - 107,342
Year ended Wealth 30 September 2002 Banking Management Insurance Other Eliminations Consolidated
$’000 $’000 $’000 $’000 $’000 $’000
External operating revenue 10,888,947 2,854,574 516,087 4,861 - 14,264,469
Operating revenue from other segments 239,609 957,705 69,684 24,207 (1,291,205) -
Operating revenue 11,128,556 3,812,279 585,771 29,068 (1,291,205) 14,264,469
Segment result 1,048,257 557,699 96,746 8,975 - 1,711,677Tax (170,149)Profit before minority
interests 1,541,528Minority interests (63,121)Net profit 1,478,407
Segment assets 92,205,438 27,596,384 3,560,878 50,523 (8,192,833) 115,220,390
Segment liabilities 80,851,446 26,433,512 3,274,661 28,156 (7,338,862) 103,248,913
Capital expenditure 1,209,944 41,440 4,708 - - 1,256,092Depreciation 272,130 9,574 9,200 93 - 290,997Amortisation 98,789 - - - - 98,789
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 52
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
4. Net Fee and Commission Income
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Fee and commission income:
Retail banking fees 527,866 491,251 524,430 489,725
Credit related fees 1,005,187 694,873 1,005,187 694,873
Other fees 189,232 184,552 46,262 61,650
1,722,285 1,370,676 1,575,879 1,246,248
Fee and commission expenses (413,924) (199,416) (408,154) (204,096)
1,308,361 1,171,260 1,167,725 1,042,152
5. Net Trading Income
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Foreign exchange translation and trading 1,971,850 743,553 1,929,809 707,158
Fixed income 92,991 385,094 73,238 122,370
Equities 843,868 2,023 773,853 -
2,908,709 1,130,670 2,776,900 829,528
Foreign exchange translation and trading income includes gains and losses arising from translation of assets and liabilitiesdenominated in foreign currency as well as those arising from foreign currency trading activity.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 53
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
6. Staff Costs
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Wages and salaries 2,847,140 2,123,436 2,559,193 1,961,295
Statutory contributions 278,423 218,037 262,552 203,063
Pension costs - defined contribution plans 95,025 75,374 91,166 72,677
Pension costs - defined benefit plans 342 (300) - -
Allowances and benefits 583,550 362,077 545,666 333,720
Staff profit share 221,059 - 221,059 -
Termination benefits 186,742 149,708 186,553 148,207
4,212,281 2,928,332 3,866,189 2,718,962
The number of persons employed as at 30 September:
The Group The Bank
2003 2002 2003 2002
Full-time 2,324 2,445 2,196 2,282
Part-time 254 315 254 289
Contract 21 46 21 33
2,599 2,806 2,471 2,604
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 54
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
7. Profit before Taxation
The following have been charged/(credited) in arriving at profit before taxation:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Directors’ emoluments -
Fees 2,141 1,648 1,236 1,111
Management remuneration 33,665 36,247 33,665 36,247
Compensation for loss of office - 37,563 - 37,563
Auditors’ remuneration 17,603 15,455 11,100 9,050
Depreciation 494,410 299,997 471,742 270,768
(Gain)/loss on disposal of property,
plant and equipment (324) (45,282) (1,242) (11,123)
Dividend income 24,776 22,270 14,204 12,137
Operating lease rentals 73,774 42,095 73,774 42,095
8. Taxation
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Current:
Income tax at 331 /3% 253,618 177,058 31,860 156,121
Premium tax at 11/2% 18,392 14,318 - -
Investment income tax at 71/2% 6,535 - - -
Tax credit on bonus issue of shares (2,825) (5,375) - -
Deferred tax (Note 20) 383,139 (15,852) 389,259 (96,579)
658,859 170,149 421,119 59,542
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 55
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
8. Taxation (Continued)
The tax on profit differs from the theoretical amount that would arise using the basic statutory rate of 33 1/3 %as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Profit before tax 3,463,250 1,711,677 2,550,654 1,037,654
Tax calculated at a tax rate of 331/3% 1,154,417 570,559 850,218 345,885
Income not subject to tax or in respect
of which tax has been remitted (676,593) (385,052) (594,820) (291,070)
Expenses not deductible for tax purposes 212,235 5,500 165,721 4,727
Effect of different tax regime applicable
to life insurance subsidiary (28,375) (15,483) - -
Effect of tax credit on bonus issue of shares (2,825) (5,375) - -
Income tax expense 658,859 170,149 421,119 59,542
(a) Tax on the life insurance business is charged on investment income, less expenses allowable in earning thatincome, at the rate of 71/2% and on premium income less reinsurance premiums at 11/2%.
(b) The tax credit on the issue of bonus shares is computed at the rate of 25% of the nominal value of theshares issued during the year. The maximum nominal value available for the credit is 50% of the after-taxprofit for the year of each company.
9. Net Profit
2003 2002
$’000 $’000
Dealt with in the financial statements of:
The Bank 2,129,535 978,112
Subsidiaries 674,856 500,295
2,804,391 1,478,407
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 56
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
10. Retained Earnings
2003 2002
$’000 $’000
Reflected in the financial statements of:
The Bank 2,567,768 2,311,363
Subsidiaries 1,284,670 644,784
3,852,438 2,956,147
11. Earnings Per Stock Unit
Basic earnings per stock unit is calculated by dividing the net profit attributable to stockholders by the weightedaverage number of ordinary stock units in issue during the year.
2003 2002
Net profit attributable to stockholders ($’000) 2,804,391 1,478,407
Weighted average number of ordinary stock units in issue (‘000) 2,466,763 2,466,763
Basic earnings per stock unit ($) 1.14 0.60
12. Cash and Balances at Bank of Jamaica
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Cash in hand and at bank 1,920,305 1,236,826 1,856,282 1,169,634
Balances with the Bank of Jamaica
other than statutory reserves 22,792 644,172 22,792 644,172
Included in cash and cash equivalents 1,943,097 1,880,998 1,879,074 1,813,806
Statutory reserves with the Bank of
Jamaica - interest-bearing 4,593,657 1,524,513 4,593,657 1,524,513
Statutory reserves with the Bank of
Jamaica - non-interest-bearing 4,104,884 4,093,585 4,104,884 4,093,585
10,641,638 7,499,096 10,577,615 7,431,904
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 57
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
12. Cash and Balances at Bank of Jamaica (Continued)
Statutory reserves with the Bank of Jamaica represent the required ratio of 9% (2002 - 9%) of prescribed liabilities.They are not available for investment, lending or other use by the Group.
Effective 15 January 2003, the Bank is required by the Bank of Jamaica under section 28A of the Bank of JamaicaAct, to maintain a special deposit wholly in the form of cash, representing 5% of prescribed liabilities. This specialdeposit earns interest at 6% per annum.
13. Due from Other Banks
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Items in course of collection
from other banks 1,615,564 521,863 1,615,564 523,830
Placements with other banks 7,501,684 5,890,708 7,826,142 5,867,868
Included in cash and cash equivalents 9,117,248 6,412,571 9,441,706 6,391,698
14. Trading Securities
The Group
2003 2002
$’000 $’000
Government of Jamaica debt securities 895,230 -
Quoted equity securities 1,011,040 -
1,906,270 -
15. Reverse Repurchase Agreements
The Group and the Bank enter into collateralised reverse repurchase agreements which may result in creditexposure in the event that the counterparty to the transaction is unable to fulfill its contractual obligations.
At 30 September 2003, the Group and the Bank held $7,441,192,000 (2002 - $10,521,897,000) and $570,538,000(2002 - $2,644,588,000), respectively of securities, mainly representing Government of Jamaica debt securities, ascollateral for reverse repurchase agreements.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 58
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
16. Loans and Advances
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Gross loans and advances 28,563,664 17,255,049 28,426,623 17,051,135
Provision for credit losses (2,163,517) (1,972,328) (2,151,883) (1,963,506)
26,400,147 15,282,721 26,274,740 15,087,629
The movement in the provision for credit losses determined under the requirements of IFRS is as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Balance at beginning of year 1,972,328 2,280,422 1,963,506 2,292,243
Provided during the year 1,906,596 409,393 1,903,784 388,750
Recoveries (1,700,035) (581,892) (1,700,035) (581,892)
Net charge/(credit) to profit 206,561 (172,499) 203,749 (193,142)
Write-offs (15,372) (135,595) (15,372) (135,595)
Balance at end of year 2,163,517 1,972,328 2,151,883 1,963,506
The aggregate amount of non-performing loans on which interest was not being accrued amounted to$1,503,254,000 as at 30 September 2003 (2002 - $1,525,898,000).
The provision for credit losses determined under Bank of Jamaica regulatory requirements is as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Specific provision 1,994,136 1,897,425 1,982,502 1,891,112
General provision 242,272 158,577 242,272 156,068
2,236,408 2,056,002 2,224,774 2,047,180
Excess of regulatory provision over IFRS
provision reflected in non-distributable
loan loss reserve (Note 30) 72,891 83,674 72,891 83,674
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 59
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
17. Investment Securities
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Originated debt securities - at amortised cost
Government of Jamaica 58,344,867 54,816,146 49,670,679 46,325,475
Foreign government 20,000 - - -
Other 725,827 2,351,347 726,915 767,035
59,090,694 57,167,493 50,397,594 47,092,510
Available-for-sale securities - at fair value
Debt securities
- Government of Jamaica 18,785,562 9,517,699 7,474,127 3,778,788
- Foreign government 175,556 - 175,556 -
- Corporate 14,370 16,888 14,370 16,888
- Other 152,578 64,996 - -
Equity securities
- Quoted 319,700 358,780 305,318 -
- Unquoted - 167,400 - 167,399
19,447,766 10,125,763 7,969,371 3,963,075
Total 78,538,460 67,293,256 58,366,965 51,055,585
The Bank of Jamaica holds as security, Government of Jamaica Local Registered Stocks valued at $2,017,151,000(2002 - $1,528,518,000) for the Group and $1,977,151,000 (2002 - $1,488,518,000) for the Bank against possibleshortfalls in the operating account.
The Financial Services Commission holds as security, Government of Jamaica Local Registered Stocks valued at$90,000,000 (2002 - $90,000,000) for the life insurance subsidiary, in accordance with Section 8(1)(B) of theInsurance Regulations 2001.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 60
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
17. Investment Securities (Continued)
Included in investment securities are the following amounts which are regarded as cash equivalents for purposesof the statement of cash flows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Debt securities with an original
maturity of less than 90 days 1,275,556 1,677,166 1,275,556 1,548,771
18. Investment Properties
The Group
2003 2002
$’000 $’000
Balance at beginning of year 17,442 16,100
Additions 8,445 1,442
Fair value gains/(losses) 2,313 (100)
Balance at end of year 28,200 17,442
The investment properties are valued annually at 30 September at fair value representing open market value byan independent professionally qualified valuer.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 61
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
19. Property, Plant and Equipment
The Group
Assets Capitalised
Freehold Furniture, Under Land and Leasehold Equipment & Finance Work-in- Buildings Improvements Software Leases progress Total
$’000 $’000 $’000 $’000 $’000 $’000
Cost -
At 1 October 2001 1,117,958 266,551 835,979 791,083 91,347 3,102,918
Additions 198,731 1,957 298,214 58,332 698,858 1,256,092
Disposals (5,477) (5,253) (11,275) (13,093) - (35,098)
Transfers 44,291 (14,180) 5,004 47,236 (82,351) -
At 30 September 2002 1,355,503 249,075 1,127,922 883,558 707,854 4,323,912
Additions 96,790 19,084 822,378 6,784 1,065,158 2,010,194
Disposals - (2,514) (9,897) (18,063) - (30,474)
Transfers 27,227 75,040 1,036,885 15,341 (1,154,493) -
Reclassification - - - - (63,574) (63,574)
At 30 September 2003 1,479,520 340,685 2,977,288 887,620 554,945 6,240,058
Accumulated
Depreciation -
At 1 October 2001 167,029 208,450 589,152 627,010 - 1,591,641
Charge for the year 24,098 11,936 151,473 103,490 - 290,997
Disposals (929) (4,990) (10,386) (8,460) - (24,765)
Transfers 14,180 (14,180) - - - -
At 30 September 2002 204,378 201,216 730,239 722,040 - 1,857,873
Charge for the year 25,414 27,836 353,500 88,160 - 494,910
Disposals - (1,996) (8,157) (14,388) - (24,541)
At 30 September 2003 229,792 227,056 1,075,582 795,812 - 2,328,242
Net Book Value -
30 September 2003 1,249,728 113,629 1,901,706 91,808 554,945 3,911,816
30 September 2002 1,151,125 47,859 397,683 161,518 707,854 2,466,039
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 62
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
19. Property, Plant and Equipment (Continued)
The Bank
Assets Capitalised
Freehold Furniture, Under Land and Leasehold Equipment & Finance Work-in- Buildings Improvements Software Leases progress Total
$’000 $’000 $’000 $’000 $’000 $’000
Cost -
At 1 October 2001 1,092,075 255,650 754,501 793,217 115,098 3,010,541
Additions 198,731 1,681 287,611 60,468 661,355 1,209,846
Disposals (5,477) - (1,905) (15,228) - (22,610)
Transfers 44,291 (14,180) 5,004 47,236 (82,351) -
At 30 September 2002 1,329,620 243,151 1,045,211 885,693 694,102 4,197,777
Additions 96,790 - 788,215 6,784 1,035,125 1,926,914
Disposals - - - (18,063) - (18,063)
Transfers 27,227 75,040 1,011,990 15,341 (1,129,598) -
Reclassification - - - - (63,574) (63,574)
At 30 September 2003 1,453,637 318,191 2,845,416 889,755 536,055 6,043,054
Accumulated
Depreciation -
At 1 October 2001 167,030 202,957 534,647 627,010 - 1,531,644
Charge for the year 24,098 7,635 135,545 103,490 - 270,768
Disposals (929) - (1,231) (8,460) - (10,620)
Transfers 14,180 (14,180) - - - -
At 30 September 2002 204,379 196,412 668,961 722,040 - 1,791,792
Charge for the year 25,414 25,416 332,752 88,160 - 471,742
Disposals - - - (14,388) - (14,388)
At 30 September 2003 229,793 221,828 1,001,713 795,812 - 2,249,146
Net Book Value -
30 September 2003 1,223,844 96,363 1,843,703 93,943 536,055 3,793,908
30 September 2002 1,125,241 46,739 376,250 163,653 694,102 2,405,985
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 63
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
19. Property, Plant and Equipment (Continued)
Included in the table above are amounts totaling $164,000,000 (2002 - $164,000,000) for the Group and the Bankrepresenting the previous Jamaican GAAP revalued amount of land and buildings which has been used as thedeemed cost of these assets under the provision of IFRS 1 (Note 2(k)).
Assets capitalised under finance leases comprise motor vehicles and computer equipment.
20. Deferred Income Taxes
Deferred income taxes are calculated on all temporary differences under the liability method using a tax rate of7.5% for the insurance subsidiary and 33 1/3% for the Bank and all other subsidiaries. Assets and liabilitiesrecognised on the balance sheet are as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Deferred income tax assets (120,426) (19,270) - -
Deferred tax liabilities 437,966 237,411 422,349 163,491
Net liability 317,540 218,141 422,349 163,491
The movement in the net deferred income tax balance is as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Net liability at beginning of year 218,141 277,565 163,491 308,167
Deferred tax (income)/expense (Note 8) 383,139 (15,852) 389,259 (96,579)
Deferred tax credited to stockholders’ equity (283,740) (43,572) (130,401) (48,097)
Net liability at end of year 317,540 218,141 422,349 163,491
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 64
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
20. Deferred Income Taxes (Continued)
Deferred income tax assets and liabilities are due to the following items:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Deferred income tax assets:
Property, plant and equipment 50 25,108 - 24,675
Investment securities 295,389 33,729 160,815 30,356
Loan loss provisions 56,460 24,131 56,460 24,131
Pensions and other
post-retirement benefits 59,419 51,519 59,419 51,519
Interest payable 425,646 149,823 - -
Interest rate swap 42,970 46,410 42,970 46,410
Tax losses carry forward 5,919 106,091 - -
Accrual for staff profit share 73,686 - 73,686 -
Other temporary differences 38,027 12,979 34,617 -
997,566 449,790 427,967 177,091
Deferred income tax liabilities:
Property, plant and equipment 159,731 1,824 157,629 -
Investment securities 8,226 29,625 - -
Obligations under securitization
arrangements 47,092 68,931 47,092 68,931
Interest receivable 446,774 294,139 - -
Unrealised foreign exchange gains 651,358 241,756 645,595 241,756
Other temporary differences 1,925 31,656 - 29,895
1,315,106 667,931 850,316 340,582
Deferred income taxes are recognised for tax losses carry forward only to the extent that realisation of the relatedtax benefit is probable. Group subsidiaries have tax losses, subject to agreement with the Commissioner ofTaxpayer Audit and Assessment, aggregating $17,757,000 (2002 - $318,273,000) available for indefinite offsetagainst future taxable income in respect of which a deferred tax asset has been recognised.
Deferred income tax liabilities have not been provided for on the withholding and other taxes that would bepayable on the undistributed earnings of certain subsidiaries to the extent that such earnings are permanentlyreinvested. Such undistributed earnings totalled $1,284,670,000 at 30 September 2003 (2002 - $644,784,000).
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 65
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
21. Retirement Benefits
(Assets)/liabilities recognised on the balance sheet are as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Pension schemes (6,009) (5,284) - -
Other post retirement benefits 178,257 154,557 178,257 154,557
Pension schemes
The Bank and its subsidiaries have established a number of pension schemes covering all permanent employees.The assets of funded plans are held independently of the Group’s assets in separate trustee administered funds.Defined benefit plans are valued by independent actuaries annually using the projected unit credit method.Thelatest actuarial valuations were carried out as at 30 September 2003.
The amounts recognised in the balance sheet are determined as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Present value of funded obligations 3,541,715 3,318,909 3,532,961 3,311,653
Fair value of plan assets (6,965,257) (6,229,192) (6,951,468) (6,217,944)
(3,423,542) (2,910,283) (3,418,507) (2,906,291)
Unrecognised actuarial gains 561,117 181,661 562,091 182,953
Limitation on asset due to uncertainty of
obtaining economic benefits 2,856,416 2,723,338 2,856,416 2,723,338
Asset in the balance sheet (6,009) (5,284) - -
Pension plan assets include:
- Ordinary stock units of the Bank with a fair value of $664,978,000 (2002 - $137,665,000).
- Repurchase obligations, promissory notes and lease obligations of the Group aggregating$1,159,475,000 (2002 - $539,325,000).
- Properties occupied by the Group with a fair value of $214,725,000 (2002 - $206,725,000).
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 66
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
21. Retirement Benefits (Continued)
The amounts recognised in the profit and loss account are as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Current service cost 420 (129) - -
Interest cost 418,666 371,320 417,586 370,657
Expected return on plan assets (551,829) (491,722) (550,664) (490,888)
Net actuarial gains recognised 7 - - -
Change in limitation on asset 133,078 120,231 133,078 120,231
Total, included in staff costs (note 6) 342 (300) - -
The actual return on plan assets was $934,182,000 (2002 - $854,337,000) and $932,436,000 (2002 -$853,161,000) for the Group and the Bank, respectively.
Movements in the amounts recognised in the balance sheet:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
(Asset)/liability at beginning of year (5,284) (3,669) - -
Total expense/(income), as above 342 (300) - -
Contributions paid (1,067) (1,315) - -
(Asset)/liability at end of year (6,009) (5,284) - -
The principal actuarial assumptions used were as follows:
The Group The Bank
2003 2002 2003 2002
Discount rate 15.0% 13.0% 15.0% 13.0%
Expected return of plan assets 10.5% 9.0 - 10.0% 10.5% 9.0%
Future salary increases 10.0% 8.0 - 10.0% 10.0% 8.0%
Future pension increases 0 - 6.5% 0 - 2.5% 6.5% 2.5%
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 67
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
21. Retirement Benefits (Continued)
Other post-retirement benefits
In addition to pension benefits, the Bank and its subsidiaries offer retiree medical and life insurance benefits thatcontribute to the health care and life insurance coverage of employees and beneficiaries after retirement. Themethod of accounting and frequency of valuations are similar to those used for defined benefit pension schemes.
In addition to the assumptions used for pension schemes, the main actuarial assumption is a long-term increase inhealth costs of 13% per year (2002 - 11.5%).
The amounts recognised in the balance sheet are determined as follows:
The Group and The Bank
2003 2002
$’000 $’000
Present value of unfunded obligations 177,028 159,339
Unrecognised actuarial gains/(losses) 1,229 (4,782)
Liability in the balance sheet 178,257 154,557
The amounts recognised in the profit and loss account are as follows:
The Group and The Bank
2003 2002
$’000 $’000
Current service cost 8,419 7,298
Interest cost 21,410 18,052
Total, included in staff costs 29,829 25,350
Movements in the amounts recognised in the balance sheet:
The Group and The Bank
2003 2002
$’000 $’000
Liability at beginning of year 154,557 133,922
Total expense, as above 29,829 25,350
Contributions paid (6,129) (4,715)
Liability at end of year 178,257 154,557
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 68
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
22. Other Assets
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Accounts receivable and prepayments 1,031,276 752,854 426,685 443,720
Interest receivable 4,987,290 2,849,413 3,608,276 1,892,098
Withholding tax recoverable 350,137 106,018 470,170 430,534
6,368,703 3,708,285 4,505,131 2,766,352
23. Due to Other Banks
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Items in course of payment 1,150,994 951,693 1,150,994 823,566
Deposits from other banks 5,106,214 1,265,655 5,106,214 1,265,378
6,257,208 2,217,348 6,257,208 2,088,944
24. Obligations Under Credit Card and Cash Advance Securitization Arrangements
In 2001, the Bank entered into an arrangement for the sale of Future Accounts Receivable amounting toUS$125,000,000 in respect of credit card and cash advance transactions in Jamaica between Visa InternationalService Association and Master Card International Incorporated and cardholders holding cards issued by banksoutside of Jamaica (primarily in the U.S.A.).This took the form of variable funding certificates issued by CitibankN.A. through Citicorp administered commercial paper conduits.The interest is payable quarterly commencing inOctober 2001 and ending October 2006. Interest is calculated daily based on the weighted average rate applicableto commercial paper transactions administered by the respective conduits. The rate approximates one month USdollar LIBOR plus 250 basis points.
The Bank also entered into an interest rate swap agreement effective October 2001 with Citibank N.A. wherebythe Bank will pay 4.33% per annum fixed and receive three month US dollar LIBOR on a notional amount ofUS$45,000,000 every quarter commencing January 2002 and ending July 2006.
In October 2001, the Bank entered into a second interest rate swap agreement effective October 2001 withCitibank N.A. whereby the Bank will pay 3.78% per annum fixed and receive three month US dollar LIBOR on anotional amount of US$45,000,000 every quarter commencing January 2002 and ending July 2006.
The fair value of these interest rate swaps at 30 September 2003 is negative US$2,166,000 (2002 - NegativeUS$2,803,000).
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 69
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
25. Other Borrowed Funds
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Development Bank of Jamaica 949,431 1,054,619 949,431 1,054,619
Student loan funds 114,074 157,230 114,074 157,230
Barclays Bank plc loan - 245,989 - -
Finance lease obligations 65,744 106,247 101,887 165,018
1,129,249 1,564,085 1,165,392 1,376,867
(a) The loans from Development Bank of Jamaica are granted in both Jamaican dollar and US dollar currenciesand are utilised by the Bank to finance customers with viable projects in agricultural, agro-industrial,manufacturing, mining and tourism sectors of the economy. The loans to customers are for terms up to 12years and at rates of 10 - 13%.
(b) Student loan funds represent funds provided by the Government of Jamaica and various funding agencies tothe Bank for the purpose of making loans to students of tertiary educational institutions. These are repayableover 7 - 10 years and attract interest at a rate of 16 -18%.
(c) The loan from Barclays Bank plc was repaid during the year.
(d) The finance lease obligations are analysed as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Minimum lease payments under finance leases:
Not later than 1 year 52,662 78,833 80,948 113,087
Later than 1 year and not later than 5 years 25,860 52,275 39,612 93,383
78,522 131,108 120,560 206,470
Future finance charges (12,778) (24,861) (18,673) (41,452)
Present value of finance lease obligations 65,744 106,247 101,887 165,018
The present value of finance lease obligations may be analysed as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Not later than 1 year 43,214 66,270 66,270 83,696
Later than 1 year and not later than 5 years 22,530 39,977 35,617 81,322
65,744 106,247 101,887 165,018
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 70
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
26. Other Liabilities
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Interest payable 2,032,588 1,483,251 1,583,414 963,009
Provisions (Note 27) 140,000 61,060 140,000 61,060
Accrued liabilities 373,569 116,007 331,770 97,880
Other 877,337 598,132 316,001 350,825
3,423,494 2,258,450 2,371,185 1,472,774
27. Provisions
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
At beginning of year 61,060 130,669 61,060 130,669
Provided during the year 90,000 - 90,000 -
Utilised during the year (11,060) (69,609) (11,060) (69,609)
At end of year 140,000 61,060 140,000 61,060
Comprising:
Provision for litigation 140,000 61,060 140,000 61,060
28. Share Capital
2003 2002
$’000 $’000
Authorised 5,750,000 5,750,000
Issued and Fully Paid Up -
2,466,762,828 Ordinary stock units of $1 each 2,466,763 2,466,763
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 71
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
29. Fair Value and Other Reserves
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Fair value reserve - available-for-sale investments (677,313) 40,388 (306,864) 89,664
Translation reserve 98,422 26,708 - -
Capital reserve 308,118 273,148 348,468 348,468
(270,773) 340,244 41,604 438,132
Capital reserve comprises:
Realised:
Capital gains from the scheme of arrangement - - 300,564 300,564
Surplus on revaluation of property,
plant and equipment 92,991 92,991 - -
Retained earnings capitalised 98,167 63,197 - -
Unrealised:
Surplus on revaluation of property,
plant and equipment 116,960 116,960 47,904 47,904
308,118 273,148 348,468 348,468
30. Loan Loss Reserve
This is a non-distributable reserve representing the excess of the provision for credit losses determined using theBank of Jamaica’s regulatory requirements over the amount determined under IFRS (Note 16).
31. Banking Reserve Fund
This fund is maintained in accordance with the Banking Act 1992 which requires that a minimum of 15% of thenet profits, as defined by the Act, of the Bank be transferred to the reserve fund until the amount of the fund isequal to 50% of the paid-up capital of the Bank and thereafter 10% of the net profits until the amount of the fundis equal to the paid-up capital of the Bank.
32. Retained Earnings Reserve
Section 2 of the Banking Act 1992 permits the transfer of any portion of the Bank’s net profit to a retainedearnings reserve. This reserve constitutes a part of the capital base for the purpose of determining the maximumlevel of deposit liabilities and lending to customers.
The deposit liabilities of the Bank and other indebtedness for borrowed money together with all interest accruedshould not exceed twenty-five times its capital base.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 72
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
33. Cash Flows from Operating Activities
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Net profit 2,804,391 1,478,407 2,129,535 978,112Adjustments to reconcile net profit to cash flow
provided by/(used in) operating activities:Depreciation of property,
plant and equipment 494,910 290,997 471,742 270,768Provision for credit losses 206,561 (172,499) 203,749 (193,142)Interest income (17,470,803) (11,915,157) (12,480,376) (9,134,773)Interest received 12,332,120 11,129,301 10,764,198 10,424,978Interest expense 10,712,921 7,632,543 6,981,076 5,501,750Interest paid (10,163,584) (7,257,774) (6,360,671) (6,021,992)Income tax expense 275,720 186,001 31,860 156,121Income tax paid (277,991) (45,391) (259,308) (16,178)Unrealised exchange loss on credit card
and cash advance securitization arrangements 881,965 325,045 881,965 325,045
Amortisation of upfront fees on credit card and cash advance securitization arrangements 107,342 98,789 107,342 98,789
Change in retirement benefit asset/obligation 22,975 19,020 23,700 20,635
Unrealised exchange gain on foreign currency denominated investments (3,063,652) (784,385) (3,063,652) (784,385)
Deferred tax expense/(credit) 383,139 (15,852) 389,259 (96,579)Gain on sale of property,
plant and equipment (324) (45,282) (1,242) (11,123)Fair value (gains)/losses on
investment properties (2,313) 100 - -Fair value (gains)/losses on
interest rate swap (10,321) 139,230 (10,321) 139,230Changes in operating assets and liabilities:
Statutory reserves at Bank of Jamaica (3,080,443) 52,890 (3,080,443) 52,890Reverse repurchase agreements 4,572,944 (1,792,666) 1,958,054 1,598,799Loans and advances (11,323,987) (6,470,383) (11,390,860) (6,378,079)Customer deposits 6,323,789 5,013,205 7,277,393 5,151,867Repurchase agreements 17,727,301 669,733 13,482,230 (3,954,303)Promissory notes and certificates
of participation (969,588) 396,347 - -Policyholders’ liabilities 1,070,137 919,055 - -Other 3,366,723 1,091,884 255,405 (443,641)
Net cash provided by/(used in) operating activities 14,919,932 943,158 8,310,635 (2,315,211)
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 73
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management
By its nature, the Group’s activities are principally related to the use of financial instruments. The Group accepts
deposits from customers at both fixed and floating rates and for various periods and seeks to earn above average
interest margins by investing these funds in high quality assets. The Group seeks to increase these margins by
consolidating short-term funds and lending for longer periods at higher rates while maintaining sufficient liquidity
to meet all claims that might fall due.
The Group also seeks to raise its interest margins by obtaining above average margins, net of provisions, through
lending to commercial and retail borrowers with a range of credit standing. Such exposures involve not just loans
and advances but also guarantees and other commitments such as letters of credit.
The Group also trades in financial instruments where it takes positions to take advantage of short-term market
movements in equity and bond prices and in foreign exchange and interest rates. The Board places trading limits
on the level of exposure that can be taken.
(a) Liquidity risk
The Group is exposed to daily calls on its available cash resources from overnight deposits, current accounts,
maturing deposits and repurchase agreements, loan draw downs, and guarantees. The Group does not
maintain cash resources to meet all of these needs as experience shows that a minimum level of
reinvestment of maturing funds can be predicted with a high level of certainty.The Group’s Treasury Division
seeks to have available a minimum proportion of maturing funds to meet such calls.The Group’s policy is to
hold a high proportion of liquid assets to cover withdrawals at unexpected levels of demand.
The following tables analyse assets and liabilities of the Group and the Bank into relevant maturity groupings
based on the remaining period, at balance sheet date, to the contractual maturity date.
The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is
fundamental to the management of the Group. It is unusual for banks ever to be completely matched since
business transacted is often of uncertain term and of different types. An unmatched position potentially
enhances profitability, but can also increase the risk of loss.
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing
liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to
changes in interest rates and exchange rates.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 74
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(a) Liquidity risk (Continued)
As at 30 September 2003:
The Group
Within 1 1 to 3 3 to 12 1 to 5 Over 5 Month Months Months Years Years Total
$’000 $’000 $’000 $’000 $’000 $’000
Assets
Cash and balances at Bank of Jamaica 8,995,432 621,205 1,025,001 - - 10,641,638
Due from other banks 8,289,854 459,188 368,206 - - 9,117,248
Trading securities - - - 387,204 1,519,066 1,906,270
Reverse repurchase agreements 3,028,696 1,612,894 1,191,367 - - 5,832,957
Loans and advances net of provision
for credit losses 3,282,078 4,289,175 5,017,116 8,619,562 5,192,216 26,400,147
Investment securities 1,168,437 5,511,832 11,715,170 28,218,121 31,924,900 78,538,460
Other 1,543,498 1,054,335 1,893,534 341,836 8,616,242 13,449,445
Total assets 26,307,995 13,548,629 21,210,394 37,566,723 47,252,424 145,886,165
Liabilities
Due to other banks 3,729,988 1,547,728 891,640 87,852 - 6,257,208
Customer deposits 58,411,201 2,056,697 5,757,560 3,463,510 - 69,688,968
Derivative financial instruments - - - 128,909 - 128,909
Repurchase agreements 13,431,481 6,692,582 8,736,251 734,646 29,781 29,624,741
Obligations under credit card and
cash advance securitization
arrangements 365,505 368,387 1,527,035 2,316,052 - 4,576,979
Other borrowed funds - - - 1,129,249 - 1,129,249
Other 12,787,678 2,549,084 3,611,763 1,073,139 1,586,615 21,608,279
Total liabilities 88,725,853 13,214,478 20,524,249 8,933,357 1,616,396 133,014,333
Net Liquidity Gap (62,417,858) 334,151 686,145 28,633,366 45,636,028 12,871,832
Cumulative Liquidity Gap (62,417,858) (62,083,707) (61,397,562) (32,764,196) 12,871,832
As at 30 September 2002:
Total assets 20,872,057 12,651,161 7,082,554 28,969,169 45,645,449 115,220,390
Total liabilities 67,125,514 18,396,531 8,886,286 7,066,490 1,774,092 103,248,913
Net Liquidity Gap (46,253,457) (5,745,370) (1,803,732) 21,902,679 43,871,357 11,971,477
Cumulative Liquidity Gap (46,253,457) (51,998,827) (53,802,559) (31,899,880) 11,971,477
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 75
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(a) Liquidity risk (Continued)
As at 30 September 2003:
The Bank
Within 1 1 to 3 3 to 12 1 to 5 Over 5 Month Months Months Years Years Total
$’000 $’000 $’000 $’000 $’000 $’000
Assets
Cash and balances at Bank of Jamaica 10,577,615 - - - - 10,577,615
Due from other banks 8,175,485 898,015 368,206 - - 9,441,706
Reverse repurchase agreements 172,729 397,809 - - - 570,538
Loans and advances net of provision
for credit losses 3,277,611 4,276,244 5,000,736 8,562,204 5,157,945 26,274,740
Investment securities 610,097 4,841,408 8,006,708 19,693,505 25,215,247 58,366,965
Investment in subsidiaries - - - - 1,456,970 1,456,970
Other 941,549 838,282 869,964 275,753 8,387,782 11,313,330
Total assets 23,755,086 11,251,758 14,245,614 28,531,462 40,217,944 118,001,864
Liabilities
Due to other banks 3,729,987 1,547,728 891,640 87,853 - 6,257,208
Customer deposits 58,357,230 1,522,785 7,330,562 3,461,366 - 70,671,943
Derivative financial instruments - - - 128,909 - 128,909
Repurchase agreements 2,274,086 12,045,053 2,866,920 672,042 - 17,858,101
Obligations under credit card and
cash advance securitization
arrangements 365,505 368,387 1,527,035 2,316,052 - 4,576,979
Other borrowed funds - - - 1,165,392 - 1,165,392
Other 1,065,918 1,127,465 988,948 1,183,144 1,533,102 5,898,577
Total liabilities 65,792,726 16,611,418 13,605,105 9,014,758 1,533,102 106,557,109
Net Liquidity Gap (42,037,640) (5,359,660) 640,509 19,516,704 38,684,842 11,444,755
Cumulative Liquidity Gap (42,037,640) (47,397,300) (46,756,791) (27,240,087) 11,444,755
As at 30 September 2002:
Total assets 17,534,253 6,831,460 4,975,213 22,275,932 39,791,153 91,408,011
Total liabilities 54,197,164 12,883,604 5,591,767 7,059,647 706,032 80,438,214
Net Liquidity Gap (36,662,911) (6,052,144) (616,554) 15,216,285 39,085,121 10,969,797
Cumulative Liquidity Gap (36,662,911) (42,715,055) (43,331,609) (28,115,324) 10,969,797
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 76
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(b) Interest rate risk
The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates
on its financial position and cash flows. Interest margins may increase as a result of such changes but may
reduce or create losses in the event that unexpected movements arise. The Asset and Liability Committee
sets limits on the level of mismatch of interest rate repricing that may be undertaken.
The Group is exposed to various risks associated with the effects of fluctuations in the prevailing levels of
market interest rates on its financial position and cash flows.The following tables summarise the Group’s and
the Bank’s exposure to interest rate risk. Included in the table are the Group’s and the Bank’s assets and
liabilities at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 77
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(b) Interest rate risk (Continued)
As at 30 September 2003:
The Group
Within 1 1 to 3 3 to 12 1 to 5 Over Non-Interest Month Months Months Years 5 Years Bearing Total $’000 $’000 $’000 $’000 $’000 $’000 $’000
AssetsCash and balances at Bank of Jamaica 2,959,461 894,572 786,752 - - 6,000,853 10,641,638
Due from other banks 3,254,407 459,188 368,206 - - 5,035,447 9,117,248
Trading securities - - - 387,205 508,025 1,011,040 1,906,270
Reverse repurchase agreements 3,028,698 1,770,612 1,033,647 - - - 5,832,957
Loans and advances net of provision
for credit losses 25,044,753 6,340 129,517 1,108,755 110,782 - 26,400,147
Investment securities 1,343,405 36,037,601 14,252,385 20,435,496 6,124,818 344,755 78,538,460
Other - - - - - 13,449,445 13,449,445
Total assets 35,630,724 39,168,313 16,570,507 21,931,456 6,743,625 25,841,540 145,886,165
LiabilitiesDue to other banks 3,729,988 1,547,728 891,640 87,852 - - 6,257,208
Customer deposits 43,922,496 2,041,151 5,630,039 3,461,366 - 14,633,916 69,688,968
Derivative financial instruments - - - 128,909 - - 128,909
Promissory notes, and certificates
of participation 6,317,550 1,901,549 1,668,680 - 231,770 - 10,119,549
Repurchase agreements 13,431,481 6,722,363 8,736,251 734,646 - - 29,624,741
Obligations under credit card and
cash advance securitization
arrangements 363,189 368,387 1,527,036 2,318,367 - - 4,576,979
Other borrowed funds - - - 1,129,249 - - 1,129,249
Other 4,232,287 80,581 24,926 101,888 - 7,049,048 11,488,730
Total liabilities 71,996,991 12,661,759 18,478,572 7,962,277 231,770 21,682,964 133,014,333
On balance sheet interest sensitivity gap (36,366,267) 26,506,554 (1,908,065) 13,969,179 6,511,855 4,158,576 12,871,832
Cumulative interest sensitivity gap (36,366,267) (9,859,713) (11,767,778) 2,201,401 8,713,256 12,871,832
As at 30 September 2002:Total assets 27,942,901 15,061,551 38,633,875 14,611,083 4,204,601 14,766,379 115,220,390
Total liabilities 58,096,304 16,165,278 6,367,462 631,334 1,894,129 20,094,406 103,248,913
On balance sheet interest sensitivity gap (30,153,403) (1,103,727) 32,266,413 13,979,749 2,310,472 (5,328,027) 11,971,477
Cumulative interest sensitivity gap (30,153,403) (31,257,130) 1,009,283 14,989,032 17,299,504 11,971,477
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 78
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(b) Interest rate risk (Continued)
As at 30 September 2003:
The Bank
Within 1 1 to 3 3 to 12 1 to 5 Over Non-Interest Month Months Months Years 5 Years Bearing Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Assets
Cash and balances at Bank of Jamaica 4,616,450 - - - - 5,961,165 10,577,615
Due from other banks 3,254,285 898,015 368,206 - - 4,921,200 9,441,706
Reverse repurchase agreements 172,729 397,809 - - - - 570,538
Loans and advances net of provision
for credit losses 25,000,005 6,340 121,714 1,129,709 16,972 - 26,274,740
Investment securities 610,097 31,560,381 10,880,023 13,158,582 1,609,857 548,025 58,366,965
Investment in subsidiaries - - - - - 1,456,970 1,456,970
Other 941,549 1,156,370 2,144,879 129,221 883,821 6,057,490 11,313,330
Total assets 34,595,115 34,018,915 13,514,822 14,417,512 2,510,650 18,944,850 118,001,864
Liabilities
Due to other banks 3,729,987 1,547,728 891,640 87,853 - - 6,257,208
Customer deposits 43,723,314 1,522,785 7,330,562 3,461,366 - 14,633,916 70,671,943
Derivative financial instruments - - - 128,909 - - 128,909
Repurchase agreements 2,274,086 12,045,053 2,866,920 672,042 - - 17,858,101
Obligations under credit card and
cash advance securitization
arrangements 363,189 368,387 1,527,036 2,318,367 - - 4,576,979
Other borrowed funds - - - 1,165,392 - - 1,165,392
Other 982,154 629,510 1,733,703 915,302 1,062,078 575,830 5,898,577
Total liabilities 51,072,730 16,113,463 14,349,861 8,749,231 1,062,078 15,209,746 106,557,109
On balance sheet interest
sensitivity gap (16,477,615) 17,905,452 (835,039) 5,668,281 1,448,572 3,735,104 11,444,755
Cumulative interest sensitivity gap (16,477,615) 1,427,837 592,798 6,261,079 7,709,651 11,444,755
As at 30 September 2002:
Total assets 23,494,013 7,911,989 30,522,591 12,183,428 1,727,187 15,568,803 91,408,011
Total liabilities 45,708,305 10,810,212 3,025,620 565,103 1,295,789 19,033,185 80,438,214
On balance sheet interest
sensitivity gap (22,214,292) (2,898,223) 27,496,971 11,618,325 431,398 (3,464,382) 10,969,797
Cumulative interest sensitivity gap (22,214,292) (25,112,515) 2,384,456 14,002,781 14,434,179 10,969,797
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 79
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(b) Interest rate risk (Continued)
The table below summarises the effective interest rate by major currencies for financial instruments of the
Group and the Bank.
The Group The Bank
J$ US$ CAN$ GBP J$ US$ CAN$ GBP
% % % % % % % %
Assets
Cash and balances at Bank of Jamaica 6.0 0.4 2.7 2.3 6.0 0.4 2.7 2.3
Due from other banks 17.2 3.8 1.8 2.8 - 3.8 - 2.8
Trading securities - debt securities - 9.8 - - - - - -
Reverse repurchase agreements 27.6 7.8 - - 19.8 6.2 - -
Loans and advances 27.8 8.0 - - 27.9 8.0 - -
Investment securities - debt securities 27.2 9.6 1.6 5.4 27.8 8.7 1.6 5.4
Liabilities
Due to other banks 29.6 2.7 - - 29.6 2.7 - -
Customer deposits 7.4 4.0 1.8 1.4 7.4 4.0 1.8 1.4
Repurchase agreements 25.9 7.7 2.6 6.4 27.5 8.2 - -
Obligations under credit card and
cash advance securitization
arrangements - 3.9 - - - 3.9 - -
Other borrowed funds 17.8 5.7 - - 7.8 5.7 - -
(c) Currency risk
The Group takes on exposure to effects of fluctuations in the prevailing foreign currency exchange rates on
its financial position and cash flows. The Credit and Risk Management Committee sets limits on the level of
exposure by currency and in total for both overnight and intra-day positions.
The following tables summarise the exposure of the Group and the Bank to foreign currency exchange rate
risk. Included in the tables are the Group’s and the Bank’s assets and liabilities at carrying amounts
categorised by currency.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 80
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(c) Currency risk (Continued)
As at 30 September 2003:
The Group
Jamaican $ US$ GBP CAN$ Other Total
J$’000 J$’000 J$’000 J$’000 J$’000 J$’000
Assets
Cash and balances at Bank of Jamaica 7,370,848 2,673,133 513,221 70,827 13,609 10,641,638
Due from other banks 1,303,189 4,703,480 2,650,891 85,673 374,015 9,117,248
Trading securities 1,011,040 895,230 - - - 1,906,270
Reverse repurchase agreements 5,025,318 807,639 - - - 5,832,957
Loans and advances net of provision
for credit losses 9,628,818 16,771,329 - - - 26,400,147
Investment securities 52,969,396 25,292,365 14,370 175,556 86,773 78,538,460
Other 12,892,555 548,632 8,149 - 109 13,449,445
Total assets 90,201,164 51,691,808 3,186,631 332,056 474,506 145,886,165
Liabilities
Due to other banks 2,924,693 3,270,839 43,408 16,323 1,945 6,257,208
Customer deposits 45,516,010 20,275,683 3,611,865 210,506 74,904 69,688,968
Derivative financial instruments - 128,909 - - - 128,909
Repurchase agreements 14,848,641 14,771,483 2,092 2,525 - 29,624,741
Obligations under credit card and
cash advance securitization
arrangements - 4,576,979 - - - 4,576,979
Other borrowed funds 14,175,584 - - - - 14,175,584
Other 7,750,613 765,061 45,897 238 135 8,561,944
Total liabilities 85,215,541 43,788,954 3,703,262 229,592 76,984 133,014,333
Net position 4,985,623 7,902,854 (516,631) 102,464 397,522 12,871,832
As at 30 September 2002:
Total assets 73,760,108 37,838,001 2,970,763 138,144 513,374 115,220,390
Total liabilities 72,048,725 28,428,547 2,570,240 188,632 12,769 103,248,913
Net position 1,711,383 9,409,454 400,523 (50,488) 500,605 11,971,477
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 81
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(c) Currency risk (Continued)
As at 30 September 2003:
The Bank
Jamaican $ US$ GBP CAN$ Other Total
J$’000 J$’000 J$’000 J$’000 J$’000 J$’000
AssetsCash and balances at Bank of Jamaica 7,567,271 2,420,762 507,584 68,389 13,609 10,577,615Due from other banks 1,202,971 5,128,156 2,650,891 85,673 374,015 9,441,706Reverse repurchase agreements 100,000 470,538 - - - 570,538Loans and advances net of provision
for credit losses 9,503,411 16,771,329 - - - 26,274,740Investment securities 40,185,831 17,904,435 14,370 175,556 86,773 58,366,965Investment in subsidiaries 1,325,063 131,565 342 - - 1,456,970Property, plant and equipment 3,793,908 - - - - 3,793,908Income tax recoverable 87,505 - - - - 87,505Other 7,430,975 - 832 1 109 7,431,917Total assets 71,196,935 42,826,785 3,174,019 329,619 474,506 118,001,864
LiabilitiesDue to other banks 2,924,693 3,270,839 43,408 16,323 1,945 6,257,208Customer deposits 46,292,928 20,481,740 3,611,865 210,506 74,904 70,671,943Derivative financial instruments - 128,909 - - - 128,909Repurchase agreements 13,559,890 4,298,211 - - - 17,858,101Obligations under credit card and
cash advance securitization arrangements - 4,576,979 - - - 4,576,979
Other borrowed funds 1,165,392 - - - - 1,165,392Deferred tax 422,349 - - - - 422,349Retirement benefit obligations 178,257 - - - - 178,257Other 5,071,004 220,826 5,779 227 135 5,297,971Total liabilities 69,614,513 32,977,504 3,661,052 227,056 76,984 106,557,109
Net position 1,582,422 9,849,281 (487,033) 102,563 397,522 11,444,755
As at 30 September 2002:Total assets 57,698,065 29,953,426 138,146 2,932,901 685,473 91,408,011Total liabilities 55,978,522 21,728,459 186,085 2,532,378 12,770 80,438,214
Net position 1,719,543 8,224,967 (47,939) 400,523 672,703 10,969,797
Government of Jamaica US$ indexed bonds are included in the US$ category for currency risk disclosure.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 82
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(d) Market risk
The Group takes on exposure to market risks. Market risks arise from open positions in interest rate,
currency and equity products, all of which are exposed to general and specific market movements. The
Group estimates the market risk of positions held and the maximum losses expected based on a number
of assumptions for various changes in market conditions. Market risk is monitored by the Credit and Risk
Management Division which carries out extensive research and monitors the price movement of financial
assets on the local and international markets.
(e) Credit risk
The Group takes on exposure to credit risk which is the risk that a counterparty will be unable to pay
amounts in full when due. Credit risk is inherent in traditional banking products - loans, commitments to lend,
and contracts to support counterparties’ obligations to third parties such as letters of credit. Positions in
tradeable assets such as bonds and equities also carry credit risk.
The risk is managed primarily by review of the financial status of each counterparty. The Group structures
the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one
borrower, or groups of borrowers, and to geographical and industry segments. Such risks are monitored on
a revolving basis and subject to an annual or more frequent review. The exposure to any one borrower
including banks and brokers is restricted by limits covering on and off-balance sheet exposures. Actual
exposures against limits are monitored daily. Exposure to credit risk is managed through regular analysis of
the ability of borrowers and potential borrowers to meet interest and capital repayment obligations and by
changing these lending limits where appropriate. Exposure to credit risk is also managed in part by obtaining
collateral and corporate and personal guarantees.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 83
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
34. Risk Management (Continued)
(e) Credit risk (Continued)
The following tables summarise the credit exposure of the Group and the Bank to businesses and
government by sector:
The Group The Bank
Guarantees Guarantees Loans and and letters Loans and and lettersadvances of credit Total Total advances of credit Total Total
2003 2002 2003 2002 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Agriculture, fishing
and mining 194,200 29,484 223,684 337,486 194,200 29,484 223,684 337,486
Construction and
real estate 1,418,164 398,871 1,817,035 1,636,837 1,387,145 398,871 1,786,016 1,778,171
Distribution 2,002,718 348,142 2,350,860 993,788 2,002,718 348,142 2,350,860 993,788
Financial institutions 301,582 67,430 369,012 458,852 301,582 67,430 369,012 458,852
Government and
public entities 5,707,199 24,529 5,731,728 3,366,818 5,707,199 24,529 5,731,728 3,366,818
Manufacturing 627,331 683,603 1,310,934 1,367,154 627,331 683,603 1,310,934 1,362,480
Personal 6,592,763 265,732 6,858,495 2,400,145 6,486,741 265,732 6,752,473 2,310,654
Professional and
other services 950,988 331,762 1,282,750 2,119,055 950,988 331,762 1,282,750 2,119,055
Tourism and
entertainment 4,063,437 69,122 4,132,559 2,638,348 4,063,437 69,122 4,132,559 2,635,987
Transportation
storage and
communication 6,678,767 103,517 6,782,284 3,465,693 6,678,767 103,517 6,782,284 3,465,693
Other 26,515 604,594 631,109 581,398 26,515 604,594 631,109 505,447
Total 28,563,664 2,926,786 31,490,450 19,365,574 28,426,623 2,926,786 31,353,409 19,334,431
Total provision (2,163,517) - (2,163,517) (1,972,328) (2,151,883) - (2,151,883) (1,963,506)
Net 26,400,147 2,926,786 29,326,933 17,393,246 26,274,740 2,926,786 29,201,526 17,370,925
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 84
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
35. Fair Values of Financial Instruments
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction. Market price is used to determine fair value where an active market
(such as a recognised stock exchange) exists as it is the best evidence of the fair value of a financial instrument.
However, market prices are not available for a significant number of the financial assets and liabilities held and
issued by the Group. Therefore, for financial instruments where no market price is available, the fair values
presented have been estimated using present value or other estimation and valuation techniques based on market
conditions existing at balance sheet dates.
The values derived from applying these techniques are significantly affected by the underlying assumptions used
concerning both the amounts and timing of future cash flows and the discount rates.The following methods and
assumptions have been used:
(a) Trading securities, derivatives and other transactions undertaken for trading purposes are measured at fair
value by reference to quoted market prices when available. If quoted market prices are not available, then
fair values are estimated on the basis of pricing models, or discounted cash flows. Fair value is equal to the
carrying amount for these items;
(b) Investment securities classified as available-for-sale are measured at fair value by reference to quoted market
prices when available. If quoted market prices are not available, then fair values are estimated on the basis
of pricing models or other recognised valuation techniques;
(c) The fair value of liquid assets and other assets maturing within one year is assumed to approximate their
carrying amount.This assumption is applied to liquid assets and the short-term elements of all other financial
assets and financial liabilities;
(d) The fair value of demand deposits and savings accounts with no specific maturity is assumed to be the
amount payable on demand at the balance sheet date;
(e) The fair value of variable rate financial instruments is assumed to approximate their carrying amounts; and
(f) The fair value of fixed rate loans is estimated by comparing market interest rates when the loans were
granted with current market rates offered on similar loans. For match-funded loans the fair value is assumed
to be equal to their carrying value, as gains and losses offset each other. Changes in the credit quality of loans
within the portfolio are not taken into account in determining gross fair values as the impact of credit risk is
recognised separately by deducting the amount of the provisions for credit losses from both book and fair
values.
The following tables present the fair value of financial instruments based on the following valuation methods and
assumptions.They are presented because not all financial instruments are reflected in the financial statements at
fair value.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 85
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
35. Fair Values of Financial Instruments (Continued)
The Group
Carrying Fair Carrying Fair Value Value Value Value
2003 2003 2002 2002$’000 $’000 $’000 $’000
Financial Assets
Cash and balances at Bank of Jamaica 10,641,638 10,641,638 7,499,096 7,499,096
Due from other banks 9,117,248 9,117,248 6,412,571 6,412,571
Trading securities 1,906,270 1,906,270 - -
Reverse repurchase agreements 5,832,957 5,832,957 10,405,901 10,405,901
Loans and advances, net of provision
for credit losses 26,400,147 26,400,147 15,282,721 15,282,721
Investment securities 78,538,460 78,133,295 67,293,256 66,879,934
Financial Liabilities
Due to other banks 6,257,208 6,257,208 2,217,348 2,217,348
Customer deposits 69,688,968 69,688,968 63,365,179 63,365,179
Derivative financial instruments 128,909 128,909 139,230 139,230
Promissory notes and certificates
of participation 10,119,549 10,119,549 11,089,137 11,089,137
Repurchase agreements 29,624,741 29,624,741 11,897,440 11,897,440
Obligations under credit card and
cash advance securitization
arrangements 4,576,979 4,718,256 4,848,691 5,055,483
Other borrowed funds 1,129,249 1,129,249 1,564,085 1,564,085
Policyholders’ liabilities 4,287,658 4,287,658 3,217,521 3,217,521
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 86
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
35. Fair Values of Financial Instruments (Continued)
The Bank
Carrying Fair Carrying Fair Value Value Value Value
2003 2003 2002 2002$’000 $’000 $’000 $’000
Financial Assets
Cash and balances at Bank of Jamaica 10,577,615 10,577,615 7,431,904 7,431,904
Due from other banks 9,441,706 9,441,706 6,391,698 6,391,698
Reverse repurchase agreements 570,338 570,338 2,528,592 2,528,592
Loans and advances, net of provision
for credit losses 26,274,740 26,274,740 15,087,629 15,087,629
Investment securities 58,366,965 57,660,750 51,055,585 50,579,167
Financial Liabilities
Due to other banks 6,257,208 6,257,208 2,088,944 2,088,944
Customer deposits 70,671,943 70,671,943 63,394,550 63,394,550
Derivative financial instruments 128,909 128,909 139,230 139,230
Repurchase agreements 17,858,101 17,858,101 4,375,871 4,375,871
Obligations under credit card and
cash advance securitization
arrangements 4,576,979 4,718,256 4,848,691 5,055,483
Other borrowed funds 1,165,392 1,165,392 1,376,867 1,376,867
36. Banking Act
At 30 September 2003 and 30 September 2002:The Bank was in breach of Section 13(1)(d) of the Banking Act. This section deals with unsecured lending toconnected persons. These lendings represent approximately 0.5% (2002 - 0.2%) of the Bank’s loans and advances.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 87
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
37. Related Party Transactions and Balances
Parties are considered to be related if one party has the ability to control or exercise significant influence over theother party in making financial or operational decisions.
The following transactions were carried out with related parties:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Interest and other income earned 154,635 30,358 256,568 276,806
Interest paid and other expenses 10,968 6,985 1,642,346 1,007,567
Year-end balances with related parties are as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Loans and advances 2,057,218 109,585 2,057,218 109,585
Due from other banks - - 424,676 109,711
Reverse repurchase agreements - - 470,538 2,209,396
Other assets 9,158 - 57,057 35,368
Customer deposits 519,674 223,947 2,715,275 354,328
Repurchase agreements 25,566 - 9,662,883 3,658,000
Obligations under finance leases - - 36,143 59,838
Other liabilities - - 643,432 103,257
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 88
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
38. Commitments
(a) Capital:Capital expenditure contracted for at the balance sheet date but not recognised in the financial statementsis as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Property, plant and equipment 301,552 1,135,837 301,552 1,135,837
(b) Operating lease:The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
The Group The Bank
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Not later than 1 year 13,291 854 13,291 854
Later than 1 year and not later
than 5 years 46,011 2,380 46,011 2,380
Later than 5 years 66 66 66 66
59,368 3,300 59,368 3,300
39. Pledged Assets
The Group The Bank
Related Related
Asset Liability Asset Liability
$’000 $’000 $’000 $’000
Balances at Bank of Jamaica 8,738,541 - 8,698,541 -
Securities 48,161,767 41,365,241 19,789,459 19,479,052
Property, plant and equipment 57,800 65,744 93,943 101,887
Other 1,849,476 1,537,256 1,849,476 1,537,256
58,807,584 42,968,241 30,431,419 21,118,195
Assets are pledged as collateral under repurchase agreements, loans from other institutions, and security depositsrelating to stock exchange membership. Statutory reserves are also held with the Bank of Jamaica. These depositsare not available to finance the Group’s day-to-day operations.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 89
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
40. Fiduciary Activities
The Group provides custody, trustee, corporate administration, investment management and advisory services to
third parties which involve the Group making allocation and purchase and sale decisions in relation to a wide range
of financial instruments. Those assets that are held in a fiduciary capacity are not included in these financial
statements. At 30 September 2003, the Group had financial assets under administration of approximately $20.6
billion (2002 - $16.2 billion).
41. Litigation and Contingent Liabilities
The Bank and its subsidiaries are subject to various claims, disputes and legal proceedings, as part of the normal
course of business. Provision is made for such matters when, in the opinion of management and its professional
advisors, it is probable that a payment will be made by the Group, and the amount can be reasonably estimated.
In respect of claims asserted against the Group which, according to the principles outlined above, have not been
provided for, management is of the opinion that such claims are either without merit, can be successfully defended
or will result in exposure to the Group which is immaterial to both financial position and results of operations.
Significant matters are as follows:
(a) Suit has been filed by a customer of the Bank against the Attorney General of Jamaica, the Bank and Mr.
Dunbar McFarlane. The customer is claiming damages arising out of an alleged breach of a contract between
the customer and the National Insurance Fund of which Mr. Dunbar McFarlane, a former director of the
Bank, was Chairman, for the sale of certain premises which were mortgaged to the Bank. The customer also
claims special damages amounting to approximately $110 million. In the opinion of the Bank’s attorneys, the
plaintiff ’s claims against Mr. McFarlane and the Bank are unlikely to succeed. A provision has, however, been
made in the financial statements in respect of likely legal costs.
(b) Suit has been filed by the Bank’s Staff Association against the Bank and Trustees of the N.C.B. Pension Scheme
for breach of trust in respect of matters concerning the amendment and merger of the former pension
funds, as well as the management and investment of the funds of the pension scheme. No provision has been
made in the financial statements as the Bank’s attorneys are of the opinion that the suit against the Bank is
unlikely to succeed.
(c) Suit has been filed against the Bank by a customer for breach of contract and/or negligence for debiting the
plaintiff ’s account. The claim is for $33.35 million with interest on the said sum at commercial bank rates
from 16 May 1997 to date of payment. No provision has been made in these financial statements for this
claim as the Bank’s attorneys are of the view that the Bank will not be found liable.
(d) Suit has been filed by a customer against the Bank for special damages in the sum of $42 million and damages
for breach of fiduciary duty, undue influence and/or negligence.The Bank’s attorneys have filed a defence and
no other steps have been taken by the plaintiff. No provision has been made in the financial statements.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 90
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
41. Litigation and Contingent Liabilities (Continued)
(e) Suit has been filed by a customer against the bank for breach of contract, breach of trust and negligence.
The claim for damages includes a sum equivalent to the profit of the business foregone as a result of an
inability to access a loan approved by the Bank and the cost of interim financing. Based on the advice of the
Bank’s attorneys, a provision has been made in the financial statements in respect of this suit.
(f) Suit has been filed by a customer against the Bank for damages suffered as a result of the Bank’s negligence
in the sale of property for an undervalued amount. The claim is for $31 million plus interest. Based on the
advice of the Bank’s attorneys, a provision has been made in the financial statements in respect of this claim.
(g) A number of other suits claiming damages in excess of $5 million each have been filed by customers of the
Bank. The sums totalled approximately $104 million. In some instances counter claims have been filed by
the Bank. Provision has been made in the financial statements for certain of these claims. No provision has
been made where the Bank’s attorneys are of the view that the Bank has a good defence.
42. Dividends per Share
Final dividends are not accounted for until they have been ratified at the Annual General Meeting. At the Board
of Directors meeting on 18 December 2003, a fourth interim dividend in respect of 2003 of $0.21 per ordinary
stock unit was declared. The financial statements for the year ended 30 September 2003 do not reflect this
resolution, which will be accounted for in shareholders’ equity as an appropriation of retained profits in the year
ending 30 September 2004.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 91
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards
The Group adopted International Financial Reporting Standards (IFRS) effective 1 October 2001. Prior to thatdate, the financial statements of the Group and the Bank were prepared in accordance with Jamaican GenerallyAccepted Accounting Principles (JGAAP). The financial statements for the year ended 30 September 2002 (theimmediately preceding comparative period) have been restated to reflect the financial position and results underIFRS.The financial effects of conversion from JGAAP to IFRS are set out as follows:
(a) Effect on stockholders’ equity as at 1 October 2001 (Date of transition to IFRS):
The Group
Effect of Previous Transition
JGAAP to IFRS IFRS
$’000 $’000 $’000
ASSETSCash and balances at Bank of Jamaica 7,857,431 - 7,857,431Due from other banks 6,404,583 - 6,404,583Reverse repurchase agreements 8,613,235 - 8,613,235Loans, after provision for credit losses (i) 8,279,420 360,419 8,639,839Investment securities (ii) 65,268,554 551,975 65,820,529Investment properties 16,100 - 16,100Property, plant and equipment 1,511,277 - 1,511,277Deferred tax assets (iii) - 97,484 97,484Retirement benefit asset (iv) - 3,669 3,669Other assets 4,988,256 324 4,988,580Customers’ liability on acceptances,
guarantees, indemnities and credits 1,817,927 - 1,817,927104,756,783 1,013,871 105,770,654
LIABILITIES AND STOCKHOLDERS’ EQUITYDue to other banks 1,419,858 - 1,419,858Customer deposits 58,351,974 - 58,351,974Promissory notes and certificates
of participation 10,692,790 - 10,692,790Repurchase agreements 11,227,707 - 11,227,707Obligations under credit card and cash
advance securitization arrangements (v) 4,105,026 (283,305) 3,821,721Other borrowed funds 1,647,170 - 1,647,170Income tax payable 8,725 - 8,725Deferred tax liabilities (iii) - 375,049 375,049Policyholders’ liabilities 2,298,466 - 2,298,466Retirement benefit obligations (iv) - 133,922 133,922Other liabilities (vi) 4,000,071 (1,034,081) 2,965,990Liability on acceptances, guarantees,
indemnities and credits 1,817,927 - 1,817,927Minority interest in subsidiary 121,870 (2,494) 119,376
STOCKHOLDERS’ EQUITY (i), (ii), (iii), (iv), (v), (vi) 9,065,199 1,824,780 10,889,979
104,756,783 1,013,871 105,770,654
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 92
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards (Continued)
(a) Effect on stockholders’ equity as at 1 October 2001 (Continued):
The Bank
Effect of Previous Transition
JGAAP to IFRS IFRS
$’000 $’000 $’000
ASSETS
Cash and balances at Bank of Jamaica 7,788,594 - 7,788,594
Due from other banks 6,316,142 - 6,316,142
Reverse repurchase agreements 4,127,391 - 4,127,391
Loans, after provision for credit losses (i) 8,155,989 360,419 8,516,408
Investment securities (ii) 54,149,198 96,806 54,246,004
Investment properties - - -
Property, plant and equipment 1,478,897 - 1,478,897
Other assets 3,624,686 - 3,624,686
Customers’ liability on acceptances,
guarantees, indemnities and credits 2,010,503 - 2,010,503
87,651,400 457,225 88,108,625
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Due to other banks 1,381,447 - 1,381,447
Customer deposits 58,242,684 - 58,242,684
Repurchase agreements 8,330,174 - 8,330,174
Obligations under credit card and cash
advance securitization arrangements (v) 4,105,026 (283,305) 3,821,721
Other borrowed funds 1,476,997 - 1,476,997
Deferred tax liabilities (iii) - 308,167 308,167
Retirement benefit obligations (iv) - 133,922 133,922
Other liabilities (vi) 3,039,370 (1,034,585) 2,004,785
Liability on acceptances, guarantees,
indemnities and credits 2,010,503 - 2,010,503
STOCKHOLDERS’ EQUITY (i), (ii), (iii), (iv), (v), (vi) 9,065,199 1,333,026 10,398,225
87,651,400 457,225 88,108,625
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 93
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards (Continued)
(b) Effect on stockholders’ equity as at 30 September 2002:
The Group
Effect of Previous Transition
JGAAP to IFRS IFRS
$’000 $’000 $’000
ASSETSCash and balances at Bank of Jamaica 7,499,096 - 7,499,096Due from other banks 6,412,571 - 6,412,571Reverse repurchase agreements 10,405,901 - 10,405,901Loans, after provision for credit losses (i) 15,199,047 83,674 15,282,721Investment securities (ii) 66,732,916 560,340 67,293,256Investment properties 17,442 - 17,442Property, plant and equipment 2,466,039 - 2,466,039Deferred tax assets - 19,270 19,270Retirement benefit asset - 5,284 5,284Other assets 3,708,111 174 3,708,285Customers’ liability on acceptances,
guarantees, indemnities and credits 2,110,525 - 2,110,525
114,551,648 668,742 115,220,390
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES
Due to other banks 2,217,348 - 2,217,348Customer deposits 63,365,179 - 63,365,179Promissory notes and certificates
of participation 11,089,137 - 11,089,137Derivative financial instruments 139,230 - 139,230Repurchase agreements 11,897,440 - 11,897,440Obligations under credit card and cash
advance securitization arrangements (v) 5,055,483 (206,792) 4,848,691Other borrowed funds 1,564,085 - 1,564,085Income tax payable 149,339 - 149,339Deferred tax liabilities (iii) - 237,411 237,411Policyholders’ liabilities 3,217,521 - 3,217,521Retirement benefit obligations (iv) - 154,557 154,557Other liabilities (vi) 2,968,603 (710,153) 2,258,450Liability on acceptances, guarantees,
indemnities and credits 2,110,525 - 2,110,525STOCKHOLDERS’ EQUITY (i), (ii), (iii), (iv), (v), (vi) 10,777,758 1,193,719 11,971,477
114,551,648 668,742 115,220,390
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 94
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards (Continued)
(b) Effect on stockholders’ equity as at 30 September 2002 (Continued):
The Bank
Effect of Previous Transition
JGAAP to IFRS IFRS
$’000 $’000 $’000
ASSETSCash and bank balances at Bank of Jamaica 7,431,904 - 7,431,904Due from other banks 6,391,698 - 6,391,698Reverse repurchase agreements 2,528,592 - 2,528,592Loans, after provision for credit losses (i) 15,003,955 83,674 15,087,629Investment securities (ii) 53,002,530 (489,975) 52,512,555Property, plant and equipment 2,405,985 - 2,405,985Other assets 2,766,352 - 2,766,352Customers’ liability on acceptances, guarantees,
indemnities and credits 2,283,296 - 2,283,296
91,814,312 (406,301) 91,408,011
LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES
Due to other banks 2,088,944 - 2,088,944Customer deposits 63,394,551 - 63,394,551Derivative financial instruments 139,230 - 139,230Repurchase agreements 4,375,871 - 4,375,871Obligations under credit card and cash
advance securitization arrangements (v) 5,055,483 (206,792) 4,848,691Other borrowed funds 1,376,867 - 1,376,867Income tax payable 139,943 - 139,943Deferred tax liabilities (iii) - 163,491 163,491Retirement benefit obligations (iv) - 154,557 154,557Other liabilities (vi) 2,182,370 (709,597) 1,472,773Liability on acceptances, guarantees,
indemnities and credits 2,283,296 - 2,283,296STOCKHOLDERS’ EQUITY(i), (ii), (iii), (iv), (v), (vi) 10,777,757 192,040 10,969,797
91,814,312 (406,301) 91,408,011
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 95
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards (Continued)
(c) Reconciliation of net profit for the year ended 30 September 2002:
The Group
Effect of Previous Transition
JGAAP to IFRS IFRS
$’000 $’000 $’000
Operating Revenue
Interest income (i) 11,910,615 4,542 11,915,157
Interest expense (ii) (7,556,124) (76,419) (7,632,543)
Net interest income (v) 4,354,491 (71,877) 4,282,614
Net fee and commission income 1,171,260 - 1,171,260
Net trading income (ii) 1,132,135 (1,465) 1,130,670
Other operating income 47,382 - 47,382
6,705,268 (73,342) 6,631,926
Operating Expenses
Staff costs (iv), (vi) 2,724,370 203,962 2,928,332
Provision for credit losses (i) (449,244) 276,745 (172,499)
Other operating expenses (ii) 2,220,856 (56,440) 2,164,416
4,495,982 424,267 4,920,249
Profit before Tax and Minority Interest 2,209,286 (497,609) 1,711,677
Taxation (iii) (186,001) 15,852 (170,149)
Net Profit before Minority Interest 2,023,285 (481,757) 1,541,528
Minority interests in results of subsidiary (63,121) - (63,121)
Net Profit 1,960,164 (481,757) 1,478,407
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 96
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards (Continued)
(c) Reconciliation of net profit for the year ended 30 September 2002 (Continued):
The Bank
Effect of Previous Transition
JGAAP to IFRS IFRS
$’000 $’000 $’000
Operating Revenue
Interest Income (ii) 9,133,255 1,518 9,134,773
Interest expense (v) (5,403,761) (97,989) (5,501,750)
Net interest income 3,729,494 (96,471) 3,633,023
Net fee and commission income 1,042,152 - 1,042,152
Net trading income (ii) 808,718 20,810 829,528
Other operating income 67,357 - 67,357
5,647,721 (75,661) 5,572,060
Operating Expenses
Staff costs (iv), (vi) 2,512,476 206,486 2,718,962
Provision for credit losses (i) (469,887) 276,745 (193,142)
Other operating expenses (ii) 1,919,356 89,230 2,008,586
3,961,945 572,461 4,534,406
Profit before Tax 1,685,776 (648,122) 1,037,654
Taxation (iii) (156,121) 96,579 (59,542)
Net Profit 1,529,655 (551,543) 978,112
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 97
NOTES TO THE FINANCIAL STATEMENTS30 September 2003
43. Financial Effects of Adopting International Financial Reporting Standards (Continued)
Brief descriptions of each item of difference:
(i) The methodology for determining the provision for credit losses under IFRS differs from Bank of Jamaica
regulatory requirements. The IFRS methodology involves discounting of projected future cash flows of
principal and interest at the original effective interest value of the loans. The Bank of Jamaica regulatory
requirements differ from IFRS in that they prescribe specific valuation rules for collateral and do not involve
discounting of cash flows. The excess of the regulatory provision for credit losses over the IFRS provision is
dealt with in a non-distributable loan loss reserve in stockholders’ equity.
(ii) Investment securities are classified as originated debt and available-for-sale securities under IFRS. Premiums
and discounts on acquisition of investment securities were amortised on a straight-line basis over the lives
of the securities under previous Jamaican GAAP. Under IFRS, premiums/discounts are amortised using the
effective yield method. Under previous Jamaican GAAP, the Bank and the Group measured all investment
securities at the lower of cost and market value. Under IFRS, available-for-sale securities are measured at fair
value while originated debt is measured at amortised cost.
(iii) No provision for deferred tax was recognised under previous Jamaican GAAP. Under IFRS, full provision is
made for deferred tax on all temporary differences using the liability method.
(iv) Assets and liabilities arising under defined benefit pension plans and other post-retirement benefit obligations
were not recognised under previous Jamaican GAAP. They are recognised under IFRS based on valuations
carried out by independent actuaries using the projected unit credit method.
(v) Upfront fees incurred in respect of the credit card and cash advance securitisation arrangements were
expensed as incurred under previous Jamaican GAAP. Under IFRS, these fees are offset against the related
liability and amortised over the life of the arrangement on an effective yield basis.
(vi) Various provisions including a provision for restructuring costs of $768,117,000 at 30 September 2001 and
$604,655,000 at 30 September 2002 recognised under previous Jamaican GAAP were reversed under IFRS,
as they did not meet the IFRS recognition criteria for liabilities. No provision was made under previous
Jamaican GAAP for vacation leave outstanding at the balance sheet date. Under IFRS, full provision is made.
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 98
CAPITAL ADEQUACY
The international standard for measuring capital
adequacy is the risk asset ratio.
The risk asset ratio calculated in accordance with the capital
adequacy guidelines of the Bank for International Settlement
is as follows.
2003 2002
J$’000 J$’000
CAPITAL BASE
TIER 1 - SHAREHOLDERS’ FUNDS 8,455,627 8,136,627
TIER 2 - GENERAL PROVISION 242,272 156,068
TOTAL CAPITAL BASE 8,697,899 8,292,695
TOTAL RISK WEIGHTED ASSETS 41,402,841 27,976,590
RISK ASSET RATIO 21.01% 29.64%
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 99
ANALYSIS OF SHAREHOLDINGS
DIRECTORS & SENIOR EXECUTIVES
N.C.B. JAMAICA LIMITED
INTEREST/OWNERSHIP OF SECURITIES BY DIRECTORS OR
SENIOR MANAGERS IN NCB JAMAICA LIMITED
AS AT SEPTEMBER 30, 2003
DIRECTORS
MR. KRIS ASTAPHAN nil
MR. AYLMER “DESMOND” BLADES nil
MR. WAYNE CHEN nil
DR. NIGEL CLARKE 1,440 1,440
MRS. SANDRA GLASGOW nil
MR. AUBYN ROCHESTER HILL nil
HON. NOEL A.A. HYLTON, O.J., C.D. nil
PATRICK ANDREW HYLTON 6,678 6,678
MR. MICHAEL LEE-CHIN
*AIC (Barbados) Ltd. * 1,850,072,242 1,850,072,242
MR. DONOVAN LEWIS 15,000
* 12,518,421 12,533,421
MRS. THALIA LYN 12,500 12,500
MR. HERBERT PHILLIPPS Jnr. nil nil
PROF. ALVIN WINT 150 150
* Indicate shares held by Nominees or connected persons
SHAREHOLDINGS OF COMPANY SECRETARY
MRS. JENNIFER DEWDNEY KELLY 26,194 26,194
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 100
SENIOR MANAGERS AS AT SEPTEMBER 30, 2003
RICKERT GEORGE ALLEN 10,000
LEROY BUCKNOR 339,316
* 73,692 413,008
COURTNEY CAMPBELL 72,811 72,811
INGRID S.M. CHAMBERS 10,000 10,000
SHEREEN JONES * 52,560 52,560
MICHAEL MARSDEN nil nil
JANICE McKENLEY nil nil
MINISH PARIKH nil nil
ALEXANDER DOUGLAS PEEBLES 27,211 27,211
MARJORIE SEEBERAN 3,720 3,720
NCB JAMAICA LIMITED
10 LARGEST SHAREHOLDERS AS AT SEPTEMBER 30, 2003
Name of Shareholder Units
AIC (Barbados) Limited 1,850,072,242
Jamaica National Building Society 98,911,646
West Indies Trust Company Limited A/c WT. 109 32,505,497
Ministry of Labour Welfare & Sports A/c N.I. Fund 20,711,712
Trading A/c – Life of Jamaica Polled Equity #1 18,521,461
Trading A/c – Scotiabank Ja. Trust & Merchant A/c # 15,387,399
Trustees NCB Employee Share Scheme 14,574,431
West Indies Trust Co. Ltd. A/c WT. 89 13,572,311
Ideal Portfolio Services 11,371,424
Carzlyn Limited 6,299,957
ANALYSIS OF SHAREHOLDINGS DIRECTORS
& SENIOR EXECUTIVES cont’d
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 101
TEN LARGEST SHAREHOLDERS AS AT SEPTEMBER 30, 2003
Shareholding
AIC (Barbados) Limited 1,850,072,242
Jamaica National Building Society 98,911,646
West Indies Trust Company Limited: Account WT. 109 32,505,497
Ministry of Labour, Welfare & Sport, Account - National Insurance Fund 20,711,712
Trading Account - Life of Jamaica Polled Equity No. 1 18,521,461
Trading Account - Scotiabank Jamaica Trust & Merchant Account 15,387,399
Trustees NCB Employee Share Scheme 14,574,431
West Indies Trust Company Limited Account WT89 13,572,311
Ideal Portfolio Services Limited 11,371,424
Carzlyn Limited 6,299,957
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 102
NCB BRANCH NETWORK SUBSIDIARY LOCATIONS&
Annotto BayP.O. Box 30Annotto Bay, St. MaryTel. 996-2213, 996-2219Fax: 996-2416David Barnes - Manager
BaywestBaywest Centre, Harbour StreetMontego Bay, JamaicaTel: 952-3640Fax: 952-7256Andrea Arscott-Allen - Officer in Charge
Black RiverChambers Plaza, Black RiverTel: 965-2207, 965-9083Fax: 965-2407Marvia Blair - Manager
Brown’s Town17 Main StreetBrown’s Town, St. AnnTel: 975-2242, 975-2275Fax: 975-2508Stuart Barnes - Manager
Chapelton40 Main StreetChapelton, ClarendonTel: 987-2225, 987-2395Fax: 987-2211Jacqueline Mighten - Manager
ChristianaMain StreetChristiana, ManchesterTel: 964-2235, 964-2426Fax: 964-2454Roberts Brooks - Manager
Credit Card Centre10 Oxford Road, Kingston 5Tel: 920-0121-5Fax: 929-3869Hemant RatanjankarClaudette RodriquezHeston HuttonDonna WaltersGarfield SangCecille Walfall
Cross Roads90-94 Slipe RoadP.O. Box 5, Kingston 5Tel: 926-7428-9Fax: 926-7463Marva Peynado - Manager
Duke & Barry Streets37 Duke Street, KingstonTel: 922-6710-9Fax: 922-4816Glen Shields - Manager
FalmouthWater Square, P.O. Box 80Falmouth, TrelawnyTel: 954-3232-3Fax: 954-3211Lorna Deers - Manager
Hagley Park Road211 Hagley Park RoadKingston 11Tel: 923-5391-5Fax: 923-7517Mark Fletcher - Manager
Half Way Tree94 Half Way Tree RoadKingston 10Tel: 926-5416-9Fax: 929-3861Kingsley Yapp - ManagerA. Narda Andrews - Asst. ManagerElene Palmer - Operations Manager
Harbour ViewHarbour View Shopping CentreHarbour View, Kingston 17Tel: 928-6361, 928-7513Fax: 928-7566Percival Chin - Officer in Charge
54 King Street54 King StreetP.O. Box 120, KingstonTel: 922-3940-9, 922-6250-9Fax: 922-6107, 922-4373Valda Facey - ManagerDonna Clarke - Asst. ManagerSheila Smith - Operations ManagerWinsome Heslop - Asst. Manager, CustomerService
1-7 Knutsford BoulevardP.O. Box 463, Kingston 5Tel: 926-9015-23Fax: 926-4210Stuart Reid - ManagerJeffrey Johnson - Asst. ManagerMargaret Lawrence - Operations Manager
30 Knutsford Boulevard30-36 Knutsford Boulevard, Kingston 5Tel: 929-8950-5Fax: 929-6112Noel Barker - Manager
Linstead29 King Street, P.O. Box 3Linstead, St. CatherineTel: 985-2257, 985-9295Fax: 985-2454Leon Rattray - Manager
LuceaMain Street, P.O. Box 30Lucea, HanoverTel: 956-2204, 956-2348-9Fax: 956-2410Donald Wilson - Manager
MandevilleP.O. Box 61Mandeville, ManchesterTel: 962-2618, 962-2161Fax: 962-3619Winston Lawson - Manager
Manor Centre195 Constant Spring RoadKingston 8Tel: 924-1388Fax: 755-1805Ilyn Thompson - Manager
Manor Park184 Constant Spring RoadManor Park Plaza, Kingston 8Tel: 924-6107-9Fax: 925-6478Ilyn Thompson - Manager
Matilda’s Corner15 Northside Drive, Northside PlazaKingston 6Tel: 702-2421-3Fax: 927-3580Jocelyn Richards - Manager
May Pen41 Main Street, P.O. Box 29May Pen, ClarendonTel: 986-2411, 986-2343Fax: 986-2745Leroy Harding - Manager
Morant Bay39 Queen Street, P.O. Box 3Morant Bay, St. ThomasTel: 982-2225, 982-2272Fax: 982-2480Linda Miller - Manager
NegrilP.O. Box 87, Sunshine VillageNegril, WestmorelandTel: 957-4239/3133Fax: 957-4118Oralee Powell - Manager
Newport West54 Second Street, Kingston 11Tel: 923-9004-5Fax: 923-5272Andrea Vaccianna - Manager
Ocho Rios40 Main StreetOcho Rios, St. AnnTel: 974-2522, 974-2580Fax: 974-2366Carolyn Schwab - ManagerJuliet Brown - Operations Manager
Old HarbourSouth & West StreetOld Harbour, St. CatherineTel: 983-2279Fax: 983-2209Laurie Spencer - Officer in Charge
Oxford Place2 Oxford RoadP.O. Box 521, Kingston 5Tel: 968-2765, 968-2773Fax: 929-4876Elizabeth Thompson - Manager
Private Banking Centre32 Trafalgar Road, Kingston 10Tel: 929-7717/8735Fax: 929-8736Elaine Riettie - ManagerAlthestan Bellamy - Asst. Manager
PortmoreShop 2D, Portmore MallTel: 988-7433-7Fax: 988-7432Ashbourne Solomon - Manager
Port Maria8 Main StreetPort Maria, St. MaryTel: 994-2551, 994-2219Fax: 994-2380Earl Mark Leakey - Manager
Red Hills RoadRed Hills Shopping Mall105 Red Hills RoadKingston 19Tel: 925-3313-4Fax: 924-5174Patrick Palmer - Manager
St. Ann’s Bay19-21 Main StreetSt. Ann's Bay, St. AnnTel: 972-2490-1Fax: 972-2462Kay Earl - Manager
St. James Street41 St. James Street P.O. Box 318, Montego Bay, St. JamesTel: 952-6540-9Fax: 952-6258Norman Reid - ManagerBeverley Creighton - Manager, Customer ServicePhyllis Smith - Asst. Manager
Santa Cruz7 Coke Drive, Santa CruzSt. ElizabethTel: 966-2204Fax: 966-2495Jacqueline Lucas - Manager
Savanna la mar68 Great Georges StreetP.O. Box 10Savanna la mar Tel: 955-2623Fax: 955-2483Clive Gordon - Manager
Spanish Town Road236 Spanish Town RoadKingston 11Tel: 901-2042/9929Fax: 901-7876Denzil McKenzie - Officer in Charge
St. Jago Shopping CentreSt. Jago Shopping CentreP.O. Box 22, Spanish TownSt CatherineTel: 984-0672-6Fax: 984-0667Peter Jennings - Manager
UniversityUniversity of the West IndiesMona, Kingston 7Tel: 927-1057/0463Fax: 927-1523Andrew McCalla - Manager
Washington Boulevard45 Elma Crescent, Kingston 20Tel: 934-1081-2Fax: 934-1381Courtney Williams - Officer-in-Charge
Windward Road89-91 Windward RoadP.O. Box 25, Kingston 2Tel: 928-1167, 928-2922Fax: 928-5922Delroy Morris - Officer-in-Charge
NCB SUBSIDIARIES
Data Cap Processing Limited1-7 Knutsford BoulevardKingston 5Tel: 926-9015-23Fax: 968-0654Owen Robinson - Manager
Edward Gayle and Company Limited3rd Floor, The Atrium32 Trafalgar Road, Kingston 10Tel: 960-7018/8592,Fax: 920-4313Patrick Hylton - Acting Managing Director
Mutual Security Insurance Brokers1st Floor, The Atrium32 Trafalgar Road, Kingston 10Tel: 929-9050Fax: 968-7725Pat Austin - Manager
NCB (Cayman) LimitedCricket Square, Elgin StreetP.O. Box 31120 Grand Cayman, B.W.I.Tel: (345) 949-8002Fax: (345) 949-4006Phillip Harrison - Manager
NCB Insurance Company Limited3rd Floor, The Atrium32 Trafalgar Road, Kingston 5Tel: 935-2004, 935-2005Fax: 929-7301Ingrid Chambers - Managing Director
NCB Jamaica (Nominees) Limited2nd Floor, The Atrium32 Trafalgar Road, Kingston 10Tel: 929-9050Fax: 968-1344Colleen McDonald - Registrar
NCB Remittance Services Limited33 Smallbrook, QueensburyBirmingham B5,4HQEnglandTel: 121-632-5334-5Fax: 121-643-8447Dale Robinson - Manager
West Indies Trust Company2nd Floor, The Atrium32 Trafalgar Road, Kingston 10Tel: 929-9050Fax: 926-6674Marlene Motta - Manager
NATIONAL COMMERCIAL BANK JAMAICA LIMITED ANNUAL REPORT 2003 103