Jamaica¹s economic woes have not made life easy for its
banks and conditions are not expected to improve soon.
After struggling through a prolonged recession, last year
Jamaica¹s real GDP grew by 1.5% and is forecast to grow by
just 0.5% this year, according to Fitch, which expects an
average growth rate of 1.0% for 2013-2014.
National Commercial Bank of Jamaica, which had total assets
of J$379.4 billion ($4.23 billion) as of mid-year up by
J$31.5 billion dollars from the year before remains the
country¹s largest player, rendering it best equipped to
handle any further economic deterioration.
NCB accounts for nearly a third of the assets in the banking
system. At the end of the first quarter, it held the largest
market share in loans (38.1%) and deposits (38.4%) in the
commercial banking industry, according to the central bank. It
also has the largest branch network and capital base.
NCB has concentrated recently on developing its retail
operations particularly consumer credit and unsecured
consumer loans, credit cards, mortgages and car loans. Small
and medium-sized business (SME) lending is also growing, which
is a positive sign for the bank, says Theresa Paiz-Fredel, an
analyst at Fitch.
The bank has grown in spite of the country¹s poor
economic activity. Loans were up by 18.4% compared to June last
year, and non-performing loans stand at 7.1% of gross loans, as
opposed to 7.3% the year before. Deposits were also up 13.3%
from June 2011.
NCB ranks top in loan share, deposits and equity, generally
dominating its market ahead of much smaller banks, Paiz-Fredel
says, noting that foreign banks¹ presence has offered some
competition, though not enough to knock NCB from its perch.
As of March this year, NCB was the leader in terms of loan
market share, at 38.1%, and deposits 38.4% on the commercial
side, according to the bank. Its size means it does not need to
rely on any one specific product area. ³Relative to other
banks in similar markets, NCB¹s income streams are much
more diversified,² Paiz-Fredel says.
While NCB¹s loan portfolio has been highly
concentrated, it is diversifying as corporate lending declines,
Paiz-Fredel says. The bank has also invested in technology and
IT, so its efficiency should improve down the line. NCB says it
plans to continue focusing on deposit portfolio growth.
For the year ahead, it highlights strategic initiatives that
include centralizing underwriting and delinquency management