NCB reserved on prospects for banking sector
Published:Friday | June 3, 2011 | 12:00 AM
- But expects to maintain own growth trajectory ahead of cross-listing
Sabrina Gordon, Business Reporter
National Commercial Bank Jamaica Limited is pessimistic about growth in the commercial banking market, and instead expects new competition from emerging business in mobile banking to limit prospects for traditional institutions.
The banking group is the most profitable company in Jamaica among businesses whose financial reports are publicly available, but it has maintained its edge by charging higher fees and strangling expenses as its net interest income and loan book dip in value.
"It is difficult to predict growth at this time, given the many changes in the competitive landscape and the fact that in many ways, the country and the sector are entering uncharted waters," said Dennis Cohen, deputy group managing director.
He was responding to Financial Gleaner queries on the bank's selling points to North American investors when it follows through on plans to either cross list in New York or Toronto. It is also unlikely to include a change in dividend policy, he said.
Cohen explained that until more clarity is obtained on issues such as mobile banking, and the longevity of the current low interest rate environment, NCB would stay reserved in its growth projections for the sector.
Still, Cohen said that with the bank's current performance - NCB has been reporting new record profit each year for a decade, rising above J$11b in 2010 - and its growth path, it is well positioned to propel active trading in the stock on the exchanges it proposes to list.
The bank is targeting US$175 million from an initial public offering and is now recruiting an investment bank to arrange the float of shares.
The number of shares floated will be determined at the pricing of the offer.
The offer, said Cohen, "represents an effective way to initiate the cross-listing by immediately providing a significant block of shares available to investors in that market, while providing new long-term funding that will contribute to the strategic growth of the company."
The bank will seek shareholder approval for a 25 per cent increase in the company's authorised share capital at its upcoming annual general meeting to facilitate the IPO.