NCBFG audited profit dips $1.7 billion

The auditors of NCB Financial Group Limited (NCBFG) have revised the conglomerate’s profit downward by $1.7 billion, bringing it to $21.6 billion, following the restatement of certain contracts.

This adjustment represented a 7.0 per cent decrease in the conglomerate’s unaudited net profit and a 1.0 per cent dip in its unaudited capital as of September 2024.

“The updates and adjustments impacted both the consolidated income statement, consolidated statement of financial position, along with the related notes,” NCB management noted in a release on Friday following the release of the audited report.

NCBFG released its September-dated unaudited accounts in November, and its auditor, PWC, released their assessment of those accounts in the week.

The issue centred on the treatment of long-term insurance contracts under the adopted international financial reporting standards (IFRS). These rules require companies globally to standardise the treatment of funds flowing under customer contracts. Previously, companies had the flexibility to determine how to stagger the flow of funds, which made it difficult to compare similar contracts.

PWC also indicated that NCB “management identified a system issue that resulted in unreconciled differences that affected certain customers’ accounts. A provision for these unreconciled differences was made for the current and prior year”.

The reduction in audited profit to $21.6 billion to September 2024 was previously reported as $23.25 billion unaudited for the group. The earnings attributable to stockholders of the parent company dipped to $13.3 billion after removing billions to sharesholders only invested in its subsidiaries such as Guardian Holdings, down from $15 billion as originally stated.

The reduction in profit, on the surface, makes next year’s undisclosed growth target easier to attain. It, however reduces NCB’s trailing 12 months profit, which it wants to hit $30 billion in the near term. It achieved that figure in 2019, which reflected record profit. It is the second year since majority owner and chairman Michael Lee-Chin took a more active management role in the group following the clean sweep of its long-standing exceutive and senior management team.

NCB still operates the largest bank in terms of assets, but Scotia Group Jamaica’s profit haul surpassed its peer for the second year in a row. Scotia, seen as the more conservative bank with virtually no debt, made $20.2 billion in profit for its October full year, up 17 per cent year on year.

The technical impact of the restatements revealed a decline in the group’s capital within retained earnings. PWC confirmed that NCBFG closed its September 2022 financial year with a capital valuation of $193 billion. However, following restatements on October 1, “the adoption of IFRS 17 resulted in a $54.6 billion reduction in total equity for the group” to $138.6 billion. Despite this, the group quickly rebounded, reporting an audited capital of $170.7 billion in 2023 and $210.75 billion in 2024. The latest unaudited capital figure stands at $212.9 billion, reflecting a slight decrease of $2.15 billion, yet indicating the group’s continued financial strength.

business@gleanerjm.com