Mayberry Investments Limited: Investor Briefing - 'NCB'

Summary

In the Mayberry Investments Limited Virtual Investor Forum, hosted by Dan Theok, NCB's year-end results were discussed. Key figures in attendance included Michael Lee-Chin, NCB Group CEO, along with other prominent guests from NCB and Mayberry Investments. The presentation highlighted NCB's impressive financial growth, particularly a 174% increase in consolidated net profit. Despite challenges, such as inefficiencies and a need for customer service improvement, the company aims to continue improving its efficiency ratios and returns on equity. The discussion also covered future strategic approaches, digital transformation impacts, and the importance of enhancing Jamaica's economic environment.

Highlights

• Michael Lee-Chin emphasized the importance of world-class standards and operational efficiencies within NCB. 🌟
• The 174% increase in NCB's net profit marks a significant upturn in performance. 📊
• NCB's digital transformation efforts remain pivotal for enhancing customer satisfaction and operational efficiency. 🖥️
• Mayberry's analysis projects significant future growth in NCB's share value. 📈
• The forum stressed the need for Jamaica to improve its execution capabilities to attract global capital. 🌍

Key Takeaways

• NCB achieved a 174% increase in consolidated net profit! 📈
• Despite challenges, like inefficiencies, NCB is on the right growth path. 💪
• Focus on reducing the efficiency ratio and improving customer experience is key. 🎯
• Digital transformation is crucial for NCB's continued success. 🌐
• The Jamaican economy must tackle execution deficits for sustainable growth. 🇯🇲

Overview

In the recent Mayberry Investments Limited Virtual Investor Forum, NCB's impressive annual performance was at the forefront of discussions. With Dan Theok as the host, leading figures such as Michael Lee-Chin and other NCB execs elaborated on the financial year's highlights, revealing a whopping 174% increase in consolidated net profit. The company managed to push through various challenges, demonstrating resilience and a commitment to growth.

Key takeaways from the forum underscore NCB’s drive toward optimizing operational efficiencies and enhancing customer service standards, as highlighted by CEO Michael Lee-Chin. This commitment was evident in the company's discussion of strategic moves to improve the efficiency ratio and thus increase profitability. Attendees noted that despite inefficiency issues, NCB is positioned for continued growth, bolstered by strong digital transformation initiatives.

The forum not only focused on NCB’s corporate strategies but also opened a broader discourse on Jamaica’s economic climate, emphasizing the need for better execution to attract more global investors. As participants, including Lee-Chin, stressed, improving standards across educational and operational sectors is crucial for Jamaica’s sustainable economic development. This holistic approach promises not just corporate growth, but national advancement.

Mayberry Investments Limited: Investor Briefing - 'NCB' Transcription

• 00:00 - 00:30 [Music] [Music] good afternoon ladies and gentlemen welcome back to yet another Maybury virtual investor Forum I'm your host Dan theok senior vice president of investment banking and today we've got a really good one to do we'll be covering NCB Financial groups year end results
• 00:30 - 01:00 and joining us today we have a full panel including the honorable Michael Lee Chan the group CEO for uh NCB group Mr Angus Young the CEO for NCB Capital markets and Mr Robert Almeida the CEO for NCB group welcome gentlemen additionally thank you thanks for being here additionally of course from Mayberry were're joined by chairman of uh Mayberry group Christopher Barry and the chairman of May
• 01:00 - 01:30 uh Gary parrot and also the CEO of Mayberry investment limited Patrick batier welcome guys good deal well if it isn't your first time checking out our content then hit the like button to subscribe uh we don't never want you to miss an episode and remember to hit the Bell to receive all future notifications because we publish videos like this just about once a week additionally if you're looking to embark on your very first investment Journey you should take that first step with mayber of course you can follow us on social media to get started today so I will do an introduction
• 01:30 - 02:00 special one for Michael E chin because we've had Rob and Angus before so Michael E chin he's the founder and chairman of Portland hold Holdings Limited uh he's widely regarded as a Visionary entrepreneur whose philosophy on doing well by doing good has resulted in extraordinary business success and inspiring philanthropic initiatives Portland Holdings is a private investment firm which manages diverse businesses and sectors like Finance Insurance tourism and nuclear and delin
• 02:00 - 02:30 is also the chairman of NCB Financial Group he has bachelor's degree in civil engineering from McMaster University in Canada he's been awarded with honorary doctorate degrees from ested University and serves on various Global boards including the board of NCB group limited and guardian Holdings Limited additionally Mr Chin has been recognized with numerous prestigious Awards including the OJ in Jamaica back in 2008 for his exceptional business and philanthropic contributions and he's recognized as a member of the order of
• 02:30 - 03:00 Ontario in 2017 he has also been appointed to significant roles such as the chancellor of Wilfred laer University in Canada and chair of Jamaica's economic growth Council Mr leein is committed to NCB The People's Bank being one of the best banks globally excelling in the areas of efficiency governance and worldclass customer experience and Care while nurturing at the bank and owner's mindset amongst the employees and striving for the highest standard standards he remains committed to
• 03:00 - 03:30 building a better Jamaica and as such NCB must be a caring institution focused on uplifting Jamaicans and helping them to create wealth welcome Mr Lee chin great to see you again my pleasure being here awesome to have you here awesome to have you here so Rob I'm GNA kick it over to you because I think you've got a wonderful presentation to share with us that covers your year and results for the period ended uh 12- Monon period ended September 2024 welcome again R
• 03:30 - 04:00 great thanks Dan um so if we can um put the presentation up on the screen and maybe go to slide number three uh Dan I've been on the show now a couple of times so I think two or three times now and so I I I live in trepidation of coming on because I have to meet your expectations right so uh last time I think uh last time I think it worked out well this time I'm I'm G to say you know what it's uh I I think I'm falling a little short of your expectations but it it it overall it's you know kind of in
• 04:00 - 04:30 the right direction so um while we're getting the uh you have you have to let me know when the slide is up okay and we got the first slide perfect okay thanks um so so just to give a little context um it's spe a heck of a year uh we we uh I'd say the business um over the last several years the B the deterioration of the business was actually probably more than I had anticipated or more than I expected from from my my my from where I
• 04:30 - 05:00 had sat on a in a board seat um and and that showed up in as as we know going looking back at the past that showed up in in in customer experience issues and operational issues in in concerns about uh you the chairman had uh com com commented on EGC efficiency uh governance and customer experience that's internal controls efficiencies uh C which and and and operational issues sharp as efficiencies as well as sharp as custom experience
• 05:00 - 05:30 issues so um I'd say it's been uh probably it's been a it's been a tougher year than I had anticipated um but uh overall when you look at the the results I put it this way where we're seeing the results that says we're on the right track um things are definitely uh a whole lot better than they they were uh but we're not where we want to be or or where we need to be there's more to do we need to be better and and that would
• 05:30 - 06:00 be the way I would capsulize this and I'll just walk you through the numbers so and I should point out these are still un audited numbers we're still working through our our our audit our audit right now and and should be out in a in a in a week or so um but from working from these numbers operating income year-over-year increased by 4% um which is consistent kind of with what we've talked about saying operating income will grow in that middle know single digit type
• 06:00 - 06:30 uh basis um but then we're looking to improve our efficiency ratio and then you start to see the benefits of the efficiency ratio where when the efficiency ratio has gone from 86.3 down to 71.6 year-over-year and as a result net profit increase Consolidated net profit increase by 174% from 88.5 billion to 23 billion and net profit attributable to shareholders of the parent uh increased to 15 billion
• 06:30 - 07:00 so an increase of 357 per. now I should point out that the prior year had a number of one-time expenses so if you were to try and normalize for the one-time expenses in the prior year you'd probably you know increase that into the 89 billion doll range and so the year-over-year increase is still um you know in the vicinity of a 100% growth year-over year in terms of re normalized net profit attributable to shareholders
• 07:00 - 07:30 um and one point out a couple of other things here one is that you'll notice our banking actually increased the net revenu only increased 2% but our insurance service result increased 27% so the insurance business is an area that has done that that in in the prior the bank is still going through uh a a a turnaround and the insurance business probably a little bit ahead so it's gone through the if for a 17 uh transition and and I'd say about a year ahead of the bank in terms of its its uh uh it's
• 07:30 - 08:00 its turnaround and it's and its Improvement trajectory um on the return on asset so 1.03% so uh you say it's it's an okay number not a not a not not a number where I'd want it to be um return on Equity still under 10% you know would like to see that closer you know moving up towards 20% and the cost income ratio at 71.6 want to see that moving down towards 50 so definitely in the 50s is where we want to get to and so it'll be moving that c income ratio down into the
• 08:00 - 08:30 50s getting the return on Equity up to about 20% um and just repeat the story which is uh it's it's nice to see the Improvement year-over-year it's disappointing uh not to see it where I where where I'd like to see it and that I'll pass it back over to you Dan we can open up and start having a discussion on it sure appreciate that Rob I really do I've got a quick one I'd like to do as well to you've covered 80% of it so I will run through my standard presentation as well too which gives our listeners sort of the our view of the
• 08:30 - 09:00 thing and then we can jump into that Q&A I've definitely got two questions i' would like to ask you it's great presentation uh great numbers so Rob alluded to sort of my expectations which was like five billion per quarter and quite frankly rob you fell short by about $3 billion but I understand what that was about right that was about a $3 billion Insurance adjustment that you reclassified this quarter it had previously being booked in q1 of this year and you reversed it back in this quarter to restate into the prior year so on an adjusted basis I'll give it to
• 09:00 - 09:30 you you did do the 5 billion so let's let's let's get her right down uhuh he actually made the $5 billion but your accountants force him to only show two billion that's correct but in actual cash profits he hit his Target if not exceeded it right Bob I'll send the invoice later so so they did so they did I think yeah the restatement definitely compared to what the trajectory we were on but i' say on a normalized basis somewhere between uh
• 09:30 - 10:00 in between those two perspectives is where we are right now so it would actually be good Dan if if um at a later date we could actually show a trend yeah because what Rob referred to earlier is that you know each time he comes the numbers actually get better yeah yeah yeah and so even from an accounting perspective um after the adjustment it shows 2 billion the reality is that um without the adjustment you you're seeing that continued Improvement in in the NCB numbers yeah absolutely go ahead and
• 10:00 - 10:30 I'll run through that in a structured way you know as they said they've got the net operating income up by 4% 120 billion that's coming from $5.3 billion uh total operating expenses they reduced that by about $10 billion or 11% got that down to $92 billion and that results in a profit before a tax of $2 28.3 billion which is up 130% uh you know good note on expenses Rob just mentioned their desire to keep reducing the efficiency ratio you know each 10% reduction in that efficiency
• 10:30 - 11:00 ratio would throw out about $10 billion more of profit so that's something we look forward to uh but still you know great job with managing expenses so far then the net profit attributable to shareholders when you take out the minority interest um you know was $15 billion compared to the reclassified $3 billion last year so that's a whopping 356 per Improvement 15 billion is not quite the you know 5 billion a quarter that I'm looking for but we kind of understand that there were some adjustments we fully expect going
• 11:00 - 11:30 forward that you'll continue to um reduce your operating expenses and grow some of the Topline revenues um and so I would expect really again going forward that whenever you come here we're doing at least $5 billion a quarter um total assets up by 5% to 2.3 billion um more importantly U shareholders Equity attributable to the parent up by 22% to 174 billion dollars so the business is really very well um capitalized and we like to see that um current share price at $50 uh has a PE of eight times so
• 11:30 - 12:00 it's like undervalued by at least 25% compared to your pairs but more like 40% if we consider the potential Improvement in earnings to come and I I I sincerely look forward to coming back in successive quarters and seeing that I think you guys are going to get the um EPS which is currently $6 up to about $8 and at uh 12 times PE which I think would be a good value for you you can see what the numbers are 8296 I I I
• 12:00 - 12:30 fully expect this stock to bounce back to around about $96 in the next 12 to 15 months I think we just need to see to it's like almost 100% it is 100% And that's sort of the reality I mean NCB as you well know traded in the $150 region solid for like two three years I won't mention what it peaked at but it it traded at $150 you know two three four years it's you know 100% gain it's a lot of part the B absolutely absolutely so I would be shocked like I said if in the next um six to 12 months we don't see
• 12:30 - 13:00 significant growth in the stock price um it's a leading Bank you know uh well capitalized very well position and it's achieving these results as Angus said with all of the headwinds that we've had high inflation High interest rates a lot of chop going on so if they're doing that well in this then I think when things settle down they'll do a lot more next slide shows sort of the profit by quarter and you can see again uh this last quarter has the $3 billion um adjustment in it and so that's if you added that three billion back see they'
• 13:00 - 13:30 basically be at the $5 billion and then the last slide we like to look at is the sort of the movement in the stock price over the last um year or and you can see that the stock price has been um falling and uh there's no reason you know logical reason why that should be because in fact in the last four quarters um they've been delivering great results it was Q4 of last year that they had the $8 billion um loss which is a result of them taking some huge adjustments um oneoff adjustments then and what they've demonstrated to the market in the four successive
• 13:30 - 14:00 quarters is the fact that they can you know more or less run at 5 billion a quarter even in the chop so I think when interest rates start to come down and whatnot we'll start to see things improving significantly so Rob first question um from me to you is I mean is a 50 or even 60% efficiency rate really achievable cost income um and you know what are your next steps to reduce your efficiency or improve your efficiency by at least 10 10 percentage
• 14:00 - 14:30 points yeah so um so it's an interesting question Dan you say is it is it achievable so short answer I'm going to say yes it it'll be achievable it's achievable uh the longer answer is it has to be achievable and so it's a question of standards and uh when you take a look at organizations that have the scale of NCB the market leadership of NCB so what we've put together it's a business that that that should that should if it was operating at at
• 14:30 - 15:00 Global standards for our type of markets and our scale of markets uh we should be in the 50s in terms of expense ratio so it's one of those things that we we have to do it um because that's what makes us uh comparable to Global peers and uh and in terms of achievability yeah the number one it it's tough work because for us to get it there's two things that'll happen simultaneously but you're working right into the guts of the organization where we've got to recalibrate standards at the minua level
• 15:00 - 15:30 so that were actually all those things that customers talk about which is hey an ABM didn't have cash in it well on the one hand the customer doesn't get cash out of the ABM but on the other side it means that we're actually spending more money getting another truck out there to to put money in the ABM because we didn't plan for it properly or because the ABM got jammed and and we're doing rework because then we're having to adjust customer accounts we're going to have to do some some special postings so there's a bunch of rework that happens in the organization
• 15:30 - 16:00 that actually consumes a lot the other part is actually just on our so that's the biggest part there'll be a a quality improvement that'll improve both operating efficiency productivity as well as reduce as well as reduce customer irritance sorry to interrupt you Rob but um you know a lot of the guys here today they're kind of focused on the stock price right if you hit an efficiency ratio of 50% I mean obviously the chairman is the one who's been speaking about it publicly what type of profits are we looking at so if when you do the math on it and Dan
• 16:00 - 16:30 keeps doing this so you you uh you take the efficiency ratio into that range you'll get to that Roe in around uh a 20% type Roe which means you're really doubling the profits from where they are today so you you're looking at contributable to shareholder for about 30 billion are you suggesting NCB could make $50 billion in one year in Consolidated so before minority interest yes and 30 bliing a tri to shareholders
• 16:30 - 17:00 yeah each 10% improv so what stock price does that work out to Dan you guys are the gurus on this yeah so it's it's $6 today he's talking about $12 and again at you know 12 times PE that's back to $150 stock price so okay um yeah so it it was there before that's the number one thing I say Dan in terms of achievability is is you can it's back to where it was so a big part of what we're doing is we're actually just returning back to where this institution was uh uh several years ago so so that's what also gives us confidence that it's achievable
• 17:00 - 17:30 yep I agree I mean they have done $30 billion if I may one of the questions um you guys have announced two transactions um Clarion bank and uh NCB K man and it's been subject to regulat approval um two questions um when do you think it's likely that you'll get that approval and then two the proceeds um what do you plan to do with the proceeds should we be looking forward to an inre dividend after that deal is
• 17:30 - 18:00 announced okay so the uh the timing it's hard to say with the with the regulatory approvals um we're targeting them to happen in around you know the calendar towards the end of the you know C of the March quarter so in that in that type of timing in terms of uh in terms of what do we do with the use of proceeds the use of proceeds we we like we we're we're looking to delever so our priorities on Capital allocation first and foremost are uh uh reduce some of the leverage in the business uh in the
• 18:00 - 18:30 process of reducing the leverage in the business we'll then start you know increasing the uh the dividend paying capacity of the business so the sequence would be uh debt reduction first followed by dividend increases so put differently for some of our subscribers out there Bob um as you reduce the debt the savings on the interest expense um is likely to then be converted to dividends absolutely right now we're we're taking operating profits and we're
• 18:30 - 19:00 using it to pay interest and dividends and if we as we uh monetize some of our non-core assets we'll reduce the debt and in the process of that exactly what you said we'll be able to take that money that goes to interest and use it to pay dividends thanks yeah good deal so Robie saw impressive results in the insurance segment right up by 27% $4 billion do uh and that's comparing likes with likes after making the IFRS adjustments you want to talk to us a little bit about you know how you achieve those great results
• 19:00 - 19:30 so the Ian chipu who runs a guardian um he's been in there about over two years now and I be put a focus again it's just it's a lot of it's just operational efficiency and the detail so a big focus on cleanup um you know we use a broad term operational efficiency but it's efficiency on a number of Dimensions it's it's not it's just idle assets that are sitting around monetizing them making sure we get them uh working or we sell them and turn them into liquid into liquid assets that we can make more
• 19:30 - 20:00 productive um at the same time uh focusing on operational efficiencies uh all the way through from um you know how do we process claims to how do we uh process new new insurance policies but the third part is also in the insurance business in particular you can understand very important to be price disciplined because there's a lot of things changing so interest rates are changing uh inflation keeps changing and in Insurance you're working over these long-term time Horizon so you've got to make sure that when
• 20:00 - 20:30 when these things change they're they're changing in your in your numbers for you know multiples of 20 30 years so they have a big impact so you got to be very price disciplined and he's been very focused on enhancing our price discipline enhancing our operating efficiency and making sure that our nonproductive assets are either divested or turned productive excuse me Rob could you just uh in an insurance business the all there's there is all that you've said which is operation but there's also the investment piece
• 20:30 - 21:00 could just come into the investment piece R sure um yeah the goes back to uh looking at the assets and and where we have the ability to take where we've got long-term liabilities you get to invest them in longer term assets and you also because the investment the insurance the Investment Portfolio is very large in Insurance business right so you've got uh you you taken the money from the the the policy holders today and you invested to pay them out one day in the future when they when they make a claim
• 21:00 - 21:30 so you have this large float um and that gets invested so it's really important to invest it well one of the things we are able to do is we're also able to invest a portion of those portfolios in global markets and by focusing on and bringing particular you know the investment Acumen that we're able to bring to to to the business uh looking around globally for for performance we've been able to achieve some pretty impressive results I mean Global markets have been good but even in addition to that we've been able to uh to to bring
• 21:30 - 22:00 in some some particular investments into the portfolio that have done very well Mr lein I have a question for you and I want to pick your brain because you're you got a brilliant brain at stock investment we just talked about insurance results up by 27% yes yet Garden holding limited stocks at $315 Jamaican dollars it's at a PE of 3.75 time what is your view about the stock price of ghl and is this you know how do you feel about it
• 22:00 - 22:30 well uh by any measure a PE of three is uh a great buying Opportunity by any measure especially when you have a management that is frenetic about turning this business around setting it on a path whereby operationally we bring our uh combined ratio uh down to less than 100 and we are uh
• 22:30 - 23:00 at the same time making sure that the longterm Investments we make uh are we we we we we are have the potential of generating significant Alpha which is what is happening now the turnaround operationally and making sure that we optimize the investment opportunity which is uh making sure that we actually
• 23:00 - 23:30 maximize the longterm uh sorry maximize the international uh portion of the portfolio that we manage so the stock price is cheap which is a function of we're in an illiquid we're in illiquid markets in the Caribbean and the markets have been they they have uh a mind of their own with they trained Jamaica relative to Global
• 23:30 - 24:00 markets so but eventually as Warren Buffett said focus on the playing field not the scoreboard so if you look at the scoreboard you say wow three times PE in a management team with a management team that is that is a very owner operated that is frenetic and that is doing the right things in terms of managing the business business operationally and making sure the in the
• 24:00 - 24:30 portfolio is optimized um so my question to you chairman leein um I think the management team you know has to be congratulated for what they' have done so far um there's more to be done but I think they're on the right track to be able to do it um but we have a lot of investors um especially mayber clients who have been investing in the NCB stock um and we're seeing where the market is not responding to the numbers and one the analysis that we've seen is that you
• 24:30 - 25:00 know there are three basically major players that are that are still selling and the market is like why would they still be selling um I couldn't bring you here and you know not put this question to you um because you as a majority shareholder you between yourself and your companies you control in excess of 1.24 billion shares in the company even now valued at over 70 billion Jamaican dollars um you have some other former Executives that are selling as well and the question is if if we're seeing what
• 25:00 - 25:30 we're seeing here from the outside right why would these three key people who would know what the potential of this business is why would they be selling because if they stop selling tomorrow morning we're of the opinion it's a $90 stock but we don't mind if you continue to sell because we can get to buy more that is the first you know everybody has to make their own Capital allocation decision so not because not because I have sold shares me means that I don't have any confidence in the
• 25:30 - 26:00 company because I've sold shes so I've sold I sell 10 15 million 20 million 30 million shares that's insignificant relative to the total holding I'm not selling my Holdings right you see I'm around I'm speaking for myself because I am I am selling I have sold shares and you have seen the the you you you you've seen how active I am in the business okay we have uh so everybody has their own uh planning
• 26:00 - 26:30 needs their own uh their own Capital allocation needs and which may not which may not have anything to do with how well the business will do or is doing and at the same time if you're selling into a market that is uh that that is il liquid then you you know it takes a lot a lot longer and uh it's but but on the flip side as you
• 26:30 - 27:00 as you said there's a longer There's an opportunity to buy uh at these prices which by any measure uh are just giveway prices basically so you've heard it Michel lein says it's Black Friday giveway prices but more importantly Gary but uh sir Mike I have made most of my money on the Jamaican stock market because of
• 27:00 - 27:30 its IL liquidity yes because when when you get the cheap stock and then everybody realize it's cheap when the when the open pinion shifts there's nobody on the S side so that's my two cents on that well what I wanted to finish Chris before you came in and thank you for that Chris is that you know in life there is perspective and levels you know so when chairman leeching uses the word insignificant what he's mean what he means is that you
• 27:30 - 28:00 know to the average person 30 million shares in NCB at $50 a share is $1.5 billion that's over 10 million us it's a lot of money but everything in life is relative so chairman leein can sell 30 million worth of share 30 million shares and it represents less than 2% of his total Holdings right and so people need to put these things into perspective if he only had 35 million shares and sold
• 28:00 - 28:30 30 then it's a different story right so you know let's take him out of the picture and his Capital his his Capital allocation strategy and whatever he does personally separate from a well-run institution that Robert almea Angus Young Etc is running and what we're seing on the numbers and my final question is really to the third member here today hold on hold on one moment one one moment please let me just hitch on what Chris said because there there's a lesson to be learned here
• 28:30 - 29:00 and significant wealth which which we're all that's our aspiration significant wealth is only possible when three preconditions are present number one there must be a difference between perception and reality you can't create any wealth when everybody knows the same thing so that's number one number two there must be inefficiency and we we we are on this screen and
• 29:00 - 29:30 saying look NCB is a turnaround therefore we must think it is inefficient that's the second uh that's the second precondition to create significant wealth and number three there must be a a lack of capital when you have those three come together it's magical and I would say you look at if you think framework wise those three preconditions are alive and well
• 29:30 - 30:00 number one perception versus reality number two inefficiencies which we talked about bringing the cost to income ratio down from mid 80s which is down to Rob said uh mid-50s 50 and less and we are we are we have blood in our eyes to make sure it's done because we are not here to to just be mediocre we are here to make sure that whatever we do in anywhere in the
• 30:00 - 30:30 world is of exportable Standards world class standards so again significant wealth is a function of three preconditions must be present perception versus reality there must be a difference between perception and reality which there is here number two there must be inefficiencies which you have said it and you ask a question you bring cost income ratio down from 80 to
• 30:30 - 31:00 50 what happens and thirdly there must be a lack of capital we're coming from a state in Jamaica whereby cap the liquidity was scarce but that is improving every day so when you step back and you just superimpose what's happening against the framework your answer is clear so in short chairman leein my interpretation of chairman Lin's point is bye bye bye bye- bye bye NCB um and I I have to give um a
• 31:00 - 31:30 question to Angus Young who is the third leg of the stool today Angus we all hear about insurance side and the banking side um you run um the broker dealer um in an NCB group um you know how can we or what are you doing that could potentially Drive profits there by 20 to 40% sure thanks thanks for your question Gary so Dan touched on it if we are able to to deliver these numbers in this type of monetary policy environment then
• 31:30 - 32:00 there's only one direction and that's upwards now when you look at where Jamaica's inflation targets are which is between 4 to 6% and we're right down in the middle right now and then the bank of Jamaica is saying that the next eight quarters look like 5% we are seeing an easing monetary policy environment which is good for our business so lower interest rates we make more money lower interest rates the capital markets reignite and NCB Capal markets is poised
• 32:00 - 32:30 to take advantage of that just by simply of the game we've played in terms of during the doldrums we never left the market we were always there and we're at the gates so as the monetary policy environment improves G uh Gary uh you're going to find that the Catalyst on my side of the business is going to be our investment bankers the transactions are coming back to Market they're plentiful they're meaningful and they're fun Mally sound that has an exponential effect
• 32:30 - 33:00 Gary in the sense that we will earn more fees we will earn more net interest margin and it will also Kickstart our trading games so there's an exponential effect for when when we leverage now this easing monetary policy environment and it kick starts with the investment banking so we're well poised to take advantage of this uh trajectory in monetary policy Gary thank you Angus and you know the team indicat at that they have had 130 stops we're 4 minutes over
• 33:00 - 33:30 I'd like to give the last question to either chairman Barry or CEO b um you know there's a question could lead in a certain direction is there a customer service question you would have for these these gentlemen I pass Chris passes Patrick thanks thanks Gary one of the questions I did have really is more about some of the digital orch you guys are doing um notice that the digital
• 33:30 - 34:00 loan book is up what should we expect in the future for digital banking services and then uh second fold question is how has digital transformation impacted some of the operational inefficiencies that you just called out and what should we expect in the future particularly around customer satisfaction yeah so so yeah so I think digital digital obviously digital loans are the fastest growing Loan in our in our portfolio um and on the insurance side again digital insurance is is also
• 34:00 - 34:30 growing faster than the rest of the insurance book so so on the product side and then you take a look at we launched um EO as um the eepos uh where you could use your phone as a as a a card acquiring device um so we we launched that we've got the link product out there so we've got these digital products that are out there and and they and and they are growing in penetration uh and that will continue so we're leader in that area and they they'll continue we I've said said before that I I think we moved faster than the market
• 34:30 - 35:00 and and probably a little faster than our own operating capabilities and the combination of those two things is the market wasn't ready for it so we created customer experience issues on that side Market's not ready to abandon cash um and on the other side the market um internally the the pace of op of implementing new Innovative products also meant that we had some operational issues so the combination of those two things is slowing down and saying hey wait a second guys let's make sure we focus on Quality quality first
• 35:00 - 35:30 Innovation can't be running so far ahead that our quality starts to slip so we're bringing back the focus on quality and using digital to enhance our quality to get efficient use digital to lower our costs use digital to do better quality assurance and on the other side uh remember the customer make sure we're we're moving with the customer and and so yeah the customer has to adopt has to it Behavior change and we cannot move faster than our customers we can't move
• 35:30 - 36:00 slower than our customers we need to lead but we need to be moving in kind of in lock step just a little bit of a gap and and we we had we had jumped a little too far ahead and that created customer service issues so overall I think customer service is The Guiding Light uh it will be digital that'll solve it but it'll be a little less on Innovation and a lot more focused on quality assurance and on customer convenience yeah thanks for that Rob last question from me to Michael lein you know one of the roles you weigh was associated with the growth
• 36:00 - 36:30 Council how are you feeling about the Jamaican economy where we're at uh what things look like over the next 12 months the potential and then you know what does that mean for the bank how are you feeling about Jamaica if I can then I need to I need to drop off so I'm gonna say my goodbyes here thank you very much thanks for having us Rob thanks for being with us we really appreciate you being here we really do and we'll see you again next quarter right so uh Dan uh again
• 36:30 - 37:00 like we we have to focus on I'm not a prognosticator in the short of short-term events so I cannot answer that question uh uh I didn't make I I have never made $1 uh predicting your prognosticate of interest rates the economy anything so I I'm not going to comment what I can say I'm I'm an operator and what I can say is for us to make sure sure that we get Jamaica on a
• 37:00 - 37:30 long-term sustainable growth path we have to address our ability to execute we have an execution deficit in our country and we have to address it head on right throughout it starts off with our the the the the education our educational system starting off with kindergarten so we need to make sure that we deal with these issues upfront transparently which
• 37:30 - 38:00 is that they are primarily an issue of Standards let me so let me give you an example of what we are doing about it at NCB so I I I I recently have been thinking about how best to make sure that we can get our client our staff members to be worldclass in their standards in terms of productivity in terms of their uh uh their presentation everything how best
• 38:00 - 38:30 to do it and I said I I came up with it the concept of you know NCBS responsibility to staff members is to enable and facilitate them to be exportable to be exportable because a lot of us in Jamaica we want to we want to immigrate and if we can help our our staff to be of that standard so when they
• 38:30 - 39:00 immigrate if they immigrate they may choose not to if they immigrate when they land in timb to they're employable so to be exportable and again this is a standard you need three things number one you have to have a Global Perspective and standards that's number one to be exportable so we have to help our St or staff to get there in terms of their Global Perspective and standards number two you to be exportable you need to be be a a you need to be able to be a
• 39:00 - 39:30 good critical thinker so we have to help our staff to become better critical thinkers and thirdly to be exportable you need to be a pro you need to be problem solvers right so uh we need to help our staff staff to become better problem solvers and if you think about it in our educational system that we those three areas should be topical right because that's how we
• 39:30 - 40:00 uplift standards so and and and I can us I can now say if we were to as I I started by saying we we we have a fundamental uh execution deficit and if we deal with that headon starting with our educational system and focusing on those three areas right from primary school 10 years from now 15 years from now we will be on a long-term sustainable growth
• 40:00 - 40:30 path great thanks for that I do appreciate that so so it may not be the answer you want yes that's fine but but it's it's an it's it's an answer that we all should be paying attention to the structural issues that are facing our country yeah no I I agree with that wholeheartedly I I think the performance of the economy has been substantial we've got all the macroeconomic indicators is working very well but you can't achieve real growth and
• 40:30 - 41:00 productivity without being able to execute so y I agree with you 100% did we take any of the online calls no we didn't I I I will get to some online some some online questions for sure um uh Michael how much longer do you reckon you can stay with us another 5 10 minutes I give five minutes at the mov all right man not a problem not a problem we cover uh one one or two questions uh from online that we have here um and let me let me me I don't think Michael's going to ask answer that
• 41:00 - 41:30 question but somebody's asking um would would NCB consider increasing its shareholding and guarding Holdings limitted I think that's a good question uh not necessarily right now no we we wouldn't do it right now good deal in fact in fact we're precluded from doing it okay okay okay you would need regulatory approval to go any further in your holding you currently own 60% of my memory serves me well 62.9% okay very good and uh question I see here Mr in are you finished selling your stocks or you you've reduced your
• 41:30 - 42:00 holding from 51% to approximately 47% no no no no no no that's just in AIC barados we also have Holdings elsewhere okay uh I think we we in in agrate we have about 53% okay all right but there's no so in in aggregate so so so maybe 2 half% maybe 2 and a half% yeah he he's still he's still there um a very interesting question um there's a a suggestion for Guardian to do a stock split which may help the price
• 42:00 - 42:30 increase I don't know if that has come across your your desk you know again if you have a pizza yeah and you split it in eight pieces or 10 pieces or 100 pieces the pizza is still the same so we don't want to play those games at the we don't want to play those games in terms of pushing stock price with if we we want to focus on building great businesses and stock price will
• 42:30 - 43:00 follow so we just have to be patient that is investing and we have we need we need also to use these Forum forums to make our citizens better investors and it comes down to when you buy a share of a company it's not a you're not buying a a a piece of paper to be traded you're buying a proat interest in an actual business so focus
• 43:00 - 43:30 on what the actual business is doing so what okay one other question you mentioned before that you know you had your three points about creating wealth and you mentioned potential shortage of capital is capital short because of flight or pause and whichever the answer is how can we reignite the presence of capital well certainly uh the ideal situation is
• 43:30 - 44:00 to make Jamaica more investable let's speak globally now yes to make Jamaica more investable when when you make Jamaica investable you'll have cap the global Reservoir to draw from so we have to as as uh as uh stewards of Jamaica we have to think about all the ways in which to make Jamaica investable so that as a as a
• 44:00 - 44:30 money manager abroad in as a money manager anywhere in the world you would say wow how come I'm not invested in Jamaica when our return on Equity uh is uh in the 20s why am I not investing in Jamaica why am I not in Jama invest in Jamaica for all of these reasons but today if if you think about it uh we have a long way to go to make
• 44:30 - 45:00 Jamaica globally investable and those are the issues that we have to deal with upfront and honestly because if you have a dollar would would you would you would would you invest and if you're sitting on the on the moon say you're sitting on the moon you're looking down on Earth you can invest anywhere in the world you have to ask yourself why would I invest in
• 45:00 - 45:30 Jamaica good deal okay so we now have to say okay we are we have to cater to that Global investor because this is where the huge reservoir of capital is not only in Jamaica the huge reservoir of capital we want to be a part of that pool so we have to compete for that pool so what do we have to do in terms of our policies to make sure we're not imp feeding capital from flowing into from
• 45:30 - 46:00 that pool into Jamaica good points all great all great points Michael on that same theme um I want to try to ask you in a way that you would answer um you're sitting on the moon in 3 to 5 years time is NCB globally investable in other words could we see a listing on a a foreign exchange I did not uh if you look at NCB from 2 two when I bought it to
• 46:00 - 46:30 201819 our track record uh was multip in term of the stock price it was multiple times the S&P 500 it was multiple times uh what you'd have made had you Rel to birkshire hatway from two 2002 was about $253 to 225 I did not I am not uh I I don't have time I'm 73 I'm not
• 46:30 - 47:00 spending my time to be when I when I cut my teeth as an international investor uh to to to not have the company in as as significant in its impact influence and scale as NCB FG I'm not I'm not about to waste my time making it anything else but but globally
• 47:00 - 47:30 competitive globally investable and hence the reason I I speak this language we have to make all our staff uplift standards and we have to we we have to bring the the freneticism that you'd expect in from new if you when you go to New York you have to bring that fstm to our to the Caribbean that's how you get productivity increases so the other thing is you know I don't know if I'm taking this too far
• 47:30 - 48:00 tangential the other thing is we want to because if we want to make our C country uh globally competitive remember one framework how was America Built America is built based on immigrants okay am I right yes yes because what immigrants do they recalibrate standards that's what immigrants do so we have to look at
• 48:00 - 48:30 we're talking about building a country which we all of us on this screen here we are stewards if we don't do it who going to do it so immigrants build countries immigrants keep countries from being stagnant okay so we have to look at what our policies are what is what is our immigration policies are we are we uh providing a frictionless environment for immigrants
• 48:30 - 49:00 to come in are we encouraging immigrants to come in because they bring build countries that's how Canada is built that's how America is built so these are fundamental issues guys that we as stewards have to deal with but we have to have the perspective in this case immigrant build countries if you don't believe if you don't believe that if that hypothesis is wrong then my whole everything I'm saying
• 49:00 - 49:30 America is wrong if you believe it then we have to say so what what are our immigration policies is it encouraging immigration or is it from my perspective sir Mike I think um you know I think in Jamaica that conversation is not even really actively taking place and um I remember I was having a a little few words with Gary Pier who was
• 49:30 - 50:00 saying that people are talking about growth um when Omar Davis was the Minister of Finance back in the day I was talking about growth and he was talking about stability and um I think you spot on and I think um definitely I don't know how we energize uh the political leadership to take on these questions and this because I feel
• 50:00 - 50:30 once we decide that we want to be a part of the Global Financial Marketplace um and we want to attract the type of people who can build our country the problem is easily solved but the discussion is not taking place at all so how do we get that discussion started I mean you sat in the the best possible position to do it and um you know I don't think you were very
• 50:30 - 51:00 successful in achieving it and I'm not blaming it on you I'm just saying how do we get you know especially the political class to begin that discussion today with this me me hijacking this this forum and taking into this direction this could be the start so let us make it the start and keep it going
• 51:00 - 51:30 blessings because that's the highest value ad we as stewards all of us on the screen we're privileged we're privileged we're the privileged class in Jamaica and as as the privileged class in Jamaica it's is it's a responsibility that we have to provide the leadership and the perspectives so it's we have to address the issues at the fundamental level uh and be strong
• 51:30 - 52:00 Advocates the retardants that are keeping us stagnant agree thank you Michael lein we really it's an Aon to I've had you on our program we appreciate your insights your thoughts I agree with you 100% that we really have to work on our execution strategy um as a country we just don't execute and there's so much lwh hanging fruit things that we should be doing substantially better better at you know
• 52:00 - 52:30 think about Renewables and the 2030 Vision to have 50% Renewables by 2030 and we had 5 years of no rfps or movements to try to attract new Renewables we think about education and how poor the education system is um you know with less than 18% of kids last year passing with five subjects and you know we have to think about this strategically make some fundamental changes make these long-term Investments to be able to to improve our country for the benefit of all so we're doing great at the macroeconomic level you know
• 52:30 - 53:00 inflation interest rates Unemployment uh monetary policy Etc but if we don't execute and use the funds efficiently then we're not going to get the growth and we're not going to be able to track the type of investment that you just mentioned so thank you so much sir for being with us on the program today we really appreciate you and I would like to have you back in the next you know quarter to you know talk a little bit more my pleasure thank you very much guys all the best here maybe maybe we can continue our ADV advocacy and it will take
• 53:00 - 53:30 rot well well you you set it up you guys have done a wonderful job at creating a form like this we can build on it and I I will be happy to be a part of the build because that's my responsibility as a citizen of Jamaica Jamaica made made me The Confident person I am and I want to make sure that for as long as I'm here I can do whatever is possible to uplift my people to be the best that they can be and we guys we here on this
• 53:30 - 54:00 forum we should be that uh uh the Catalyst because we can thank you bye guys thank you sir well to our viewers thank you that's it for today's discussion it was a great uh discussion if you're not convinced that you should be buying NCB stock now I don't know how to help you I want to give special thanks to Angus to Rob and to Michael lein for joining us today we really appreciate the NCB team coming
• 54:00 - 54:30 out in its full Glory thanks Angus appreciate you also to the thanks man also to the Mayberry team thanks for chairman Barry chairman parro and Patrick bti for you guys coming out as well to support the program it's the insights you know are really special to our viewers good deal to our viewers be sure to look out for updates on our virtual investor for by following us on social media we share all things form related on our social media their Pages if you missed the show no problem
• 54:30 - 55:00 you can Rel you can review the highlights on our YouTube channel Mayar Investments limited subscribe now and be to watch your favorite episodes well that's it for today again remember wise investors slow and steady wins the race keep safe y'all bye take care [Music] [Music]