NATIONAL COMMERCIAL BANK JAMAICA LIMITED FINANCIAL …

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



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


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.


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


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


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.



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.


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


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


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.


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.



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.




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


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


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.




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


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.


Branch Manager, Stuart Reid speaking with a customer at the recentlyreconfigured NCB branch at 1-7 Knutsford Boulevard



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.


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


Afew faces of NCB


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.


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.


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%


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 #

“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


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


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


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


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


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


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


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


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,


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


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


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:




Due to other banks 23 (6,257,208) (2,217,348)

6,078,693 7,753,387


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


BALANCE SHEET30 September 2003

Restated

Notes 2003 2002

$’000 $’000

ASSETS



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


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,


Total Assets 118,001,864 91,408,011


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



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


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


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:




Due to other banks 23 (6,257,208) (2,088,944)

6,339,128 7,665,331


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.



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.




(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.




(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.




(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.




(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.




(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.



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



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.



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



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



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



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



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.



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



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.



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.



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


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



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


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


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



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



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).



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).



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%



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:


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:


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



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).



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



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



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.



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)



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.



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


Total assets 20,872,057 12,651,161 7,082,554 28,969,169 45,645,449 115,220,390


Net Liquidity Gap (46,253,457) (5,745,370) (1,803,732) 21,902,679 43,871,357 11,971,477





(a) Liquidity risk (Continued)


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


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



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


Net Liquidity Gap (42,037,640) (5,359,660) 640,509 19,516,704 38,684,842 11,444,755



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





(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.




(b) Interest rate risk (Continued)


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


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



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






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


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



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


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





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 - -



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.




(c) Currency risk (Continued)


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


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



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


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




(c) Currency risk (Continued)


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.




(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.




(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



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.



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



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



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



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.



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



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.



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.



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.



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



43. Financial Effects of Adopting International Financial Reporting Standards (Continued)

(a) Effect on stockholders’ equity as at 1 October 2001 (Continued):

The Bank


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


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




(b) Effect on stockholders’ equity as at 30 September 2002:

The Group


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




(b) Effect on stockholders’ equity as at 30 September 2002 (Continued):

The Bank


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




(c) Reconciliation of net profit for the year ended 30 September 2002:

The Group


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




(c) Reconciliation of net profit for the year ended 30 September 2002 (Continued):

The Bank


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




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.


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%


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


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


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


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


Documents

NATIONAL COMMERCIAL BANK JAMAICA LIMITED FINANCIAL …