Angus Young

NCB Global Finance Limited (NCBGF) has been affirmed with a rating of CariA (Foreign and Local Currency) on the regional rating scale, and ttA on the T&T national scale to from Caribbean Information & Credit Rating Services Limited (CariCRIS).

According to CariCRIS these ratings indicate that the level of creditworthiness of the NCBGF, in relation to other obligors within T&T and the Caribbean is good.

CariCRIS has also maintained a stable outlook on the Ratings. The stable outlook is predicated on CariCRIS’ expectation that NCBGF is well positioned to sustain their operations and stable credit profile over the next 12-15 months.

Moreover, CariCRIS expressed that despite the likely negative impact of the COVID-19 on economic activity in T&T and the wider Caribbean region, NCBGF is expected to realise continued profitable operations in FY2020, albeit at a reduced level.

As a member of the NCB Financial Group, one of the largest financial conglomerates in the region, the report emphasised that NCBGF has access to additional capital and financial support if needed.

It said that the ratings of NCBGF reflected the company’s competitive advantage, which lies in its affiliation with the NCB Financial Group, a leading financial services provider in the region.

Also supporting the ratings is the Company’s financial performance, which is supported by continued profitability and good asset returns.

CariCRIS outline that another factor supporting the ratings is NCBGF’s asset quality, which is considered good and is characterised by a consistently low Non-Performing Loans (NPL) ratio, which is well below that of the local industry.

In highlighting the factors that could lead to an improvement of the ratings and/ or outlook of NCBGF, CariCRIS included the successful rollout of the Company’s income rebalancing strategy leading to a greater contribution to total income from its Retail and Business Banking Division to over 40 per cent and a reduction in the reliance on institutional funding to under 50 per cent.

CariCRIS noted that an upgrade could be given to NCBGF if the company records sustained increases in profitability of ten per cent over the next 3 years.

According to CariCRIS, the factors that could lead to a lowering of the ratings and/or Outlook include two consecutive years of declining asset yields or rising funding costs, leading to a material contraction in spread income to below 1 per cent.

NCBGF could also receive a lower rating from CariCRIS if there is a systematic increase in liquidity pressures in the environment, leading to funding withdrawals in excess of 50 per cent from large institutional investors, and a worsening of short-term TT$ liquidity measures over an 18-month period.

The rating agency also maintained that deterioration in the parent company’s credit rating that could materially impact the extent of credit support available to NCBGF, is also a factor that could lead to a lower rating. (KR)