The net profit for the Group was $1.1 billion compared to $971.1 million for the corresponding period of the previous year, an increase of $166.9 million, or 17%. Operating revenue (revenue minus interest expense) for the three months was $4.3 billion, an increase of $305.9 million or 8% when compared to the corresponding quarter of last year. Net interest income and net fees and commissions for the period reflected increases of 16% and 32% respectively when compared to 31 December 2004. Overall operating expenses increased by less than 2% despite the increase in staff costs; provision for credit losses and other operating expenses were below the comparative prior year by 72% and 7% respectively.

COMPARISON OF KEY RATIOS

	Dec. 2005	Dec. 2004
Return on Avg. Equity	21.51%	21.78%
Return on Avg. Total Assets	2.32%	2.15%
Growth in Revenue	4.4%	4.2%
Cost Income Ratio	63.6%	64.2%
Net Asset Value per Share	$8.55	$7.50

REVENUES
Total revenues for the Group increased by $291 million or 4% compared to the prior year quarter. Although net trading income decreased by 36%, the Group continues to reflect growth in loan income and non-interest income over the period as follows:

• Income from loans increased by $200.3 million or 13%.
• Net fee and commission income increased by $179.1 million or 32%.

LOAN PORTFOLIO
Loans and advances totaled $39.8 billion as at 31 December 2005, an increase of $4 billion or 11% over 30 September 2005.

The aggregate amount of non-performing loans amounted to $1.59 billion compared to $1.61 billion as at 30 September 2005. The provision for credit losses for the three months was $46.2 million compared to $165 million for the corresponding period of the prior year, a decrease of 72%.

As at 31 December 2005 the accumulated provision for credit losses of $2.2 billion represented an overall coverage of 141% of non-performing loans. Provisions for credit losses that exceed the amounts required by International Financial Reporting Standards (IFRS) are credited to a non-distributable Loan Loss Reserve. As at 31 December 2005 the balance in the Loan Loss Reserve was $269.4 million. The Bank’s provisioning policy is in compliance with the Bank of Jamaica regulations.

BALANCE SHEET
The Group’s total assets as at 31 December 2005 was $199.31 billion, a growth of $5.5 billion or 3% compared to 30 September 2005. The increase in the asset base is mainly attributable to the growth in loans and advances and other assets of 11% and 8% respectively.

The growth in the asset base over the three months was mainly funded as follows:

	INCREASE
	$B	%
Customer Deposits	1.95	2.3
Repurchase Agreements	1.4	2.8
Due to other Banks	1.5	24.7

CAPITAL
As at 31 December 2005 the Group’s total stockholders’ equity was $21.1 billion, a marginal decrease of less than 1% when compared to September 2005 due to a reduction in the fair value reserves. As at 31 December 2005, the Risk-based Capital Ratio was 16.84% which exceeds the minimum requirement of 10% by the Bank of Jamaica.

DIVIDENDS
At the Board of Directors meeting held 26 January 2006, an interim dividend of 13 cents per share (total cost J$320,679,167.64) was approved. The dividend is payable on 24 February 2006 for shareholders on record as at 10 February 2006.

BASIS OF PREPARATION
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention as modified by the revaluation of available-for-sale investment securities, trading securities, derivative contracts and investment property.

As of 1 October 2005, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and are effective for accounting periods beginning on or after 1 October 2005. The adoption of these new accounting standards and interpretations has resulted in changes to the Group's accounting policies in the following areas that have affected the amounts reported for the current and prior periods:

IAS 39: Originated debt securities traded in an active market, which were previously carried at amortised cost, are now carried at fair value.

IFRS 3: Negative goodwill arising from the acquisition of an associate has been derecognised as at 1 October 2004, by crediting retained earnings at that date. Under the previous accounting policy, negative goodwill would have been amortised over its expected economic life. Positive goodwill is no longer amortised but assessed annually for impairment.

IFRS 4: Certain policy contracts issued by the Bank's life insurance subsidiary in 2004 which were previously accounted for as insurance contracts did not meet the definition of insurance contracts under IFRS 4 (Insurance Contracts), as they transferred primarily financial risk and did not contain significant insurance risk. In 2004 these contracts were treated as financial instruments in accordance with IAS 39 (Financial Instruments: Recognition and Measurement). The contracts were revised during 2005 and are now treated as insurance contracts under IFRS 4.

Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current period.

All amounts are stated in Jamaican dollars unless otherwise indicated.

The Bank's accounting policy has been amended subsequent to the adoption of IFRS 3 as at 1 October 2004. This has resulted in the transfer of the negative goodwill arising on acquisition of associates to retained earnings. Positive goodwill is assessed annually for impairment and is no longer amortised.

COMMUNITY RELATIONS
In the first quarter of the 2006 Financial Year, NCB continued its tradition of providing support to the communities we serve, aligning our corporate responsibilities with our business objectives. In November, NCB’s ongoing support of education, through its Jamaican Education Initiative was demonstrated with the $17M sponsorship of the Principles of Business and Principles of Accounts CXC Examinations for the academic year 2005/2006. As a result, 15,571 students will be able to sit these examinations.

NCB sought to promote excellence and to offer positive role models in the field of sports by announcing a $6M commitment over the next four years to the MVP Track and Field Club's athletic development program. The funding will help the MVP's cadre of amateur and professional athletes, which include the world's fastest man, Asafa Powell and Olympic Gold Medalist, Sherone Simpson, in preparing for the Beijing Olympics in 2008.

Our subsidiary, NCB Capital Markets Ltd, provided a substantial boost to the charitable work performed by the Mustard Seed Communities with a donation of $1 million. This donation will help fund the organization's activities for 2006 including caring for handicapped children and those living with HIV/AIDS. Mustard Seed also provides training opportunities including subsidized classes in computer skills. A donation of computers was also made to the Mustard Seed Communities by NCB during the quarter.