Scotia Group earns $2.58 billion net profit
Scotia Group Jamaica Limited (SGJ) continues to see a steady rebound in its performance as it sequential net profit improved by 45 per cent to $2.58 billion in the second quarter (February to April) despite its year over year results being down by five per cent from $2.73 billion.
The financial services group was able to grow its net interest income by 19 per cent to $6.55 billion despite its loan book shrinking by three per cent to $208.02 billion. Its non-accrual loans were down by 36 per cent to $3.9 billion with the expected credit loss provisions declining further due to the improved economic outlook. The commercial loan book rose by three per cent during the quarter after the reduction in the first quarter from soft demand.
“Scotia Group delivered strong results for another quarter. We continue to advance our customer first strategy and support the recovery process as the economy normalises. Performance improved across our business lines as we continue to deliver relevant, value-added solutions to assist our customers to meet their financial objectives,” stated president and Chief Executive Officer Audrey Tugwell Henry in the shareholder release.
The group’s other operating income declined by 23 per cent to $3.70 billion as it saw a net loss on its financial assets and a reduction in gains on foreign currency activities. Net fees and commissions improved by 23 per cent to $1.75 billion due to higher transaction volumes. This should improve going into the fourth quarter when the original increase on fees for the banking subsidiary take effect after being pushed from February to August. It has not raised interest rates despite the Bank of Jamaica raising its policy rate. The current borrowing rates as mentioned on the website expire on August 15.
Total expenses increased by seven per cent to $5.97 billion as the group’s other operating expenses grew to $3 billion. As a result, profit before taxation (PBT) declined by three per cent to $3.63 billion. The six months PBT was down two per cent to $6.59 billion with net profit coming in three per cent lower at $4.37 billion.
The group’s treasury, corporate and commercial and insurance services all saw an improvement in PBT with the retail and investment management services seeing a reduction during the six months period. The retail segment saw an eight per cent reduction in PBT to $493.87 million despite the mortgage book growing 22 per cent. Assets under management for the investment subsidiary closed the period at $191 billion.
SGJ’s recovery comes against the backdrop of the Caribbean and Central America segment of its parent seeing a 25 per cent rise in net income to CA$95 million ($11.52 billion) for the quarter. The segment experienced a two per cent improvement in total revenue to CA$523 million.
The purchase and sale agreement of Scotiabank’s Guyana operations with Trinidadian-based First Citizens Bank Limited (FCB) has expired and the agreement was terminated. The deal was announced in March 2021 with the Bank of Guyana (BOG) noting that First Citizens had no licence to operate in the country. The BOG was still determining in March whether to issue a license to FCB to operate in Guyana. The Guyana subsidiary had GYD$81.11 billion ($59.70 billion) in total assets as of October which resulted in it earning GYD$1.87 billion in net profit.
The Government of Trinidad and Tobago will be selling 10,869,565 ordinary shares in First Citizens Group Financial Holdings Limited (FCGFH) through First Citizens Holdings to raise TT$500 million later this year. FCGFH had TT$46.26 billion in total assets as of March and generated TT$335.20 million from TT$1.06 billion in total income.
Total assets for SGJ rose by seven per cent to $604.37 billion, which was largely comprised of $162.78 billion in cash and cash equivalents. Total liabilities and shareholders’ equity grew to $489.82 billion and $114.55 billion, respectively. Deposits totalled $397.66 billion. SGJ will pay a $0.35 dividend on July 20 to shareholders on record as of June 28. This payment totals $1.09 billion.