Scotia Group Jamaica Limited (SGJ) has unveiled its four-pillar strategy which is focused on making it easier to do business with the financial conglomerate while bringing the range of services to its customers.

The strategy was unveiled at Scotiabank’s Investor Day on December 13 by Bank of Nova Scotia (BNS) CEO Scott Thompson, who is seeking to improve not only shareholder returns, but the relationship with clients across the globe. These four pillars include ‘grow and scale in priority businesses’, earn primary client relationships’, ‘make it easy to do business with us’ and ‘win as on team’. This is further complemented by the plans to grow the Mexican business and allocate more incremental capital to priority businesses in the rest of Canada, USA and the Caribbean.

In the case of Jamaica, these strategies will revolve around removing pain points and reviewing the customer experience, bringing the full-service range of the group to their clients, enhance the strengths of its team members and maintain a sustainable business with strong fiscal management. SGJ is already under the 50 per cent BNS target of cost-to-income ratio, a metric which measures operating expenses to operating income.

“What we’re working on right now, hopefully, would be launched in the next quarter or two, is the ability for new clients to bank. They would be able to open a bank account digitally and that’s going to be a real game-changer for us. Of course, it requires us to have the ability to KYC (know your customer) and verify who the client is in accordance with local laws, but that is a new functionality,” said Scotia Group Jamaica Chair Anya Schnoor at the 17th annual general meeting (AGM) held yesterday the AC Hotel.

Its against this backdrop that Scotia Group President and Chief Executive Officer (CEO) Audrey Tugwell Henry mentioned that the bank spent more on technical services last year to make its ABM (automated banking machine) network able to process the new Jamaican banknotes. However, she noted the constraints that would have been observed by customers on ABM availability which stood at 292 ABMs in December.

“We are very aware that our ABM service over the past couple days has not been at our usual standards, but please, rest assured that we are executing on a robust action plan, some of which has already started, and I’d expect that these issues would be resolved in the coming months and you’d see marked improvement in the performance,” Tugwell Henry added, while noting that 60 ABMs would be replenished and refreshed this year.

When asked about the digital strategy forward, she noted that the Bank of Jamaica’s (BOJ) central bank digital currency (CBDC) initiative is still being explored due to the complexity of the project. Although she didn’t delve fully into some of the other methods of payment that the Bank of Nova Scotia Jamaica Limited (BNSJ) would explore, she referenced a system like Zelle, a digital platform in the USA, that is being explored at the industry level. Tugwell Henry is also president of the Jamaica Bankers’ Association.

The SGJ also referenced recently introduced digital services such as Scotia General Insurance Agency Limited (trading as ScotiaProtect) that brought in $170 million from over 1,000 policies during the first quarter, and its insurance product Solace, a fully digital plan offered by Scotia Jamaica Life Insurance Company Limited.

Last year, Scotia Investments Jamaica clients were able to access their monthly statements via the BNSJ mobile application and online banking platform, which currently contributes to 40 per cent of total transactions being completed by BNSJ customers.

When asked about the potential for new products and a fully digital platform for its investment clients, Tugwell Henry responded, “So, our wealth arm, under Scotia Investments Jamaica Limited, also is working in collaboration with our international wealth management group and they have designed and are working through a whole transformation programme that is being delivered to the market, as well. What we’re looking at is a complete refresh which includes looking at our product shelf.”

SGJ was able to grow its first quarter net interest income by 19 per cent to $11.11 billion with its total operating income rising five per cent to $13.89 billion. However, a higher asset tax and staff costs pushed its profit before tax down three per cent to $5.22 billion. Net profit came in marginally lower at $3.13 billion compared to the $3.37 billion earned in January 2023.

When asked about the impact of upcoming Basel III changes, SGJ Chief Financial Officer Gabrielle O’Connor noted that they continue to do parallel reporting to the BOJ and remain well-capitalised with BNSJ’s capital adequacy at 14.23 per cent in January. BSJ transferred an extra $2 billion to its retained earnings reserve.

SGJ ended January with a cash and cash equivalents balance of $202.09 billion, a substantial sum that drew questions about larger dividends, share buybacks or merger and acquisition opportunities. However, Schnoor noted that capital is allocated on a quarterly basis as needed and that the cash acts as a source of liquidity to guard against unforeseen events while allowing them to grow their business. Scotia Jamaica Life Insurance hasn’t paid a dividend since 2021 to BNSJ.

On a sequential quarter basis, Scotia Group’s total assets grew to $665.91 billion with loans, net of credit allowances and investment securities jumping to $275.73 billion and $139.64 billion. Total liabilities also increased to $544.51 billion, with total deposits rising by $10.13 billion to $459.50 billion. Shareholders equity marginally declined to $121.41 billion as the defined pension asset dropped in value, which resulted in a book value of $39.02.

Scotia Group’s stock price ended Thursday down nearly two per cent to $46.07 but remains up 20.13 per cent in 2024 with a market capitalisation of $143.35 billion. This also translates to a price to earnings ratio of 8.44 times. Scotia Group declared a dividend of $0.40 totalling $1.24 billion to be paid on April 17 to shareholders on record as of March 26. This brings the annualised dividend to $1.55 per share.

All resolutions were approved, including the amendment to the company’s articles of incorporation to allow for future AGMs to be held in either a hybrid or virtual format. Schnoor thanked Dr William Warren Smith for his contributions as a director at the end of the meeting.

“I want to reassure you that we’re always seeing excellence in our service channels. We continue to make the right investments and place the client at the centre of our decisions to ensure we deliver best-in-class experiences. When we fall short of our own high expectations, we will not shy away from acknowledging that fact and will work on making this right,” Schnoor closed.