DESPITE Scotia Group Jamaica Limited (SGJ) reporting another record quarter of profits, and calls by minority shareholders for larger dividends, SGJ has maintained its nominal dividend payout as it awaits the full implementation of the Basel III regulatory framework.

This was the message told to shareholders at SGJ’s annual general meeting (AGM) held on Friday at Jamaica Pegasus hotel. Scotia Group reported a 35 per cent increase in consolidated net profit from $3.13 billion to $4.20 billion for its first quarter (November to January). This translated to an increase in the earnings per share (EPS) from $1.00 to $1.35, with the group’s operating cashflow doubling to $10.32 billion.

Despite the improvement financial conglomerate reporting these impressive financial metrics, it only declared a $0.45 dividend — totalling $1.40 billion — to be paid on April 17 to shareholders on record as of March 26. While this is an improvement on the $0.40 paid last April, it is the same nominal amount that was paid on January 24 with respect to its Q4 numbers, when it generated $6.16 billion with an EPS of $1.98. Also, the dividend just declared translates to a dividend payout ratio of 33 per cent, compared to Q1 2019 when it had a dividend payout ratio of 68 per cent when it declared a dividend of $0.51 relative to a $0.75 EPS.

“Fair observation. One of the things that we spoke about in our earlier remarks was our focus on prudent risk management, our ability to meet all our capital adequacy ratios in all of our subsidiaries, and we are now at a point where the central bank is looking at introducing new capital adequacy ratios. So, we’re going through that parallel run period,” said Audrey Tugwell Henry, Scotia Group Jamaica president and chief executive officer (CEO) in response to a shareholder query on dividends.

The Scotia Group Jamaica CEO also added, “When we cut over to the new Basel III, the capital adequacy ratios will be significantly impacted. So, as the prudent bankers that we are, we’re holding sufficient capital to make sure that there are no breaches when we switch to Basel III. One thing we’re very proud of is that we continue to make quarterly dividend payments. And, as you can see, in 2024 at $1.70 it is indicatively higher than the preceding four years. So, continue to bear with us. Once the dust has settled we can make other determinations on dividend payments.”

Bank of Nova Scotia Jamaica Limited (BNSJ), SGJ’s core banking subsidiary, reported a capital adequacy ratio of 12.68 per cent at the end of October, with this figure rising to 12.97 per cent at the end of January. The capital adequacy ratio (CAR) is an expression of a bank’s regulatory capital dividend by its risk weighted assets, and acts as a gauge for understanding how much capital a bank holds relative to the risk associated with assets on and off its balance sheet. Scotia Group Jamaica’s three other major regulated subsidiaries have CAR’s four to six times above the regulatory minimum requirements.

Dr Jide Lewis, deputy governor at Bank of Jamaica (BOJ), told the public at its August quarterly briefing that BOJ was expected to take another two years to fully implement the Basel III framework. That timeline likely falls around March 2026. The Basel III framework will likely require banks to hold more capital on hand, with systematically important banks like BNSJ having to retain more capital due to its significance in the financial system.

“We have increased dividends this [financial] year by 21 per cent, but in the long-term interest of the bank, and in a period of uncertain changes in our regulatory and in the global environment, we feel that maintaining a capital buffer — which is not outside of what we see with the other banks globally — is appropriate in this environment,” stated Anya Schnoor, SGJ chair and executive vice-president of global insurance at Bank of Nova Scotia (Scotiabank).

As the bank continues to grow its capital base for Basel III it is continuing to increase its technology spend, with Tugwell Henry mentioning a digital roadmap that will take place over the next couple of years across the subsidiaries and under the four-pillar strategy being overseen by Scotiabank President and CEO Scott Thompson. Some of these initiatives have been rolled out, such as Scotia Access and Econsent for the premium clients, but the timeline on the ability of debit card users to freeze their cards was not provided by Tugwell Henry. Credit card users currently can freeze their cards and set transaction limits.

This query by a shareholder on debit card freezes occured after some BNSJ customers experienced what the Scotia Group CEO called a “fraud incident” in January. She noted that, thanks to their technology and tools, BNSJ was able to shut down 90 per cent of the accounts that were impacted by the event. She also explained that BNSJ reached out to the affected customers, and they would have received their affected balances and made whole recently.

On BNSJ’s plans to further digitise products Schnoor said, “That’s why we’ve started with deposit accounts; the next step will be to move on to the lending products. If you’re requesting a loan, you more than likely will have to set up a client profile, so we’re starting, getting that work in, and then we will start to move to add additional products.”

Total assets grew five per cent on a sequential quarter basis to $739.25 billion, with consolidated loans at $312.46 billion and cash at $177.59 billion. Total liabilities rose four per cent to $588.57 billion, with total deposits at $493.86 billion while shareholders’ equity increased nine per cent to $150.68 billion, with $6 billion transferred from retained earnings to retained earnings reserves. The book value of SGJ was $48.43.

SGJ’s stock price closed Monday at $58.96 which didn’t just leave it up ten per cent in 2025 with a $183.47 billion market capitalisation, but as the largest company on the Jamaica Stock Exchange (JSE) by market cap. SGJ peaked at a new, all-time, intra-day high of $63.99 on January 21. With a trailing twelve months EPS of $6.83, the company’s price to earnings (P/E) ratio was $8.63 times while the company’s price to book (P/B) ratio was 1.22 times. Resource in Motion Limited, a company controlled by Donovan Lewis, bought an extra 1,637,015 ordinary shares during the first quarter which resulted in a total stake of 40,026,046 ordinary shares.

At the AGM, Eric Crawford, Angela Fowler and Evelyn Smith retired as directors of SGJ’s board, after not putting themselves up for re-election, but remain as directors of BNSJ’s board. Roxanne De Freitas, a former director of Scotiabank Trinidad & Tobago Limited, was elected to SGJ’s board after she was appointed on June 6. Also, Jabar Singh, the CEO of Scotiabank Colpatria, SA and recently appointed head of the Caribbean & Central American (CCA) region; and Meigan Terry, Scotiabank’s SVP and chief sustainability, social impact and communications officer, were elected as directors of SGJ.