Scotia Group Jamaica reported a quarterly decline in net profit driven by surging operating expenses, despite achieving growth in its loan book, operating income, and status as Jamaica’s top mortgage provider for the 2025 financial year, which was also marked by significant one-off costs from Hurricane Melissa.

During the 2025 financial year, Scotia Group reinforced its market strength by becoming Jamaica’s largest mortgage provider with $118 billion in residential loans. It expanded its total loan portfolio by 12 per cent to $350.44 billion. This growth led to a 9 per cent increase in annual operating income, reaching $64.71 billion, which included a 4 per cent rise to $16.31 billion in the fourth quarter.

However, these gains were partially eroded by rising expenses for cash transportation, technology, and renegotiated staff salaries. In the fourth quarter, operating expenses increased by 29 per cent to $8.82 billion, up from $6.85 billion. This included a 44 per cent rise in salaries and benefits to $4.21 billion, following negotiations with the staff union. The quarter also recorded $817 million in non-recurring expenses for efficiency initiatives, asset write-downs, and provisions related to Hurricane Melissa.

“We’re a large commercial bank. Cash handling is a big part of what we do. We have vendors that provide that service, to the extent that our vendors are experiencing increased operating costs. Clearly, there is repricing that will take place in terms of the service that they deliver to us,” said SGJ President and Chief Executive Officer Audrey Tugwell Henry at Thursday’s media briefing.

Chief Financial Officer Gabrielle O’Connor revealed that for the overall 2025 FY, cash handling costs increased by 28 per cent, a reflection of the rising cost by banks to process cash. Tugwell Henry pointed out that two-thirds of the 300 automated banking machines in operation by The Bank of Nova Scotia Jamaica Limited (BNSJ) are offsite or not attached to a branch, adding to the complexity of providing cash access to customers. There was an adjustment to fees on May 1 or the start of the third quarter in relation to credit cards, lending services and some sundry fees.

Despite the impact to the Western end of Jamaica from Hurricane Melissa, the SGJ CEO noted that the impact to their business shouldn’t be as pronounced with respect to non-performing loans (NPLs). The group’s non-accrual loans represented $4.8 billion or 1.3 per cent of gross loans with accumulated credit loss provisions at $5.9 billion, 123 per cent more than total NPLS. Scotia Group has launched client assistance programme to allow for banking customers to defer loan payments, flexibility with active policies for life insurance customers and other services to assist the most affected customers.

“Kingston, St Andrew and St Catherine is where the vast majority of the Jamaican population resides. So, we have assessed our total exposure in the most affected areas and we’re very confident that just given the size and scale relative to the rest of the book of business, we don’t anticipate any significant negative impact on our performance,” Tugwell Henry explained.

SGJ’s consolidated net interest income grew eight per cent to $13.04 billion in the fourth quarter and $50.01 billion in the 2025 FY. The Bank of Jamaica’s (BOJ) unaudited balance sheet data revealed that for the September 2024 to September 2025 period, BNSJ’s loan book grew by $43.79 billion, which was responsible for 55 per cent of the increased loan growth across the eight commercial banks.

However, consolidated net profit during the quarter declined 17 per cent from $6.16 billion to $5.14 billion due to the higher operating expenses. Without the non-recurring expenses, SGJ’s net profit would have been three per cent lower.

“In the Caribbean, Jamaican and Dominican Republic economic activity will be affected by the impacts of Hurricane Melissa which caused significant damage in both countries. Jamaica was more heavily impacted by the hurricane and rebuilding efforts will be substantial. This should eventually lead to a strong rebound in activity, but the near-term consequences of the hurricane will weigh on the outlook,” stated the Bank of Nova Scotia (BNS) in its 2025 annual report. BNS (Scotiabank) is the ultimate parent company of SGJ.

Scotia Group

Scotiabank has been accelerating its four-pillar strategy since December 2023 under global CEO Lawren Scott Thomson. One of those pillars dubbed ‘make it easy to do business with us’ has been executed in Jamaica through several digital initiatives to improve the convenience offered to clients. BNSJ launched online onboarding in the 2024 FY and launched online debit card controls in the last month to further protect customers. This enables customers to manually freeze their cards if they detect anything suspicious or lose their debit card.

Customers of Scotia Investments Jamaica Limited (SIJL) were also given the ability to view their investment portfolios on the Scotia Caribbean mobile banking app and online banking platform.

BNSJ has previously touted plans to introduce Apple Pay to Jamaica and enable wire transfers to be handled digitally but has not publicly announced the timelines to launch these services. BNSJ also intends to further digitise certain services like credit card and loan applications for customers on its digital channels to make business easier for existing customers. Scotia General Insurance Agency Limited (trading as ScotiaProtect) is currently a digital agency to enhance the suite of financial services offered to clients.

“We’re at an advanced stage. We remain committed to ensuring that the onboarding process is enhanced and convenient for our clients,” said Head of Sales Distribution Yvett Anderson.

Scotiabank’s 2025 annual report revealed that the onboarding process for the international banking business for commercial teams was cut from 30 days to approximately ten days and that the new case management tool called ‘ScotiaFlow’ will be fully implemented across the remaining Latin American and Caribbean countries in 2026.

For the overall 2025 financial year, SGJ’s operating expenses grew 19 per cent from $29.42 billion to $34.99 billion due to higher staff costs and other operating expenses. This resulted in profit before taxation marginally rising to $29.72 billion with consolidated net profit down one per cent from $20.16 billion to $19.90 billion. This translated to an earnings per share of $6.40.

According to Tugwell Henry, BNSJ reported $21.5 billion in profit before taxes (PBT) excluding inter-company dividends. SIJL reported $2.1 billion in PBT, ScotiaProtect reported $224 million in PBT and Scotia Jamaica Life Insurance Company Limited reported $4.5 billion.

Consolidated total assets improved 10 per cent to $773.78 billion with cash resources of $201.77 billion and investment securities of $169.90 billion. Total liabilities grew ten per cent to $623.26 billion with $532.89 billion in deposits and $51.40 billion in insurance contract liabilities. Shareholder’s equity increased nine per cent to $150.51 billion which translates to a book value of $48.37. Scotia Group’s audited financial statements are due by January 29.

SGJ closed Thursday at $52.39, leaving the stock down two per cent in 2025 with a market capitalisation of $163.03 billion. This means SGJ has a price-to-earnings ratio of 8.19 times and a price-to-book ratio of 1.08 times. SGJ declared a dividend of $0.45, totalling $1.40 billion, to be paid on January 21 to shareholders on record as of December 30. This brings the total amount payable for the year to $1.80 for a dividend yield of 3.44 per cent.

“Whilst Melissa remains the most devastating of them all, we are confident that the bank and Scotia Group in total will continue to deliver strong, robust, business and financial performance. We are a strong financial institution; we are well positioned to navigate this situation,” the SGJ CEO closed.

TUGWELL HENRY…we are a strong financial institution; we are well-positioned to navigate this situation.