Scotia Group profit slips as NPLs nudge $5b mark
On the back of flat revenue and a near 60 per cent increase in write-offs of bad loans, Scotia Group Jamaica Limited reported a seven per cent decline in net profit to $10.1 billion at yearend October.
The bank's 2013 profit was restated downwards to $10.89 billion, a variance of a billion dollars, in accordance with International Financial Reporting Standard (IFRS) to reflect the adoption of provisions for employee benefits.
Scotia Group grew its net interest income moderately to $24.5 billion, while fees and commission income were close to flat at $5.86 billion. But the bank saw a marginal dip in insurance revenue to $2.3 billion, a sharp drop in foreign exchange gains to $1.96 billion, and it wrote off $1.6 billion of bad loans over the past year, which was 58 per cent more than the $1 billion written off in 2013.
Scotia Group's total non-performing loan portfolio has climbed to $4.9 billion, or 3.32 per cent of the total loan portfolio, reflecting an increase of $411 million from prior year NPLs amounted to 3.29 per cent of the loan portfolio IN 2013.
The loan impairments "continue to reflect the underlying signs of the challenging economic environment faced by our customers and increased by $590 million year over year," the banking group said in a statement appended to the accounts.
Scotia Group has provisioned $5.1 billion to cover the loan losses.
Across the commercial banking sector, the central bank last estimated NPLS at 2.2 per cent of total assets, indicating improvement in the management of bad loans to June, when NPLs across the board also fell nominally to $18 billion.
For Scotia Group's total loan portfolio, Jacqueline Sharpe, who has concluded her first year as president and CEO of the No. 2 banking group, touted gains in all business lines of nine per cent in its commercial and SME portfolios; six per cent for retail loans, and 12 per cent growth in mortgages. The portfolio grew by $11 billion or eight per cent to $146 billion. Assets grew overall by $18 billion to $407 billion.
Scotia Group will pay a final dividend of 40 cents per share, totalling $1.2 billion, on January 13, while its wealth subsidiary Scotia Investments Jamaica, which contributed 12.5 per cent of group profit, will pay dividend of 45 cents per share or $190 million in total at the same date.
The top three contributors to group profit are the commercial bank BNS Jamaica at 40 per cent, Scotia Life Jamaica Insurance at 27 per cent, and Scotia Investments.
Scotia Group did not respond to questions on its results, but indicated that it would be holding a briefing to explain the results.