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Scotia Group outperforms itself in second quarter

Published:Wednesday | June 15, 2016 | 6:00 AM
Jacqueline Sharp, president and CEO of Scotia Group Jamaica.

Scotia Group Jamaica profit spiked by more than a quarter to $3 billion in its second quarter due to strong results in all business segments, except investment management services, where the numbers were flat.

Over six months, the group made $4.97 billion, up more than a billion from $3.85 billion.

"We are pleased with the performance of the group as we continue to focus on meeting our customer's needs, while taking the necessary action to restructure our business and manage costs," said Jacqueline Sharp, president and CEO, in remarks accompanying the No. 2 banking group's financial statements.

Total operating revenues for the group over three months ending April increased $1.2 billion to $9.4 billion or seven per cent year over year, while operating expenses fell by $311 million or three per cent.

"The success in these key performance indicators translates into positive operating leverage and improved productivity ratios," said Sharp.

The impact of the asset tax totalling $956 million was recorded in the first quarter. The year to date return on average equity was 11.26 per cent compared to 9.71 per cent for the second quarter of 2015

STEADY GROWTH

The directors also approved a second interim dividend of 42 cents per stock unit - $1.3 billion in total - payable on July 21.

"We experienced good volume growth in all our business lines, and we continued to have steady growth in our customer base," the bank said.

Scotiabank's online banking transactions are up 36 per cent in the past year, ATM usage is up eight per cent, and point of sale transactions are up 25 per cent. The number of mobile banking users is up by 68 per cent.

Over the six-month period, retail banking remained the dominant contributor to revenue at $2.4 billion; insurance contributed $1.7 billion; corporate banking contributed $1 billion; and investment management $666 million.

Scotia Group now manages assets totalling $450 billion, which reflects a near nine per cent or $36 billion gain year on year. The growth was primarily attributable to increases of $9.7 billion or 6.57 per cent in loans, net of allowance for impairment losses, $20.5 billion or 8.84 per cent in cash resources, investments and pledged assets, and $7.3 billion in other assets resulting from a higher retirement benefit asset on our defined benefit plan pension scheme, the group stated.

The bank's loan portfolio now tops $157 billion. The non-performing loan (NPL) portfolio is also shrinking. At April 2016, Scotia reported $4.5 billion of NPLs, representing 2.8 per cent of total gross loans. The ratio merely narrowed from 2.9 per cent in January, but has fallen moderately from 3.26 per cent a year ago at April 2015.

The bank's capital base has increased 13 per cent to $88 at April 2016 as a result of internally generated profits.

steven.jackson@gleanerjm.com