Scotia Group makes less profit after revenues dip $500 million
The revenues at Scotia Group Jamaica (SGJ), the island's second-largest bank by assets, dipped by nearly $500 million, leading it to report lower profit for its second quarter, ending April 2018.
The group made earnings per share of $1.08 for the quarter compared to $1.10 a year earlier.
The revenue dip comes at a time when the bank actually increased its loan book but continues to struggle in a market with low interest rates.
"We continued to make changes to simplify our operating structure and focus more on our core business lines to better position the group for success in the future," stated SGJ president and chief executive officer David Noel in the preface to the financials.
The group made total operating income of $9.5 billion for the April 2018 quarter compared with $10 billion a year earlier. It resulted in net profit after tax of $3.35 billion compared to $3.48 billion a year earlier.
The group, however, congratulated itself for higher six-month revenues and profit when it combined both the first- and second-quarter results.
"While we invest for the future, we have maintained steady performance over the first half of the financial year. Despite the low interest rate environment, we are pleased to report that total revenues grew by 5.0 per cent year on year, expenses were flat, and our loan portfolio grew by $6.6 billion, or 4.0 per cent, compared to the corresponding period last year," said Noel.
Over six months, the group made net profit of $6.76 billion compared with $5.7 billion in 2017 on total operating income of $21.1 billion versus $19.7 billion in 2017.
Added Noel: "We have reversed the trend over the past three quarters with positive growth trajectory expectations for the future. There was solid performance across our business lines quarter over quarter and year over year."
Deposits increased to $283 billion, or 8.0 per cent, reflecting higher inflows from retail and commercial customers. This signalled continued confidence in the group, said SGJ.
Shareholders' equity grew 15 per cent to $109 billion as a result of internally generated profits.
"We continue to exceed capital requirements in all our business lines, and our strong capital position also enables us to manage increased capital adequacy requirements in the future and take advantage of growth opportunities," said SGJ.
The segment results include retail banking, which made higher year-on-year profit at
$3 billion; as well as treasury, which made a profit at $1.8 billion; investment management services which made a profit of $798 million; insurance services $2.26 billion but corporate and commercial banking made less profit, at $1.4 billion.
The main subsidiaries of SGJ include Bank of Nova Scotia Jamaica Limited and Scotia Investments Jamaica Limited. SGJ is 71.8 per cent owned by Scotiabank Caribbean Holding, ultimately held by Canada-based Scotiabank.