Mon | Mar 8, 2021

Scotiabank pandemic waivers taken up by 50,000

Published:Thursday | September 10, 2020 | 6:17 PMSteven Jackson - Senior Business Reporter
David Noel, President & CEO Of Scotia Group Jamaica Limited.
David Noel, President & CEO Of Scotia Group Jamaica Limited.

Some 50,000 customers took up Scotia Group Jamaica’s waiver of interest on some loans and credit cards during the May-July quarter.

Within that period, the No. 2 banking group made net profit of $1.5 billion, but that was just over a third of what it earned in the comparative period in 2019.

Over nine months ending July, Scotia Group’s profits totalled $5.6 billion, compared to $9.8 billion in 2019.

The bulk of the 2020 fallout related to non-cash transactions, specifically expected credit losses, rather than any actual default on loans.

Scotia Group said the write-downs can be written back and the losses recovered if the economic environment improves. The group’s non-performing loans were 2.1 per cent of gross loans, a slight worsening from 1.9 per cent a year earlier.

President and CEO David Noel said that it is possible that the economic decline could worsen in the coming months but start turning around next year.

“Even though you expect a contraction this year, there is an expectation that we will return to GDP growth and hopefully strong growth in 2021,” said Noel in response to queries at its online investor briefing on Thursday. “So, we expect an uptick in activity in 2021 as we get through this crisis.”

The Planning Institute of Jamaica on Wednesday estimated that the economy contracted 18 per cent in the June quarter. Its fiscal year projection is for a 10 per cent contraction.

“We are looking at all the likely scenarios. If things pick up as we hope, and there is an early vaccine then we can write back those provisions. But we are taking provisions just in case the situation is worse than we expect,” said Noel.

The group’s digitalisation process was ramped up with the pandemic, and the bank is seeing signs that customers are responding positively to its campaign to shift them towards electronic and online channels and away from in-branch service. In July, for example, only 5.8 per cent of all transactions were done in branch, and that's down from 10.5 per cent in July 2019.

Scotia Group said in its third quarter financial report that it supported over "50,000 individuals and businesses via its Customer Assistance Programme (CAP) which offered loan deferrals to support those experiencing financial challenges". These clients were given an initial waiver of some fees or interest on credit cards and certain loans for three months.

Extensions are done on a case by case basis. Noel said that most customers were now compliant on their debt to the bank. Its loan portfolio has grown by $23 billion or 11.8 per cent year over year to $221.7 billion.

Scotia Group said loan growth also occurred within the period when the lockdowns against the coronavirus was under way.