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BNS profits dip four per cent in third quarter - But Scotia Group results strong
published: Friday | August 31, 2007

Bill Clarke, president of Scotiabank Jamaica, says the reorganisation of Scotia Jamaica was finalised in the July quarter. - File

Bank of Nova Scotia Jamaica Limited (BNS) recorded net income of $1.6 billion for its third quarter ending July, a 4.4 per cent decline that flowed from a near $400 million increase in operating expenses.

During the quarter, the bank's net interest income was up by $300 million to $4.1 billion when matched against the July 2006 period, while operating income also rose to $5.2 billion.

But staff costs which grew by more than $110 million to $1.25 billion in the period, plus depreciation charges and other expenses, plucked $2.9 billion from operations. The result was a reduced 55 cents earnings per share compared to 58 cents in the 2006 period.

BNS's local parent company, the newly formed Scotia Group Limited, meantime says it will pay dividends of 30 cents per share, having reported strong third quarter performance with total revenue amounting to $16.4 billion, representing an increase of $1.96 billion.

The group includes new acquisition Dehring Bunting and Golding Limited and its associated companies.

"During the quarter we completed the reorganisation of Scotiabank Jamaica," said president William Clarke.

"On July 1, Scotia Investments became a wholly owned subsidiary of DB&G in our quest to consolidate the investment management activities within the group to achieve efficiencies and economies of scale."

That transaction was finalised after DB&G shareholders voted their approval of the acquisition on June 6 at an extraordinary general meeting.

Share swap

DB&G acquired Scotia Jamaica Investment Management Limited (SJIM) under a share swap that saw the investment bank acquiring all of SJIM's shares from its sister company BNS in exchange for 113,936,126 of DB&G's ordinary shares.

The new Scotia Jamaica Invest-ment Company, which is now a wholly owned subsidiary of DB&G, reported gross income of $3.7 billion for the nine-month period ending July.

Scotia Group's net interest income was up by $1.2 million to a total of $12.7 billion when compared to the last year.

This was attributed to growth primarily in the retail portfolio, even as net interest margins or spreads continue to trend downwards in line with market interest rates.

Income from securities also increased due to volume growth in the investment and repurchase agreement portfolios, Scotia said.

At the bottom line, the group raked up net income of $2 billionfor the quarter, $323 million above the similar quarter for 2006 and $229 million above the second quarter ending April 30.

For the nine-month period, October to July, net income was reported at $5.4 billion, an increase of 8.4 per cent when compared to net income of $4.98 million for the same period last year, and resulting in earnings per share of $1.72.

The company's productivity ratio was reported at 54.8 per cent, signalling a slight improvement in overall efficiency, which was recorded at 53 per cent at the end of the last financial year.

Non-interest expense recorded an increase of $942 million over last year, due to the inclusion of DB&G in the consolidated results, as well as increases in staff costs and public relations.

Loans as at July 31, were $1.62 billion, with DB&G accounting for $392 million, while BNS accounted for the remainder.

Growth in retail lending

Combined, the group's performing loan portfolio amounts to $73 billion, an increase of $14 billion over the previous year, attributed to growth in retail lending even as the demand for commercial loans continues to trend downward.

Deposits were also reported to have grown to $132.6 billion, up $15 billion.

Scotia Group at the end of July had total assets of $258 billion, a year over year increase of $64 billion.

The consolidation contributed $37 billion to growth in total assets.

"This reorganisation has positioned the Scotia Group to become the leader in wealth management and creation," said Clarke.

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