Avia Colllinder, Business Reporter
New President and CEO of Scotia Group Jamaica Limited Jacqueline Sharp will focus on expanding the bank's loan and strive for growth of off-balance sheet assets to reduce dependence on net interest income.
Sharp, who telegraphed her focus as the new boss of the bank at an investor's briefing Wednesday, also laid out five 'strategic imperatives' under her administration.
"We are growing the core and aggressively going after market share," she said.
The banking group, in its nine-month period ending July, grew its loan book by close to J$15 billion to about J$131 billion, which Sharp pronounced as a very good result "in a bad economy".
The bank also expanded profit by more than nine per cent to J$8.7 billion in the nine-month period, under former president Bruce Bowen, who has gone on to a new job with the parent bank in Toronto.
Sharp served with Bowen latterly as chief financial officer.
Now as the boss, since September 1, she relays her 'imperatives' as: a high-performance culture among the Scotia team; sustainable revenue growth based on deepening existing client relationships and getting into new markets; better operational efficiencies; client intimacy, including improved customer experience; and risk management.
The bank president is also banking on cross-selling of products across commercial and SME client groupings to build business.
Within the nine-month period, Scotia Group improved profit, as well as insurance revenues and fee income, made gains on securities trading, as well as foreign-currency trading and investments.
Net income, Sharp said, was affected by an 18 per cent increase in expenses, factored into which were new asset taxes that took effect this year.
The positives, she said, included growth of the bank's deposit base to J$129 billion, arising primarily from new corporate clients, as well as general improvement in return on equity from 16.11 per cent last year to 16.95 per cent at July.
Wayne Powell, vice-president with responsibility for retail and commercial banking, said profit growth was driven by the bank's strategy of going after volumes in order to overcome low margins.
Among the best performers in loans were the car market, new unsecured loan products for two government ministries and mortgages.
The group's best performing sector were: treasuries, which yielded J$1.91 billion off revenues of J$2.09 billion; insurance with pre-tax profit of J$2.43 billion earned on revenues of J$3.36 billion; while investment services earned J$2.02 billion from revenue of J$3.18 billion.
The retail banking arm earned J$2.62 billion before tax on revenue of J$10.68 billion; and corporate banking earned J$1.56 billion on revenue of J$5.73 billion.
Lissant Mitchell, the CEO of wealth subsidiary Scotia Investments Jamaica Limited (SIJL), said profit of J$563 million for the third quarter was the highest seen in two years. SIJL made profit of J$1.4 billion over the nine months.
"We have increased revenue from fees and commissions. Net interest revenue is down, which is the result of the NDX, but our strategy from long before was to build non-interest revenue," Mitchell said.
Diversification paying off
With a total of J$141 billion under management, Mitchell said Scotia Investment's diversification strategy was paying off.
"We have two extremely successful products: one is the Caribbean Income Fund, which was started in 2008 with seed capital of US$7 million. Today it is valued at US$77 million," he said.
"The other is the Jamaican dollar Money Market Fund, which started in 2009 with J$25 million and is now valued at J$4.4 billion."
The investment division has J$84 billion in funds under management, which are off balance sheet assets, compared to J$57 billion on balance sheet.
The division now has 42 per cent of the unit trust market, he noted, with funds under management of J$22.5 billion reflecting growth of 5.2 per cent year-over-year.
Outgoing CEO Bowen, who was present at the briefing, said that low interest rate environment, which characterised the reporting period, gave people the confidence to go out and buy things, thereby allowing the bank the opportunity to grow its personal-loan portfolio.
He said, however, that business confidence needed to improve in order for the bank to leverage business from that sector.
Echoing Sharp's statement that the bank would be moving away from reliance on interest income, Bowen said, "We need to be moving more and more into what commercial banks ought to be doing, which is taking people's money and lending it to others."
Bowen's new role is senior vice-president for Caribbean banking. He will be based in Toronto.
The latest industry data on the loan market, compiled by the central bank to March, indicates that Scotia Group's commercial banking operation then held 34 per cent of the market, while close rival NCB held 40 per cent.
Scotia Group will pay interim dividend of 40 cents per share on October 9, amounting to J$1.24 billion, while its investment subsidiary will pay 45 cents per share on the same day, totalling J$190 million.