Scotia Group Jamaica President and CEO Jacqueline Sharp said Scotiabank has adjusted lending rates to offset the effects of the national debt swap in February, which robbed the bank of liquidity.
"We did increase retail lending rates in August. The cost of funds have gone up," Sharp said Wednesday at her first investor's briefing four days into her new job as boss of the bank.
The former chief financial officer replaced Bruce Bowen on September 1.
"There were inflows expected in February, but with the NDX the payment period was extended. This, coupled with other actions, moved liquidity out of the system. So the cost of funds has increased, and increasing loan rates was a response," she said.
On Thursday, the bank said through its corporate relations arm, that there was no change to the base lending rate.
"Our base lending rate for retail lending continues to be 15.75 per cent," the bank said.
However, Bowen reaffirmed to the Financial Gleaner that there had been some tweaking of rates, and that the "biggest change was to end some special promotions".
Under the National Debt Exchange, which was a precondition of a bailout deal with the International Monetary Fund, Scotia Group and its subsidiaries exchanged about J$120 billion of GOJ securities for new bonds with lower coupon rates and longer tenures.
It swapped another J$4.88 billion of bonds under the ensuing Private Debt Exchange, also referred to as NDX2.
The group reported an immediate loss of J$397 million on its financial assets after the swap, and capital loss of J$1.35 billion throughout the group.
"Our hope is that this situation will stabilise and rates will go back down. As Government reduces borrowing, this should help," Sharp said.
She cited the liquidity factor as one challenge facing the bank, saying. "To the extent that it is tight, it affects the ability to grow our loan book."
The banking group grew loans by J$14.6 billion for the nine months ending July to J$130.9 billion.