Sat | Dec 2, 2023

Scotia Group gets bump from rising rates but profit dips

Published:Friday | June 10, 2022 | 12:09 AM
President & CEO of Scotia Group Jamaica Limited Audrey Tugwell Henry.
President & CEO of Scotia Group Jamaica Limited Audrey Tugwell Henry.

Scotia Group Jamaica, SGJ, made $2.6 billion in profit for the April quarter, reflecting a slide of more than five per cent.

Still, the banking group views the performance as creditable within the context of Jamaica’s economic environment that’s still feeling the effects of the coronavirus pandemic and is dealing with the fallout from war raging far away in Europe.

“Performance improved across our business lines as we continue to deliver relevant, value-added solutions to assist our customers to meet their financial objectives,” said SGJ President and CEO Audrey Tugwell Henry in a statement issued with the financial report.

An investor briefing on the financial results was cancelled on Thursday.

In a year-on-year comparison, profit dipped by $145 million, while revenue improved by about $300 million to $9.6 billion.

The operator of Scotiabank Jamaica said the group benefited from rising interest rates, which led to an 18 per cent improvement in net interest income to $6.5 billion. Interest income is the primary revenue stream for banks.

Bank of Jamaica, the regulator of commercial and other banks, increased its base rate from 0.5 per cent to 5.0 per cent over eight months to curb double-digit inflation. Consequently, banks and other lenders have been increasing their loan rates.

Over six months, Scotia Group’s profit also dipped to $4.37 billion on revenue of $20 billion. Its half-year profit in 2021 amounted to $4.48 billion on revenue of $20.1 billion.

As of April, the banking group recorded an 11 per cent rise in deposits, which Scotia Group said underscored “strong customer confidence” in the bank. Net loans dipped slightly to $208.5 billion from $214.7 billion a year earlier, reflecting the more austere business environment. That said, on the consumer side of the loan portfolio, mortgages grew by 22 per cent.

“ We have maintained very attractive mortgage rates to enable more of our customers to purchase and achieve their goal of home ownership,” said Tugwell Henry.

Also, the group cut non-performing loans to 1.9 per cent of its loan book, down from 2.8 per cent a year earlier.

But the capital held slipped by $3.9 billion to $114.5 billion.

“This was due primarily to lower remeasurement results of the defined-benefit pension plan assets coupled with internally generated profits, which was partially offset by dividends paid,” the banking group said.

Scotia Group will pay its usual quarterly dividend of 35 cents per share on July 20, totalling $1.09 billion.

The financial report made no mention of the impact that the Russian invasion of Ukraine could have on SGJ’s outlook.