June 07, 2018

Scotia Group Jamaica Limited(SGJ) for the six months ended reported Net Interest Income declined by 3% to $12.82 billion, moving from $13.16 billion for the corresponding period in 2017, while Interest Expenses declined by 26% to total $1.64 billion (2017:$2.23 billion). Net Interest Income for the period decreased from $6.54 billion in 2017 to $6.18 billion. The Company noted, “There were increased retail loan and transaction volumes across our business lines, which offset the impact of reduced net interest margins.”

The company reported an Impairment Loss on Loans of $554.03 million compared to the loss of $975.47 million for the comparable period in 2017. Management noted this was, “due to higher recoveries and lower provisioning requirements on a reduced non-accrual loan (NAL) portfolio.” As such, Net Interest Income after Impairment losses on loans grew 1% to $12.26 billion relative to the $12.19 billion recorded for the corresponding period in 2017.

Total Other Revenue increased by 18% to $8.83 billion (2017: $7.49 billion).

• Net Fees and Commission Income amounted to $4.11 billion (2017: $4.42 billion), a decrease of 7% relative to the corresponding period in 2017. The performance according to SGJ was “impacted by continuous customer education on alternatives to reduce fees and creased free transactions.”
• Insurance Revenue climbed by 10% and closed the period at $1.88 billion relative to $1.70 billion last year. SGJ noted, insurance revenue was impacted, “due to growth in core insurance business and actuarial reserve releases from changes in assumptions on valuation of the portfolios”.
• Net Foreign Currency Activities increased by 51% and amounted to $1.65 billion (2017: $1.09 billion), SGJ noted that this was “based on increased market activities”.
• Net Gains on Financial Assets improved to $422.44million relative to $219.41 million recorded in 2017.
• Gain on disposal of subsidiary totalled $753.14 million as the company noted this, “relates to Scotia Jamaica Micro Finance Company Limited (Credi-Scotia), which was sold effective December 1, 2017.”
• Other revenue declined from $56.07 million in the second quarter of 2017 to $16.75 million, a decline of 70%.

As such, Total Operating Income for the period increased 7% to total $21.10 billion versus $19.68 billion for the corresponding period in 2017.

Total Operating Expenses for the six months amounted to $11.20 billion, a 1% growth from the $11.12 billion booked for the corresponding period in the prior financial year.

Under operating expenses:

• Salaries and Staff Benefits increased to close the period at $5.13 billion (2017: $5.32 billion).
• Property Expenses (Including Deprecation) fell by 3% amounting to$995.82 million (2017: $1.03 billion).
• Amortization of Intangible Assets increased 18% to close the period at $75.07 million versus $63.49 million in 2017.
• SGJ reported $1.09 billion for asset tax, 2% more than the $1.07 million documented for the same period for 2017.
• Other Operating Expenses increased by 8% and closed the period at $3.91 billion relative to $3.63billion.

Profit before Taxation for the period totaled $9.89 billion, this represents an increase of 15% from the $8.57 billion recorded in 2017.

Tax charges for the period totaled $3.14 billion (2017: $2.88 billion), as such Net Profit for the period totaled $6.76 billion, 19% more than the $5.69 million posted for the same period in 2017. Profit for the quarter  amounted to $3.35 billion, 4% less than the total of $3.48 billion a year earlier.

Earnings per share (EPS) for the period totaled $2.17 (2017: $1.80), while earnings per share for the quarter totaled $1.08 (2017: $1.00). The trailing earnings per share amounted to $4.29. The total number of shares employed in our calculations amounted to 3,111,572,984 units. Notably, SGJ’s stock price closed the trading period on June 7, 2018 at a price of $53.00

The company noted, “During the six months period under review, we continued to make changes to simplify our operating structure and focus more on our core business lines to better position the Group for success in the future. We continue to invest in our digital capabilities, and we have seen a 40% increase year over year in the number of customers that do their banking on their mobile phones. During the quarter we rolled out “The Pulse” which is a digitally enabled tool that allows us to receive customer feedback that is shared real time with our branches and executives. Since launching in Q2.2018, over 6,000 customer have provided their feedback.”

Balance Sheet Highlights:

As at April 30, 2018, the company’s assets totaled $515.79 billion, 5% more than its value a year earlier. The increase in total assets was primarily driven by increases in ‘Cash Resources’ by $10.67 billion to total $126.24 billion, ‘Retirement benefit assets’ by $9.90 billion to a total of $28.50 billion and in ‘Investment Securities’ by $7.36 billion to $131.56 billion.

SGJ’s shareholders’ equity at the end of the period amounted to $109.09 billion relative to the $98.68 billion recorded in the prior year’s corresponding quarter. Consequently, the book value per amounts to $35.06 (2017: $30.54).

 

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