Having incurred credit losses on loans of J$2.7 billion, Scotiabank Jamaica recorded a marginal three per cent increase in profits for 2019.
After tax profit for the year was J$13.2 billion, an increase of J$419 million or three per cent more than 2018. Net income increased year on year by J$1.2 billion or 10 per cent excluding gains on the sale of a subsidiary of J$753 million that occurred in 2018.
Scotiabank’s 2019 Annual Report, which was just released, showed strong growth in its core business with its total loan portfolio increasing year over year by 13%. This includes an increase of 17% over prior year in its Scotia Plan retail loan portfolio, and another year of double digit growth for the mortgage portfolio, which increased by 13 per cent.
In his report to shareholders, Scotiabank Jamaica President and CEO, David Noel explained that the significant growth in these portfolios was achieved through consistent execution of the bank’s strategic initiatives to improve service to customers, making it more convenient for them to access our suite of products and services. He boasted about the strong growth in bank’s Corporate and Commercial banking portfolio with a 27 per cent increase in loans to the private sector.”
Scotiabank’s Insurance and Investment subsidiaries also delivered strong results for 2019 with Scotia Investments recording a 10 per cent growth in revenue as well as a 13 per cent increase in assets under management. The Capital Markets Unit was recognised for its successful execution of Fontana Pharmacy Initial Public Offering.
The Scotiabank president commented on the positive performance of Scotia Jamaica Life Insurance Company, which continued to improve sales productivity delivering a 20 per cent increase in policies sold year over year. As it regards dividend payment, Noel noted that last year the bank took a decision to distribute accumulated earnings built up over several years and paid special dividends of $2.68.
After factoring in these dividends, the bank’s capital remained strong to take advantage of future growth opportunities. Return on equity was 11.25% and earnings per share amounted to $4.24, which was 3.4 per cent higher than prior year.
Expected credit losses on loans amounted to $2.7 billion, an increase of $769 million or 40 per cent from prior year impacted by the initial adoption of International Financial Reporting Standards (IFRS) 9 (Financial Instruments), which resulted in a significant change to the Scotiabank’s impairment methodology. Non-accruals loans (NALs) as at October 31, 2019 was $3.7 billion, up $35.3 million or 1 per cent compared to prior year.
NALs currently represent 1.77 per cent of gross loans and 0.68 per cent of total assets as at year end October 31, 2019. The bank’s NALs as a percentage of gross loans and total assets remain well below the industry average.
Taxes for the year were $5.3 billion, down $229 million or 4.1 per cent from prior year. The effective income tax rate reduced to 28.6 per cent from 30.2 per cent as a result of an increase in non-taxable income in 2019. When the asset tax of $1.1 billion is added, the tax expense for the year equated to 32.8% of pre-tax income.
As for 2020 Scotiabank reported that it will to make advances in optimizing its business processes and customer offerings in branches, as well as through the digital channels. During last year the bank piloted new systems for managing branch traffic which will be rolled out this year.
In addition, Scotiabank plans to change its branch operating model to better serve. The bank says it has improved its digital banking offerings across our network with the introduction of newer and more efficient Automated Teller Machines (ATMs), as well as Intelligent Deposit Machines, which allow customers immediate access to their deposits.
Scotia in its annual report pointed to its enhanced its online and mobile banking offerings with the introduction of new transaction and security alerts, and the addition of credit card controls, which have all enhanced customers’ daily banking experience.
During the course of this year Scotiabank will continue to improve both its branch experience and user experiences on its mobile banking application and look forward to the opening of its new state of the art branch at Scotiabank Centre, which will offer the best in class service to its customers.