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Scotiabank Jamaica's headquarters in downtown Kingston, Jamaica.

Scotiabank Jamaica reports Q1 rise in customer deposits

Scotiabank Jamaica's headquarters in downtown Kingston, Jamaica.

Jamaicans welcomed 2021 with a surge in savings, according to the latest report from Scotia Group on its banking division’s first quarter, which ended on January 31.

Deposits from Scotiabank customers increased to JM$341.9 billion, up from JM$315.3 billion in the previous year. 

In remarks attached to the period’s unaudited financials, directors pointed out that this JM$26.7-billion or 8.5 per cent growth in core deposits reflected higher inflows from retail and commercial customers, “signalling continued confidence in the strength of the [Scotia] Group.”

Marginal movements

Meanwhile, the financial group reported net income of JM$1.75 billion for the three months ended January 31, 2021, which dipped marginally below that of the corresponding period by JM$33 million or 1.9 per cent. 

The 2019 cohort of the Scotiabank Vision Achiever Programme makes a ceremonial “woosh” at the final ceremony. Higher inflows from retail and commercial customers contributed to an increase in net income for Q1 2021, which ended January 31.
(Photo: Scotia Group Jamaica)

Total revenues, excluding expected credit losses for the three months ended January 31, 2021, amounted to JM$11.2 billion, representing an increase of JM$163 million or 1.5 per cent over the comparative period last year. 

“Total revenues continue to be heavily impacted by the COVID-19 pandemic as evidenced by the ongoing reduction in interest rates offered in the market, leading to a reduction in group’s net interest income coupled with the decline in transaction volumes resulting in lower net fee and commissions as well as insurance revenues,” directors noted.

Net interest income after expected credit losses for the quarter moved up by JM$5.4 billion or 1.8 per cent to JM$93 million when compared to the comparative period last year. The slight increase was primarily attributable to the reduction in expected credit losses of JM$465 million, partially offset by reduced yields from the current macroeconomic environment, it was stated. 

Prior period results included additional provisions of JM$408 million (a one-time impact) based on the adoption of a more prudent approach in determining credit loss provisions. 

Other income

Other income, defined as all income other than interest income, increased by JM$535 million or 10.9 per cent. 

Net fee and commission income amounted to $1.7 billion and showed a reduction of $339 million or 16.8 per cent. 

Management said that the year-over-year decline noted in fee and commission revenues was primarily attributable to lower transaction volumes stemming from the COVID-19 pandemic in conjunction with the continued execution of the group’s digital adoption strategy geared towards educating customers about various electronic channels which attract lower fees.

Year-over-year decline in fee and commission revenues was primarily due to lower transaction volumes stemming from, among other things, continued execution of Scotia Group’s digital adoption strategy geared towards educating customers about various electronic channels which attract lower fees. (File photo)

Gains and losses

Insurance revenues decreased by JM$423 million or 40 per cent to JM$634 million due to the reduction in premium income stemming from the pandemic as well as lower actuarial reserve releases.

It was noted that despite lower trading volumes as a consequence of the pandemic, net gains on foreign currency activities and financial assets amounted to JM$2.2 billion, representing an increase of JM$333 million or 18.3 per cent above the prior year given higher revaluation gains. 

Other revenue increased by JM$963 million over the same period a year ago

Rising expenses

Operating expenses amounted to JM$7.8 billion for the period and reflected an increase of JM$656 million or 9.2 per cent. 

This was primarily attributable, the financial group said, to an increase in other operating expenses of JM$804 million, which was partially offset by the reduction in salaries and staff benefit costs of JM$196 million (due to continued expense management initiatives despite restructuring provisions recorded). 

Asset tax expenses increased year over year by JM$23 million or 1.9 per cent to $1.3 billion given the increase in the group’s assets. 

The Group’s asset base increased year over year by JM$10.2 billion to JM$552.5 billion as at January 31, 2021. 

This was predominantly as a result of the growth in cash resources of JM$17 billion or 15 per cent and growth in Scotia Group’s loan portfolio of JM$4.5 billion or 2.0 per cent, which was partially offset by a reduction in investments of JM$3.1 billion or 2 per cent, and other assets of JM$8.1 billion or 13.4  per cent.

The group’s  loan portfolio grew by $4.5 billion or 2.1  per cent year over year, with loans after allowances for credit losses, increasing to $217 billion. 

Commenting on the Scotia Group Jamaica’s performance, new President and CEO Audrey Tugwell Henry said, “The COVID-19 pandemic and the subsequent global and local containment measures continue to negatively impact our local macroeconomic landscape. Notwithstanding this challenging environment, Scotia Group continues to deliver solid results to shareholders. “

President of Scotia Group Jamaica Audrey Tugwell Henry (File photo)

On Friday, the board of directors approved an interim dividend of 40 cents per stock unit in respect of the first quarter, which is payable on April 22, 2021, to stockholders on record as at March 31, 2021.