Mar 2010 Financial News

Scotiabank: T&T economy transforming for growth

Mar 03, 2010

The worse of the recession is over, but concern still remains about the performance of the global economy when stimulus spending from the world’s leading economies dry up, says Richard Young, managing director, ScotiaBank T&T Limited. In an exclusive interview with the Guardian, Young said the global economy is starting to churn forward. The growth is not as strong as it was two years ago, and I am concerned that the economic activity may just be based on government spending rather than a strengthening of the economic fundamentals. He said the world was in a very strong position in 2006 and 2007, the economy was very buoyant and very productive, so the rapid onset of the recession could be part of this correction.

“Since the end of last year, manufacturing and consumer demand has been growing in the developed economies, but this has to translate into consumer confidence for purchases and for the productive sector to seek funding to invest in their business.” Young said he sees 2010 as a transition year and his outlook for the local economy is filled with caution. “The global turmoil is drawing to an end, so we will use this year to increase our efficiency and to reposition ourselves for when the economy begins to strengthen and investor confidence begin to pick up again.”

Local performance
Young said the local financial institutions had weathered the global financial crisis very well, and this may be a fact that the local industry needs to express to the wider business community. Young said despite a severe reduction in the country’s demand for borrowings, resulting in a marginal decline in the bank’s loan portfolio, ScotiaBank’s net interest income grew to $832 million, up 12.5 per cent. He said for every dollar earned by the bank, 25 cents is paid out to customers and depositors in the form of interest, 14 per cent is used to cover staffing costs with a further 23 per cent representing other expenses. Taxes paid to the government accounts for 8 per cent, 18 per cent is retained profits, while 12 per cent is paid out as dividends to shareholders, he said. Young noted that despite the shrinking market for loans, the group’s balance sheet grew by 11.8 per cent to a record $16 billion.

Loan loss provisions
Young said a growing concern for Scotiabank and other banks has been the growth in loan loss expenses. “Gross loan loss expense increased significantly in 2009 to 0.9 per cent. However, this is consistent with the industry trend, given the current economic conditions. Young said it was commendable that the local banking sector is still able to turn a profit when the rest of the world is struggling.

Productivity
“Our productivity ratios are the lowest in the industry indicating superior productivity and overall efficiency. Scotiabank continues to strengthen and evolve new strategies that enable us to deliver on our core purpose to be the best at helping customers become financially better off by providing relevant solutions to their unique needs,”Young said.


Source:
Peter D Neptune
peter.neptune@gmail.com
Trinidad Guardian
Wednesday March 3, 2010

http://guardian.co.tt/business/business/2010/03/03/scotiabank-tt-economy-transforming-growth