Dec 2014 Financial News

Scotia pins 2015 growth on transaction volumes, rather than fee increases

Dec 05, 2014

SCOTIA Group Jamaica (SGJ) expects higher profit in 2015 based on increasing transaction volumes rather than "significantly" raising bank fees, according to president and chief executive Jackie Sharp.

"We are aiming for growth, but double-digit growth would be aggressive in the current environment," she told the Jamaica Observer at the SGJ Analysts Briefing on Wednesday at Scotiabank Centre in downtown Kingston.

The bank earned $10.1 billion in after-tax net profit for its year end, or seven per cent less than a year ago due to a fall in four of the five segments at the financial conglomerate.

The bank indicated that for 2015 it would aim for sustainable revenue growth, better client intimacy, operational efficiency, and a high-performance culture. During the financial year, total operating income at $33.8 billion -- comprised of net interest income after impairment losses and other revenue -- decreased $408 million year-on-year. However, fees accounted for $5.8 billion, and that figure remained flat year-on-year.

On Wednesday, Sharp said that fees would largely remain unchanged next year.

"So we are looking at all our various categories to see how we can increase volumes on our marketshare without necessarily increasing fees, because fee increases will not be significant in 2015," she said.

In January, the Bank of Jamaica (BOJ) released its Interim Survey on Fees and Charges of Deposit-Taking Institutions. The interim report showed that roughly 23 cents from every dollar earned by local commercial banks were earned from fees, which totalled an estimated $18.5 billion in 2013, according to the survey. It added that these fees increased 12.6 per cent year-on-year amid profits dipping by one-third at these institutions.

The Jamaica Bankers Association said on its website that fees are necessary to recover some of the operational costs associated with providing their services, which include staff, location, security, technology, and back-office processing.

"So we have the asset management, the capital market business, and car fees. There are a number of different areas that we earn fee revenues and the good thing is that they are all diversified. So the good thing is that when one is down, another can prop up the total non-interest revenue," added Sharp.

In November, the Economy Production Committee of Parliament expressed concern about bank fees, which ultimately led to the reports. The BOJ conducts an annual bank fee survey which started some three years earlier following a similar uproar over bank fees. However, previous reports are difficult to find on the BOJ website.

Source:
BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com
Jamaica Observer
Friday December 5, 2014    

http://www.jamaicaobserver.com/business/Scotia-pins-2015-growth-on-transaction-volumes--rather-than-fee-increases_18061737