Mar 2016 Financial News

Retail banking scores well for BNS

Mar 07, 2016

Scotia Group (BNS Jamaica) is eking out more profit from its retail banking arm, with profit before tax from this segment climbing to $1.17 billion for the first quarter ended January 31, compared to $611.75 million in the first quarter of 2015.

Jackie Sharp, President and CEO said the bank is seeing results from a renewed focus on core business, also indicating that there were higher loan volumes and reduced wholesaling of loans during the quarter.

On January 31, the groups loan portfolio stood at $156 billion, increasing by $10.1 billion or seven per cent year over year. Deposits were $219 billion, increasing by $21.2 billion or 11 per cent year over year.

While retail banking contributed 48 per cent to revenues, the contribution of treasury was eight per cent, investment management services eight per cent, corporate banking 23 per cent and other, two per cent.

Total revenues for the group, excluding impairment losses on loans — for the three months ended January 31, 2016 — was $9.06 billion, an increase of $54 million over the prior year.

In a related release on Friday, Scotia Group reported a 33 per cent climb in first quarter earnings, with net income of $1.96 billion which is $481 million more than results in the quarter ended January 31, 2015.

Sharp commented that the group is now seeing the result of an executed “focus on growing core business, while managing risk and controlling expenses”.

Return on average equity was 9.04 per cent for this quarter, and 7.58 per cent for the period ended January 31, 2015.

Scotia Group Jamaica Ltd is a subsidiary of Scotiabank Caribbean Holdings Ltd, with the Bank of Nova Scotia in Canada as the ultimate parent.

The group includes the Bank of Nova Scotia Jamaica Ltd, Scotia Investments Jamaica Ltd and Scotia Jamaica Micro Finance Ltd.

As at Friday, it has 32 banking and investment branches and 900,000 clients in Jamaica.

Sharpe pointed to an increase of $141 million or two per cent in total operating income year over year, partly attributed to operating efficiency initiatives implemented last year.

“Excluding the impact of asset tax, we achieved a $394 million or 8 per cent reduction in operating expenses.”

Revenues, Sharpe said, were driven by increased volumes countering the impact of reduced margins.

Net interest income after impairment losses for the period was $5.97 billion — $236 million above the similar quarter in 2015.

This, the group CEO said, was mainly due to growth in net interest income of $149 million, resulting from lower levels of wholesale funding.

Growth in loan volumes was recorded for residential mortgages, consumer, small business and commercial portfolios to offset the reductions in net interest margins due to lower market interest rates and the competitive environment.

Sharp noted that the group’s “strong risk management culture has resulted in a reduction in loan losses by $87 million or 25 per cent year over year, due to enhanced adjudication, monitoring and recovery efforts”.

The group’s suffered losses on investments, which Sharp said was due to net losses on financial assets resulting from market-to-market movements on securities and lower foreign currency gains, offset by the growth in net fees and commission income from increased transaction volumes on card and merchant service business segments.

The group’s operating expenses for the quarter was $5.6 billion — a decrease of $733 billion or 11.61 per cent compared to the prior year.

This, Sharp said, was due primarily to a decline in the asset tax of $339 million as the rate for regulated insurance companies moved from 100bps to 25bps; correspondingly, the corporate income tax rate for these entities was increased from 15 per cent to 25 per cent.

Salary-related and other operating expenses declined $394 million.

Total assets for Scotia Group increased year over year by $25.6 billion or 6.18 per cent to $439 billion during the period — growth attributed in the main to increases of $10.1 billion or 6.9 per cent in loans.

Non-performing loans (NPLs) at January 31, 2016 totalled $4.6 billion – a 2.9 per cent of total gross loans down from 3.34 per cent last year, the group CEO stated.

A first interim dividend of 42 cents per stock unit was approved for payment on April 15 to stockholders on record at March 23, 2016.

 

Source:
BY AVIA COLLINDER
collindera@jamaicaobserver.com
Business reporter 
Jamaica Observer
Sunday March 6, 2016  

http://www.jamaicaobserver.com/business/Retail-banking-scores-well-for-BNS_53650