Scotia Group Jamaica made $4.2 billion profit for the April 2023 quarter, reflecting a 75 per cent rise year on year.
The banking group’s outlook remains positive despite the challenging economy.
“We saw significant growth in our core business lines,” said President and CEO Audrey Tugwell Henry on the bank’s investor call.
“We managed the risk very well and we continue to execute on prudent risk management; and we managed our operations efficiently and managed costs notwithstanding the high inflation environment,” she said.
The bank benefited from rising interest rates, which lifted its interest revenue from loans. Total revenue for the quarter equalled $12.7 billion, while profit nearly doubled from $2.4 billion to $4.2 billion in the second quarter.
Like its peers, Scotia Group Jamaica Limited continues to feel the negative effects of asset prices. Its capital dipped to $109.3 billion from $112.8 billion a year earlier, primarily due to the reduction in the carrying value of the defined benefit pension plan as well as remeasurement on its investment portfolio which was impacted ‘heavily’ by the movement in interest rates, the bank indicated in its second quarter earnings report.
However, now that the central bank is holding steady on its key interest rate, Scotia Group is projecting a fall in rates.
“We expect to see, in the upcoming months, interest rates returning to normal and at that point in time, you will see the valuations, which are impacted by the high interest rates … going back to normalcy. That will happen over the next couple of months,” said Director of Finance and Chief Financial Officer Gabrielle O’Connor.
Bank of Jamaica has been holding interest rates steady at 7.0 per cent since last November after a sustained period of hikes lasting a year to curb inflation.
Consequently, banks and other lenders have been increasing their loan rates.
Over six months, Scotia Group’s profit grew to $7.6 billion on revenue of $26 billion. Its half-year profit in 2022 amounted to $3.66 billion on revenue of $18.6 billion.
As of April, the banking group recorded a 10 per cent rise in deposits. Net loans grew 20 per cent to $249 billion, reflecting continued growth in mortgages.
“We are very satisfied with the credit quality and the performance of our credit portfolio. We are seeing strong performance even better than pre-COVID-19 levels,” said Tugwell Henry.