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Scotia profit spikes, but capital dips

Published:Wednesday 12:42 AM

President & CEO
Scotia Group Jamaica Limited, Audrey Tugwell Henry.

Scotia Group Jamaica Limited, SGJ, increased its net profit by more than a third, but its capital dipped marginally due to reduced fair valuations of certain assets at year ending October.

The financial group, which operates a bank, investment brokerage, insurance company and building society, made $11.7 billion in net profit, up 35 per cent on the $8.6 billion reported in 2021. It will pay a dividend of 35 cents per share in January 23.

The improved performance was “anchored by growth across all business lines,” said SGJ President & CEO Audrey Tugwell Henry at an investor briefing on Monday.

Its earnings reflected a 10.4 per cent return on capital, compared to 7.5 per cent a year earlier.

Despite the improvement in the ratio, SGJ’s overall capital dipped to $110.9 billion from $113.9 billion, which the banking group indicated was primarily due to the reduction in the carrying value of the defined-benefit pension plan assets, reduction in the fair value of the investment portfolio, and dividends paid which was partially offset by internally generated profits.

Tugwell Henry said the bank expects market conditions to improve over time with the reduction in inflation, which should have a knock-on effect on interest rates and, eventually, portfolio values.

“We do not want to speculate on interest rates that is driven by the monetary policy of the central bank,” said the banker. “The BOJ’s focus is on inflation targeting and we are starting to see inflation coming down. We will not offer any speculation on where rates will go, but what we can certainly say is that we have sufficient capital … and there is absolutely no concern on whether the bank can maintain its capital adequacy levels in line with the regulatory requirements.”

In regard to its outlook, SGJ said it intends to upgrade its online platform and introduce new features to enable improved digital interaction between customers and their banking agents.

Scotia Group is Jamaica’s second-largest banking operation, with a loan portfolio that grew 14 per cent to $238 billion over the past year. Mortgages increased by 28 per cent, consumer loans by 17 per cent, and commercial loans by 7.0 per cent.

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