Scotia Group Jamaica Limited (SGJ) for the six months ended April 30, 2017 recorded an improvement in Net Interest Income to $13.17 billion, moving from $12.40 billion for the corresponding period in 2016, while Interest Expenses declined by 13% to total $2.23 billion (2016: $2.56 billion). Interest Income for the six months increase 3% to close at $15.40 billion relative to $14.96 billion. Within the second quarter, the bank posted a 6% improvement in Net Interest Income to $6.54 billion (2016: $6.17 billion), stemming from a 3% growth Interest Income to $7.63 billion (2016: $7.42 billion) and a 13% decline in Interest Expense to $1.09 billion (2016: $1.26 billion). According to Jackie Sharp, President and Chief Executive Officer, “Our second quarter results for 2017 reflects continued strong growth in our core business lines, with total revenue growth of 6% quarter over quarter, and 10% year over year.”
Impairment Losses of Loans rose 60% to $975.47 million compared to $608.59 million for the comparable period in 2016. As such, Net Interest Income after Impairment losses on loans grew 3% to $12.19 billion relative to the $11.79 billion recorded for the corresponding period in 2016.
Total Other Revenue increased by 16% to $7.49 billion (2016: $6.46 billion) with SGJ highlighting that, “the positive movement was achieved through increased loan and transaction volumes across our business lines.” See breakdown below:
- Net Fees and Commission Income amounted to $4.42 billion (2016: $3.62 billion), an increase of 22% relative to the corresponding period in 2016. The performance according to SGJ this, “was driven by higher transaction volumes and the growth in our credit card, merchant services, and asset management business.”
- Insurance Revenue climbed by 30% to closed the period at $1.70 billion relative to $1.30 billion last year. SGJ noted, insurance revenue was impacted by, “growth in core insurance business and actuarial reserve release from changes in assumptions on valuation of the portfolios.”
- Net Foreign Exchange Trading Income declined by 24% and amounted to $1.10 billion (2016: $1.44 billion).
- Net Gains on Financial Assets improved to $219.41 million relative to a $90.04 million.
- Other revenue grew from $16.21 million in the first six months of 2016 to $56.08 million, a surge of 246%.
The CEO noted, “we have been executing well on our strategy, to grow our revenues’ streams and taking the necessary actions to reduce our structural operating costs, which has translated into the 355 bps improvement in our productivity ratio and positive operating leverage of 6.8%.”
As such, Total Operating Income for the first six months increased 8% to total $19.68 billion versus $18.25 billion for the corresponding period in 2016. SGJ’s Total Operating Income for the second quarter improved 6%, moving from $9.45 billion in 2016 to $10.05 billion for the quarter ended April 30, 2017.
Total Operating Expenses quarter over quarter reflected a 1% reduction from $5.24 billion in 2016 to $5.16 billion. Total Operating Expenses for the six months amounted to $11.12 billion, a 3% growth from the $10.82 billion booked for the corresponding period in the prior financial year. Under operating expenses:
- Salaries and Staff Benefits increased to close the period at $5.32 billion (2016: $5.12 billion).
- Property Expenses (Including Deprecation) rose by 7% amounting to $1.03 billion (2016: $960.27 million).
- Amortization of Intangible Assets increased 4% to closed the period at $63.49 million versus $61.21 million in 2016.
- SGJ reported $1.07 billion for asset tax, 12% more than the $956.45 million documented for comparable period of 2016.
- Other Operating Expenses decreased by 2% and closed the period at $3.63 billion relative to $3.72 billion.
Profit before Taxation totaled $8.57 billion, this represents an increase of 15% from the $7.43 billion recorded in 2016.
Tax charges for the period totaled $2.88 billion (2016: $2.46 billion), as such Net Profit for the period totaled $5.69 billion, 14% more than the $4.98 billion posted for the same period in 2016. For the quarter, Net Profit outperformed last year’s second quarter results by 16% to close at $3.48 billion (2016: $3.01 billion).
Profit Attributable to Shareholders amounted to $5.60 billion, 15% more than the total of $4.88 billion a year earlier.
Earnings per share (EPS) for six months totaled $1.80 (2016: $1.57), while the EPS for the quarter amounted to $1.10 (2016: $0.95). The tailing earnings per share now totals to $3.96. The total number of shares employed in our calculations amounted to 3,111,572,984 units.
Balance Sheet Highlights:
As at April 30, 2017, the company’s assets totaled $491.05 billion, 9% more than its value a year earlier. The increase in total assets was primarily driven by increases in Cash Resources by $26.77 billion to a total of $115.57 billion due to, “increased liquidity from inflows of retail and commercial deposits.” Management further noted, “we continued to maintain adequate liquidity levels to enable us to respond effectively to changes in cash flow requirements.” Investment Securities also contributed to the increase in the asset base with a $10.05 billion improvement year over year to $124.20 billion.
SGJ’s Shareholders’ Equity at the end of the period amounted to $95.12 billion relative to the $88.34 billion recorded in the prior year’s corresponding quarter. Consequently, SGJ’s book value per amounted to $30.54 (2016: $28.39).
Disclaimer:
Analyst Certification -This research report is for information purposes only and should not be construed as a recommendation. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.