March 12, 2020
Scotia Group Jamaica Limited (SGJ) for the three months ended January 31, 2020, reported a decline in net interest income to $6.17 billion, relative to $6.20 billion for the corresponding period in 2019. Interest expenses declined by 8.41% to total $627.92 million (2019: $685.61 million). Interest income for the quarter decreased from $6.88 billion in 2019 to $6.79 billion for the same period ended January 2020. The Company noted, “Loan and transaction volumes continued to grow across our business lines, however lower interest rates and increased competition, resulted in margin compression.” Additionally SGJ noted, “if interest rates remained unchanged year over year, the Group’s net interest income would have been higher by $400 million.”
The company reported an Expected credit loss of $894.87 million compared to the loss of $854.33 million for the comparable period in 2019. As such, Net interest income after expected credit losses for the quarter fell 1.29% to $5.27 billion relative to the $5.34 billion recorded for the corresponding period in 2019.
Total other revenue decreased by 7.57% to $4.91 billion (2019: $5.31 billion). Of this:
- Net fees and commission income amounted to $2.01 billion (2019: $2.05 billion), a decline of 1.97% relative to the corresponding period in 2019. The performance was due to, “continued customer education on the various channels which provide alternatives to reduce fees, and the ongoing shift to online and mobile transactions which attract lower fees.”
- Insurance revenue climbed by 3.51% and closed the period at $1.06 billion relative to $1.02 billion last year. SGJ noted the movement was, “due mainly to higher premium income year over year which was partially offset by lower actuarial reserve releases.”
- Net foreign currency activities decreased by 16.14% and amounted to $1.71 billion (2019: $2.04 billion), SGJ noted that this was, “owing to lower revaluation gains which was partially offset by increased trading activities.”
- Net gains on financial assets improved to $115.26 million relative to $182.91 million recorded in 2019.
- Other revenue fell from $9.97 million in 2019 to $9.50 million, a decline of 4.69%
As such, total operating income for the year decreased 4.42% to total $10.18 billion versus $10.65 billion for the corresponding period in 2019.
Total operating expenses for the quarter amounted to $7.12 billion, a 3.01% decline from the $7.34 billion booked for the corresponding period in the prior financial year. The company noted, “ salaries and staff benefit costs decreased based on continued expense management initiatives in conjunction with the reduction in other operating expenses of $184 million. the decrease noted in other operating expenses was attributable to the timing of expense payments coupled with the reduction in fraud losses based on enhanced security measures implemented.” Under operating expenses:
- Salaries and staff benefits decreased to close the quarter at $2.76 billion (2019: $2.87 billion).
- Property expenses (including deprecation) amounted to $560.85 million (2019: $527.67 million).
- Amortization of intangible assets decreased by 23.49% to close the period at $29.39 million versus $38.41 million in 2019.
- SGJ reported $1.24 billion for asset tax, 4.28% more than the $1.19 billion documented for the same period for 2019.
- Other operating expenses decreased by 6.79% and closed the period at $2.53 billion relative to $2.71 billion in 2019.
Profit before taxation for the period totaled $3.06 billion; this represents a decrease of 7.55% from the $3.31 billion recorded in 2019.
Tax charges for the period totaled $1.28 billion (2019: $989.50 million), as such Net Profit for the quarter totaled $1.78 billion, 23.27% less than the $2.32 billion posted for the same period in 2019. Profit attributable to shareholders for the quarter amounted to $1.78 billion, 23% less than the total of $2.32 billion a year earlier.
Total comprehensive income for the period totaled $3.31 billion, compared to the $1.90 billion recorded for the same quarter in 2019.
Earnings per share (EPS) for the quarter totaled $0.57 (2019: $0.75), while the trailing twelve months earnings per share totaled $4.07. The total number of shares employed in our calculations amounted to 3,111,572,984 units. Notably, SGJ’s stock price closed the trading period on March 11, 2020 at a price of $51.02.
Balance Sheet Highlights:
As at January 31, 2020, the company’s assets totaled $556.80 billion, 3.66% more than its value of $537.13 billion last year earlier. The increase in total assets was primarily driven by increases in ‘Loans, After Allowances for Impairment Losses’ which closed at $212.53 billion (2019: $185.66 billion). ‘Retirement benefit assets’ also aided the overall movement in the asset base to close the quarter at $46.33 billion (2019: $34.82 billion).
SGJ’s shareholders’ equity at the end of the period amounted to $119.71 billion relative to the $115.03 billion recorded in the prior year. Consequently, the book value per share amounted to $38.47 (2019: $36.97).
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