SGJ reports 27% increase in nine months profits attributable to shareholders

Date: September 14, 2018 

For the nine months ended  July 30, 2018, Scotia Group Jamaica Limited’s (SGJ) Net Interest Income declined by 4% to $19.12 billion, moving from $19.93 billion for the corresponding period in 2017, while Interest Expenses declined by 27% to total $2.42 billion (2017:$3.33 billion). Interest Income for the period decreased from $23.26 billion in 2017 to $21.54 billion. The Company noted, “While there were increased loan and transaction volumes across our business lines, this was offset by reduced net interest margins as a result of lower interest rates, due to a stable macroeconomic environment and increased competition.” Net Interest Income for the third quarter fell 7% to $6.30 billion relative to $6.76 billion for the correspond quarter of 2017.

The company reported an Impairment Loss on Loans of $1.17 billion compared to the loss of $1.48 billion for the comparable period in 2017. As such, Net Interest Income after Impairment losses on loans fell 3% to $17.94 billion relative to the $18.44 billion recorded for the corresponding period in 2017.

Total Other Revenue increased by 26% to $13.92 billion (2017: $11.04 billion). Of this:

  • Net Fees and Commission Income amounted to $6.11 billion (2017: $6.59 billion), a decrease of 7% relative to the corresponding period in 2017. The performance was, “ impacted by the ongoing shift from branch transactions to online and mobile transactions which attract lower fees.”
  • Insurance Revenue climbed by 6% and closed the period at $2.40 billion relative to $2.27 billion last year. SGJ noted, insurance revenue was impacted, “due to growth in core insurance business and actuarial reserve releases from changes in assumptions on valuation of the portfolios”.
  • Net Foreign Currency Activities increased by 116% and amounted to $3.61 billion (2017: $1.67 billion), SGJ noted that this was, “based on increased market activities and revaluation gains”.
  • Net Gains on Financial Assets improved to $1.02 billion relative to $447.80 million recorded in 2017.
  • Gain on disposal of subsidiary totalled $753.14 million as the company noted this, “relates to Scotia Jamaica Micro Finance Company Limited (Credi-Scotia), which was sold effective December 1, 2017.”
  • Other revenue declined from $65.22 million to $22.90 million, a decline of 65%

As such, Total Operating Income for the period increased 8% to total $31.86 billion versus $29.48 billion for the corresponding period in 2017.  Total Operating Income for the quarter amounted to $9.65 billion, 1% lower than the $9.79 billion booked for the same quarter of 2017.

Total Operating Expenses for the nine months amounted to $16.26 billion, a 1% growth from the $16.12 billion booked for the corresponding period in the prior financial year.

Under operating expenses:

  • Salaries and Staff Benefits decreased to close the period at $7.59 billion (2017: $8.00 billion).
  • Property Expenses (Including Deprecation) fell by 4% amounting to$1.51 billion (2017: $1.57 billion).
  • Amortization of Intangible Assets increased 22% to close the period at $116.21 million versus $95.25 million in 2017.
  • SGJ reported $1.09 billion for asset tax, 2% more than the $1.07 million documented for the same period for 2017.
  • Other Operating Expenses increased by 11% and closed the period at $5.96 billion relative to $5.38 billion in 2017.

Profit before Taxation for the period totaled $15.60 billion; this represents an increase of 17% from the $13.36 billion recorded in 2017.

Tax charges for the period totaled $4.44 billion (2017: $4.37 billion), as such Net Profit for the period totaled $11.16 billion, 24% more than the $8.99 million posted for the same period in 2017. Profit for the quarter amounted to $4.40 billion, 33% less than the total of $3.30 billion a year earlier.

Profit attributable to shareholders for the period totaled $11.16 billion, a 27% increase on the $8.81 billion recorded in 2017. Profit attributable to shareholders for the third quarter totaled $4.40 billion compared to $3.21 billion booked for the comparable period of 2017.

Earnings per share (EPS) for the period totaled $3.59 (2017: $2.83), while earnings per share for the quarter totaled $1.41 (2017: $1.03). The trailing earnings per share amounted to $4.67. 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 September 13, 2018at a price of $56.32

Balance Sheet Highlights:

As at July 31, 2018, the company’s assets totaled $535.15 billion, 7% more than its value of $501.18 billion last year earlier. The increase in total assets was primarily driven by increases in ‘Cash Resources’ by $11.60 billion to total $145.73 billion, ‘Investment Securities’ also increased by $17.31 billion to a total of $130.49 billion. Loans, after allowance for impairment losses also contributed to the upward movement with an 8% increase to $176.98 billion (2017: $163.88 billion). This was however offset by the 28% decline in ‘Pledged assets’ to $26.81 billion (2017$45.79 billion)

SGJ’s shareholders’ equity at the end of the period amounted to $112.90 billion relative to the $96.99 billion recorded in the prior year’s corresponding quarter. Consequently, the book value per amounts to $36.29 (2017: $31.17).

Disclaimer:

Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. 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.

2018-09-14T12:55:57+00:00