Date: December 5, 2019
For the year ended October 31 ,2018 Scotia Group Jamaica Limited’s (SGJ) net interest income marginally declined amounting to $25.12 billion, relative to $25.21 billion for the corresponding period in 2018, while interest expenses declined by 19% to total $2.61 billion (2018:$3.20 billion). Interest income for the year decreased from $28.41 billion in 2018 to $27.73 billion. Net interest income for the fourth quarter rose 6% to $6.43 billion relative to $6.09 billion for the corresponding quarter of 2018. The Company noted, “Loan and transaction volumes continued to grow across our business lines, however lower interest rates due to stable macroeconomic environment and increased competition, resulted in margin compression.”
The company reported an Expected credit loss of $2.60 billion compared to the loss of $1.92 billion for the comparable period in 2018. As such, Net interest income after expected credit losses for the year fell 3% to $22.52 billion relative to the $23.29 billion recorded for the corresponding period in 2018.
Total other revenue increased by 18% to $20.06 billion (2018: $17.00 billion). Of this:
Net fees and commission income amounted to $8.10 billion (2018: $8.13 billion), a marginal decrease of 0.3% relative to the corresponding period in 2018. The performance was, “impacted by continuous customer education on alternatives to reduce fees, and the ongoing shift to online and mobile transactions which attract lower fees.”
Insurance revenue climbed by 13% and closed the period at $3.30 billion relative to $2.93 billion last year. SGJ noted the movement was, “due to higher premium income year over year, partially offset by lose actuarial reserve releases”.
Net foreign currency activities increased by 74% and amounted to $6.95 billion (2018: $4.00 billion), SGJ noted that this was, “due to increased market activities”.
Net gains on financial assets improved to $1.48 billion relative to $1.16 billion recorded in 2018.
The company reported no Gain on disposal of subsidiary for 2019 compared to the $753.14 million reported in 2018.
Other revenue increased from $29.30 million to $220.89 million, a vast increase of 654%
As such, total operating income for the year increased 6% to total $42.58 billion versus $40.29 billion for the corresponding period in 2018. Total operating income for the quarter amounted to $10.68 billion, 27% higher than the $8.43 billion booked for the same quarter of 2018.
Total operating expenses for the year amounted to $24.10 billion, a 10% growth from the $22.00 billion booked for the corresponding period in the prior financial year. The company noted, “ The group’s operating expenses were also higher than prior year partially due to increase fraud related expenses, as well as increased investments in technology and business optimization which we believe are necessary investments for the future, as we continue to focus on improving customer satisfaction.”
Under operating expenses:
- Salaries and staff benefits increased to close the year at $11.14 billion (2018: $10.45 billion), “primarily due to increased incentives to our sales team resulting in the growth of our loan portfolio”
- Property expenses (including deprecation) amounted to $2.13 billion (2018: $2.14 billion).
- Amortization of intangible assets marginally increased by 0.1% to close the period at $154.76 million versus $154.55 million in 2018.
- SGJ reported $1.13 billion for asset tax, 4% more than the $1.09 million documented for the same period for 2018.
- Other operating expenses increased by 17% and closed the period at $9.53 billion relative to $8.17 billion in 2018, “attributable to increased technology investments such as ATM software, online banking enhancements, security chips for credit cards and network upgrade to support our digital strategy”.
Profit before taxation for the period totaled $18.48 billion; this represents an increase of 1% from the $18.29 billion recorded in 2018.
Tax charges for the period totaled $5.29 billion (2018: $5.52 billion), as such Net Profit for the year totaled $13.19 billion, 3% more than the $12.77 million posted for the same period in 2018. Profit for the quarter amounted to $3.40 billion, 111% more than the total of $1.61 billion a year earlier.
Profit attributable to shareholders for the period totaled $13.19 billion, a 3% increase on the $12.77 billion recorded in 2018. Profit attributable to shareholders for the fourth quarter totaled $3.40 billion compared to $1.61 billion booked for the comparable period of 2018.
Earnings per share (EPS) for the year totaled $4.24 (2018: $4.10), while earnings per share for the quarter totaled $1.09 (2018: $0.52). 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 December 4, 2019 a price of $55.48.
Balance Sheet Highlights:
As at October 31,2019, the company’s assets totaled $549.00 billion, 5% more than its value of $521.86 billion last year earlier. The increase in total assets was primarily driven by increases in ‘Cash Resources’ by $12.24 billion to total $135.00 billion (2018: $122.76 billion) and ‘Retirement benefit assets’ which amounted to $43.70 billion (2018: $34.52 billion).
SGJ’s shareholders’ equity at the end of the period amounted to $118.11 billion relative to the $115.65 billion recorded in the prior year. Consequently, the book value per share amounted to $37.96 (2018: $37.17).
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.