December 13, 2021
For the year ended October 31 ,2020 Scotia Group Jamaica Limited’s (SGJ) net interest income declined 9% to amount to $22.71 billion, relative to $24.86 billion for the corresponding period in 2020, while interest expenses declined by 22% to total $1.86 billion (2020: $2.37 billion). Interest income for the year decreased from $27.23 billion in 2020 to $24.57 billion for the period under review. Net interest income for the fourth quarter fell 7% to $5.71 billion relative to $6.15 billion for the corresponding quarter of 2020.
The company reported an expected credit loss of $2.81 billion compared to the loss of $5.85 billion for the comparable period in 2020. As such, net interest income after expected credit losses for the year rose by 5% to $19.90 billion relative to the $19.01 billion recorded for the corresponding period in 2020. SGJ noted that “Total revenues continue to be heavily impacted by the COVID-19 pandemic as evidenced by the ongoing reduction in interest rates offered in the market and lower transaction volumes, which have contributed to a reduction in the Group’s net interest income, lower net fee and commissions as well as insurance revenues.” Total other revenue decreased by 7% to $17.91 billion (2020: $19.18 billion). Of this:
- Net fees and commission income amounted to $6.09 billion (2020: $7.16 billion), a decrease of 15% relative to the corresponding period in 2020. The performance was “primarily attributable to lower transaction volumes stemming from the COVID-19 pandemic in conjunction with the continued execution of the Group’s digital adoption strategy geared towards educating customers about our various electronic channels which attract lower fees,” according to the Company.
- Insurance revenue fell by 13% and closed the period at $2.63 billion relative to $3.01 billion last year. SGJ noted the movement was, due to the reduction in premium income stemming from the pandemic as well as lower actuarial reserve releases.”
- Net foreign currency activities increased by 10% and amounted to $7.56 billion (2020: $6.85 billion).
- Net gains on financial assets fell to $604.43 million relative to the gain of $940.87 million recorded in 2020.
- Other revenue decreased from $1.23 billion to $1.02 billion, a decrease of 17%. This was “was attributable to lower gains realized on the extinguishment of debt facilities,” as per SGJ.
As such, total operating income for the year decreased 1% to total $37.81 billion versus $38.20 billion for the corresponding period in 2020. Total operating income for the quarter amounted to $8.06 billion, 29% less than the $11.37 billion booked for the same quarter of 2020.
Total operating expenses for the year amounted to $25.14 billion, a 1% growth from the $24.80 billion booked for the corresponding period in the prior financial year.
Under operating expenses:
- Salaries and staff benefits decreased to close the year at $9.48 billion (2020: $10.63 billion), “due to continued expense management initiatives despite restructuring provisions recorded,” as noted by the Company.
- Property expenses (including depreciation) amounted to $2.33 billion (2020: $2.41 billion).
- Amortization of intangible assets decreased by 17% to close the period at $97.67 million versus $117.56 million in 2020.
- SGJ reported $1.22 billion for asset tax, 2% more than the $1.20 billion documented for the same period for 2020, “due to the increase in the Group’s assets.”
- Other operating expenses increased by 15% and closed the period at $12.02 billion relative to $10.45 billion in 2020, SGJ noted that, “the increase noted in other operating expenses was due to an increase in technology expenses as we continue to make significant investment in support of our digital transformation strategy, coupled with restructuring expenses partially offset by strong underlying cost management.”
Profit before taxation for the period totaled $12.70 billion; this represents a decrease of 5% from the $13.40 billion recorded in 2020.
Tax charges for the period totaled $4.26 billion (2020: $4.35 billion), as such net profit for the year totaled $8.41 billion, 7% less than the $9.05 billion posted for the same period in 2020. Profit for the quarter amounted to $1.12 billion, 68% less than the total of $3.49 billion a year earlier.
Profit attributable to shareholders for the period totaled $8.41 billion, a 7% decrease on the $9.05 billion recorded in 2020. Profit attributable to shareholders for the fourth quarter totaled $1.12 billion compared to $3.49 billion booked for the comparable period of 2020.
Total comprehensive income for the year totaled $7.67 billion, relative to a loss of $2.22 million posted for the same period in 2020. Total comprehensive loss for the quarter amounted to $1.51 billion, relative to a loss of $962.76 million, a year earlier.
Earnings per share (EPS) for the year totaled $2.70 (2020: $2.91), while earnings per share for the quarter totaled $0.36 (2020: $1.12). 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 10, 2021 a price of $37.57 with a corresponding P/E of 13.90 times.
Balance Sheet Highlights:
As at October 31,2021, the company’s assets totaled $585.44 billion, 8% more than its value of $543.24 billion last year earlier. The increase in total assets was primarily driven by a 22% increase in ‘Investment Securities’ to total $141.63 billion (2020: $116.40 billion) and a 19% increase in ‘Cash Resources’ which amounted to $168.68 billion (2020: $141.26 billion). This was also partly tempered by a 6% decrease in ‘Loans, After Allowances for Impairment Losses’ to $208.52 billion ($220.73 billion).
SGJ’s shareholders’ equity at the end of the period amounted to $113.60 billion relative to the $110.76 billion recorded in the prior year. Consequently, the book value per share amounted to $36.51 (2020: $35.59).
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