SGJ reports 8% increase in year end Profit attributable to shareholders

Date: December 6, 2018

For the year ended September 30,2018 Scotia Group Jamaica Limited’s (SGJ) net interest income declined by 5% to $25.21 billion, falling from $26.64 billion for the corresponding period in 2017, while interest expenses declined by 26% to total $3.20 billion (2017:$4.32 billion). Interest income for the year decreased from $30.97 billion in 2017 to $28.41 billion. Net interest income for the fourth quarter fell 9% to $6.09 billion relative to $6.72 billion for the corresponding quarter of 2017. The Company noted, “The quarter over quarter results were negatively impacted by foreign exchange revaluation losses, gains on the sale of investments in Q3 not repeated in Q4, accruals for one-time structural transformation costs, as well as increases in fraud losses for Q4.”

The company reported an impairment loss on loans of $1.92 billion compared to the loss of $2.18 billion for the comparable period in 2017. As such, net interest income after impairment losses on loans fell 5% to $23.29 billion relative to the $24.47 billion recorded for the corresponding period in 2017.

Total other revenue increased by 13% to $17.00 billion (2017: $15.03 billion). Of this:

Net fees and commission income amounted to $8.13 billion (2017: $8.64 billion), a decrease of 6% relative to the corresponding period in 2017. 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 5% and closed the period at $2.93 billion relative to $2.79 billion last year. SGJ noted the movement was, “due to growth in core insurance business”.

Net foreign currency activities increased by 60% and amounted to $4.00 billion (2017: $2.49 billion), SGJ noted that this was, “due to increased market activities”.

Net gains on financial assets improved to $1.16 billion relative to $1.03 billion 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 $75.02 million to $29.30 million, a decline of 61%

As such, total operating income for the year increased 2% to total $40.29 billion versus $39.49 billion for the corresponding period in 2017.  Total operating income for the quarter amounted to $8.43 billion, 16% lower than the $10.01 billion booked for the same quarter of 2017.

Total operating expenses for the year amounted to $22.00 billion, a 3% growth from the $21.29 billion booked for the corresponding period in the prior financial year.

Under operating expenses:

  • Salaries and staff benefits decreased to close the year at $10.45 billion (2017: $10.64 billion).
  • Property expenses (including deprecation) increased by 1% amounting to $2.14 billion (2017: $2.11 billion).
  • Amortization of intangible assets increased 5% to close the period at $154.55 million versus $146.90million 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 12% and closed the period at $8.17 billion relative to $7.32 billion in 2017.

Profit before taxation for the period totaled $18.29 billion; this represents an increase of 1% from the $18.20 billion recorded in 2017.

Tax charges for the period totaled $5.52 billion (2017: $5.79 billion), as such Net Profit for the year totaled $12.77 billion, 3% more than the $12.41 million posted for the same period in 2017. Profit for the quarter amounted to $1.61 billion, 53% less than the total of $3.42 billion a year earlier.

Profit attributable to shareholders for the period totaled $12.77 billion, an 8% increase on the $12.17 billion recorded in 2017. Profit attributable to shareholders for the fourth quarter totaled $1.61 billion compared to $3.36 billion booked for the comparable period of 2017.

Earnings per share (EPS) for the year totaled $4.10 (2017: $3.91), while earnings per share for the quarter totaled $0.86 (2017: $1.08). 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 5, 2018 a price of $58.09.

Balance Sheet Highlights:

As at September 30, 2018, the company’s assets totaled $521.86 billion, 6% more than its value of $490.88 billion last year earlier. The increase in total assets was primarily driven by increases in ‘Loans, After Allowances for Impairment Losses’ by $16.11 billion to total $182.61 billion, ‘Investment Securities’ also increased by $14.44 billion to a total of $134.73 billion. This was however offset by the 42% decline in ‘Pledged assets’ to $21.43 billion (2017: $37.25 billion)

SGJ’s shareholders’ equity at the end of the period amounted to $115.65 billion relative to the $102.43 billion recorded in the prior year. Consequently, the book value per share amounted to $37.17 (2017: $32.92).


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