JDX eats into Scotia profits
Published:Sunday | May 30, 2010 | 12:00 AM
Scotia Group Jamaica Limited has reported net profits of $2.6 billion for its second quarter ending April, a financial performance, which, though still strong, is seven per cent less than the banking group netted in the same period last year, reflecting what the commercial bank-led outfit said includes two months of lower yields on securities arising from the Government-imposed Jamaica Debt Exchange (JDX) finalised in February of this year.
Bank executives are still buoyed by the performance and are promising new strategies to combat the lower yields on the company's investment portfolio.
"The performance of the group during this time of unprecedented change and challenge within the economy should reassure all our stakeholders of the continued strength of Scotia Group," Bruce Bowen, its president and chief execu-tive officer said in a state-ment accompanying the financial results.
Aggressive strategies
"Our specific strategies employed to aggressively grow earning assets volumes resulted in another successful quarter, despite the significant reduction in yields on our investment portfolio this quarter," he added.
Scotiabank had pre-dicted earlier that the impact of the JDX on equity would have been less than one per cent, with the transaction expected to negatively affect the group's net interest income. A focus was placed on loan growth, along with alternative pro-ducts, new business and achieving operating efficiencies to offset the lower revenue gains expected.
So far, for the three months up to April, net interest income totalled $5.5 billion, less than the $6.2 billion recorded for the similar three months period in the previous year, and the $6.5 billion earned in the first quarter ended in January.
While net fee and commission income was also down for the period, reported at $942 million compared to $999 million recorded for the April 2009 quarter, it was 14 per cent higher than the first-quarter earnings in this category.
Insurance revenues also performed well, amounting to $974 million, with the Scotia insurance subsidiary contributing the most to the group's bottom line.
But even as the bank focused on controlling expenses and improving operating efficiencies, overall operating expenses increased to $3.8 billion for the reporting period.
The group's loan portfolio totalled $94 billion, up $1.6 billion over the previous quarter. The growth, according to Scotia, was reflected mainly in commercial loans.