Scotia looks to mortgages, SMEs to grow business
Published:Friday | March 4, 2011 | 12:00 AM
Scotiabank Jamaica will be seeking to increase market share in, it says, under-served market segments such as retail mortgages and small business services, to stem a year of profit drift.
"Our strategies will include offering new products, more efficient processes for faster response time, and increased staff training to help staff become more effective in identifying client needs and offering customised solutions," said president and chief executive officer Bruce Bowen at the banking group's annual general meeting Wednesday.
"Through this holistic needs identification process, together with a strong internal referral programme, we aim to increase our share of each customer's wallet and deepen our customer relationships."
Scotiabank last year reported a 7.8 per cent reduction in net profit, from J$11.6b to J$10.7b.
Profit also dropped four per cent in its first quarter ending January 2011, from J$2.8b to J$2.7b.
Bowen did not share the specifics of his planned strategy to drive business within the segments identified, nor the revenue potential they contain.
Scotia Jamaica Building Society, through which mortgages are sold, is last in the mortgage loans market of four players, with a J$7.4 billion portfolio, according to September 2010 industry data published by the central bank. The mortgage loan market, valued at J$85 billion, is dominated by Jamaica National and Victoria Mutual, with FirstCaribbean coming a distant third with a portfolio just about J$300 million larger than Scotia's.
Scotiabank later reported a J$7.6 billion residential mortgage portfolio at October 2010.
While Scotiabank has been relatively subdued in the mortgage market, it has been enticing small businesses with loans at reduced rates, resulting, the bank said, in double-digit growth in its SME loan portfolio.
Scotiabank's combined loan portfolio at yearend October 2010 stood at J$95.8 billion, but dropped to J$93.9 at first quarter ended January 2011, impacted in part by continued debt defaults.
"Another significant impact on earnings in the past few years has been provisions for credit losses or impairment losses on loans," said Bowen, in his presentation to shareholders at Wednesday's annual general meeting in Kingston.
"In 2009, we experienced a significant increase in provision for credit losses as Jamaica's economy plunged into recession and unemployment rose."
Non-performing loans now represent 4.43 per cent of the bank's total gross loans, compared to 3.9 per cent a year ago.
In addition to increasing market share in under-represented segments, Bowen said the bank would be expanding its distribution channels, giving customers more options to access products and services.