Decrease in non-performing loans at Scotiabank
Published:Sunday | May 29, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
Scotiabank Jamaica has reported a slowdown in the number of retail loans that end up in the non-performing category, the result of new strategies on which the bank has embarked, including an aggressive collection strategy.
Still, non-performing loans during the quarter ended April 30 totalled $4.2 billion, up $315 million over the corresponding quarter of the previous year, but $24 million less than the figure recorded in the quarter ended January 2011.
"Early recognition methods has helped us to better understand customers' finances," said Wayne Powell, executive vice president, retail banking at Scotiabank.
Addressing the bank's investors briefing last Thursday at its Acadia Boulevard training centre in St Andrew, Powell said significant improvement was seen in loan losses quarter over quarter.
The decline he attributed primarily to lower credit card write-offs, more aggressive methods of collection with increased recovery, lower provision on the commercial book and an improved attitude towards repayment.
Performance on the corporate and commercial loan portfolio side, Powell said, remained stable with close portfolio management to make sure that they recognise very early where there are going to be problems.
The reduction in loan losses was also credited for the group's net profit performance which grew by four per cent or $95 million to $2.8 billion at the end of the second quarter.
But while net profit was up, overall, the Group recorded a decline in total operating revenues to $14.8 billion, down one per cent or $193 million when compared to the similar quarter of the previous year.
With the declining interest rate environment, net interest income declined by $822 to $11.2 billion while other revenues went up by $342 million to $4.1 billion.
Contributions from the various subsidiaries remained buoyant, but with the Group now seeing a shift in terms of the highest contributor to the Group's overall performance.
"The insurance segment has been growing in contribution as there was earning pressure on the banking side. Now we find that we are seeing improvement in the quality of our balance sheet and so we are starting to see that shift back," said Bruce Bowen, president of Scotiabank Jamaica.
"So whereas last year BNSJ represents 42 per cent of net income, this year it has moved to 45 per cent. We were seeing where insurance was 44 per cent, now its 38 per cent, and that's one of the advantages of a diversified revenue stream," he explained to journalists and financial analysts at the company's briefing.
The Scotiabank Group last traded at $23, with shares valued at $71 billion on the market.
On balance sheet, it has an asset base of $337.8 billion, of which loans totalled $98.6 billion, an area targeted for growth going forward.
So far, Powell said the retail loan portfolio has seen growth of $4.5 billion year over year and a number of strategies have been implemented to drive further growth.