Minimal branch closures at BNSJa

 Jacqueline Sharp CEO of Scotia Group

Jacqueline Sharp CEO of Scotia Group

There will be minimal branch closures in Jamaica, Jacqueline Sharp, CEO of Scotia Group, stated in response to an IC Insider question, in connection with the Canadian parent company’s pronouncement of closure of 35 branches, within the Caribbean region.
Sharp was addressing the press, in providing an update on the group’s operation for the year to October. The local group closed their Westgate and Barnett street branches, with the opening of the new branch at Fairview, just outside of the old Montego Bay city centre. “The main branch in Sam Sharp’s square remains open. Due to the limited branch closures no provision was made in the 2014 accounts and the staff at the closed branches were absorbed within the group,” Sharp said.
SCot Bnk signThe Canadian parent had announced closure of branches and staff cut of 1,500, to trim cost and better align branches with customer demand. But Sharp stated that the local operation was always looking at ways of making the operation more efficient and will focusing on this aspect going forward.
Business as usual locally, comes against the back ground of Scotia Group making profit of $10 billion versus nearly $11 billion in 2013, but more importantly, the banking operations made profit of $3.935 billion vs $3.99 billion in 2013 after absorbing additional asset tax cost of $260 million.

Lower Q4 profit squeezes Scotia Group

Scotia hq 25 9-14Scotia Group Jamaica (Scotia Group) reported profit after tax of $10.1 billion for the year ended October, 2014, a decrease of $774 million or 7 percent compared with the net income of $10.9 billion in 2013.
The results for the fourth quarter of $2.5 billion represents an increase of $129 million or 5 percent over the same period last year, and a decrease of $188 million or 7 percent compared to the previous quarter ended July, 2014.
Earnings per share were $3.14 compared to $3.37 in 2013, and the Return on Average Equity was 13.41 percent, down from 15.67 percent last year. During the October quarter, income from foreign currency trading fell sharply from the July quarter, from $636 million to only $234 million and insurance revenues dropped from $661 million to $495 million, a fall of $166 million or 25 percent. While insurance income was higher than in the 2013 quarter at $476 million, the foreign exchange trading gains was still well below the $677 million generated in the 2013 quarter. Loan loss impairment fell to $227 million in the October 2014 quarter slightly higher than the $191 million in 2013 but much lower than the $497 million in the July 2014 quarter.
Jackie Sharp, President and CEO said, “Scotia Group experienced another year of solid performance across all business lines. We saw 9 percent growth year over year in our Commercial & SME portfolios; 6 percent growth in our retail loan portfolio; 12 percent growth in mortgages; and our Premium Money Market Fund which is offered by our subsidiary, Scotia Investments surpassed the $10 Billion mark. During the last half of the year, we have seen strong growth and we are poised for another successful year in 2015.”
Net interest income after impairment losses for the year was $22.9 billion, an increase of $57 million compared to 2013. Other revenue for this financial year amounted to $10.9 billion, a reduction of $465 million or 4 percent compared to 2013. Net fee and commission income remained stable year over year, despite the growth in loan and transaction volumes. Net gains on foreign currency activities decreased by $767 million, while net gains on financial assets increased by $520 million compared to the prior year.
ScotiaBank Falmth crpOperating Expenses for the year amounted to $20.2 billion, an increase of $527 million or 2.7 percent compared 2013. The Group experienced an increase in the asset, premium and minimum business taxes of $861 million as a result of the increased rates implemented earlier in the year.
Loans, after allowance for impairment losses amount to $145.7 billion as at the year-end is only up by just over $1 billion from the $144.6 billion at the end of the July quarter but increased 8 percent from $134.8 billion in October 2013.
Non-performing loans (NPLs) at October 31, 2014 totaled $4.9 billion, reflecting an increase of $411 million from prior year. Total NPLs now represent 3.32 percent of total gross loans compared to 3.29 percent last year and 3.31 percent as at July 31, 2014.Interest rates are falling on the deposit side that shows up in lower interest cost in the October quarter over that of the July quarter.
Looking ahead|Scotia should be able to manage the net interest income to their benefit going forward as Treasury bill rate continue to fall. The lower foreign exchange earnings in the last quarter is tied up in the revaluation of the Jamaican dollar during the quarter and should show improvement in the January 2015 quarter with some moderate slippage in the value of the Jamaican dollar. The slow growth in lending is likely to continue for a while longer and will act as a drag of accelerated income and profit growth. Investors should be looking for a gradual growth in profit rather than a big spurt, at any rate earnings should be climbing towards the $3.50 level in 2015.
The Board of Directors approved a final dividend of 40 cents per stock unit payable on January 13, 2015. The stock closed at $20, at the end of trading on the Jamaica Stock Exchange on Friday.

Negative Inflation for rest of 2014?

Price fallPrices increased for October rose by a mere 0.1 percent over September this year, and is in line with the increase in February and June but above a negative 0.3 percent in April. The rate for the rest of the year could be negative based on developments locally and overseas.
The inflation rate, the Statistical Institute of Jamaica (Statin) reveals was mainly due to a 0.2 percent increase in the index for the category of Food and Non-Alcoholic Beverages and 0.3 per cent increase in Housing, Water, Electricity, Gas and Other Fuels. This increase in the index for the latter division was mainly as a result of higher water and sewerage charges in October 2014 Statin stated. A 0.8 percent fall of prices in transportation, moderated the effect of the increases, in the other areas. Statin said that the ‘Transport’ division’s index fell as a result of the decline in the cost of airfares, as well as the price of fuel.

Lower airfares helped to keep October inflation low

Lower airfares helped to keep October inflation low

The October number brings the yearly inflation to 7.2 percent to date. The shortage of many locally grown food items, pushed up prices and inflation in the food category for the September by 2.1 percent, the worse monthly increase by far for the year. Supplies are coming back to normal and will moderate prices in this category, so there should be lowering of inflation here. The price of oil have fallen on the world market down to the mid US$70 range and local gas prices at the pumps, having declined sharply. The fall in world oil prices will be passed through to consumers in lower fuel rate by JPS. With all of these developments rest of the year should see negative inflation that may pull the full year rate well below 7%. The inflation rate for 2012 was 8.0 percent and in 2013, 9.5 percent.

Business sector don’t get it

BOJ 3Jamaica has to rely on the private sector, to help lift it from the economic quagmire it finds itself in, for the past 3 decades. A look at certain data shed some light on the task the country faces.
It tells of a nation where the business sector leaders seem to be managing more from the seat of their pants than based on properly informed position. Take the case of inflation, which ran at 5.1 percent up to August, for 2014, for an average of just less than 0.68 percent per month, and against the back ground of slippage in the exchange rate in the early months that would have helped spike inflation then. With an almost stable Jamaican dollar in September a survey done by the Statistical Institute of Jamaica on behalf of the Bank of Jamaica to ascertain the expectations of Chief Executive Officers, Managing Directors and Financial Controllers about the future movement of prices in September this year, to which 270 responded, found that their expectation for inflation for 2014, will end at 10.2 percent. On what basis is they arrive at this forecasted amount.
Interestingly, the official inflation rate to October is 7.3 percent, the full year’s figure should hoover around this level with the price of oil on the world market having declined sharply, pulling some local cost down with it.
The business sector record on business confidence both on the current state as well as a year out has no better record as ca be seen from the wild fluctuation in the periodic results.
On the matter of Treasury bill rate, while rates have been declining monthly from a peak in March, this year. The survey respondents expected the rate for the 182 day Treasury bill to come out at 8.6 percent at a time the rate had already declined to 8 percent. Admittedly, the interest rate forecast is not totally inconsistent with the managerial group inflation forecast, as investors would want to be compensated with an interest rates above the inflation as they see it. But if the inflation rate forecasted is as high as the private sector figures there would also be need for a greater slippage in the rate of exchange for the Jamaican dollar versus the US dollar. Yet their perception that the exchange rate would slip by 1.3 percent by the end of 2014 from September, would not be in keeping with the high inflation rate they projected.

Future business confidence jumps 19%

A recent survey, undertaken on behalf of Bank of Jamaica by The Statistical institute of Jamaica, shows continued improvement in the perception of present and future business conditions among respondents within the executive ranks of corporate Jamaica.
Grph of fut BCon 9-14The improvement in current conditions show, a gradual monthly improvement since April last year, with periods of slippages in between. The September result of 123.6 reflects a recovery from a fall in August this year to 110.2. It is now just a little higher than the level reached in July of 121.1 and is at its highest since March last year, when the survey showed a 134.7 reading. If the business sector is gaining increasing confidence about current conditions they seem pretty bullish about the future a year out, as the perceptions of future business conditions continue to display a general upward trend, with the latest numbers coming in at 142.4 representing a leap of 19 percent from August this year. The latest survey figures for future conditions, is a shade short of the 148.8 achieved in May 2012 and March 2013.
Grhp Crrt B con 9-14The data for both surveys show the difficulty in relying on them as to what can really be expected going forward, with fairly high levels of variations. This is also borne out by the forecasting of the business sector on inflation, with their forecast consistently ahead of what the out turns end up being.

Treasury-bill rates continue down

Tbill grph 11-14The latest results for Government of Jamaica Treasury bill auctions, show a decline in the interest rate on 28 days instrument, to 6.71 percent from 6.826 percent in October, as $976 million chased the $400 million on offer.
Investors, demand for the 91 days Treasury bills offered continued to climb, jumping to $1.042 billion, up from $903,521,900 for the October auction and well up on September’s $641,904,600. Demand for the longer-term 182 days instrument, was for $942 million for the latest auction in which the amounts available was $400 million for all three Treasury bills on offer.
The Treasury bill for the 91 day period, Friday, November 21 to mature on Friday, February 20 next year, attracted an average yield of 7.052 percent, down from 7.336 percent in October, 7.46952 percent, at the September auction. At the August auction the average rate out turn was 7.46767 percent. The yield for July was an average of 7.63643 percent, for the June issue 7.65893 percent and 8.2 percent in May, for the Treasury bill of same duration.
The offer of 182 days duration, maturing on May 22 next year, generates an average interest rate yield of 7.387 percent, a decline from 7.73187 percent, 7.99887 percent, at the September auction, 8.11578 percent, in August, 8.21982 percent at the July’s auction and 8.36502 percent for the June issue, of the same duration. At the May Treasury bill auction, the rate came out at 8.932 percent.

NCB shoots to $19 falls back to $18.15

ncb-logoInvestors responded well to the National Commercial Bank’s year end results, showing earnings of $4.73 per share and with a surprise announcement, of a final dividend, of 96 cents per share.
The stock immediately traded at $17.75 at the opening of the market, and at $17.99 with the purchase of 448,385 shares. Later it traded just 12,412 units at $18.75 and 1,700 at $19 and then fell back to $18.15. Bids to buy start at $18.20 at the high end then $18.15, then $18.10 with a small amount at $18.05 then at $18, an amount of 147,000 units. The lowest offer is now at $20 with 29,918 units then the next serious offer is at $24. The total amount to trade so far is 475,780 units. The stock has room to move much further over the next twelve months with IC Insider’s forecast of $5.50 earnings per share for 2015 and the PE of the stock at 3.8 based on this year’s results. that is one reason why IC Insider gave the stock a Buy Rated status.
The price gain helped to move the All Jamaica Composite index up 521.71 to 81,121.66.

NCB books $1B loan loss in Q4

ncb-logoNational Commercial Bank pushed provision for loan losses to $988 million in the September quarter, well up from $357 million in the June quarter and $283 million for September 2013, to reach $2.2 billion for the year, compared to $2.07 billion.
Despite the losses in this area NCB reported profit after tax of $2.9 billion, for the September quarter and $11.6 billion for the fiscal year.
Non-performing loans totalled $8.7 billion as at September 2014 versus $7 billion at September, 2013, representing 5.4 percent of the gross loans compared to 4.8 percent as at September 2013. The total provision for the year amounts to a high 8 percent of total interest income, for the segments that lend and would be much higher as a percentage of loan income.
After the provision for credit losses, loans and advances, totaled $157.6 billion at September this year and grew by 12 percent, or $16.5 billion, compared to the loan portfolio, at September 2013.

NCB hikes dividend, profit up 36%

NCB Nkgn -2014National Commercial Bank has hiked the final for this year to 96 cents per share to stockholders on Thursday December 11, from only 16 cents last year December.
The dividend will be due to Stockholders on record at November 28. The banking group paid 16 cents per share in December, last year. NCB reported net profit of $11.6 billion, an increase of 36 percent or $3.1 billion to generate earnings per stock unit of $4.73 for the year to September.
The final payment for 2014, brings the total dividends, for the year to $1.98. National Commercial Bank made dividend payment of 35 cents per share in August 25, on May 22, the payment was 35 cents per share and 32 cents per share on February 20 this year.

Heavy trading in C&WJ shares

CWJ old OffIn early trading on the Jamaica Stock Exchange, Cable & Wireless was the most active stock trading with more than 9.6 million shares changing hands.
Investors stepped up and bought the stocks as high as 64 cents at the opening of the market, inducing sellers to enter the market at lower levels, pushing the price back down to 54 cents. Increased offers are currently posted for 4.45 million units between 58 and 65 cents. Bids to buy, remain mostly in the low 40 cents region.
Elsewhere Grace traded 1.3 million shares as high as $62, the price is up $3.90 from Tuesday’s close and National Commercial Bank traded 4,848 shares at $17.50 up by 50 cents. Carreras fell 99 cents with 17,680 shares trading, to $35.
The price movements helped to push the All Jamaica Composite index up by 283.67 points, to 80,722.91 at 10.30.