In the July quarter, Scotia Group jacked-up expected credit loss provision by 344 percent from $582 million in the 2019 period to $2.6 billion due to the impact of the 2020 COVID 19 virus has on several businesses in Jamaica and, notably, the banking sector, resulting from lower business activity since March.
Scotia Group increased loan loss provision by 344% in the July quarter.
The big July quarter, the increase comes after the banking group hiked the provision by a hefty 264 percent to $1.77 billion in the April quarter, from $487 million in the April 2019 quarter and $895 million in the January 2020 period.
The Group’s total expected credit loss provision for loans in July 2020 amounts to $8.1 billion, while nonperforming loans amount to $4.9 billion compared to $3.8 billion last year and $5 billion at the end of April.
Loans advanced to customers stood at $221 billion at the end of July, a growth of 12 percent year over year, but declined modestly from $223 billion at the end of April, the result of the increased credit loss provisioning and no new net loans granted.
While the bank increased the provision for expected credit loss sharply in the quarter, the stabilization of nonperforming loans at the April levels may be an indication that there may be no need for heavy provisioning in the next few quarters. If the nonperforming loans hold around current levels, it could help in returning profit to more normal levels, compared to a profit after tax that declined sharply by 63 percent for the July quarter to $1.55 billion, from $4.2 billion in 2019.
At the close of trading on the Jamaica Stock Exchange, Main Market to stock gained 50 cents in ending at $50.50.
