Virtually flat profits at Scotia Group

Scotia Group head quarters in Kingston.

Profit after tax rose just 7.7 percent at Scotia Group for the year to October, resulting in $12.17 billion attributable to the Group’s shareholders. For the October quarter profit rose to $3.36 billion from $3.1 billion in 2016.
Net interest income grew by $1.27 billion to $26.64 billion for 2017 versus $25.38 billion in 2016, but a sharp climb in bad loan provisioning of $746 million, reduced the impact of the rise in net interest income. Other income grew by $1.6 billion for the year to $15 billion.
Operating Expenses amounted to $21.3 billion for the year, an increase of $595 million or 3 percent compared to prior year. Employees’ costs increased $212 million, while other operating expenses were up $159 million. Asset tax increased by $112 million or 12 percent to $1.1 billion. The productivity ratio moved from 53.38 percent last year to 51.09 percent.
Loans remained flat, year over year at $166.5 billion, according to the company, the performance in this area is “driven by an overall decline in our foreign currency portfolio. Our small business, residential mortgages and personal loans continue to show solid performance quarter over quarter and year over year.”
Deposits by the public, increased to $260.6 billion, from $248.4 billion in the previous year, but the increase is not being put to the best use with no growth in the loan portfolio.
Results for the October quarter does not shine any light to suggest that the slow growth period is behind them. With soft demand for loans, and decline in interest rates in the wider economy, Scotia faces a tough road for the next fiscal year, in this environment the focus is going to be on cost cutting. Already, all the express locations that they currently operate will be closed in early January, the acquisition of all the minority shares in Scotia Investments is yet another move to cut cost.
On the balance sheet, assets held for sale amounted to $664 million and most likely represents the assets of CrediScotia that was subsequently sold.

In Thursday’s trading on the Jamaica Stock Exchange the stock closed at $53 at a PE of 13.5 based on earnings per share of $3.93.

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