Forex decline has been good for Scotia
SCOTIA GROUP Jamaica underperformed on one of its key metrics, interest income, but was able to cauterise the bleed with outsize foreign exchange gains of more than $1.3 billion in the July quarter.
Although interest income declined by $800 million in the period, profit spiked by more than a billion dollars, from $3.3 billion or $1.03 per share to $4.4 billion or $1.41 per share due to the forex windfall, which came amid a rapid slide in the Jamaican currency.
Inflows from Scotia Group’s core activity dropped from $6.3 billion to $5.7 billion, but that was offset by forex gains that more than tripled from $570 million to $1.95 billion.
Within the review quarter May to July, the Jamaican currency lost $10 of its value, sliding from $125.37 at the top of the period to $135.44 against the USD at July 31.
Scotia Group President & CEO David Noel attributed the decline in interest income to the downward movement of interest rates; and a 7 per cent reduction in fee income to the migration of customers to its electronic platforms, where they face lower costs to do transactions.
The banking group reported a 24 per cent increase in mobile banking, while noting that nonbranch transactions overall – inclusive of mobile, ATMs, online banking and point of sale – now account for more than 85 per cent of all activity.
Over nine months, Scotia Group’s net profit increased from $9 billion $11.2 billion – inclusive of a $753 million gain from the sale of microfinancing subsidiary CrediScotia to Lasco Financial Services last December – while the bank also saw solid gains on its loan portfolio.
“We are pleased to report solid performance over the past nine months with loan growth of 8.0 per cent, total revenues increasing 7.0 per cent, and expenses remaining flat,” said Noel.
The loan portfolio grew by $13 billion to $177 billion. Customer deposits grew 14 per cent to $302.
“We continue to exceed regulatory capital requirements in all our business lines, and our strong capital position also enables us to manage increased capital adequacy requirements in the future, and take advantage of growth opportunities,” said the bank president.