Scotia’s Profit Jumps Despite Higher Interest Rate Environment

Scotia Group Jamaica Limited recorded a net profit attributable to shareholders of $17.23Bn for its financial year ended October 30, 2023, representing a 66.9% YoY increase in profitability. This was driven by strong performance in all its business lines as well as the efficient management of its operations.
Total revenues, excluding expected credit losses for the year ended October 31, 2023, grew by $12.33Bn to $55.46Bn, reflecting an increase of 28.6% over the previous year. This was primarily driven by an increase in net interest income of $8.8Bn stemming from the strong growth in its loan portfolio, higher insurance revenue, higher gains on foreign currency activities, and higher fee and commission income earned, given the significant increase in transaction volumes.
Operating expenses continue to be anchored by the Group’s expense management initiatives and totaled $27.63Bn for the year ended October 2023, an increase of $2.9Bn or 11.8% driven by higher technical support fees arising from the higher transaction volumes.
Expected credit losses for the period showed a reduction of $661.54Mn or 21.6% compared to full year 2022. The Group’s credit quality remains strong and the company is well provisioned for both its performing and non-performing loans, ensuring adequate coverage for possible future non-performing loans.
SGJ's stock price has increased by 0.9% since the start of the calendar year. The stock closed Tuesday’s trading session at $34.53 and currently trades at a P/E of 6.2x which is below the Main Market Financial Sector Average of 11.9x.
As part of its strategic move to target more businesses in the middle to upper-income band, the company recently partnered with American Express to issue Jamaica’s first metal AmEx platinum card. This partnership augurs well for the company as the embedded benefit may increase card usage, allowing more revenues to be generated from credit card interest and merchant fees.

(Source: JSE)