Susan Gordon, Business Reporter

President and CEO of Bank of Nova Scotia Jamaica Limited, William Clarke, and executive vice-president and chief financial officer, Stacie Ann Wright, are seen in this November 23, 2006 photo. Scotia Group on Monday announced another record year of profits of $7.6 billion. - File

Described as the 'jewel in the crown' of the franchises outside of Toron-to, Scotiabank Jamaica has reported yet another year of record profit that tops $7.6 billion.

Over the 12-month period ending October 31 - in a local environment that has become far more competitive with increased invest-ment options - the William Clarke-led Scotiabank Group grew net profit by $811 million or 12 per cent year over year. Its deposits also climbed by $17 billion.

"We at Scotiabank believe that the success of our bank is twofold. It's the excellent execution team that we have and loyalty and support of our customers," said Clarke.

Growth in revenue

In fact, the bank says it saw growth in all revenue streams, including net interest income, but still faces challenges in cutting its expenses.

"There has been growth in expenses and the major is in staff costs," said Scotiabank executive vice-president and chief financial officer, Stacie Ann Wright. "We are trying to manage expenses very tightly."

The bank's operating expenses rose from $2.6 billion to $3.5 billion, of which $1.2 billion financed salaries.

Clarke, BNS president and chief executive officer, attributed the banking group's stellar performance to diversification of the bank's products, accommodated by its acquisition of investment bank Dehring Bunting and Golding a year ago.

DB&G contributed more than $550 million to profits. Scotia Group, which boosted a total asset base of $200 billion last year October, reported that assets grew by $63 billion to $263 billion in the space of a year.

Again, the acquisition of DB&G was said to have contributed some 32 per cent to asset growth. Deposits grew to $137 billion, up by 14.43 per cent over the previous year, while shareholders' equity grew to $34 billion, $6.9 billion more than the prior year.

"The revenue stream is diversified," said Wright at a media briefing at the bank's corporate offices in Kingston Monday. "We are getting profit from the bank as well as other subsidiaries in the group."

Wright said that Scotia's core operation, the commercial bank, contributes 71 per cent of the revenue while its insurance subsidiary - which the bank says has a 27.7 per cent market share in gross premium income behind dominant player Life of Jamaica - brought in 16.4 per cent of group revenue.

BNS Jamaica's operation contributed $4.93 billion of profit or 65.83 per cent, while Scotia Jamaica Life Insurance Limited contributed $1.38 billion or 18.43 per cent. DB&G, the bank said, contributed 7.2 per cent to profit. In fact, net income increase for the quarter for DB&G was up by at 154 per cent, noted Wright.

Scotia Building Society added 5.2 per cent to group performance and Scotia Investment Management, which is now merged with DB&G, contributed 2.3 per cent.

Diversification strategy

"Our strategy of diversifying across business lines has once again allowed us to achieve record results and to meet our key financial targets for 2007," said Clarke. "All our business lines contributed signi-ficantly to our net income, in spite of increased operating costs and reduction in interest margins resulting from lower market interest rates."

For the year, Scotia Group grossed $31.7 billion. Its net interest income also rose by almost $2 billion to $17.47 billion.

"This is a result of strong portfolio volume growth primarily in our retail portfolio, as net interest margin continued to trend downwards in line with market interest rates," explained the bank.

Interest-income earned from securities also increased due to volume growth in investment, an expanded repurchase agreement portfolio and pledge assets, gained once again from DB&G's business.

Scotia's performing loans rose to $76 billion, up $16 billion more for the financial year for a 27 per cent per increase in the portfolio.

The bank said it also saw improve-ments in the performance of its commercial loans.

susan.gordon@gleanerjm.com