Correction & Clarification

In a story titled ‘Scotia Group to Pay $1b in quarterly dividend’, published in the Financial Gleaner of May 29, 2009, it was incorrectly stated that the payment of dividend would be May 28. Payment will be made June 30.

Scotia Group Jamaica, shrugging off some of the weight of non-performing loans, has grown profit to $2.9 billion in its April quarter, and is planning to share more than $1 billion of it with its 13,520 shareholders, matching an interim payment in January.

The bank will pay dividend of 34 cents per share to its 13,250 ordinary stock on May 28, and 12.13 cents on its preference shares on June 30.

More than 70 per cent of the distributions will, however, go to majority shareholder Scotiabank Canada.

Scotia Group, which is among the top five listed companies most generous to shareholders, similarly paid out just over $1 billion in dividend in February on the January 2009 first quarter earnings.

For the half year, profits rose 15 per cent to $5.4 billion.

The bank, which announced its results last week, had a leg up on the competition - reporting growth in profit, whereas National Commercial Bank's net income declined in the second quarter by 15 per cent or about $400 million.

'We feel proud'

"So really in the current economic environment this is a result we feel proud of in a very difficult year," said Bruce Bowen, president and chief executive officer of Scotia Group Jamaica.

Bowen, however, recognises that the $3.6 billion of non-performing loans on the bank's books at the end of April, is not an attractive position.

The bank has written off $473 million in the April quarter and $837 million of those loans over its first half year - more than four times the $198 million write-off in FY 2008 - and said it has made provision of $2.6 billion for other losses in line with regulatory requirements.

Approximately 80 per cent of the unserviced loans are "in our retail portfolio book," said Bowen at a investors briefing in Kingston.

Economic conditions

"The increase reflects the impact of the current economic conditions, especially on retail loan customers," added a bank release.

But the decline on the retail loan side was countered by growth in corporate and public loans now accounting for 43 per cent and 11 per cent of the Scotia Group's total loan portfolio which stood at $92.8 billion.

For the reporting period, the bank also grew deposits from $145 billion for the similar quarter last year, to $155 billion.

Scotia outpaces all other six rivals in deposits, loans and profits, but is bested by NCB on total assets and capital base.

Though the Canadian-owned bank says it continues to maintain tight control over its costs, for the quarter total operating expense went up by 19 per cent moving to $4.3 billion from $3.6 billion.

Staff expenses accounted for the major portion of the cost, totalling $1.9 billion.

Bowen expects more challenges during the year, but says there are some signs of recovery, which may come as early as the next six months.

"It appears that the rapid decline has slowed down which says we may be closer to a bottom ... and this is encouraging although too early to say for sure," he said.

"But we feel a lot more confident than months ago."

sabrina.gordon@gleanerjm.com