Scotiabank Centre, corporate headquarters of the Bank of Nova Scotia Jamaica, in downtown Kingston. - File

Scotia Group Jamaica Limited has outdone itself again, reporting another year of record profit that grew by $2 billion, to trounce chief rival National Commercial Bank, but the Canadian owned banking group fell just short of the anticipated $10-billion mark.

It, however, came very close.

Scotia will pay dividend of 34 cents per share - a total of $1.06 billion - on the fourth-quarter results, taking payout for the year to $1.70 per share or $5.3 billion total.

For its financial year ended October 31, Scotia Group reported net profit of $9.6 billion on revenue of $39 billion, a 26 per cent increase over last year's profit of $7.6 billion from revenue of $31.7 billion that cements former president Bill Clarke's legacy as profit king.

Clarke, who ran the bank for 13 years, delivered improved profit for more than a decade. He retired on October 31, and is replaced by Bruce Bowen.

Bowen, at a press conference on Thursday to announce the bank's results, said Scotiabank, whose financial year ended just as the financial crisis was building, said he expects that next year would be a tough environment for the bank.

PROFIT GROWTH

But the new president also said he will continue to grow profits, though he warned that growth is unlikely to reach this year's 26 per cent.

Scotia Group at the close of summer had announced that it had no exposure to the financial downturn that began in the United States and spread to world markets, but yesterday Bowen said the bank has increased its bad-debt provisions by 45 per cent as a safeguard against worsening conditions.

"The increase in the provisions reflects the slowdown in the economy and is weighted toward the retail side of the business," Bowen told reporters.

The provisions reflect Scotia-bank's culture as, some would say, an ultra-conservative bank.

But there is a level of practicality within it, and perhaps renewed caution, given that the Jamaican operation's Canadian parent was hit with a CA$890 million loss - CA$595 million after taxes - which included a charge related to the bankruptcy of Lehman Brothers in September, valuation adjust-ments on some investments, and a write-down on the fair value of 'available for sale securities'.

Net profit

The group recorded net profit of $9.6 billion for year end, an improvement of $2 billion or 26 per cent, in comparison to the corresponding period last year.

Within the Jamaican operation, its non-performing loans are on the increase, rising by $862 million to $3 billion at year end. A year ago, the bank had $2.1 billion non-performing loans.

Proportionately, they now represent 3.28 per cent of total loans and 1.06 per cent of total assets, compared to 2.72 per cent and 0.8 per cent, respectively, in the 2007 period.

Net interest income up

The commercial bank contributed 63 per cent to profit, Scotia Life Insurance contributed 24 per cent, Scotia DBG Investment 8.33 per cent, and the building society five per cent.

Net interest income for the group was up by almost $5 billion at $22 billion.

The strong performance was chiefly attributed to volume growth in loans and investment portfolios.

Scotia Group, though it is smaller in total assets than NCB, has the lead in the loan market. It opened up that gap by growing loans from $77 billion to just under $90 billion.

Total assets rose to $280 billion from $263 billion.

"We continue to experience growth in retail lending and have also seen an improvement in the demand for commercial loans," the bank said in a statement appended to the financial report.

Of note, however, is that deposits from the public were down marginally from $131 billion to $130.67 billion, but when 'other deposits' are factored, the total rose from $137.9 billion to $139.9 billion.

business@gleanerjm.com

Left: William 'Bill' Clarke has left a legacy of profitability. - File Right: New Scotia Group Jamaica President Bruce Bowen says he will grow profits in 2009, but not at the same levels.