Businessuite #9 Caribbean Ranked Public Company for 2015
Continuing a legacy of strength, stability and
building long term value

Stock Exchange: Jamaica

Company: Scotia Group Jamaica Ltd.

2016 Rank:
2015 Rank: #9
2014 Rank: #8

Chair: Sylvia Chrominska

President & CEO: Jacqueline (Jackie) Sharp
Address: Scotia Centre
Cnr Duke and Port Royal Street Kingston Jamaica
1.888.4SCOTIA
1.888.472.6842
Website: www.scotiabank.com/jm
Annual Reports and Performance http://www.jamstockex.com/market-data/stock-data/sgj

Company Profile:
Scotia Group Jamaica Limited (Scotia Group) has delivered 125 unbroken years of high quality financial services to Jamaica, supported by a network of 38 banking and investment branches, 237 Automated Teller Machines and 2,282 employees. Our parent company, The Bank of Nova Scotia, operates from headquarters in Toronto, Canada.

We provide a broad range of financial services through our main subsidiaries to a wide base of personal, commercial, corporate and government clients across Jamaica.

Our financial performance over the past year was achieved against a difficult economic backdrop. While the country has started to see improved fiscal conditions as evidenced by the successful completion of all IMF tests to date, the fairly significant devaluation of the Jamaican dollar versus the US dollar coupled with stagnant wages have negatively impacted our customers’ disposable incomes. Slow economic growth and the attendant uncertainty about job security continued to weigh on business and consumer confidence throughout the year.

Not only were our customers impacted by the economic conditions, but we also faced tightened liquidity conditions and a material increase in its operating expenses resulting from an increase in asset tax imposed by the Government. We also saw heightened competitive pressures as rivals aggressively vied for market share in a low growth environment.

Notwithstanding the challenges in the operating environment, we are proud to continue our legacy of strength, stability, and building long-term value for shareholders. During the year, we continued our focus on growing our core business while prudently managing risk and improving operating efficiencies.

We are pleased to announce that Scotiabank Group recorded net profit of $10.118 billion for the year, driven primarily by growth in our retail and commercial loan portfolios.

We also continue to be well capitalized with all operating subsidiaries exceeding prudential requirements. Our strong capital base positions us well to take advantage of growth opportunities as they arise. Our performance during the year confirms that our strategy and business model is sound, and that our management team continues to execute well on key initiatives. We continued to be recognized by international institutions as Jamaica’s leading financial services provider including “Bank of the Year Jamaica” by the Banker Magazine and “Best FX Bank” by Global Finance for the 6th consecutive year.

We continued to innovate and expand our product offering to meet the diverse needs of customers. We are pleased to have enhanced our credit card suite with the re-launch of AERO® Platinum and MasterCard® Gold products, which now afford customers more attractive loyalty rewards. We also launched a new universal life insurance policy, AFFIRM through Scotia Insurance. AFFIRM will offer clients higher insurance coverage with added investment options, meeting multiple client needs under a single umbrella.

Scotia Group continued to operate in a very challenging environment during the financial year, as efforts by the Government of Jamaica (GOJ) to stabilize the economy further affected market conditions. The tight liquidity conditions which existed at the end of the last financial year intensified during the first half of the year, as the Government strived to meet its Net International Reserve targets in March 2014. During this period, financial institutions experienced increased funding costs as a result of the constrained supply of JMD liquidity.

In May 2014, Government increased asset tax rates to assist in meeting its fiscal targets. The asset tax for regulated entities increased from 0.14% to 0.25%, excluding insurance companies, which experienced a more significant increase from 0.14% to 1.00%. This aggregate additional tax cost imposed on the financial sector is estimated at $2.7 billion per annum. In addition, the sector faces a higher corporate income tax rate of 33.33% compared to 17.5 % – 25% for other companies.

Despite the economic challenges, business confidence for the first 3 quarters of 2014 was higher than the same period for any year since 2007; as some macroeconomic indicators started to trend positively.

A substantially higher proportion of businesses expected better conditions in the future and as a result, expressed their intent to increase investments in the year ahead.

Consumer confidence, however, continued to decline as opportunities for job creation waned, while purchasing power continued to be eroded by the depreciation of the Jamaica dollar and tax increases, and wages remained stagnant.

Gross loans in institutions regulated by the Bank of Jamaica grew at a generally slower rate this year with gross loans increasing by 7.3% as against 14.9% last year. In the commercial banking sector, loans to the private sector increased by 3.5% or $5.7 billion (vs. 15.5% or $22.1 billion in 2013) while consumer loans increased by $15 billion or 9.2% year over year (vs. 23.8% or $31.2 billion last year) as at September 2014.

Deposits grew by 7.3%, down from 13.6% growth in the previous year, with growth in foreign currency deposits outpacing the JMD portfolio. Credit quality for the sector also improved with non-performing loans being 4.8% of total loans as at September 2014 down from 5.8% the prior year. The decline in lending rates impacted the retail sector, in particular, as competitive forces drove lending rates down. Average overall lending rates fell 54 basis points (bps).

The collective investment industry (unit trusts and mutual funds) grew by 42.7% to US$1.0 billion during the year ended October 2014, as institutional investors repositioned their portfolios. Gross life insurance premiums sold in the industry were flat over the same period, despite the efforts of market participants to launch new products and expand their customer base.BM

Ms. Sylvia Chrominska was appointed Chairperson of Scotia Group Jamaica Limited and The Bank of Nova Scotia Jamaica Limited on March 1, 2013. Ms. Chrominska joined The Bank of Nova Scotia in 1979 and prior to her retirement on May 1, 2013, she served in several capacities including Group Head, Global Human Resources and Communications.