Home' Trinidad and Tobago Guardian : March 8th 2015 Contents MARCH 8 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
Scotia Investments Jamaica
Ltd (SIJL) is a 77 per cent
owned subsidiary of Scotia
Group Jamaica Ltd. Among
its almost 2,800 sharehold-
ers, SIJL s shares are owned
by 14 insurance companies
and 31 pension funds; this ownership profile
suggests that institutional investors hold it in
On the other hand, only four of its ten direc-
tors currently own shares, either directly or
The company s principal activities are the
provision of investment advisory and brokerage
services, portfolio and fund management,
investment management services for pension
plans and operating foreign exchange cambios.
One of the company s main goals is to wean
itself from its high dependence on revenues
from net interest income.
Let us review the company s results for its
last fiscal period, which ended on October 31,
Total income for 2014 fell to J$4.17 billion
from last year s J$4.46 billion, reflecting a
decline of J$281.6 million or 6.32 per cent.
Total interest income contracted from J$4.76
billion to last year s J$4.51 billion. Only one cat-
egory, interest from deposits with banks and
other financial institutions, registered an
increase, improving to J$181.4 million from the
previous level of J$97.7 million.
The largest category, interest from investment
securities, closed 2014 at J$4.24 billion; this
was J$210.4 million or 4.73 per cent lower than
the J$4.45 billion earned in 2013.
Another significant category, interest on loans,
fell to J$80.9 million from the previous year s
tally of J$171.1 million.
Smaller declines were observed in both inter-
est from fair value assets through profit and
loss and interest on repurchase agreements.
The former fell to J$7.3 million from 2013 s
J$13.6 million. In the case of the latter, 2013 s
figure of J$20.3 million was followed by last
year s J$2.3 million.
Total interest expense rose to J$2.23 billion
from 2013 s J$2.04 billion. Here, the largest
increase was recorded under interest paid on
repurchase agreements, which moved from
J$1.88 billion to last year s J$2.19 billion, reflecting
a rise of almost 17 per cent.
On the other hand, interest on loan balances
contracted to J$80.9 million from the previous
level of J$171.1 million.
These changes produced net interest income
of J$2.28 billion for 2014; this was J$428 million
or 15.8 per cent lower than the J$2.71 billion
recorded for 2013.
The 2013 national and private debt exchange
programme set the stage for a significantly
lower interest rate environment over an extended
period of time; the previous result is consistent
with that situation.
The next major income category, fee and
commission income, posted an increase of
almost 2 per cent, moving to J$953.5 million
from the previous year s J$936.5 million.
Within this category, one of the more reliable
elements, asset management fees, recorded an
increase of almost 14 per cent; this component
moved from the 2013 figure of J$705.5 million
to almost J$804 million last year.
Another reliable component, trust fees,
improved from J$38.9 million to J$44.7 million
Structured financing fees contracted from
J$108.8 million in 2013 to last year s J$51.6 mil-
lion. Also showing a significant decline was
stock brokerage fees, which fell to J$18.5 million
from the previous level of J$27.2 million.
Net foreign exchange trading income con-
tracted by almost 48 per cent to J$134 million
from the 2013 figure of J$256 million.
Net gains on financial assets climbed by
almost 83 per cent to reach J$777.6 million; in
the previous year, this result was J$425.5 million.
This improvement was largely influenced by
the absence of the debt exchange programme,
which negatively impacted the 2013 results.
The major movement occurred in the cat-
egory, debt securities available-for-sale; here,
the figure increased from 2013 s J$161.2 million
to last year s J$452 million. Also showing healthy
gains were equity securities held for trading at
J$15.5 million (2013: J$8.5 million) and other
equity securities at J$79.1 million (2013: J$ Zero).
Other revenue fell to J$17.6 million from
J$27.6 million in the earlier period.
Expenses and profit
Total expenses declined to J$1.63 billion from
the previous year s level of J$1.66 billion, rep-
resenting a fall of 2.02 per cent.
Despite this beneficial movement, some sig-
nificant components exhibited increases. Among
them were employment costs, which advanced
to J$855.1 million from the previous year s
J$834.7 million, representing an increase of 2.4
Property expenses, which includes depreci-
ation, also rose, moving to J$139.9 million from
J$132.6 million previously.
In line with an increase in asset tax from
0.14 per cent to 0.25 per cent, asset tax and
minimum business tax rose to J$144.1 million
from J$89.3 million, representing a spurt of
61.5 per cent.
Computer related expenses increased by J$11.3
million, moving from J$122.2 million to last
year s J$133.5 million; this reflected a rise of 9.3
Among the more notable declines were mar-
keting and advertising expenses and other oper-
ating expenses. The former fell to J$48.8 million
from the previous year s J$81.8 million. In the
latter s case, the decline was more acute as
costs fell to J$178.3 million from the previous
level of J$268.8 million.
These changes allowed SIJL to report a pre-
tax profit of J$2.55 billion vs. J$2.80 billion in
Taxation declined to J$758.7 million from
2013 s J$802 million, while the effective tax rate
increased marginally to 29.8 per cent from the
previous year s 28.7 per cent.
The after-tax profit for 2014 came in at J$1.79
billion versus J$1.99 billion for 2013. This result
translated into EPS of J$4.23 (2013:J4.71).
Total assets declined marginally to J$72.3 bil-
lion from the previous year s J$73.7 billion.
The most significant decline occurred under
pledged assets, which fell to J$59.4 billion from
the previous year s J$62.9 billion. This drop
was concentrated under the broad heading of
government issued securities (GIS). Those GIS
described as "available for sale" moved from
J$38.5 billion in 2013 to J$37.7 billion last year.
More significantly, GIS grouped as "loans
and receivables" contracted to J$1.93 billion
from J$7.31 billion. Meanwhile, GIS classified
as "held to maturity" fell to J$5.65 billion from
J$7.32 billion in 2013.
The most significant increase was described
as deposits with financial institutions, which
rose to J$10.7 billion from the previous level of
Cash resources also recorded a healthy 47.8
per cent growth, moving from J$1.98 billion in
2013 to J$2.92 billion as at last year-end.
Loan balances increased to J$110 million from
J$80 million as at year-end 2013; this reflected
a rise of 37.8 per cent. Personal loans were the
principal driver of this improvement.
Available-for-sale investment securities closed
2014 at J$5.42 billion; this reflected an increase
of 4.5 per cent. Almost 95 per cent of this bal-
ance represents Government of Jamaica secu-
rities, with the remainder representing small
amount of treasury bills and quoted shares.
Other asset balances increased to J$3.92
billion from the 2013 figure of J$3.39 billion.
The largest increase was shown under cus-
tomers liabilities under guarantees, which ended
2014 at J$2.84 billion (2013: J$2.33 billion).
These figures are fully offset by liabilities of
Total liabilities fell to J$45.67 billion from
J$48.24 billion as at year-end 2013.
The two most prominent liabilities were cap-
ital management and government securities
funds and securities sold under repurchase
The former s value, at J$13 billion, was little
changed from the 2013 figure. The value of the
latters liabilities declined to J$42 billion from
J$44.9 billion in 2013. Both of these liabilities
form part of the pledged funds.
Shareholders equity rose from J$12.49 billion
as at year-end 2013 to J$13.64 billion last Octo-
ber. This improvement was largely driven by
increases in the unappropriated profits com-
ponent, which rose to J$11.77 billion from J$10.74
billion as at October 2013.
Profit for the year of J$1.79 billion added to
the balance while dividends paid of J$761.8
million restrained the increase.
With 423,195,000 shares outstanding, each
share had a book value of J$32.23 (2013: J$29.52).
Share price and dividends
Over the last year or so, SIJL shares peaked
at J$26.70 on April 17, 2014 on its home market.
The share was quoted as low as J$20.00 on
August 4, 2014. More recently, it closed at
J$25.63 on March 3, 2015.
Total dividends paid in respect to its 2014
fiscal year were J$1.80. At its most recent price
of J$25.63, the dividend yield was 7.02 per cent,
which is extremely attractive.
On the local exchange, this share s price has
ranged from TT$1.59 on March 17, 2014 down
to TT$1.40 on August 11, 2014. It was traded
at TT$1.45 on March 2, 2015.
This share trades regularly on both markets
and the prices are comparable in either currency;
consequently, there is little room for arbitrage
Scotia Investments Jamaica Ltd 2014 results:
Diversifying income streams
Links Archive March 7th 2015 March 9th 2015 Navigation Previous Page Next Page