Loans losses decrease by $22 million

Scotiabank (Trinidad and Tobago)  has recorded its 12th successive year of income growth, according to its 2004 annual report. Reported net income to be divided among its shareholders for the year was $203.5 million, an increase of $8.9 million, which represents a five percent increase year over year. Among the main contributors to the increase were strong growth in credit card related revenues, coupled with contributions from new revenue streams such as ScotiaLife, the bank’s local insurance subsidiary, which was launched in early 2004 and “whose performance has surpassed initial expectations.”

The report stated, “In a highly competitive environment of declining intermediation rates, the Group has produced a record earnings per share of 173.1 cents for 2004, as compared to 165.6 cents in 2003. Overall net interest and other income increased by $12.1 million or two percent to $543.2 million. “The increase was driven by other income which offset a marginal decline in net interest income, reflecting the compression of interest margins throughout the financial sector,” added the report.

Other income totalled $162.6 million, an increase of $13.3 million or nine percent over year. On its loans portfolio, the report reflected that losses in this area decreased by $22 million or 74.2 percent year over year and this has been attributed directly to a reduction in retail loan losses, because of various initiatives undertaken by its Centralised Retail Collection Unit. “Non-performing loans now represent 2.8 percent of total loans and 1.6 percent of total assets. Total loan loss provisions stood at $32.3 million and represent specific provisions against facilities for which the Group anticipates potential write-offs,” added the report.

The report pointed out that liquidity risk arose from fluctuations in cash flows. “Maintaining a strong credit rating also ensures timely access to borrowing on favourable rates and terms,” the report stated, noting that the bank’s extensive branch network provides a strong foundation for diversifying its funding and raising the level of core deposits. According to the report the Group “maintains large holdings of liquid assets which can be used to sustain operations in the event of unexpected disruptions.” As of October 31 2004, liquid assets were $1,627 billion, which is equal to 21.7 percent of total assets. These assets comprise 36 percent securities and 64 percent cash and deposits.