Worry over ScotiaLife TT sale

MANAGING Director of Scotiabank TT, Stephen Bagnarol, at the 49th Annual General Meeting yesterday at the Hyatt Regency in Port of Spain, had to address shareholders' concerns with the decision to sell Scotia Life – the insurance portfolio of the bank – and join Sagicor TT in the sale of their products.

Bagnarol assured shareholders that the sale of Scotia Life to Sagicor was a step in the right direction, which would provide Scotiabank clients with a wide range of insurance products. He said the sale of Scotiabank’s insurance portfolio to Sagicor was less of a sale and more of a partnership.

“I have a problem with the sale of Scotiabank Life,” said a shareholder, “is it because it is not a good mix between banking and insurance? And 20 years is an extremely long time to deal with the distribution aspects.” The shareholder questioned the thinking of the bank and suggested it develop their insurance modules instead of partnering with Sagicor.

Another shareholder said he heard the company taking over Sagicor’s parent company has not paid dividends, and questioned the general morals of the soon-to-be parent company.

“Is this the kind of people that we are getting involved with,” the shareholder asked. Bagnarol said the sale was still subject to regulatory approval and customary closing conditions.

He added the bank wants to limit its risk, which is high with an insurance company, but will still provide insurance to Scotiabank clients. He also said the arrangement would be made strictly with the TT branch of Sagicor, which he described as a first-rate company.

“It is not so much of a sale, it is more of a partnership,” explained Bagnarol in an interview after the AGM. “The suite of products we have in Scotiabank TT is limited. Sagicor has a much larger suite of products that we can now provide to our customers to deepen those relationships."

It was announced last November that the two companies would embark on a 20-year distribution agreement which would provide Scotiabank customers with an enhanced suite of market-leading insurance products and solutions. As part of the partnership, Scotiabank would have to sell its insurance subsidiary to Sagicor.

At the AGM, the board of directors announced a six percent increase in total revenues for the 2018 fiscal year, despite having to adjust to an increased tax rate.

The bank leaders made the announcement to several shareholders at their 49 th Annual General Meeting held at the Hyatt Regency in Port of Spain yesterday.

“For the year ended October 31 2018 the bank achieved a net income after tax of $644 million, a decline of $13 million or 2 percent,” explained Vice Chairman George Janoura in his opening remarks.

“I am pleased to note that the bank's total revenue increased to 1.83 billion and the core profitability of the bank, excluding the impact of the corporation tax rate, increased by 3 percent. I think these results are commendable in the context of the challenges being faced within the local economy.”

Rehsard Mohammed, Scotiabank’s Chief Financial Officer, told shareholders a new tax rate, levied on banks at 35 percent, cost the bank about $35 million in tax expenses, but overall, the bank enjoyed an increase in revenue because of growth across the business.

“Total revenue comprising of net interest income and non-interest revenue was 1.8 billion in 2018 an increase of 108 million over the prior year,” Mohammed said, “Net interest income of 1.3 billion increased by 44 million or 44% over the past year driven by strong growth in our retails loans and investment securities portfolio.”

“Non interest revenue continues to be a significant source of earnings for the group representing 30 percent of our total revenue. Non interest revenue was 544 million in 2018 an increase of 60 million or 13 %, primarily driven by revenues from our credit card portfolio and increased revenues from our insurance sector.”

Mohammed added that there was also a four percent increase in of revenue in loans.

Stephen Bagnarol, managing director of Scotiabank said the bank focused on the core business and its growth, and that was one of the major factors behind the growth of the company, despite the tax raise.

“Every single business line that we had has done well. You saw the retail has grown commercial has grown, and small business has grown so we are very proud that our underlying business and core business continues to grow,” Bagnarol said.