World Report

ighter regulations and consolidation have placed the Jamaican banking and finance sector in its strongest position for several years. Minister of Finance and Planning, Dr Omar Davies, recently announced that in the first quarter of 2003, the financial services sector was the area that experienced the highest rate of growth, 12.5 per cent.

Government holdings in financial institutions, which once required financial intervention, have been sold and these banks are now back in private hands. The larger banks have seen consistent growth in the past five years and new management has revitalised others.

Director General of the Planning Institute of Jamaica (PIOJ), Dr Wesley Hughes, points out that banks have seen improved revenue generation and healthier balance sheets following restructuring of the sector.
“It’s a very competitive market,” says William Clarke, Managing Director of Scotiabank, the Bank of Nova Scotia’s Jamaican company. “The National Commercial Bank (NCB), for example, has been sold to new players and they have re-energised it.

“They have come to the market with a very aggressive approach. Like most big players, they would like to be able to grow their market share.”
However, he does not see much scope for investment in the sector for the foreseeable future.“I do not think there are any huge opportunities for investment in the financial sector in Jamaica,” he says.
“The players that currently exist are dominant and there is not much room for smaller institutions looking to start up. It will not be an area for foreign investment unless a foreign investor decides to buy or merge with existing institutions.”

Nor does he see much more consolidation in the market. “I think that consolidation in the market is pretty well done. There may be a few merchant banks that will consider consolidation as part of their growth strategy. The number of institutions is likely to remain the same for a while.”

Mr Clarke speaks from a commanding position in the finance sector – his bank achieved record profits for the quarter ending 31st January. At nearly £10.3 million, the figure was nearly 14 per cent up on the previous quarter and more than doubled the profits recorded in the quarter ending October last year.

The Jamaican public continues to show confidence in the bank and deposits have been growing steadily. “We have the largest share of the market and therefore everybody is focused on us,” says Mr Clarke.
“But we will continue to grow our market share. If we continue to grow, this will detract market share from our competitors, thus pushing us even further ahead.”

Scotiabank’s two insurance companies have grown considerably in the past five years, says Mr Clarke. He puts the bank’s success down to being careful. “The strength of our bank has always been prudent management of risks and very strong cost control.

“We also invest a lot in technology to make sure we are able to meet the needs of our clients. We try to make sure we are one step ahead of the competition.”
Traditional retail banking services remain Scotiabank’s core business and main income generator. The service has recently been expanded to reach internet customers.
“Electronic services will continue to generate moderate growth. Even with moderate growth, retail banking is a highly profitable business,” he says.

With such a powerful position in the island’s financial life, Scotiabank has also established itself as a major contributor to the community. The Scotiabank Jamaica Foundation spends about £361,000 a year on health care projects, building and equipping school classrooms.
Scotiabank may have the largest share of the market, but in this dynamic sector there is competition from other leading institutions, like NCB, Guardian Life and Life of Jamaica.

Since its acquisition in 2002 by AIC Ltd, NCB now has one of the largest capital bases in Jamaica. The bank prides itself on its good customer relations, offering an expanded branch network and telephone banking services. NCB’s subsidiaries are also leading providers of investment services, offering stock brokerage, money market and offshore banking services.
Another firm to benefit from the growth in the financial services sector is Jamaica Market Money Brokers (JMMB). They specialise in financial management and financial advice,on behalf of over 70,000 clients.
Using specialised products and services, they empower their clients to achieve financial success.