Reading Time: 7 minutes

Prepared for Our Today | Capital Markets & Investments Desk May 12 2026

There is a useful exercise for any investor following the Jamaica Stock Exchange. Pull up the price chart of Scotia Group Jamaica Limited (JSE: SGJ) over the last three years, then pull up its earnings growth over the same period. The two lines do not move in the same direction. Earnings have compounded steadily. The share price has lagged. That gap is the central question for anyone considering this stock today, and the second-quarter result published in June of last year remains the cleanest data point from which to interrogate it.

In Q2 of fiscal 2025, covering the three months to April 2025, Scotia Group Jamaica delivered net income of approximately five billion Jamaican dollars, an increase of seven hundred and ninety-seven point nine million or nineteen per cent over the previous quarter. Total revenue reached fifteen point six billion dollars against fourteen point six billion a year earlier. The asset base grew by eighty-seven billion dollars or twelve point nine per cent to seven hundred and sixty three point five billion as at April 2025. The Board approved a forty-five-cent per stock unit dividend for the quarter. By any measure, it was a clean print.

Twelve months on, that quarter still merits attention. Not because it was a peak, which it was not, but because it was the moment Scotia Group quietly demonstrated that the operating leverage in its franchise had returned, even as the rest of the financial year tested how durable that leverage really is.

The composition of the nineteen per cent

Profit growth is only as good as the line items that produce it. In the April 2025 quarter, the nineteen per cent expansion was driven by two engines that capital markets analysts watch closely in any deposit-taking institution. Net interest income rose eight point five per cent year over year, reflecting both higher earning asset balances and the disciplined repricing of the loan book through a period of elevated Bank of Jamaica policy rates. Other revenue, which captures fees, commissions, and treasury income, rose by thirteen per cent. That combination, interest income that is structurally durable and non-interest income that is operationally diversified, is the profile capital allocators want to see in a Caribbean commercial bank.

The underlying loan book told a similar story. The retail loan portfolio grew by fourteen per cent year over year. Mortgages grew twenty-four per cent, which was the standout number and the basis on which Scotia later cemented its position as Jamaica’s largest mortgage provider with one hundred and eighteen billion dollars in residential loans by year’s end. Commercial loan volumes climbed seven per cent. These are not the growth rates of a defensive bank running off legacy assets. They are the growth rates of a franchise that is actively winning share in the segments of the Jamaican credit market that matter most for medium-term earnings.

The subsidiary contribution was equally instructive. Scotia Investments Jamaica Limited grew assets under management by twelve per cent year over year, and in March 2025, its corporate solutions unit was lead arranger on the nine hundred and fifty million dollar Fontana Pharmacy bond, which on its own represented one of the more meaningful debt capital markets transactions on the JSE that quarter. Scotia Jamaica Life Insurance Company posted a seventy six percent increase in net insurance business revenue. Scotia General Insurance Agency reported sixty-four per cent growth in gross written premiums and a fifty-five per cent rise in policy sales. These contributions matter because they are precisely the diversification that distinguishes Scotia Group from a pure commercial bank, and they are growing faster than the parent.

The full year context that the headline missed

It is tempting to read the Q2 print in isolation, but the more honest reading places it inside the full fiscal 2025 result published in December. For the year, Scotia Group expanded its total loan portfolio by twelve per cent to three hundred and fifty point four four billion dollars. Annual operating income grew nine per cent to sixty-four point seven one billion, with a four per cent rise in the fourth quarter to sixteen point three one billion. The bank became Jamaica’s largest mortgage provider on a residential book of one hundred and eighteen billion dollars.

Against that, operating expenses grew nineteen per cent from twenty-nine point four two billion to thirty-four point nine nine billion, driven by higher staff costs and other operating expenses, including significant one-off costs related to Hurricane Melissa. Profit before taxation rose only marginally to twenty-nine point seven two billion. Consolidated net profit declined one per cent from twenty-one billion to nineteen point nine billion. Earnings per share landed at six dollars and forty cents.

This is the tension at the heart of the Scotia thesis. The top line is unambiguously growing. The franchise is winning share. The subsidiaries are scaling. The cost base, however, expanded faster than revenue in fiscal 2025, and a meaningful portion of that was structural rather than purely event-driven. Investors who looked only at the Q2 headline saw nineteen per cent profit growth. Investors who waited for the full year saw the operating leverage compress in the second half. Both observations are true, and reconciling them is the work.

Q1 fiscal 2026 and what it signals

The most recent data point published this March, covering the three months to January 2026, suggests the cost story is beginning to normalise. Net income for the first quarter of fiscal 2026 came in at approximately four point one billion dollars. Total revenue excluding credit losses grew nine point nine per cent year over year to eighteen point eight billion. Total deposits rose eleven point five per cent to five hundred and forty seven point six billion, signalling sustained client confidence. Shareholders’ equity available to common shareholders reached one hundred and sixty-eight point five billion, an eleven point eight per cent increase over the same quarter a year prior.

More instructively, the loan book composition continues to shift in the direction of higher-yielding retail credit. Mortgages grew by nineteen per cent year over year. Consumer loans grew by sixteen per cent. Credit cards grew by ten per cent. Commercial loans grew by five per cent. That is the mix of a bank that is consciously rebalancing toward retail margin density while maintaining its commercial relationships. Combined with a deposit base that is growing faster than the loan book, the funding cost outlook for the remainder of fiscal 2026 is materially better than it was twelve months ago.

The valuation question

Scotia Group Jamaica produced earnings per share of six dollars and forty cents in fiscal 2025. The stock currently trades at a price-to-earnings multiple that, by any honest comparison with the JSE main market financial index, does not reflect the underlying franchise economics. Return on equity of approximately fourteen point five per cent is competitive for a Jamaican commercial bank. The dividend has been maintained at forty-five cents per quarter, providing a yield that compares favourably with the JSE average. Market share remains in the order of twenty per cent of the Jamaican banking system.

The case against the stock is not difficult to articulate. The cost base inflation in fiscal 2025 was real. The Hurricane Melissa impact was one-off, but the underlying expense growth was not entirely so. The Client Assistance Programme, extended through March 2026, will continue to weigh on near-term recoveries. Caribbean commercial banking is, structurally, a slow-growth business in a small economy. The capital adequacy buffers, while strong, also imply that excess capital deployment will be measured rather than aggressive.

The case for the stock is the harder one to make in a single sentence, which is partly why the market has been reluctant to re-rate it. Scotia Group is a diversified financial services franchise with the largest mortgage book in Jamaica, a growing investment arm, two profitable insurance subsidiaries, and a deposit base that is compounding at low double digits. It earns through the cycle. It pays a quarterly dividend. It carries the capital position to acquire opportunistically if Caribbean consolidation accelerates. The nineteen per cent Q2 print was not a peak. It was a reminder of what this franchise can do when the cost base behaves.

The view from here

For investors building Caribbean exposure, the question is not whether Scotia Group Jamaica is a strong franchise. The data answers that. The question is whether the current price adequately reflects what a sustained normalisation of operating expenses, combined with continued loan book growth, would produce in fiscal 2027 earnings. Run the arithmetic with operating expense growth moderating to high single digits, revenue growth of nine to ten per cent, and a stable provision charge, and the earnings power of this business is meaningfully higher than the trailing six dollars and forty cents per share.

That is not a forecast. It is the shape of the upside case, and it is the case that the market has not yet been willing to price. The April 2025 quarter, with its clean nineteen per cent profit growth, sits in the record as evidence that the case is not theoretical. Investors who took the time to read the Q2 release a year ago, and the Q1 release this March, have a more complete picture of this franchise than the share price currently suggests. That is usually how value gets created.

---

This commentary is prepared for informational and editorial purposes only and does not constitute investment advice. Readers should conduct their own due diligence and consult a licensed financial adviser before making any investment decisions. All figures sourced from Scotia Group Jamaica Limited media releases and quarterly results (Q2 2025, FY2025, Q1 2026), Jamaica Observer, Jamaica Gleaner, and Jamaica Times reporting.