Competitive Advantage for Scotiabank in the Caribbean

1066 Words Jan 16th, 2018 4 Pages
Founded in Halifax, Nova Scotia and based in Toronto, Scotiabank is one of the leading retail banks in the Caribbean, with over 200 branches in 20 countries and territories throughout the region. The bank provides retail banking services, primarily taking deposits and then relending that money through home mortgages, personal loans and small business loans.

In recent years, economic conditions in the Caribbean have been weak. Scotiabank, in its annual report notes that ongoing weakness in the Caribbean has reduced lending and increased the allowance for impaired loans in the region. Demand for borrowing is typically based on the health of the economy and the prevailing rates. A significant amount of borrowing, according to the bank's 2011 Annual Report, is for the hospitality industry, and in that there has been a slump in recent years as tourism from North America has declined. The size of the bank's residential mortgage portfolio in the Caribbean has been increasing, however. The supply conditions also bear some relation to the health of the economy, because savings rates are a critical variable that fluctuate with the state of the economy.

There is a significant amount of price elasticity of demand for lending products. Borrowers prefer to borrow when interest rates are low, because that lowers the cost of the project. In middle income regions like the Caribbean, borrowers can be particularly price sensitive. In…
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