Dec. 2 (Bloomberg) -- Bank of Nova Scotia, Canada’s third- largest bank by assets, said profit fell for the fourth straight quarter after taking C$642 million ($515 million) in investment writedowns.

Fourth-quarter net income dropped 67 percent to C$315 million, or 28 cents a share, from C$954 million, or 95 cents a year earlier, the Toronto-based bank said today in a statement. Scotiabank announced Nov. 18 that writedowns would be C$595 million.

Chief Executive Officer Richard Waugh said Scotiabank will have “moderate” growth next fiscal year, after annual profit dropped 22 percent to C$3.05 billion, a four-year low. The profit increase of 7 percent to 12 percent next year, will be led by emerging markets and by cost cuts, the bank said.

“We have sustainable growth and we feel comfortable in those numbers,” Waugh told investors on a conference call. He also said the bank’s dividend “is safe.”

Scotiabank, which has operations in about 50 countries, fell C$2.47, or 7.1 percent, to C$32.38 in 4:10 p.m. trading on the Toronto Stock Exchange. The stock has dropped 36 percent this year, compared with a 34 percent decline for the nine- member S&P/TSX Banks Index.

Before one-time items such as the writedowns, Scotiabank earned 95 cents a share, National Bank Financial analyst Robert Sedran said. That’s ahead of the 93-cent-a-share estimate he made before the writedowns were announced last month.

Scotia Capital

Profit at Scotia Capital plunged 81 percent to C$44 million because of the writedowns and lower revenue. Capital markets fees dropped amid a slump in stock sales and the slowest pace for Canadian mergers in four years.

Earnings from Canadian consumer banking rose 6.2 percent to C$466 million because of higher revenue from asset management. The bank purchased the Canadian operations of E*Trade Financial Corp. in September for about $442 million and owns about 18 percent of Toronto-based money manager DundeeWealth Inc.

The bank expects to close its purchase of a 37 percent stake in money manager CI Financial Income Fund next week. At least two Scotiabank executives will be appointed to the Toronto-based company’s board, Chief Financial Officer Luc Vanneste said.

International banking profit dropped 37 percent to C$227 million as expenses and provisions for credit losses in countries such as Mexico, Peru and Chile increased. The bank expects asset growth in Peru and some parts of Asia next year, Executive Vice President Robert Pitfield told investors on the call.

Scotiabank set aside C$207 million for bad loans, more than double the C$95 million it set aside a year ago. For the full year, provisions more than doubled to C$630 million.

“It seems obvious to us that both Scotia Capital and international will experience higher provisioning in 2009,” Merrill Lynch & Co. analyst Sumit Malhotra wrote in a note to investors.

Bank of Montreal

Bank of Nova Scotia is the second Canadian lender to release complete results. Bank of Montreal, Canada’s fourth- biggest bank by assets, said last week that profit climbed 24 percent to C$560 million after it had year-earlier trading losses and credit writedowns.

Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and National Bank of Canada are scheduled to report on Dec. 4, while Royal Bank of Canada reports Dec. 5. Toronto-Dominion, National Bank and Royal Bank have released preliminary figures.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

Last Updated: December 2, 2008 16:15 EST