Scotiabank Profit Tops Estimates on Global Rebound

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Bank of Nova Scotia became Canada’s sixth lender to report quarterly profit that beat analysts’ estimates, led by a rebound in international banking.

Net income for the fiscal third quarter ended July 31 was C$1.85 billion ($1.4 billion), or C$1.45 a share, down from a record C$2.35 billion, or C$1.85, a year earlier on a gain from selling a stake in CI Financial Corp., the Toronto-based company said Friday in a statement. Profit was C$1.47 a share excluding some items, topping by a penny the average estimate of 15 analysts surveyed by Bloomberg.

“While Scotia came in modestly ahead of expectations, as we saw with Royal (Bank), a near beat is not nearly enough this quarter,” John Aiken, a Barclays Plc analyst, said Friday in a note to clients. “As only one of two banks to not materially beat expectations, we anticipate that Scotia will incur some pressure today.”

Canada’s biggest banks beat estimates this quarter as rising deposits and business loans offset plunging oil prices that have led to five straight monthly declines in the country’s economy. The Standard & Poor’s/TSX Banks Index soared 7.1 percent since Monday, the biggest three-day gain in almost four years.

For Scotiabank, expansion in Latin America led to a 10 percent profit gain in its international banking business, reversing four consecutive quarters of year-over-year declines.

Scotiabank, which has operations in more than 55 countries, is focusing on Latin America, especially Peru, Colombia, Mexico and Chile, Porter, 57, has said. The lender last month agreed to buy Citigroup Inc.’s banking operations in Panama and Costa Rica, the second deal between the two firms since December.

Revenue Down

Revenue fell 5.6 percent to C$6.1 billion from a year earlier, according to the statement. The bank set aside C$480 million for bad loans, up 21 percent from C$398 million. The company raised its dividend 2.9 percent to 70 cents a share.

Canadian banking profit, which includes domestic wealth management and insurance, was C$863 million compared with C$1.33 billion a year earlier, when results included the C$555 million CI Financial gain. Excluding the CI sale and tax changes, earnings from the domestic banking business jumped 15 percent, the bank said.

Scotiabank’s global banking and markets unit had profit of C$375 million, down 20 percent from a year earlier. Underwriting and advisory fees fell 44 percent to C$113 million. Trading revenue climbed 1.7 percent to C$353 million.

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