- Bank investment to streamline operations, cut cost by 2018
- Mexico, Chile, Peru and Colombia operations to be revitalized
Bank of Nova Scotia, the Canadian bank with the most international exposure, plans to spend C$350 million ($241 million) in the next few years to improve retail lending operations in Mexico, Chile, Colombia and Peru and expand offerings in those markets.
Scotiabank outlined its spending plan and earnings growth targets for the four priority Latin America markets it dubs as Pacific Alliance nations during an investor conference in Mexico this week. The Toronto-based bank has been focusing on those countries because of their relative economic stability, demographics and growth prospects.
"By 2018, we’ll have invested over C$350 million in the Pacific Alliance in an effort to lower our structural costs, streamline our operations and revitalize our banking platforms,” Dieter Jentsch, the firm’s group head of international banking, said Tuesday at the end of the two-day event.
Scotiabank’s three-to-five year earnings targets for Chile, Colombia and Peru forecast at least a 10 percent compound annual growth rate, driven by bolstering deposits, attracting more customers, building off partnerships and tapping technology. Banking businesses in Chile and Colombia are predicted to have annual earnings growth of 11 percent to 13 percent within three to five years, while Peru’s will be 10 percent to 12 percent.
"We have the right strategies in place that are focused on building relevance and presence in these markets by developing more primary customer relationships, simplifying and digitizing the customer experience and optimizing our structure to fund growth," Jentsch said. "By 2018, we’ll be a much better bank."
Mexico, Scotia’s largest Latin America operation, will be a “leaner, more competitive diversified bank" with more digital offerings and a larger customer base, Jenstch said. Peru will accelerate its credit cards and payments business and expand its branch network, while Colombia will evolve into a more diversified universal bank with more offerings, he said. Chile will become leaner, and build on Scotiabank’s purchase last year of a stake in the financial services business of retailer Cencosud SA to boost profitability through expanding in credit cards, he said.