Scotiabank Profit Rises 5% on Gains in International Banking

  • Bank lifts quarterly payout after beating analysts' estimates
  • Loan loss provisions climb on oil and gas, Canadian lending

Bank of Nova Scotia, Canada’s third-largest lender by assets, beat analysts’ estimates after reporting a 5 percent jump in fiscal first-quarter profit led by the international-banking business.

Net income for the period ended Jan. 31 climbed to C$1.81 billion ($1.34 billion), or C$1.43 a share, from C$1.73 billion, or C$1.35, a year earlier, the Toronto-based bank said Tuesday in a statement. The lender raised its quarterly dividend 2.9 percent to 72 cents a share. Scotiabank said profit excluding some items was C$1.44 a share, beating the C$1.42 average estimate of 15 analysts surveyed by Bloomberg.

“We delivered strong earnings to start 2016 with solid top line growth in both our Canadian banking and our international-banking businesses," Chief Executive Officer Brian Porter, 58, said in the statement. “Mexico, Peru, Chile and Colombia continued to deliver robust loan, deposit and fee growth."

Scotiabank shares fell 2.2 percent this year through Monday, less than the 4.4 percent decline by the eight-company Standard & Poor’s/TSX Composite Commercial Banks Index.

Revenue rose 8.6 percent to C$6.37 billion from a year earlier. The bank set aside C$539 million for bad loans, up from C$463 million a year earlier, primarily on higher provisions in the oil-and-gas industry and in Canadian retail lending.

Oil and Gas

Impaired oil-and-gas loans rose to C$336 million as of the end of January, more than double the C$165 million at the end of October. Scotiabank had C$17.9 billion of oil-and-gas loans as of the end of January, representing about 3.6 percent of its overall loan book -- the highest among Canada’s banks. The lender had C$16.5 billion of oil-and-gas loans as of Oct. 31 and C$15.4 billion in the first quarter of 2015, according to filings.

Earnings from international banking, which includes wealth management and insurance overseas, rose 21 percent to C$505 million from a year earlier due to foreign currency translation and loan, deposit and fee growth in Latin America, Scotiabank said. The lender has operations in more than 55 countries.

Canadian banking profit, which includes domestic wealth management and insurance, increased 7.4 percent to C$875 million from a year earlier. Global banking and markets posted net income of C$366 million, down 9.4 percent, on higher provisions and lower investment-banking fees from a year earlier.

Scotiabank is the last of Canada’s six largest lenders to report quarterly results.

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