Scotiabank Profit Rises 28% as International Business Gains

  • Canadian banking profit climbs 19%; capital markets decline
  • Lender cut 1,140 jobs since July, mostly in Canadian banking

Bank of Nova Scotia said fiscal fourth-quarter profit rose 28 percent on gains in its international banking business and a decline in expenses, including 1,140 fewer jobs since the end of July.

Net income for the period ended Oct. 31 climbed to C$1.84 billion ($1.38 billion), or C$1.45 a share, from C$1.44 billion, or C$1.10, a year earlier when Scotiabank had restructuring costs, the Toronto-based lender said Tuesday in a statement. Profit excluding some items was C$1.46 a share, beating the C$1.44 average estimate of 15 analysts surveyed by Bloomberg.

“The bank continues to perform well, given challenging conditions in certain businesses and markets,” Chief Executive Officer Brian Porter, 57, said in the statement. “We are well-positioned, including through the Pacific Alliance countries, for future growth."

Scotiabank is the first Canadian lender to report fourth-quarter results. Average adjusted profit at Canada’s six biggest banks is expected to increase 4 percent from a year earlier, according to Rob Sedran, a CIBC Capital Markets analyst.

Revenue Misses

The lender’s revenue rose 6.6 percent to C$6.13 billion from a year earlier, missing analysts’ estimates, while operating expenses fell 2.3 percent to C$3.27 billion. The bank set aside C$551 million for bad loans, down from C$574 million.

Earnings from international banking, which includes wealth management and insurance overseas, surged 53 percent to C$564 million. The lender, which has operations in more than 55 countries, is focusing on Latin America for growth, especially Peru, Colombia, Mexico and Chile, Porter has said. The firm in July agreed to buy Citigroup Inc.’s banking operations in Panama and Costa Rica, the second deal between the two firms since December.

Scotiabank’s global banking and markets unit had profit of C$325 million, down 14 percent from a year earlier. Investment-banking fees were C$109 million in the quarter, down almost half from a year ago, while trading revenue climbed 26 percent to C$348 million.

Job Cuts

Canadian banking profit, which includes domestic wealth management and insurance, rose 19 percent to C$837 million. Scotiabank cut 1,014 full-time positions in its Canadian division since July 31, according to financial disclosures.

Scotiabank had 89,214 employees across the bank as of Oct. 31, a 1.3 percent decline from the end of July. Scotiabank said Oct. 22 it plans to close some Canadian back-office support operations over the next two years as it shifts to digital banking. A year ago, Scotiabank announced 1,500 job cuts -- the most of any Canadian lender in a decade -- and took C$148 million in costs tied to severance.

Canadian bank stocks are on pace for their first annual decline since 2011 amid a slowing domestic economy and slumping energy and commodities prices. The eight-company Standard & Poor’s/TSX Commercial Banks Index has fallen 4.8 percent this year, compared with a 9.3 percent gain in 2014. The index’s last annual decline was four years ago, when it slid 2.8 percent.

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