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Scotiabank Q2 profit tops estimates on strong Canadian banking division

Last updated: 04:56 29 May 2015 EDT, First published: 09:56 29 May 2015 EDT

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Scotiabank says results were bolstered by a strong quarter in its Canadian banking division.

Bank of Nova Scotia (TSE:BNS), Canada’s third-largest lender by assets, reported a fiscal second-quarter profit that exceeded market expectations, fuelled by strong results from its Canadian banking division. Shares advanced.

Net income rose to C$1.8 billion, or C$1.42 per share, in the second quarter through April 30, from C$1.8 billion, or C$1.39 per share, a year ago, the Toronto-based company said in a statement today.

Excluding special items, earnings were C$1.43, surpassing the C$1.39 average estimate of 14 analysts polled by Capital IQ.

Revenue rose 4.2 percent to C$6.05 billion from a year earlier and the bank set aside C$448 million for bad loans, up from C$375 million.

Scotiabank said results were bolstered by a strong quarter in its Canadian banking division.

“This quarter’s results reflect the strength of our strategy, our priorities and our ability to grow during more moderate economic times,” chief executive officer Brian Porter said in a statement.

Shares rose 0.7 percent to C$65.00 at 9:39 a.m. in Toronto, paring losses this year to 2%.

Canadian banking profit, which includes domestic wealth management and insurance, increased to C$829 million from C$824 million a year earlier.

Earnings from international banking, which includes wealth management and insurance overseas, slid 4.1 percent to C$487 million from a year earlier on higher provisions and lower margins, the firm said. 

Scotiabank has operations in more than 55 countries in Latin America, the Caribbean and Asia. The bank, which is pushing hard into Mexico, Peru, Chile and Colombia, has also been looking at acquisitions in the region.

Scotiabank said in a separate statement it plans to buy back up to 24 million shares, or about 2 percent of its stock, within the next year.

The bank maintained its quarterly dividend at 68 Canadian cents a share.

Scotiabank is the last of Canada’s six largest lenders to report quarterly results, all of which beat earnings expectations. Royal Bank of Canada, Canadian Imperial Bank of Commerce and National Bank of Canada posted higher profit prompted by gains in capital markets. Toronto-Dominion Bank and Bank of Montreal had lower profit as restructuring costs weighed on results. Three of them, Bank of Montreal, National Bank of Canada and Canadian Imperial Bank of Commerce, also raised their dividends.

Still, investors remain worried about slowing domestic growth and a lack of strong catalysts for the lenders, as well the impact from exposure to the energy industry.


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