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Scotiabank beats views on strong consumer lending, wealth management

Published: 08:49 27 May 2014 EDT

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Bank of Nova Scotia (TSE:BNS), Canada's third-largest bank by market value, posted a 14 percent profit gain in its fiscal second-quarter, topping Bay Street's expectations, lifted by higher income from domestic consumer lending and wealth management.

Net income rose to C$1.80 billion, or C$1.39 per share, in the three months ended April 30, from C$1.58 billion, or C$1.22 per share, a year earlier, the Toronto, Ontario-based bank said in a statement today.

Stripping some items, adjusted earnings were C$1.40 per share, ahead of Wall Street's consensus of C$1.31.

Revenue increased 10 percent to $5.75 billion. Analysts on average predicted C$5.6 billion.

The bank set aside $375 million for bad loans, up from $343 million a year earlier.

“We had strong results this quarter across our businesses, particularly in Canadian banking and global wealth and insurance," Chief Executive Officer Brian Porter said in the statement. “We continue to focus on deepening customer relationships to deliver results and grow all of our businesses.”

Domestically, banking earnings rose 11 percent to C$565 million from a year ago on higher revenue, increasing interest margins and “double-digit growth” in credit cards and automotive lending volumes, the lender said.

Outside of Canada, earnings slid 0.6 percent to C$463 million as net interest margins narrowed and provisions rose. Scotiabank has operations in more than 55 countries, including Chile, Mexico and Thailand.

Earnings from the bank's wealth management and insurance division increased 11 percent to C$355 million from a year earlier, boosted by higher sales and improving markets. 

Profit at Scotiabank’s global banking and markets unit grew 9.4 percent to C$385 million, backed by growth in its fixed-income, investment-banking and U.S. corporate-banking businesses. Underwriting and advisory fees advanced 14 percent to C$160 million, while trading revenue rose 13 percent to C$425 million.

The bank also said it planned to buy back up to 12 million shares, or about 1 percent of its outstanding shares, during the next year.

Scotiabank's board approved a dividend of 64 cents per share. This quarterly dividend applies to shareholders of record as of July 2, and is payable July 29.

Shares closed up 0.3 percent at C$62.51 in Toronto yesterday, stretching this year's gains to 2.4 percent.

Scotiabank is the third Canadian lender to report second-quarter results. On May 22, Royal Bank of Canada (TSE:RY), the nation's largest bank by market value, reported a 15 percent jump in its fiscal second-quarter profit, beating Bay Street's expectations, driven by strong domestic lending volumes and its capital markets business.

Toronto-Dominion Bank, Canada’s second-largest lender by market value, reported its quarterly profit rose 16 percent on the back of strong Canadian and U.S. retail lending.

Bank of Montreal (TSE:BMO), Canada's fourth-biggest lender by market value, is scheduled to report quarterly results tomorrow, followed by Canadian Imperial Bank of Commerce (TSE:CM) on May 29.

 

 

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