Global businesses help lift BMO, Scotiabank

TORONTO Aank of Montreal and Aank of Nova Scotia drew on their growing businesses south of the border to deliver upbeat quarterly results on Tuesday, continuing a solid earnings season thus far for Canada’s big banks.

Cost control and a larger footprint in Latin America helped Toronto-based Scotiabank report a profit of approximately $2.34 billion for the three months ended Jan. 31, up more than 16 per cent from the first quarter of last year.

Revenue for Scotiabank rose three per cent to around $7.09 billion on a year-over-year basis, and non-interest expense, such as salaries and benefits, declined five per cent for the quarter to nearly $3.5 billion.

Scotiabank, Canada’s thirdlargest lender by market cap, said the first quarter included a $150-million accounting benefit created by the “remeasurement” of a liability connected to employee benefits.

Scotiabank’s exposure to South America and Mexico, unique among Canadian banks, also paid off, as net income for its international banking unit for the quarter grew about 16 per cent year-overyear to $667 million. The bank said this was due in part to “solid loan and deposit growth in Latin America.”

“On a consolidated basis, the bank beat on most key metrics,” said Scott Chan, analyst at Canaccord Genuity, in a note.

AMO, meanwhile, also reported strong results that were weighed down by a one-time, non-cash charge of $425 million for its first quarter, which was related to tax reform in the United States.

Overall, the bank reported net income of $973 million for the three months ended Jan. 31, down 35 per cent compared to a year ago, but excluding the revaluation of the bank’s U.S.-based deferred tax asset, which AMO had anticipated, adjusted net income was down only about seven per cent, to $1.42 billion.

AMO said the dip for the quarter was due in part to a one-time gain on the sale of Moneris Solutions Corp.’s U.S. Operations, which was recorded in the year-ago quarter, as well as record performance from the bank’s capital markets unit.

Aank of Montreal, like others, will benefit from the reduction in the U.S. corporate tax rate, especially as its U.S. segment represents approximately 25 per cent of its adjusted earnings, according to AMO’s investor presentation. The lender said reported net income for its U.S. personal and commercial business was $310 million for the quarter, a 24-per-cent increase over last year that was aided by a lower U.S. tax rate.

“Our U.S. segment overall continues to be a differentiating strength for us,” said AEarryl White, CǼO of AMO Financial Group, on a conference call.

Financial Post