Sco­tia­bank’s sec­ond quar­ter 30 per cent more prof­itable

The Hamilton Spectator - - BUSINESS - THE CANA­DIAN PRESS

TORONTO — Sco­tia­bank re­ported a 30 per cent surge in prof­its Tues­day, clos­ing out a quar­ter that saw Canada’s five big­gest banks beat ex­pec­ta­tions, largely thanks to lower than an­tic­i­pated credit costs.

But con­cerns about fu­ture loan growth in Canada per­sist, as high house prices and over­stretched bor­row­ers have damp­ened in­vestor sen­ti­ment.

Com­bined, the five big banks, in­clud­ing Royal, TD, BMO and CIBC — had $9.67 bil­lion in net in­come dur­ing the sec­ond quar­ter, up nearly 20 per cent from $8.12 bil­lion a year ago.

Their com­bined quar­terly rev­enue was $34.8 bil­lion, up five per cent from $33.11 bil­lion dur­ing the sec­ond quar­ter of 2016.

There was no in­di­ca­tion in the re­sults that Cana­di­ans are hav­ing trou­ble ser­vic­ing their mort­gages, credit card debts or other types of loans, said Bar­clays an­a­lyst John Aiken. But while credit trends look solid, an­a­lysts said the growth out­look for the lenders’ key Cana­dian re­tail bank­ing op­er­a­tions re­mains chal­lenged in light of record lev­els of house­hold debt and over­heated house prices in Toronto and in Van­cou­ver.

The sec­ond quar­ter of the year saw “pos­i­tive, but not spec­tac­u­lar” Cana­dian loan growth for the bank­ing sec­tor.

The big­gest neg­a­tive com­ing out of the quar­ter was re­tail bank­ing growth south of the bor­der, which was not as strong as ev­ery­one had been ex­pect­ing, Aiken said.

“We did see mar­gin ex­pan­sion ben­e­fit­ing from ris­ing Fed rates, but loan growth just did not ex­ist. Con­sid­er­ing the fact that the U.S. bank­ing op­er­a­tions are ex­pected to grow faster than the Cana­dian bank­ing op­er­a­tions, this is a bit of a disappointment.”

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