Scotiabank second quarter profit tops expectations
TORONTO — The Bank of Nova Scotia’s second-quarter earnings beat expectations, fuelled by operations in Latin America and at home despite a slowdown in the Canadian housing market.
Canada’s third-largest lender on Tuesday reported a nearly four cent jump in net income attributable to common shareholders. Its international division delivered 14 per cent earnings growth and its Canadian banking division saw a five per cent year-over-year increase.
Scotiabank was the fourth of Canada’s biggest banks to report earnings for the three-month period ended April 30 that beat expectations against a backdrop of slowing real estate activity and tighter lending guidelines.
However, residential mortgage balances at Scotiabank during the period grew by six per cent, compared with last year, to $203.8 billion, while the value of new mortgages issued during the period fell to $8.9 billion from $9 billion a year earlier and $10.3 billion in the previous quarter.
Scotiabank chief financial officer Sean McGuckin said the bank is still expecting five per cent growth for its 2018 financial year, helped by the pull-forward effect of buyers rushing to lock in home loans in the previous quarter ahead of the new rules.
“We’re still very optimistic ... With all the other growth levers we have in the bank, in international banking and in commercial lending, we can overcome any slowdown or moderation in our mortgage growth,” he said.
Scotiabank’s net income attributable to common shareholders during the quarter ended April 30 was $2.04 billion or $1.70 per diluted share, up from $1.97 billion or $1.62 per diluted share a year earlier. On an adjusted basis, the profit amounted to $1.71 per diluted share, compared with analysts’ expected earnings per share of $1.67, according to Thomson Reuters Eikon.
The lender’s Canadian banking division saw a five per cent increase in net income attributable to equity holders to $1.02 billion, while its international banking arm saw an even bigger increase of 14 per cent to $675 million.
Scotiabank chief executive Brian Porter said its earnings at home were driven by solid asset growth led by commercial and small business, auto and mortgages, as well as margin expansion in a rising rate environment.