Scotiabank stays Latin American course

TORONTO — Scotiabank will stick within its existing Latin American footprint if it goes on a shopping spree, the bank’s chief executive told analysts and investors Friday.

“You’re not going to see us plant a new flag in a different country or put down $5 billion for 10 per cent of a bank in country X,” Brian Porter said during the company’s second-quarter conference call. “That doesn’t make sense for us.”

A number of large financial institutions have stumbled because they decentralized too much, and are now facing pressure from regulators and looking to exit certain markets, Porter said. Scotiabank hopes to avoid these pitfalls by focusing on Canada and the Pacific Alliance countries of Mexico, Peru, Chile and Colombia.

The Pacific Alliance is the “sixth-largest economy in the world,” Porter said, with an average age of 29 years. That compares with 39 years in North America.

“There’s a growing middle class,” said Porter. “We like that.”

The bank has also taken steps to mitigate risk in recent years by exiting its operations in Egypt, Russia and Turkey.

Porter made his comments after the bank released its second-quarter earnings Friday.

Scotiabank was the last of the five biggest Canadian banks to report its results. Combined, the five institutions — which include Royal Bank, Bank of Montreal, TD Bank and CIBC — saw their cumulative net income climb to $8.07 billion, from $7.37 billion in the second quarter of last year. Quarterly revenue for the five totalled $30.45 billion, up from $28.97 billion a year ago.

Scotiabank said profits rose two per cent during the quarter as it benefited from growth in consumer and business loans and results from its wealth management division.

The bank said net income was $1.8 billion, or $1.42 per share, relatively flat with a year earlier when earnings per share were $1.39. Net income attributable to common shareholders was $1.73 billion versus $1.7 billion a year ago. On an adjusted basis, the results were equal to $1.43 a share. Revenue grew to $5.94 billion from $5.73 billion.

Barclays analyst John Aiken said the bank’s international arm had a “solid” quarter, as it benefited from the lower loonie. Earnings grew five per cent from the previous quarter.

Domestic banking operations had net income of $829 million, an increase of $6 million from a year ago.

Wealth management had profits of $824 million, rising $77 million from the comparable period.