Bank of Nova Scotia profit beats estimates
TORONTO — Bank of Nova Scotia (Scotiabank) wrapped up Canadian banks’ quarterly results reporting on Tuesday, beating analysts’ estimates, thanks to fewer-than-expected provisions to cover loan losses and an increase in domestic loan growth.
But Scotiabank’s global banking and markets unit posted a slight profit decline, the only one of Canada’s six biggest banks to do so.
And pre-tax, pre-provisions (PTPP) earnings rose a muted three per cent from a year ago, as a decline in its Pacific Alliance-focused international banking unit offset an increase in Canada, where business lending expanded more than rivals’ at about four per cent from a year earlier.
Scotiabank shares fell 1.1 per cent to $80.30 in morning trading in Toronto, after
hitting a three-year intraday high earlier. The Toronto stock benchmark rose 1.25 per cent.
Canada’s No. 3 lender reported adjusted net income of $1.90 a share in the three months ended April 30, from $1.04, a year earlier. Analysts had expected $1.76 a share, based on IBES data from Refinitiv.
Canada’s six biggest lenders have reported better-thanexpected earnings driven by strong capital markets and wealth management, and lower provisions than analysts had predicted, as a raft of government and bank measures since the start of the coronavirus pandemic helped keep a lid on soured loans.
The lender took provisions for credit losses of $496 million, down from $1.8 billion a year earlier.
While that included a recovery of about $696 million of provisions on performing loans, Scotiabank set aside nearly $1.19 billion to cover higher retail loan write-offs in its Latin American operations. Executives said on the call that these have peaked.
Scotiabank expects overseas loan growth to improve in the second half, with 10 per cent expansion “very likely” in 12 to 18 months, chief executive Brian Porter said on an analyst call.