Sco­tia­bank CEO op­ti­mistic of beat­ing growth tar­gets

Canada’s third big­gest lender posts fourth quar­ter re­sults, which are marginally be­low an­a­lysts’ fore­casts

The Gulf Today - Business - - INTERNATIONAL -

TORONTO: Bank of Nova Sco­tia (Sco­tia­bank) is op­ti­mistic of beat­ing its growth tar­gets next year, Chief Ex­ec­u­tive Brian Porter said af­ter the bank posted fourth quar­ter re­sults, which were marginally be­low an­a­lysts’ fore­casts.

Canada’s third big­gest lender re­ported ad­justed earn­ings per share of C$1.77 in the quar­ter ended Oct.31, up 8 per cent but short of the av­er­age an­a­lyst fore­cast of C$1.79 per share, ac­cord­ing to IBES data from Refini­tiv. An­a­lysts blamed the miss on costs re­lated to re­cent ac­qui­si­tions. Speak­ing to an­a­lysts on a con­fer­ence call, Porter said he ex­pected the bank to ben­e­fit from im­proved mar­gins next year due to ris­ing in­ter­est rates and a strong eco­nomic back­drop in its key mar­kets.

“We are op­ti­mistic that we will con­tinue to per­form strongly and, again, ex­ceed our medium-term ob­jec­tives,” he said.

Shares in Sco­tia­bank were up 0.3 per cent in mid-morn­ing trad­ing, af­ter ini­tially drop­ping 0.5 per cent.

The bank has tar­geted an­nual earn­ings growth of 7 per cent or more in Canada next year and 9 per cent from its in­ter­na­tional op­er­a­tions, strip­ping out cur­rency move­ments.

Ex­clud­ing one-off costs, net in­come rose by 13 per cent to C$2.35 bil­lion ($1.77 bil­lion) in the lat­est quar­ter, com­pared with the av­er­age es­ti­mate by an­a­lysts of C$2.24 bil­lion, ac­cord­ing to IBES data.

MAR­GINS IM­PROVE

For the full year, Sco­tia­bank re­ported a 7 per cent in­crease in earn­ings at its Cana­dian busi­ness to C$4.4 bil­lion, helped by im­proved mar­gins as it ben­e­fited from five Bank of Canada in­ter­est rate hikes since last sum­mer and growth in cus­tomer de­posits.

How­ever, Cana­dian bank­ing head James O’sul­li­van told an­a­lysts the mar­ket for de­posits was “quite com­pet­i­tive.” Com­pe­ti­tion for de­posits among Cana­dian banks was heat­ing up for the first time since the fi­nan­cial cri­sis and could crimp mar­gin growth, an­a­lysts said.

The bank also said on Tues­day it planned to exit nine coun­tries in the Caribbean, in­clud­ing An­tigua and Grenada, by sell­ing its op­er­a­tions to Re­pub­lic Fi­nan­cial Hold­ings.

It also plans to sell its in­sur­ance op­er­a­tions in Ja­maica and Trinidad & Tobago to Sagi­cor Fi­nan­cial. The bank has been sell­ing non-core busi­nesses and fo­cus­ing its in­ter­na­tional op­er­a­tions on the Pa­cific Al­liance trad­ing bloc of Peru, Mex­ico, Chile and Columbia, which now ac­counts for around a quar­ter of its rev­enue. The trans­ac­tions are not ma­te­rial to Sco­tia­bank, it said, but will re­sult in its core tier 1 cap­i­tal ra­tio, a key mea­sure of its fi­nan­cial strength, in­creas­ing by 10 ba­sis points.

Mean­while, the Cana­dian dol­lar weak­ened to its low­est in nearly five months against a broadly firmer green­back on Tues­day, as con­cern about world trade ten­sions led to fluc­tu­a­tion in fi­nan­cial mar­kets ahead of the G20 Sum­mit this week. US stocks and the price of oil see­sawed af­ter US Pres­i­dent Don­ald Trump’s threat to move ahead with ad­di­tional tar­iffs on Chi­nese goods damp­ened hopes of re­solv­ing the trade spat be­tween the two coun­tries.

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