The Bank of Nova Scotia, commonly known as Scotiabank, exceeded analysts’ expectations in its fiscal third-quarter results, driven by robust performance in its Canadian retail banking and international units. The bank reported an adjusted profit of $1.63 per share, surpassing the $1.62 average estimate projected by analysts in a Bloomberg survey.
For the three months ending in July, Scotiabank’s domestic banking division achieved adjusted earnings of $1.1 billion (US$817 million), reflecting a six percent increase from the same period last year. This growth follows two years of stagnant or minimal growth in its Canadian operations, marked by slow loan growth and substantial provisions for loan losses. The bank had previously paused expansion in its mortgage portfolio to focus on acquiring clients with multiple banking products.
In a statement released Tuesday, Scotiabank attributed its improved performance to solid revenue growth, driven by continued deposit momentum and net interest margin expansion. The bank also highlighted a third consecutive quarter of positive operating leverage, though this was partially offset by increased provisions for credit losses compared to the prior year.
The total provisions for credit losses amounted to $1.05 billion for the quarter, aligning with analysts’ forecasts. The bank has been addressing high credit provisions, particularly in its operations across Colombia, Chile, and Peru, amid ongoing challenges from high interest rates affecting consumers and businesses alike.
Scotiabank’s international business contributed $709 million in earnings for the quarter, marking a 10 percent increase from the previous year. This growth was supported by revenue increases and cost-cutting measures, though it was partially mitigated by higher provisions for loan losses.
Additionally, Scotiabank recently announced its acquisition of nearly 15 percent of Cleveland-based KeyCorp for US$2.8 billion. This strategic investment aligns with Chief Executive Officer Scott Thomson’s plan to reallocate capital from Latin America to the U.S., aiming to enhance shareholder returns, which have lagged among Canada’s six largest banks over the past five years.
