Bloomberg News

Scotiabank Third-Quarter Profit Rises on International Bank

August 30, 2011

(Updates with cost cuts in eighth paragraph.)

Aug. 30 (Bloomberg) -- Bank of Nova Scotia, Canada’s third- largest bank, reported quarterly profit that topped analysts’ estimates, led by its international business.

Net income in the third quarter ended July 31 rose 22 percent to C$1.29 billion ($1.31 billion), or C$1.11 a share, from C$1.06 billion, or 98 cents, a year earlier, the Toronto- based bank said today in a statement. It was the eighth straight quarter of earnings growth.

Scotiabank, which has operations in 50 countries including Mexico and Thailand, said profit from international banking climbed 27 percent to C$350 million on increases in commercial lending and higher consumer loans in Chile and Peru. The bank has spent about $2 billion on foreign acquisitions in the last five years.

“We’ve always thought there was a huge potential in Latin America with the growing middle class there,” said David Baskin, who oversees about C$425 million at Baskin Financial Services in Toronto, including Scotiabank shares. “Bank of Nova Scotia’s had a long-standing position there; they’ve paid their dues, so now they’re getting payback.”

Before one-time items, the bank said it earned C$1.14 a share, topping the C$1.12-a-share estimate of 14 analysts surveyed by Bloomberg News.

Canadian Banking

Scotiabank rose C$1.15, or 2.2 percent, to C$53.50 in 4 p.m. trading on the Toronto Stock Exchange. The shares have fallen 6.3 percent this year, compared with a 2.8 percent drop on the 10-member S&P/TSX Banks Index.

Profit from Canadian banking increased 4.3 percent to C$461 million on deposit growth, while asset-management earnings climbed 16 percent to C$256 million. Earnings from its Scotia Capital investment bank dropped 5.2 percent to C$289 million because of an increase in loan-loss provisions and higher expenses.

Chief Executive Officer Richard Waugh told investors on a conference call that Scotiabank is looking at ways to reduce costs, although the bank isn’t considering layoffs or closures.

Capital markets had “a weak quarter, as trading and advisory revenues were down sequentially,” Barclays Capital analyst John Aiken said in a note to clients today. “This is not out of line with the other banks that have reported.”

The bank set aside C$243 million for bad loans, down from C$276 million a year ago.

CIBC Tomorrow

Scotiabank is the fourth Canadian bank to report third- quarter results. Bank of Montreal said Aug. 23 that profit climbed 19 percent to C$793 million. National Bank of Canada reported earnings of C$312 million, up 15 percent. Royal Bank of Canada, the country’s largest bank, reported a net loss of C$92 million. Royal Bank’s profit missed analysts’ estimates, while National and Bank of Montreal topped expectations.

Canadian Imperial Bank of Commerce is scheduled to report results tomorrow, followed by Toronto-Dominion Bank Sept. 1.

--With assistance from Doug Alexander in Toronto. Editors: David Scanlan, William Ahearn

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net


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