Bank of Nova Scotia opened the Canadian Big Six earnings season on Wednesday with a pace and a dividend increase as profits rose in all but its main divisions in the capital markets.
Scotia said its second-quarter net income, which ended April 30, rose to $ 2.75 billion from $ 2.46 billion the previous year. On a tight basis, Scotia earned $ 2.18 per share; the average estimate among analysts followed by Bloomberg was $ 1.97 in earnings adjusted per share.
The bank also announced that its quarterly dividend will increase to $ 1.03 per share from $ 1.00, beginning July 27th.
“Continued 13 percent loan growth, improved net interest margin, strong customer balance sheets, combined with prudent expense management, are making the bank grow its profits,” said Brian Porter , President and CEO of Scotland, in a statement. .
Profits in Scotland’s top Canadian banking division rose 27% year-on-year to $ 1.18 billion in the last quarter. Credit quality was a factor of change compared to the previous year, as Scotia released $ 12 million of the unit’s provisions for loan losses in the most recent quarter; a year earlier, it had recorded $ 145 million in new provisions for loans that could go wrong.
Scotia said it had an average of $ 271.8 billion in residential mortgages on its Canadian loan book during the second fiscal quarter, nearly three per cent more than the previous quarter.
Growth in Scotland’s international division was even sharper as net income rose 44% year-on-year to $ 605 million as provisions for loan losses fell and revenue rose.
The Banking and Global Markets division of Scotland saw a friction in profits, as net income fell 6% year-on-year to $ 488 million, which the bank attributed to higher non-interest expenses and lower interest-free income.
In a report to clients after the results were released, Barclays analyst John Aiken said he did not believe Scotia would be in an atypical situation with the fall in profits from its capital markets business.
However, Aiken noted that the fall in Scotland’s Tier 1 capital ratio to 11.6 per cent from 12.0 per cent in the previous quarter may not please investors.
“The only real impact on the results will probably be the lower regulatory ratio than in Scotland, which was again taken from share repurchases. Although we believe so. [Scotia] it is moving towards a much more efficient level of capital, the market does not like atypical values, especially in terms of capital and uncertain prospects. “