Scotiabank's international operations show signs of improvement as earnings top expectations
Bank of Nova Scotia took higher-than-expected provisions for credit losses in the second quarter, but revenue gains helped Canada’s fourth-largest bank beat analyst expectations.
Revenue rose 5.5 per cent from the corresponding period a year earlier, reaching nearly $8.4 billion, while provisions for credit losses were around $1 billion compared to $709 million a year earlier. The PCL ratio was 54 basis points, up four basis points from the previous quarter and 17 basis points from a year ago.
Adjusted net income for the quarter ended April 30 was $2.1 billion, with earnings per share of $1.58, slightly above the consensus analyst estimate of $1.56, and down slightly from $2.16 billion a year ago.
International banking was a particularly bright spot in the second quarter. Less than six months after Scotia unveiled a strategy to focus on efficiencies rather than capital deployment in markets outside North America, the bank posted higher revenue, lower expenses and lower provisions for credit losses in the segment.
Net interest margin, which reflects what the bank takes in from credit products like loans and mortgages against what it must pay out on deposits and other savings products, was up 11 basis points from the previous quarter. Adjusted earnings in the division were $701 million.
Executives said the bank is also delivering on a strategy of increasing “share of wallet,” with new customers increasingly taking products and services beyond the initial mortgage or credit card.
“We are executing on our commitment to balanced growth as our deposit momentum continues, while maintaining strong capital and liquidity metrics,” said Scott Thomson, who was pulled from the boardroom 18 months ago to become Scotia’s CEO, a rare
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