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The Bank of Nova Scotia has kicked off the earnings season for Canada’s big six lenders by easily beating profit expectations amid a sharp drop in funds set aside for loans that could go bad.
Scotland said on Tuesday that its fiscal fourth quarter net profit was $ 1.9 billion, up from $ 2.3 billion a year earlier. On an adjusted basis, it earned $ 1.45 per share. Analysts, on average, had expected $ 1.22.
In a potentially encouraging signal about credit quality trends over the course of the second wave of COVID-19, the bank recorded $ 1.13 billion in loan loss provisions during the three months ending October 31. While this was a 50% increase from a year earlier, it was a significant drop from the $ 2.18 billion that was set aside in the previous quarter.
Scotland’s major Canadian banking operations suffered in the quarter compared to the same period in 2019, with revenue down 4% yoy and adjusted profit down 13%. The bank pointed out that its net interest income has come under pressure due to the Bank of Canada rate cuts. On a sequential basis, the unit’s profit increased by 81%.
The bank’s large international operations rebounded in the quarter as adjusted profit reached $ 353 million from just $ 4 million in the fiscal third quarter.
Scotland’s other primary business units – wealth management and global banks and markets – each produced year-over-year growth in adjusted earnings.
“As we look forward to 2021, we will continue to put customers first and remain cautiously optimistic that better times await us as we continue to grow our presence as a leading bank in the Americas,” CEO Brian Porter said in a statement.
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