Scotiabank's Jarislowsky Deal Lifts Canada Profit to Record

(Bloomberg) -- Bank of Nova Scotia’s purchase of Jarislowsky Fraser is already paying off.

The acquisition of the Montreal-based money manager, along with improved margins and lower provisions, contributed to record Canadian banking profit in the fiscal third quarter, Scotiabank said Tuesday. Earnings from domestic banking rose 8 percent to C$1.13 billion ($880 million) from a year earlier.

The C$950 million purchase of Jarislowsky Fraser in May is one of six deals announced by Scotiabank in the past nine months, as the Toronto-based lender has committed about C$7 billion of capital to acquisitions at home and abroad. Two other deals also closed in the quarter: a C$2.9 billion purchase of a 68 percent stake in Chilean lender BBVA Chile and a takeover of Citigroup Inc.’s Colombian consumer and small business operations.

Net income fell 7.8 percent to C$1.94 billion, or C$1.55 a share, from C$2.1 billion, or C$1.66, a year earlier. Adjusted earnings, which exclude some costs associated with its acquisitions in Chile and Colombia, were C$1.76 a share. The average estimate of 12 analysts surveyed by Bloomberg was for adjusted earnings of C$1.77. The bank raised its quarterly dividend 3.7 percent to 85 cents a share.

Here’s a summary of Scotiabank’s results:

  • Scotiabank had acquisition-related costs of C$320 million in the quarter. Excluding those costs, Scotiabank said net income rose 7 percent to C$2.26 billion.
  • Revenue rose 4.2 percent to C$7.18 billion and non-interest expenses increased 2.7 percent to C$3.77 billion.
  • Common Equity Tier 1 capital ratio fell to 11.4 percent, after taking into account acquisitions.
  • Earnings from international banking fell 29 percent to C$475 million, after costs tied to acquisitions. Adjusted earnings for the division were C$784 million, up 15 percent.
  • Profit from global banking and markets was unchanged from a year ago, at C$441 million.

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