Scotiabank Extends Earnings Record in International Banking

(Bloomberg) -- Bank of Nova Scotia continued its record earnings streak in international banking.

Canada’s most global bank saw profit from its overseas unit jump 13 percent to C$745 million ($573 million), extending its record for a second quarter. The contributions, along with gains in Canadian banking, helped the Toronto-based bank company post overall profit that beat analysts’ estimates. Latin America accounted for 60 percent of international banking earnings in the quarter ended April 30.

“International banking reported strong results with another quarter of double-digit earnings growth," Chief Executive Officer Brian Porter said Tuesday in a statement. “This was driven by continued momentum in the Pacific Alliance region, better credit performance and productivity gains."

Scotiabank has been focusing on four so-called Pacific Alliance countries -- Mexico, Chile, Peru and Colombia -- for international expansion. That’s been fueled of late by an acquisition tear, which has seen the lender pursue three foreign acquisitions since November including its deal to buy Banco Bilbao Vizcaya Argentaria SA’s 68 percent stake in a Chilean lender for $2.2 billion and buying consumer lending businesses in Colombia and Peru.

This month, Scotiabank agreed to buy 51 percent of the credit card and consumer loan business of Peruvian retailer Cencosud Peru for C$130 million, making Scotiabank the second-largest credit card issuer in the South American nation.

“Recently announced acquisitions in Chile, Colombia and Peru -- all expected to close in the second half of the year -- will further grow our customer base and improve our presence in the Pacific Alliance region," Porter, 60, said.

Here’s a summary of Scotiabank’s second-quarter results:

  • Net income for the period ended April 30 rose 5.6 percent to C$2.18 billion, or C$1.70 a share, from C$2.06 billion, or C$1.62, a year earlier. The bank said adjusted earnings, which exclude some items, were C$1.71 a share, compared with the C$1.67 estimate of 13 analysts surveyed by Bloomberg.
  • Scotiabank separately said it plans to buy back up to 24 million shares, or about 2 percent of its outstanding shares, in the next year.
  • Earnings from Canadian banking, its largest operation, rose 4.7 percent to C$1.02 billion from a year earlier.
  • Earnings from its global banking and markets unit fell 14 percent to C$447 million.
  • Revenue increased 7.2 percent to C$7.06 billion.
  • Scotiabank’s domestic mortgage balances rose about 6 percent, on par with the growth seen at Canada’s other lenders for the quarter.
  • Productivity ratio -- or expenses as a percentage of revenue -- was 52.8 percent, down from 54.7 percent a year earlier but up from the first quarter, which was 49.3 percent. Scotiabank uses this as a measure of the bank’s efficiency.

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