* Profit of C$1.34 excluding items meets Wall Street estimate
* International banking division's profit slips
* Canada's third-largest lender caps off strong bank earnings period
TORONTO, March 4 (Reuters) - Bank of Nova Scotia capped off Canada's bank earnings period with a higher quarterly profit and a dividend increase on the back of strong domestic lending volumes and wealth management income, but its international retail operations posted softer results.
Still, Scotiabank Chief Executive Officer Brian Porter said the bank planned to keep looking for international acquisitions, particularly in its wealth management and insurance business.
"The phone continues to ring, and there will continue to be opportunities within our footprint," Porter said on a conference call.
The results from Scotiabank, Canada's No. 3 lender, follows a series of reports that showed the country's top banks had continued to earn solid returns from domestic lending despite signs that heavily indebted consumers were slowing their borrowing.
Scotiabank's net income rose to C$1.71 billion ($1.54 billion), or C$1.32 a share, in the first quarter ended Jan. 31 from C$1.61 billion, or C$1.24 a share, a year earlier. Excluding an amortization charge, the bank earned C$1.34 a share, meeting analysts' estimates.
Most of the growth came from Scotiabank's global wealth management and insurance business, which benefited from recent acquisitions of pension assets in Colombia and Peru. The unit's profit increased 15 percent to C$327 million.
Acquisitions also helped Canadian personal and commercial banking income, which rose 7 percent to C$575 million. The purchase of Dutch lender ING Groep's Canadian online bank in late 2012 helped stoke asset and deposit growth.
This deal is among dozens that Scotiabank has completed since the financial crisis, with the bulk of them expanding the bank's presence in Latin America and Asia.
But while analysts consider Scotiabank's international footprint a source of long-term strength, the international retail banking division has become a drag on earnings growth over the last two quarters, hurt by narrowing loan margins and higher expenses.
Income from the unit slipped 2 percent to C$401 million during the quarter.
Porter acknowledged rising concerns about emerging markets growth, but said business growth prospects remained strong in Scotiabank's four key Latin American markets: Mexico, Chile, Colombia, and Peru.
"These countries have demonstrated sound economic management and discipline and have strong banking and regulatory frameworks," he said. "Each one has great potential, with a growing middle class as well as a young increasingly well-educated and underbanked population."
However, National Bank Financial analyst Peter Routledge said Scotiabank's valuation had underperformed its competitors over the past several months due to worries about its exposure to emerging markets.
"Scotiabank until quite recently traded at a premium to peers," he said. "That premium has largely disappeared and just given the intensified perceived risk in emerging markets, that premium probably stays away for a little while longer."
The bank's shares were up 0.9 percent at C$63.62 on the Toronto Stock Exchange.
The global banking and markets division, Scotiabank's wholesale banking unit, earned C$339 million, down 13 percent.
Scotiabank increased its quarterly dividend by 2 Canadian cents, or 3.2 percent, to 64 Canadian cents a share, making it the fourth Canadian bank to do so this quarter.
The Canadian banks as a group are well capitalized after boosting levels to comply with stricter Basel III requirements. Aside from acquisitions and further dividend increases, Porter said share buybacks were "in the kit bag."