* Targeting loans valued less than $6,000
* Sees 100-million-strong market in four countries
* 2012 Mexican acquisition key to growth plans
* Strong growth contrasts with slow Canadian loan growth
Jan 22 Bank of Nova Scotia is targeting
growth in Latin American consumer loans and micro-financing, an
area that offers wide profit margins at a time when the outlook
for loan growth in Scotiabank's home market in Canada is
Scotiabank, which is Canada's third-largest bank and which
also has a big presence in Latin America and Asia, entered the
small-loans business in Peru in 2007 with two acquisitions, and
has since expanded. As of last year, its small-loan portfolio
stood at C$3 billion ($3.02 billion) spread throughout Latin
Consumer and micro-finance loans are usually valued between
$300 and $6,000 and made to individual borrowers and small
The bank now sees the area as a key lending segment and
expects to ramp up growth following its 2012 purchase of Credito
Familiar in Mexico, which added 246 branches in what is the
largest market for micro-finance in the region, the bank says.
"We see the opportunity for certainly double-digit growth
rates in net profit from this segment, and it will be a sizeable
contributor to the division in retail profit overall," Wendy
Hannam, the bank's executive vice president of Latin America,
said at a bank presentation in Lima on Tuesday.
Scotiabank sees a potential market of about 100 million
people spread through Peru, Mexico, Chile, and Colombia, and
Hannam expects the division to eventually account for up to 15
percent of Scotiabank's total international retail assets, up
from just under 10 percent right now.
Customers from the segment will also feed the bank's
traditional higher-value retail loan business as they become
more affluent, Hannam said.
The loans boast higher returns than traditional loans, but
are also higher risk, with higher loan losses, which is a factor
in the bank deciding to limit the size of the business to 15
percent of total international assets, said Scotiabank President
"We're building it thoughtfully," he said.
Strong growth in the small loan segment contrasts with a
slowing growth picture in Canada. Canadians are expected to curb
their borrowing habits due to already record high personal debt
levels, and the Canadian housing market has shown signs of
Scotiabank has spent about C$6 billion on more than 20
international acquisitions since 2007, and has also made some
sizable domestic deals, including last year's C$3.1 billion
purchase of ING Groep's Canadian online bank.
Bank executives said their focus is now more on organic
growth, with little likelihood of it doing any deals valued at
more than a C$1 billion, and with no plans to push outside the
bank's current geographical footprint.