* Profit of C$1.34 excluding items meets Wall Street
* International banking division's profit slips
* Canada's third-largest lender caps off strong bank
By Cameron French
TORONTO, March 4 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
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
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
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."