Scotiabank earnings in Canada rise on strength of lending in international unit

A woman leaves a branch of the Bank of Nova Scotia (Scotiabank) in Ottawa, Ontario, Canada, May 31, 2016. REUTERS/Chris Wattie/File Photo

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TORONTO, Aug 23 (Reuters) – The Bank of Nova Scotia reported third-quarter profit slightly below estimates on Tuesday, but profits rose from a year earlier on strong loan growth, particularly in its international business, having helped offset the difficulties in its wealth and capital markets. units.

Canada’s third-largest lender said net profit excluding exceptional items was C$2.61 billion ($2 billion), or C$2.10, in the three months ended July 31, compared to 2.56 billion Canadian dollars, or 2.01 Canadian dollars, a year earlier. Analysts had expected C$2.11 per share, according to Refinitiv data.

Provisions for credit losses (PCL) increased from C$380 million to C$412 million, although lower than the C$535.6 million forecast by analysts.

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Markets expected PCLs to start rising, reversing the trend of recent quarters, as banks brace for an increase in potential defaults due to rising inflation and interest rates .

Adjusted profit before tax and before provisions fell 1% compared to the previous year.

Nonetheless, strong loan growth and higher spreads resulting from higher interest rates boosted Scotiabank’s earnings.

Its international business posted a 30% rise in adjusted profit, driven by strong loan growth and margin expansion.

The same factors resulted in a 12% increase in profits for its Canadian unit.

This helped offset a 26% drop in earnings from its global banking and capital markets business due to difficult market conditions. Lower fees due to market volatility led to a 3% drop in earnings from its wealth management business.

Scotiabank reported overall net income of C$2.59 billion, or C$2.09 per share, compared with C$2.54 billion or C$1.99 a year ago.

($1 = 1.3021 Canadian dollars)

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Reporting by Nichola Saminather in Toronto and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri and Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

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