TORONTO –
Scotiabank saw its earnings climb in its first quarter and beat expectations as it saw gains across its main business lines, including international banking where it is already benefiting from higher interest rates.
The Toronto-based bank said Tuesday that it had a first-quarter profit of $2.74 billion for the quarter ending Jan. 31, up from nearly $2.40 billion a year earlier.
“Double-digit loan growth continued in Canadian banking while international banking and global bank and markets also delivered accelerating loan growth in conjunction with improving margin performance,” chief executive Brian Porter told a conference call with financial analysts.
The Bank of Canada is widely expected by economists to raise its key interest rate target Wednesday, but Scotiabank has already started to benefit from rising rates in its international markets, including Chile and Mexico.
Overall its international banking net interest margin was up seven points in the quarter compared with last year, which added $23 million in net interest income.
Despite the rate increases in its international markets, the bank still sees steady loan growth demand, said Ignacio Deschamps, group head of international banking.
“Overall, I’m very optimistic about loan growth. We are growing at three per cent, as I said in this for two quarters already. So that is our expectation, that we will continue to grow two to three per cent per quarter.”
Emphasizing its confidence in its international business, Scotiabank announced Monday it was buying Grupo Said’s 16.8 per cent stake in Scotiabank Chile in a deal valued at $1.3 billion in cash and shares. The deal will increase its ownership stake in Scotiabank Chile to 99.8 per cent.
Porter said Scotiabank Chile has exceeded pre-COVID levels of profitability since the first quarter of last year, and that the deal will add about $35 million per quarter to earnings in international banking.
“The transaction allows us to further invest in a business and an economy we know very well,” Porter said.
Barclays analyst John Aiken said in a note that the last quarter represented another improvement for Scotiabank’s international division.
“The segment saw a lift in its margins, which could represent an inflection point, and volume growth that continues to be masked somewhat by the strength of the Canadian dollar.”
He said Scotiabank didn’t get quite the lift from capital markets seen so far from other Canadian bank results, but that it was a solid quarter that like other banks came in above expectations.
Scotiabank reported Tuesday its profit amounted to $2.14 per diluted share for the quarter ended Jan. 31, up from $1.86 per diluted share a year ago.
Revenue totalled nearly $8.05 billion, compared with $8.07 billion in the same quarter last year.
Provisions for credit losses totalled $222 million, down from $764 million a year ago.
On an adjusted basis, Scotiabank says it earned $2.15 per diluted share in its latest quarter, up from an adjusted profit of $1.88 per diluted share a year ago.
Analysts on average had expected an adjusted profit of $2.05 per share, according to financial markets data firm Refinitiv.
Scotiabank said its Canadian banking business earned $1.20 billion, up from $911 million a year ago, while its international banking operations earned $630 million, up from $477 million in the same quarter last year.
The bank’s global wealth management business earned $415 million, down from $421 million a year ago, and its global banking and markets business earned $561 million, up from $543 million.
The bank’s other category reported a loss of $67 million, compared with a profit of $46 million a year ago.
This report by The Canadian Press was first published March 1, 2022.
