Scotiabank beats expectations for mortgage and commercial loan growth

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Canada’s third-largest lender reported aggregate net income of $2.75 billion

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The Bank of Nova Scotia posted adjusted net income of $2.75 billion in the first quarter, up from $2.4 billion a year ago, as the bank’s four lines of business saw their incomes increase.

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Overall adjusted earnings were $2.15 per share, compared to $1.88 a year ago. Analysts had expected earnings of $2.05 per share, according to IBES data from Refinitiv.

In the Canadian banking division, adjusted profit rose 32% to $1.2 billion from the same period last year, driven by strong loan growth and customer demand.

The international banking sector saw its adjusted profit increase by 38%, to $552 million, thanks to strong growth in mortgage and commercial loans.

The company’s global wealth management ($419 million) and global banking and markets ($561 million) divisions also posted higher adjusted earnings, fueled by higher revenue.

“We are very pleased with our start to fiscal 2022. Strong loan growth and fee income translated into strong earnings contribution from each of our four businesses,” said Brian Porter, President and chief executive officer of Scotiabank, during a conference call Tuesday morning.

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“Double-digit loan growth continued in Canadian Banking, while International Banking and Global Banks & Markets also saw an acceleration in loan growth, alongside improved margin performance. . Credit trends remain favorable thanks to our high quality portfolio.

Porter also added that Scotiabank is deploying capital to support future organic earnings growth as well as share buybacks.

John Aiken, principal analyst and head of research at Barclays, told clients that Scotiabank had a quarter of strong earnings, largely due to improvements in the international segment.

“The (international) segment saw margins increase, which may represent an inflection point, and volume growth that continues to be somewhat masked by the strength of the Canadian dollar,” Aiken wrote.

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“While Scotia benefited from the strength in financial markets, we would say it was not to the same degree, on an absolute basis, as some of its peers,” he added.

“Overall, we believe this quarter has been strong and provides another additional point supporting the turnaround in international that management is advocating.”

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The lender further invested in its international division this week. On Monday, Scotiabank agreed to buy the remaining 16.8% minority stake in Scotiabank Chile for $1.3 billion.

National Bank Financial analyst Gabriel Dechaine also attributed Scotiabank’s earnings to higher revenue and lower provisions for credit losses.

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