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Bank of Nova Scotia BNS-T reported lower third-quarter profit that met analysts’ expectations as climbing reserves for potentially bad loans and expenses weighed on results.
Scotiabank earned $2.21-billion, or $1.72 per share, in the three months that ended July 31. That compared with $2.61-billion, or $2.10 per share, in the same quarter last year.
Adjusted to exclude certain items, including additional income taxes, the bank said it earned $1.73 per share. That matched the $1.73 per share analysts estimated, according to Refinitiv.
“The Bank delivered another quarter of stable earnings, strengthening our capital and liquidity metrics while prudently increasing loan loss allowances and managing expense growth as we navigate this period of economic uncertainty,” Scotiabank chief executive officer Scott Thomson said in a statement.
The bank kept its quarterly dividend unchanged at $1.06 per share.
Bank of Nova Scotia is the fourth major bank to report earnings for the three months that ended on July 31. Bank of Montreal also released results on Tuesday, posting profit that missed analyst expectations. Royal Bank of Canada and Toronto-Dominion Bank reported earnings last week. National Bank of Canada is set to report on Wednesday, and Canadian Imperial Bank of Commerce will close out the week on Thursday.
In the quarter, Scotiabank set aside $819-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $81-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, Scotiabank set aside $412-million in provisions.
Total revenue rose 4 per cent in the quarter to $8.09-billion, and expenses increased 9 per cent to $4.56-billion.
Profit from Canadian banking was $1.06-million, down 12 per cent from a year earlier, as a side in expenses driven by higher staffing costs offset an uptick in revenue. But loan balances were up 3 per cent year over year.
Profit from the bank’s international division fell to $647-million from $677-million in the same quarter a year earlier as costs and provisions for credit losses rose.
The global wealth management division generated $368-million of profit, down from $378-million in the same quarter a year earlier. And capital markets profit rose 15 per cent to $434-million as a boost in revenue offset higher expenses.
