Bank of Nova Scotia’s third-quarter profit fell 34 per cent as it set aside nearly $2.2-billion to cover potential loan losses, wiping out earnings from its international banking division and overshadowing strong results from capital markets.
Canada’s third-largest bank earned $1.3-billion, or $1.04 a share, in the three months that ended July 31, compared with $1.98-billion, or $1.50, a year ago.
On average, analysts had expected Scotiabank to earn $1.12 a share, according to data from Refinitiv.
The bank held its quarterly dividend steady at 90 cents a share, in keeping with guidance from Canada’s banking regulator.
Provisions for credit losses – the funds banks set aside to cover loans that could go sour – surged by 206 per cent from a year ago, as Scotiabank absorbed the impact of the more recent spread of novel coronavirus in Latin American countries where it has a significant presence. The $2.18-billion in new provisions eclipsed the $1.85-billion the bank had already earmarked in the previous quarter, after the onset of the pandemic, but the bank views the third-quarter level as “the peak,” said chief risk officer Daniel Moore.
“We are at the high-water mark. We’re seeing the tide go out from here,” he told analysts on a conference call.
More than four-fifths of the increase in provisions was to cover loans that are still being paid back but could suffer future losses, based on economic models. And much of that increase was in Scotiabank’s international arm, which is concentrated in Mexico, Peru, Chile and Colombia. As a result, profit from abroad that would have been nearly $1.2-billion before provisions and taxes was slashed to just $26-million, down 96 per cent from a year ago.
After a later onset of COVID-19 in Latin America created a lagging impact on the bank’s international results, there are signs that some of those countries are “on a recovering path,” said Ignacio Deschamps, head of international banking and digital transformation. Yet that recovery is likely to take some time. “For sure, 2021 is going to be a transitional year,” he said.
“We are most concerned about the medium-term prospects for the bank’s international business, which we believe could see materially suppressed earnings power in a low-rate environment,” said Mike Rizvanovic, an analyst at Credit Suisse, in a note to clients.
In Canada, Scotiabank still has 236,000 loans worth $41.5-billion – mostly mortgages, but also credit-card debt and personal loans – that are deferring payments, and a further 2,330 loans totalling $18.1-billion in deferrals across its international markets. About 90 per cent of those deferrals are expected to expire by Oct. 31, but Mr. Moore said the bank has seen encouraging signs as 92 per cent of borrowers whose deferrals have already expired are once again on time with their payments.
Profit from Canadian retail banking, which is Scotiabank’s largest division, fell 53 per cent to $429-million, largely because of higher provisions for loan losses. But lending margins also tightened by 18 basis points, presenting a longer-term challenge to the bank’s key source of profits (100 basis points equal one percentage point).
A buoyant quarter from the capital markets division delivered its best-ever quarterly profit of $600-million, up 60 per cent year-over-year thanks to strong revenue from trading and investment banking, helping to offset some of the pressure on other parts of the bank. And the bank’s wealth management arm, rebuilt through acquisitions in recent years, improved profits by 6 per cent to $321-million amid rebounding markets.
Scotiabank’s capital levels also bounced back, with its common equity Tier 1 (CET1) ratio rising to 11.3 per cent, after falling to the lowest level of any major Canadian bank at 10.9 per cent last quarter.
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Union representing Canadian auto workers announces new deal with Ford – Global News
TORONTO – Unifor says Ford Motor Company of Canada Ltd. has agreed to spend nearly $2 billion on its Canadian plants as part of collective bargaining negotiations.
Under the tentative deal, Unifor National President Jerry Dias says $1.95 billion will be invested in Ford’s Canadian plants, including $1.8 billion toward the production of five electric vehicles in Oakville, Ont., and an engine contract that could yield new jobs in Windsor, Ont.
Dias says the 6,300 union workers at Ford will vote on the deal this weekend.
Talks between the union and the automaker came to a head on Monday ahead of a bargaining deadline of 11:59 p.m eastern time.
Workers had previously voted to support a strike if a deal could not be reached by that deadline, with the future of the Oakville, Ont. plant potentially on the line.
Once agreed to by union members, Ford’s deal on new products lines, shifts, wages, pensions and benefits will set the tone for upcoming talks with Fiat Chrysler Automobiles and General Motors.
© 2020 The Canadian Press
Tesla slashes the price of the Powerpack by 27% on Battery Day – Electrek
Tesla has greatly reduced the price of its Powerpack battery system today ahead of its Battery Day event.
Powerpack hasn’t been talked about much lately.
It has been relegated to the background since Tesla introduced the bigger Megapack for utility-scale projects.
However, Tesla is still making the product and it is still being used for many commercial-scale projects, like Electrify America’s charging stations.
Now we’ve learned that Tesla is slashing the price of the Powerpack.
Earlier this year, Electrek reported that Tesla revealed the price of the battery system through its new commercial solar configurator.
At the time, the Powerpack was being sold for $172,000 before incentives and including a commercial inverter.
Now a tipster pointed out to Electrek that Tesla has updated the pricing today, reducing the Powerpack to $125,000:
It brings the cost of the system down to $539 per kWh, but that’s including the expensive commercial inverter.
The price per kWh goes down significantly when adding more Powerpacks to the same inverter system.
That’s also without incentives.
Tesla’s price guide for commercial solar is only available in California, where they have strong incentives for energy storage for self-generation.
According to Tesla’s configurator, a Powerpack can be added to a 40 kW solar system for just $26,000 after incentives.
The price change happens as Tesla is about to announce new batteries at its Battery Day event later today.
While the timing is interesting, it could be completely coincidental, but I guess we will know in just a few hours.
It is a significant price drop before incentives, but the system was already expensive to start with.
The price difference might also be on the inverter side and not the battery side.
Either way, it is worth noting, especially considering the crazy incentives in California. If I was a business owner in California, I would certainly consider this solution.
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Canada signs deal with VBI Vaccines to develop coronavirus candidate by 2022 – Global News
Canada will contribute around 75% of the U.S.-based company’s development costs and C$55.9 million ($42.2 million) for the project.
VBI Vaccines said last month that together with the National Research Council Canada it was investigating the vaccine candidate, VBI-2900, in preclinical trials.
As per the agreement, signed last week, the company’s Ottawa-based unit is obligated to complete the vaccine development in or before the first quarter of 2022.
Ottawa signs 2 new COVID-19 vaccine deals for Canada
There are currently no approved vaccines for COVID-19, but around 38 vaccines are being tested in humans around the world.
© 2020 Reuters
Union representing Canadian auto workers announces new deal with Ford – Global News
Canada at 'crossroads' in battling COVID-19 as cases accelerate nationally, officials say – CBC.ca
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