Scotiabank reports $2.31B fourth-quarter profit, up from $2.27B a year ago

Scotiabank reports $2.31B fourth-quarter profit, up from $2.27B a year ago

TORONTO — The Bank of Nova Scotia is expecting a strong performance from its Canadian banking segment next year driven by higher contributions from business banking, credit cards and growth of Tangerine digital banking.

The bank’s domestic operations are forecast to contribute 30 to 40 per cent of all bank earnings in 2020, with international banking at 25 to 30 per cent, global banking and markets at 15 to 20 per cent and global wealth management at about 15 per cent.

“In Canada, economic activity remains solid in light of strong population growth driven by immigration, robust employment and wage growth, accommodative monetary policy, a stronger housing market and good levels of business and consumer confidence,” CEO Brian Porter said Tuesday during a conference call to discuss fourth-quarter results.

“We continue to believe that a recession is unlikely here in Canada or in the U.S. in the near term.”

The bank anticipates modest improvement in global growth in 2020 despite trade tensions between the U.S. and China. But it sees a slight slowing of growth in the U.S. as the waning impacts of the 2018 tax decreases and trade uncertainty weigh on the economy despite resilient consumer confidence.

Scotiabank says competition in the credit card market will intensify as Air Canada relaunches its Aeroplan loyalty program next spring.

The bank said it earned $2.31 billion for the three-month period ended Oct. 31 compared with a profit of $2.27 billion in the same quarter last year. The profit amounted to $1.73 per diluted share for the quarter, up from $1.71 a year ago.

Adjusted for acquisitions and divestitures, Scotiabank says it earned $1.82 per diluted share, up from $1.77 per diluted share last year.

The results matched analyst expectations, according to financial markets data firm Refinitiv.

Porter said the bank delivered improved fourth-quarter results to end a productive year for the bank.

“We made considerable strides in repositioning the bank as a stronger, more focused business while maintaining high degree of diversification to manage risk and optionality to fuel future growth,” he told analysts.

Over the past four years it simplified the bank’s footprint, improved earnings quality and provided a path to higher capital ratios, which have reduced its risk profile by exiting higher risk and lower growth jurisdictions, Porter added.

“We consider the bank to be downturn ready. Our integration efforts were highly successful and are now complete. This will provide continued benefits to our customers and shareholders for years to come.”

The overall increase in its fourth-quarter profit came as Scotiabank reported its Canadian banking operations earned $1.14 billion, up from nearly $1.12 billion in the same quarter last year. Revenues were up four per cent to $3.57 billion with loans growing five per cent, residential mortgages up five per cent, personal loans three per cent and credit cards six per cent. Business lending was up 11 per cent and deposits nine per cent.

Canadian Wealth Management adjusted earnings increased 15 per cent year-over-year.

Scotiabank’s international banking division earned $823 million, up from $804 million as Chile earnings were up 25 per cent, while global banking and markets earned $405 million, down from $416 million.

Meanwhile, provisions for credit losses totalled $753 million, up $163 million or 28 per cent compared with a year ago. Scotiabank said the increase came due to higher provisions in both the retail and commercial portfolios in line with organic and acquisition-driven asset growth.

Scotiabank’s common equity tier 1 ratio, a key measure of its financial health, was 11.1 per cent at Oct. 31, the same as a year ago.

The bank is changing the timing of its dividend decision but plans to maintain the payout ratio at 40 to 50 per cent.

Dividend hikes will be decided in the second quarter in line with other large North American banks instead of twice a year.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

SARS-CoV-2 virus particles, which causes COVID-19, emerge from the surface of cells isolated from a patient in the U.S. and cultured in a lab in a 2020 electron microscope image. THE CANADIAN PRESS/AP-HO, National Institute of Allergy and Infectious Diseases - Rocky Mountain Laboratories
Alberta adds 463 new COVID-19 cases on Sunday

The central zone has 818 active cases

Red Deer teacher Janelle Van Tetering had her students write letters to attach to Blankets of Hope, which will be donated to the Mustard Seed. (Contributed photo)
Red Deer teacher, students donate ‘Blankets of Hope’ to those in need

A Red Deer teacher and her students are giving warm blankets and… Continue reading

RCMP have charged a Sylvan Lake man for allegedly defrauding five people of more than $100,000.
Advocate file photo
20-year-old woman killed in collision: Blackfalds RCMP

A 20-year-old woman was killed in a collision on Saturday, says Blackfalds… Continue reading

Patrick Malkin, co-owner of The Granary Kitchen, says he wants the provincial government to lift COVID-19 restrictions that shutdown in-person dining. (File photo by Advocate staff)
Red Deer restaurant owner ‘frustrated’ in-person dining restrictions are still in place

Dr. Deena Hinshaw announced the restrictions won’t yet be eased this past Thursday

As of Friday, Alberta has under 10,000 active COVID-19 cases. (Image courtesy CDC)
Alberta identifies 573 new COVID-19 cases, 13 deaths on Saturday

There are currently 9,727 active cases of the virus in the province

Terrance Josephson of the Princeton Posse, at left, and Tyson Conroy of the Summerland Steam clash during a Junior B hockey game at the Summerland Arena in the early spring of 2020. (John Arendt - Summerland Review)
QUIZ: How much do you know about hockey?

Test your knowledge of Canada’s national winter sport

Toronto Maple Leafs' Alexander Kerfoot, centre, tries to get the puck past Calgary Flames goalie Jacob Markstrom, right, as Noah Hanifin looks on during first period NHL hockey action in Calgary, Sunday, Jan. 24, 2021.THE CANADIAN PRESS/Jeff McIntosh
Morgan Reilly’s three assists lifts Maple Leafs to 3-2 win over Flames

Leafs 3 Flames 2 CALGARY — Morgan Reilly’s three assists helped the… Continue reading

Green Bay Packers' Adrian Amos (31) reacts after intercepting a pass intended for Tampa Bay Buccaneers' Mike Evans during the second half of the NFC championship NFL football game in Green Bay, Wis., Sunday, Jan. 24, 2021. (AP Photo/Jeffrey Phelps)
Road warriors: Bucs win 31-26 at Green Bay, reach Super Bowl

GREEN BAY, Wis. — Tom Brady and the Tampa Bay Buccaneers’ road… Continue reading

People arrive to be tested for COVID-19 at a clinic in Montreal, Sunday, January 24, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Too soon to know if Canada’s COVID-19 case decline will continue, Tam says

MONTREAL — It’s still too soon to know whether the recent downward… Continue reading

Flowers are seen at the front door of Dr. Denis Vincent's dental practice in North Vancouver, B.C. on March 31, 2020, after he died of COVID-19. The British Columbia Dental Association has written a letter to Premier John Horgan urging him to include dentists in a priority group for the COVID-19 vaccine. THE CANADIAN PRESS/Jonathan Hayward
Dentists, teachers disappointed they won’t be prioritized for vaccine in B.C.

VANCOUVER — Dentists and teachers are among the groups that are disappointed… Continue reading

Indiana Pacers guard Justin Holiday (8) shoots over Toronto Raptors forward DeAndre' Bembry (95) during the first half of an NBA basketball game in Indianapolis, Sunday, Jan. 24, 2021. (AP Photo/Michael Conroy)
Anunoby’s hot hand helps short-handed Raptors beat Pacers

Raptors 107 Pacers 102 INDIANAPOLIS — OG Anunoby scored a season-high 30… Continue reading

A woman injects herself with crack cocaine at a supervised consumption site Friday, Jan. 22, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Drug users at greater risk of dying as services scale back in second wave of COVID-19

OTTAWA — Under fluorescent lights, Wendy Muckle surveys the supervised consumption site… Continue reading

The Canada Revenue Agency (CRA) headquarters Connaught Building is pictured in Ottawa on Monday, Aug. 17, 2020. nbsp; THE CANADIAN PRESS/Sean Kilpatrick
Taxpayers’ watchdog sees complaints spike, raising worries about pandemic tax season

OTTAWA — Canada’s taxpayers’ ombudsperson says his office has seen a steep… Continue reading

Most Read