Bank of Nova Scotia or Scotiabank (BNS, BNS.TO), Canada's third biggest bank by assets, reported Tuesday a decline in second-quarter profit, as the prior year was benefited by acquisition-related gains. The company also said it remains confident of achieving its goals and targets for 2012.
The company's targets for 2012 include generating growth in earnings per common share of 5 to 10 percent and maintaining strong capital ratios, with a Tier 1 ratio of 12.2 percent.
Scotiabank's last year's earnings per share benefited 33 cents per share from non-recurring gains. Excluding these gains, earnings per share were up 8 percent over last year, the company said.
Rick Waugh, president and CEO of Scotiabank said, "We are very pleased with the strong performance of all of our business lines. Our continued focus on sustainable and diversified revenues in high-growth markets, together with ongoing cost-containment initiatives are contributing to solid growth in earnings."
During the quarter, Canadian Banking net income increased 23 percent, International Banking net income was up 14 percent from last year, while Global Wealth Management reported a 40 percent lower net income for the quarter.
The company's quarterly net income attributable to shareholders declined to C$1.34 billion from C$1.53 billion reported last year. On a per share basis, earnings were C$1.15, down from C$1.39 per share in the previous year.
Adjusted earnings per share fell to C$1.18 from C$1.41 per share in the year-ago quarter.
On average, 14 analysts polled by Thomson Reuters expected the company to earn C$1.15 per share for the quarter. Analysts' estimates typically exclude special items.
On a taxable equivalent basis, total revenues grew 1 percent to C$4.77 billion from C$4.71 billion in the same quarter last year, which also exceeded analysts' estimate of C$4.60 billion. Excluding last year's non-recurring gains revenues were up 11 percent.
Net interest income, on a taxable equivalent basis, rose year-over-year to C$2.48 billion. Meanwhile, non-interest revenue declined to C$2.29 billion from C$2.57 billion in the preceding year.
Operating expenses increased to C$2.57 billion from C$2.4 billion in the prior year. Effective tax rate was 22.2 percent, higher than 17.9 percent last year.
Provision for credit losses was C$264 million, slightly lower than C$270 million a year earlier. Tier 1 capital ratio as at April 30 was 12.2 percent, up from 11.4 percent at the end of January 2012.
Separately, the company's board announced a dividend of C$0.55 per common share for the quarter ending July 31.
BNS is currently trading at $50.51, up $1.02 or 2.06 percent, on a volume of 366 thousand shares on the NYSE.
On the Toronto Stock Exchange, BNS.TO trades at C$51.90, up C$1.11 or 2.19 percent, on a volume of 986 thousand shares.
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