Canadian financial services provider Bank of Nova Scotia (BNS, BNS.TO) or Scotiabank Tuesday reported higher profit for the second quarter, as revenues improved helped by the acquisition of ING Bank of Canada or ING DIRECT. The company announced a quarterly dividend of 60 Canadian cents per common share.
Rick Waugh, Scotiabank CEO, said, ''We continue to have very strong results this quarter driven by very good revenue growth. Each business line made a solid contribution to these good results. Our diversification and straightforward business model have allowed us to take advantage of opportunities to grow.''
Net income attributable to common shareholders increased to C$1.479 billion from C$1.336 billion in the prior year. Earnings per share improved to C$1.23 from C$1.15.
Adjusted earnings per share totaled C$1.24 while it was C$1.16 last year. On average, 17 analysts polled by Thomson Reuters expected earnings of C$1.26 per share for the quarter. Analysts' estimates typically exclude special items.
The lender attributed the growth in profit to recent acquisitions, higher net interest income, growth in transaction-based fees and wealth management revenues as well as increased net gains on investment securities.
On a taxable equivalent basis, revenue increased to C$5.30 billion from C$4.77 billion, with acquisitions accounting for C$202 million. Analysts expected revenues of C$5.17 billion.
Total revenue climbed to C$5.22 billion from C$4.70 billion as net interest income improved over 12 percent to C$2.78 billion amid asset growth.
Net interest income benefited from the acquisition of ING Bank of Canada and growth in assets, primarily Canadian residential mortgages, retail and commercial loans in International Banking and corporate loans. Non-interest revenue advanced 10 percent to C$2.44 billion.
Provision for credit losses climbed to C$343 million from C$264 million due to higher provisions across all business lines. The largest increases were in International retail banking and Canadian commercial banking, where the bank provided for one large account.
Segment-wise, at Canadian Banking, net income attributable to equity holders increased 19 percent to C$547 million, driven by the acquisition of ING Bank of Canada, strong organic asset growth and gains on investment securities.
In International Banking, net income attributable to equity holders rose 5 percent to C$419 million, amid strong loan growth in Latin America, higher gains on investment securities and a stronger contribution from associated corporations.
Profit climbed 12 percent to C$326 million in the Global Wealth Management unit due to strong results from the wealth management and insurance businesses.
Profit fell 7 percent in Global Banking and Markets to C$361 million due to market-driven challenges in the commodities and precious metals businesses, along with lower underwriting and advisory fees.
Return on equity was 16.2 percent compared to 18.6 percent last year. Tier 1 capital ratio was 10.7 percent in comparison with 12.2 percent last year.
Looking ahead, Waugh said, ''With strong results in the first six months of this year and the continued execution of our focused strategy, we are well-positioned to successfully achieve our goals for 2013.''
BNS.TO closed up 0.5 percent on Monday at C$59.61.
BNS closed on the NYSE on Friday at $57.48.
For comments and feedback: editorial@rttnews.com