By Ketki Saxena
Investing.com -- Bank of Nova Scotia (TSX:BNS) kicked off earnings season for the Big Six Canadian banks today, with profits largely in line with analyst estimates.
Provisions for credit losses climbed, while revenue from capital markets activity and wealth management collapsed, while strong loan growth, particularly in its international business helped partially offset declines elsewhere.
Despite what Scotia’s CEO today referred to “a more challenging macro environment”, earnings were still up from a year earlier.
Scotiabank earned $2.59 billion, or $2.09 per share, compared with $2.54 billion, or $1.99 per share, in the same quarter a year earlier. Adjusted to exclude certain items, Scotiabank said it earned $2.10 per share, short of the $2.13 consensus analyst estimate had expected.
The bank kept its quarterly dividend constant at $1.03 per share and announced it had bought back five million common shares in the quarter.
As called for by analysts given macro volatility, global banking and capital markets profit were sharply lower, down 26% to $378 million. Advisory fees were also lower. The quarter’s sharp decline in equity markets also pressured wealth management profit down 3% to $ 376 million.
As had been widely expected, the bank increased its provisions for credit losses, the funds set aside by banks to cover potential loans that may default. Provisions for credit losses increased to $ 412 million in the quarter, compared to $ 380 million a year earlier.
Loan balances rose rapidly both in Scotia’s international and Canadian banking divisions. International banking profit soared 30% to $ 625 million, while profit from Canadian banking was up 12% to $1.2 billion. Despite sharply rising interest rates, the Canadian banking division saw a 23% rise in business loans and a 14% increase in residential mortgages.