Scotiabank beats expectations as its third-quarter profit declines
Published Tuesday, August 27, 2013 8:39AM EDT
Last Updated Tuesday, August 27, 2013 12:24PM EDT
TORONTO -- Scotiabank (TSX:BNS) delivered third-quarter earnings that beat analyst expectations on Tuesday, as the bank raised its dividend.
Canada's most international bank earned $1.77 billion compared with $2.05 billion a year earlier when it benefited from the sale of its headquarters in Toronto.
The results were equal to $1.37 per share compared with $1.69 per share a year ago.
On an adjusted basis, the bank earned $1.39 per share, coming in above analyst expectations of $1.31 per share, according to a survey by Thomson Reuters, but down from $1.70 cents per share a year ago.
Revenue rose slightly to $5.52 billion from $5.51 billion.
Scotiabank also increased its quarterly dividend by two cents to 62 cents per share.
Shares of the bank fell 66 cents to $58.03 near midday on the Toronto Stock Exchange.
National Bank analyst Peter Routledge said the results were close to what he expected.
"It wasn't like it was a disaster," he said. "It was a good quarter, but a lot less good than we had hoped."
Routledge pointed to Scotiabank's international operations as an area where results fell short of his expectations.
International banking profits rose 26 per cent to $494 million, but the increase of $102 million came mostly from an after-tax benefit of $150 million from the sale of an asset in Thailand.
He also said that the banks overall expenses increased from the second quarter to nearly $3 million, even though they were down from a year earlier, most likely on costs related to acquisitions.
Scotiabank noted that last year's results benefited from an after-tax gain of $614 million on the sale of Scotia Plaza in Toronto, equivalent to 53 cents per share.
The most recent quarter included a net benefit of seven cents per share related to non-recurring items in international banking, including a gain on the sale of a subsidiary by an associated corporation.
Adjusting for both these items, diluted earnings per share grew 12 per cent, the bank said.
"We are very satisfied with our results and our top-line revenue growth this quarter, reflecting the value of our diversified business model," CEO Rick Waugh said in a statement.
"We anticipate achieving our 2013 financial goals, as outlined in our guidance at the beginning of the year and are well positioned for 2014," he said.
In the Canadian retail banking division, net income rose 13 per cent to $590 million, fuelled by the acquisition of ING Bank of Canada.
The global wealth management division reported net income rose 18 per cent to $327 million, helped by higher contributions from the bank's investment in CI Financial.
Provisions for credit losses, or the money set aside to cover bad loans, declined by $88 million.
Scotiabank has operations across Latin America and the Caribbean and more than 75,000 employees in 55 countries.