Canada’s Scotiabank profit rises on lending strength in international unit

TORONTO, Aug 23 (Reuters) – Bank of Nova Scotia reported third-quarter profit a touch below estimates on Tuesday, but earnings rose from a year earlier as strong loan growth, particularly in its international business helped offset challenges in its wealth and capital markets units.

Canada’s third-largest lender said net income excluding one-off items was C$2.61 billion ($2 billion), or C$2.10, in the three months ended July 31, compared with C$2.56 billion, or C$2.01, a year earlier. Analysts had expected C$2.11 a share, according to Refinitiv data.

Provisions for credit losses (PCL) rose, to C$412 million from C$380 million, although they were lower than the C$535.6 million that analysts had expected.

Markets have been expecting PCLs to begin to tick higher, reversing the trend of the past several quarters, as banks brace for a rise in potential delinquencies driven by rising inflation and interest rates.

Adjusted pre-tax, pre-provision earnings fell 1% from a year earlier.

Still, strong loan growth and higher margins resulting from rising interest rates gave Scotiabank’s earnings a boost.

Its international business reported a 30% jump in adjusted earnings, driven by strong loan growth and margin expansion.

The same factors drove a 12% increase in earnings in its Canadian unit.

That helped offset a 26% decline in profit in its global banking and markets business driven by challenging market conditions. Lower fees due to market volatility drove earnings 3% lower in its wealth management business.

Scotiabank reported overall net profit of C$2.59 billion, or C$2.09 a share, up from C$2.54 billion or C$1.99, a year ago.

($1 = 1.3021 Canadian dollars)

Reporting by Nichola Saminather in Toronto and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri and Susan Fenton

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