Record High Revenue for Scotiabank

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The Bank of Nova Scotia has reported its quarterly net income of $872 million which is down 11% from a year ago profit of $980 million although their revenue grew 12% to a record high.Scotiabank has earned 81 cents per share in its second quarter which ended April 30th, down 16 cents from the 97 cents per share it was a year ago.

With bigger loan loss provisions across all business lines, however it’s earning was revived 4% from the first quarter. CEO Rick Waugh noted that the solid performance in Canadian and international banking and a record quarter from Scotia Capital allowed them to earn through higher credit provisions and a challenging economic environment.

Scotiabank benefited from a stable more stable interest margin in Canadian banking and widening margins in Scotia Capital and international banking in which the overall net interest income grew.

The total revenue was just under $3.6 billion, higher from last year’s $3.17 billion as the net interest income grew 11.4% to $2.09 billion.

Provisions for credit losses bloated to $489 million compared with to its being $153 million in the second quarter last year. New provisions included a $60 million sectoral allowance for the deteriorating automotive business.

Return on equity was 17.6% which is down from the 21.4% last year but it was well above the levels reported at other big Canadian banks this week. Bank of Montreal (BMO) was 8.1%, Toronto Dominion Bank (TD) was at 6.6%, and Canadian Imperial Bank of Commerce (CIBC) negative 3.5%.

Scotia Capital’s wholesale division had a record high quarter due to widening loan spreads and increased customer activity in corporate and investment banking.

With the unpredictable impact of the global economy the financial markets will continue to pressure the bank’s results this years, we can only hope that there are not many negative consequences to come.

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