Scotiabank reports record annual profit
The Scotiabank logo is seen outside headquarters in Toronto on December 3, 2002. THE CANADIAN PRESS/Kevin Frayer
TORONTO, Cananda - Bank of Nova Scotia (TSX:BNS) posted a record annual profit of nearly $6.7 billion on Friday, but fell just shy of investor expectations for its latest quarter.
The bank said it earned a fourth-quarter profit of $1.7 billion or $1.30 per share, up from $1.52 billion or $1.18 per share a year ago.
However, Scotiabank's core earnings were $1.31 per share, a penny short of the average analyst estimate compiled by Thomson Reuters or $1.32 per share.
Helping drive the results was strong growth at its Canadian banking operations, boosted by the acquisition of ING Direct Canada as well as improved margins, lower loan loss provisions and asset growth.
Return on equity for the quarter was 15.7 per cent, down from 16.4 per cent a year ago, when there were fewer shares outstanding.
"The bank's enterprise strategy and diversified business model continue to differentiate us from our competitors in Canada and internationally and once again have enabled us to deliver strong results," said Scotiabank president and chief executive Brian Porter, who took over the top job at the bank last month.
Barclays analyst John Aiken noted Scotiabank shares could be under pressure Friday.
"The miss against consensus, augmented by substantial margin compression in international, will likely generate negative sentiment on the name today," Aiken wrote in a note to clients.
"While we do not view the combined earnings negatively, and believe that there are several positives outside of the margin issues in international banking, investors have been looking for reasons to take profits during this earnings season and we see no reason to believe that this will not hold true for Scotia."
As this week began, Canadian banking stocks were up about 20 per cent as a group year-to-date, but the whole sector has been declining since Bank of Montreal issued its financial report on Tuesday.
Scotiabank shares closed Thursday at $63.32, down from $65.21 at the end of last week — a decline of 2.9 per cent over four days. However, Scotiabank shares began trading this year at $58.22 and remained up nearly nine per cent for 2013.
Following its fourth-quarter and full-year earnings report, Scotiabank's shares opened at $63.21, less than a percentage point below the previous close.
Scotiabank's Canadian banking group earned $593 million for the quarter, up from $481 million a year ago.
Scotiabank's international operations earned $420 million for the quarter, up from $401 million in the fourth quarter of 2012.
The bank noted the improvement came with strong loan growth in Latin America and Asia, and higher banking fees, partly offset by a decline in the interest margin, higher provisions for credit losses and expenses.
The international operations also saw a $25 million after-tax gain on the sale of a non-strategic business in Peru this quarter.
The bank's global wealth management business earned $318 million, up from $294 million a year ago on growth in its mutual fund and insurance business.
Global banking and markets earned $336 million, down from $395 million.
For the full year ended Oct. 31, Scotiabank reported a profit of $5.15 per share, compared with a profit of $6.47 billion or $5.22 per share a year ago.
Revenue for the full year was $21.3 billion, including $5.4 billion in the fourth quarter. A year earlier, Scotiabank had $19.7 billion of revenue for fiscal 2012, including $1.83 billion for the fourth quarter.