Scotia Q3 profit in line despite shaky capital markets and higher loan provisions
BNN Bloomberg
Bank of Nova Scotia reported fiscal third-quarter profit Tuesday that was essentially in line with expectations, as growth in its bread and butter banking operations helped mitigate a jump in loan loss provisions and a sharp downturn in its capital markets operations.
“Overall, it was not a bad quarter, but we believe that the market’s focus will be on the headline miss and investors will be looking ahead to the uncertain outlook against the backward-looking growth generated in the third quarter,” stated John Aiken, Barclays’ head of research in Canada, in a note to clients.
Profit from Scotia's Canadian banking unit climbed 12 per cent year-over-year to $1.21 billion, as higher rates boosted its net interest income and as loan growth jumped 14 per cent from a year earlier.
As analysts anticipated heading into the quarter, Scotia set aside more funds for loans that could eventually go bad. In the Canadian division alone, it booked $93 million provisions; by contrast, it released funds from its provisions in each of the previous three quarters.
