A Scotiabank branch in downtown Toronto.Fred Lum/The Globe and Mail
Bank of Nova Scotia posted third-quarter profit of $2.05-billion on Tuesday, helped by the recent sale of its Toronto head office Scotia Plaza, and is raising its dividend.
Excluding the sale of its marquee building, which it will now rent, the bank's earnings came in at $1.44-billion, compared to $1.3-billion a year ago. (While Scotiabank sold its headquarters for $1.27-billion, the after-tax gain on the sale amounted to $614-million.) The results are slightly above analysts' expectations, and the bank is boosting its quarterly dividend by 2 cents to 57 cents per share.
Scotiabank's core cash earnings per share, the measure that analysts use when forecasting the bank's profits, came in at $1.22, while the consensus had expected $1.19, RBC Dominion Securities analyst Andre-Philippe Hardy said in a note to clients.
Scotiabank is the second large Canadian bank to report its profit this week. Earlier Tuesday morning Bank of Montreal announced results that surpassed expectations.
Lower-than-anticipated credit losses, or soured loans, were a key reason why Bank of Montreal beat estimates. In contrast, Scotiabank's provisions were higher than expected, Mr. Hardy noted.
Scotiabank decided to increase its allowance for credit losses on loans that are currently performing okay by $100-million, a decision that chief executive officer Rick Waugh said was made due to weakening economic forecasts and continuing global uncertainty.
That bank's total provision for credit losses came in at $402-million, up $152-million from a year ago, with the increase driven by its international operations.
With interest rates low and competition strong, Scotiabank and its peers have been grappling with lower margins in their core Canadian lending businesses. Thanks to some of its international operations, including Asia and Peru, Scotiabank's margins were higher than a year ago, but they still declined from the prior quarter.