Bank of Nova Scotia fails third quarter as provisions hit $ 2.18 billion


The Bank of Nova Scotia fell short of profit expectations in the third quarter of its fiscal year as its international banking business degenerated into a loss and in the midst of a double-digit increase in provisions for credit losses.Net income for the three months ending July 31 was $ 1.30 billion, up from $ 1.98 billion a year earlier. Per share, Scotia earned $ 1.04; analysts on average expected the bank to earn $ 1.10.

The bank set aside $ 2.18 billion in the quarter for potentially deteriorating loans, an 18% increase from the previous quarter, when Scotia’s credit loss provisions hit 1.85 billion of dollars.

“Scotiabank continues to focus on its customers while remaining operationally resilient during the COVID-19 pandemic,” President and CEO Brian Porter said on Tuesday. “The bank has strong capital and liquidity ratios and has conservatively reserved estimated future loan losses. ”

Scotia’s sprawling international banking division posted a net loss of $ 28 million last quarter, compared to a profit of $ 844 million a year earlier. The third fiscal quarter was marked by another strong increase in provisions for credit losses, which reached $ 1.28 billion, from just over $ 1 billion in the previous quarter. In a statement, Scotia noted that economic activity in Latin America was hampered during the quarter by the spread of COVID-19.

The bank’s Canadian operations also suffered in the quarter, with earnings falling to $ 429 million from $ 910 million a year earlier. Scotia blamed the erosion of earnings on higher provisions for credit losses and lower net interest income.

Scotia’s Global Banking and Markets unit provided some relief, as that division’s profits jumped 60 percent year over year to $ 600 million.

Wealth management also performed well in the third quarter of the year, with this unit’s net income increasing 6% to $ 321 million.


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