The bank said it would increase its quarterly dividend by 10 cents to $ 1 per share and plans to repurchase up to 24 million of its shares as it reported higher fourth-quarter earnings, while also announcing an accelerated shift. to digital for its international banking division.
Shareholder payout increase and share repurchase plan follow a decision by the Office of the Superintendent of Financial Institutions earlier this month to lift COVID-19 restrictions and allow regulated banks and insurers federal government to increase dividends, resume share buybacks and increase executive compensation.
Scotiabank chief executive Brian Porter said on a conference call Tuesday with an analyst that the payment increases come as the bank has more than recovered from the effects of the outbreak.
“Our industries have returned to or exceeded pre-pandemic profit levels. “
He said the pandemic had also accelerated the pace of digital adoption in its international division and that the trend had not reversed as the pandemic receded.
“Obviously the pandemic has changed a lot of things in terms of customer preference… our digital sales in our international operations have doubled since 2019. That’s a lot. “
In response, Scotiabank said it was taking a restructuring charge of $ 126 million as it cut its international branches by 10% and full-time staff by 7% to create savings of a similar amount. next year.
The cuts must continue in its operations in Latin America and the Caribbean, where the bank said it has seen digital adoption rise from 35% to 50% in most countries, and to over 65% in Chile and in Colombia.
Porter said, however, that the bank does not see the same trend nationally.
“The acceleration and adoption of digital internationally is much faster than here in Canada in terms of customer preference, and we need to be aware and aware of this. “
The pandemic has also altered home buying habits and contributed to a sharp rise in house prices in Canada, particularly relative to earnings, but Dan Rees, group head of Canadian banking at Scotiabank, said said he expects lower demand in the future.
“We believe the offer supports price appreciation. And while that persists, if rates go up earlier in the year, as I think many of us expect, we expect that to slow demand. “
He said the money passed down from families would be an important support for mortgage growth in the future, while minimizing risk by noting the high credit scores of borrowers and the lack of growth in HELOC loans.
For the fourth quarter, Scotiabank said its net income was nearly $ 2.6 billion or $ 1.97 per diluted share for the quarter ended Oct. 31, compared to $ 1.9 billion or $ 1.42 per diluted share in the same quarter last year.
Revenue totaled nearly $ 7.7 billion, up from $ 7.5 billion a year ago.
On an adjusted basis, Scotiabank said it earned $ 2.10 per diluted share, up from adjusted earnings of $ 1.45 per diluted share in the fourth quarter of last year.
Analysts on average expected Scotiabank to make adjusted earnings of $ 1.90 per share, according to data compiled by financial market data firm Refinitiv.
The profit increase came as the bank’s credit loss provisions fell to $ 168 million in the fourth quarter, from $ 1.13 billion in the same quarter last year and $ 380 million in the third. trimester.
“The write-backs of credit loss provisions boosted this performance, and this is mainly due to improved macroeconomic forecasts and strong credit quality,” said Carl De Souza, senior vice president and head of banking team at DBRS Morningstar.
He said a key area going forward will be non-mortgage growth, including credit card loan balances that aren’t growing much yet as customers always have extra cash.
“Mortgage balances drove loan volumes, but going forward we would like to see what happens with non-mortgage volumes. “
Scotiabank said its Canadian banking operations brought in $ 1.2 billion, up from $ 778 million in the same quarter last year.
International banking earned $ 528 million, up from $ 263 million a year ago, while global wealth management earned $ 385 million, up from $ 323 million. Banks and global markets earned $ 502 million, compared to $ 460 million.
For its full year, Scotiabank said it earned nearly $ 10 billion or $ 7.70 per diluted share on $ 31.3 billion in revenue, compared to profit of nearly $ 6.9 billion or $ 5.30 per diluted share on $ 31.3 billion in revenue a year earlier.
Scotiabank’s adjusted earnings for the full year were $ 7.87 per diluted share, compared to $ 5.36 per diluted share.
This report by The Canadian Press was first published on November 30, 2021.
Companies in this story: (TSX: BNS)
Ian Bickis, The Canadian Press