Scotiabank profit lifted by ING Direct, but lower than expected

Tue May 28, 2013 11:50am EDT
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By Cameron French

TORONTO (Reuters) - Bank of Nova Scotia (BNS.TO: Quote) said on Tuesday that quarterly profit rose 9.6 percent due largely to an acquisition, but missed estimates due to weaker commodities-related revenue and higher loan-loss provisions.

At mid-morning, the bank's shares were down 0.8 percent at C$59.11 in Toronto, making it the weakest performer among Canada's six biggest lenders, which were otherwise higher.

The result, the third earnings report from a Canadian bank this quarter, was padded by last year's C$3.1 billion ($2.98 billion) acquisition of the Canadian online lender ING Direct.

That deal contributed to a 19 percent jump in profit at Scotiabank's Canadian banking unit, which earned C$547 million.

But gains were more muted in the bank's other businesses, particularly global banking and markets, which saw income slide 6.7 percent to C$361 million due to declines in the bank's commodities and precious metals business.

Provisions for bad loans also weighed on the overall result, rising 30 percent to C$343 million, with most of the gains coming from the bank's international banking division.

"That goes to their exposure geographically. It's hard to get a handle on credit exposure there. It's just higher risk," said Tom Lewandowski, an analyst at Edward Jones in St. Louis.

Toronto-based Scotiabank operates in more than 50 countries, with the heaviest weighting in Latin America and a growing presence in Asia.   Continued...