Scotiabank profit rises 14 percent, eyes acquisition pipeline
By Cameron French
TORONTO (Reuters) - Bank of Nova Scotia said on Tuesday its second-quarter profit rose 14 percent, beating estimates, and the lender's CEO suggested its strong capital levels will be directed toward acquisitions rather than large share buybacks.
The bank's stock surged to an all-time high on the results.
Brian Porter, who has emphasized organic growth since taking over as chief executive officer last year, said the bank was eyeing expansion in credit cards, as well as wealth management and retail banking growth in Peru, Colombia, Mexico and Chile.
"We do have a pipeline of acquisitions that we're looking at ... if they fit our criteria, we want to have the ability to capitalize on those," Porter said on a conference call.
The bank, Canada's third-largest, posted a Tier 1 common equity ratio of 9.8, higher than rivals Toronto-Dominion Bank and Royal Bank of Canada posted last week, and well above the regulatory target minimum of 8 percent that comes into effect in 2016.
That figure could rise when Scotiabank disposes of all or part of its 37 percent stake in asset manager CI Financial, in line with plans announced two weeks ago.
Scotiabank, like its rivals, is looking for ways to offset the impact of slower growth in its core Canadian lending business amid a cooling housing market.
"I think you have to go out and find growth elsewhere, and you have a big slug of capital coming your way, it would make sense to go and deploy that," said Tom Lewandowski, a St. Louis-based analyst with Edward Jones. Continued...