Scotiabank profit misses expectations, shares drop
By John Tilak
(Reuters) - Bank of Nova Scotia (BNS.TO: Quote) posted a lower-than-expected quarterly profit on Tuesday, hurt by an increase in credit-loss provisions and higher expenses, sending its shares down about 1.6 percent.
The results at Scotiabank, Canada's No. 3 lender, round out a mixed quarter for the country's big banks, with Royal Bank of Canada (RY.TO: Quote) and Canadian Imperial Bank of Commerce CM.TO topping profit expectations, Bank of Montreal (BMO.TO: Quote) falling short, and Toronto-Dominion Bank (TD.TO: Quote) basically in line.
The group's results were the focus of much market attention as investors tried to gauge the impact of the oil-price slump and a sluggish economy on performance.
Scotiabank’s provisions for credit losses jumped 30 percent to C$463 million ($369.8 million) in its first quarter, ended Jan. 31, and noninterest expenses rose about 3 percent.
Loans outstanding to corporate clients in the oil-and-gas sector were C$15.4 billion, up 20 percent from the fourth quarter, despite low oil prices.
"It's a bit worrisome," Edward Jones analyst James Shanahan said. "If that meant that they are making large, incremental bets on the oil-and-gas sector, that makes me a little bit nervous."
Chief Risk Officer Stephen Hart said the bank’s “oil-and-gas exposure is manageable”.
“Any stress losses would leave the bank within our risk tolerances for both capital and loan loss provisions and would not affect our ongoing strategies,” he said on a conference call. Continued...