Scotiabank fourth-quarter profit rises, energy concerns remain
By John Tilak
TORONTO (Reuters) - Bank of Nova Scotia (BNS.TO: Quote) reported a higher quarterly profit on Tuesday, helped by asset growth and favorable foreign exchange moves, but weakness in its capital markets business and an increase in bad energy loans kept the optimism in check.
Shares of Scotiabank, Canada's third-largest bank, added 0.5 percent.
A rise in bad loans and provisions for loan losses in the energy sector highlighted worries about the bank's oil and gas presence in an environment of weak commodity prices.
The bank's drawn corporate oil and gas exposure of C$16.5 billion forms 3.5 percent of its total loan book.
"We're very comfortable with that portfolio. We think it's in good shape," said Chief Financial Officer Sean McGuckin, who noted that the lender has completed about 70 percent of its planned borrowing base redeterminations.
For two thirds of those companies, Scotiabank has either confirmed current levels or increased those limits, he said in an interview.
"We've not relaxed terms," McGuckin added.
Canadian banks have remained profitable despite concerns about a sluggish domestic economy and the impact of the oil price slump. The lenders are active with both retail and commercial clients in the energy sector. Continued...