Scotiabank's first quarter results underwhelm analysts
By Matt Scuffham
TORONTO (Reuters) - Bank of Nova Scotia (BNS.TO: Quote), Canada's third-biggest lender, reported improved first-quarter earnings that appeared to be just ahead of market expectations but which underwhelmed banking analysts.
Scotiabank said net income in the first quarter to Jan.31 was C$2 billion ($1.5 billion) compared with C$1.8 billion the year before. Earnings per share rose to C$1.58 from C$1.44 the year before. Analysts had on average forecast earnings per share of C$1.57, according to Thomson Reuters I/B/E/S data.
However, Barclays analyst John Aiken said that earnings were boosted by a gain of around C$40 million on the sale of real estate in Canada and an unquantified gain on an investment in Colombia.
"Therefore, the view of earnings is either C$1.55 or a low quality C$1.58 and will likely be viewed disappointing against consensus (and our) forecast of C$1.57," he said.
RBC Capital Markets analyst Darko Mihelic said he viewed the results as "mildly negative".
"Even assuming that the market interprets Scotiabank's earnings as C$1.58 per shares -- this would be close to in line with consensus whereas other banks beat consensus estimates handily," he said.
Rival Bank of Montreal (BMO.TO: Quote) on Tuesday reported earnings which were well ahead of market forecasts. Royal Bank of Canada (RY.TO: Quote) and Canadian Imperial Bank of Commerce (CM.TO: Quote) also reported forecast-beating results last week.
Scotiabank, which has the biggest foreign presence of any Canadian bank, is focusing its international strategy on the Pacific Alliance, a Latin American trade bloc comprising Mexico, Peru, Chile and Colombia. Continued...