Scotiabank profit and dividend up, but shares fall

Tue Mar 8, 2011 5:00pm EST
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By Cameron French and John McCrank

TORONTO (Reuters) - Profit at Bank of Nova Scotia rose 18 percent in its first quarter on stronger Canadian retail and international banking income, prompting the lender to raise its quarterly dividend.

But shares of Canada's No. 3 bank fell as the earnings -- though slightly above analysts' estimates -- failed to satisfy ambitious expectations fueled by strong results from the bank's rivals in recent weeks.

Scotiabank earned C$1.17 billion ($1.21 billion), or C$1.07 a share, in the quarter ended January 31, up from C$988 million, or 91 Canadian cents a share, in the year-before period.

Adjusted to take account of tax amortization of intangible assets, the bank earned C$1.09 a share, which beat the C$1.06 a share expected by analysts.

The results cap a quarter in which Canadian bank earnings blew past expectations as strong growth in consumer loans and deposits defied predictions that lending would dry up.

Scotiabank's shares ended down 1.4 percent at C$59.29 on the Toronto Stock Exchange, underperforming the market's bank group as a whole, which closed up 0.53 percent.

"Coming in in line is almost a bit disappointing this quarter because the bank group largely exceeded expectations," said Craig Fehr, an analyst at Edward Jones in St. Louis, Missouri.

DIVIDEND HIKE   Continued...