UPDATE 2-Scotiabank quarterly profit tops estimates, to buy back shares

Fri May 29, 2015 9:53am EDT
 
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(Adds fund manager comment, updates shares)

By John Tilak

TORONTO May 29 (Reuters) - Bank of Nova Scotia reported a quarterly profit that beat market expectations on Friday and outlined a plan to buy back shares as earnings grew at its Canadian banking division.

The second-quarter report from the country's third-largest lender rounds out results from the six major Canadian banks, all of which beat earnings estimates. Three of them, Bank of Montreal, National Bank of Canada and Canadian Imperial Bank of Commerce, also raised their dividends.

Still, investors remain concerned about slowing domestic growth and a lack of strong catalysts for the lenders, as well the impact from exposure to the energy industry.

Excluding items, earnings at Scotiabank's Canadian banking division grew 9 percent year-over-year, and net interest margins in this segment climbed 10 basis points from the first quarter.

Scotiabank, whose stock gained 0.7 percent to C$65.01 in morning trading, joined some of its peers in reporting robust capital markets results.

"We think it was a very positive quarter," Barclays analyst John Aiken said. "The increase in margins in the domestic retail business is a meaningful offset to the slowing loan growth we're seeing."

However, he was cautious about the prospects for the broader Canadian banking industry.   Continued...