May 28, 2009 / 3:46 PM / in 9 years

UPDATE 1-Scotiabank profit falls but beats forecasts

* Q2 EPS C$0.81 vs EPS C$0.97

* Credit loss provision C$489 mln vs C$153 mln

* Scotia Capital notches record quarter

* Shares rise 1.1 pct

TORONTO, May 28 (Reuters) - Bank of Nova Scotia BNS.TO said on Thursday its profit fell 11 percent in the second quarter as record revenues and strong investment banking were offset by a jump in the amount the bank set aside for bad loans.

Canada’s third-largest bank said it earned C$872 million ($785 million), or 81 Canadian cents a share, compared with C$980 million, or 97 Canadian cents a share, a year earlier.

Scotiabank said provisions for credit losses rose to C$489 million from C$153 million. Bad loans have been increasing at Canadian banks as the economy struggles and unemployment rises.

Analysts had expected a profit of 77 Canadian cents a share, according to Reuters Estimates.

“Solid underlying performances in Canadian and international banking and a record quarter from Scotia Capital allowed us to earn through higher credit provisions and a challenging economic environment,” Chief Executive Rick Waugh said in a statement.

Shares of Scotiabank rose 1.1 percent to C$38.85 on the Toronto Stock Exchange.

$1=$1.11 Canadian Reporting by Andrea Hopkins; editing by Rob Wilson

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