Scotiabank Profit Increases 35% on CI Sale; Dividend Rises

Aug 26, 2014 7:02 am ET

(Updates with revenue, unit performance from fifth paragraph.)

Aug. 26 (Bloomberg) -- Bank of Nova Scotia, Canada’s third- largest lender by assets, said profit rose 35 percent on gains from selling its stake in money manager CI Financial Corp. The firm raised its dividend 3.1 percent.

Net income for the period ended July 31 jumped to a record C$2.35 billion ($2.14 billion), or C$1.85 a share, from C$1.75 billion, or C$1.36, a year earlier, the Toronto-based bank said today in a statement. Profit excluding some items was C$1.41 a share, matching the average estimate of 14 analysts surveyed by Bloomberg.

Scotiabank reported a total gain in the third quarter of C$555 million from selling part of its CI Financial stake in May and then reclassifying the 22 million shares it still holds as available-for-sale. Higher earnings from investment banking also boosted profit.

Scotiabank has increased 12 percent this year, the third- worst performance in the eight-company Standard & Poor’s/TSX Commercial Banks Index and the laggard among Canada’s six biggest lenders.

Revenue rose 18 percent to C$6.49 billion from a year earlier, Scotiabank said. The lender set aside C$398 million for bad loans, up from C$314 million a year earlier.

Canadian bank earnings rose 2.7 percent to C$565 million from a year earlier, while profit from global wealth management and insurance more than doubled to C$846 million on the CI gain. International banking profit slid 16 percent to C$452 million, pulled down by weaker results in the Caribbean and Central America, the bank said. Scotiabank has operations in more than 55 countries, including Chile, Mexico and Thailand.

Underwriting Jump

Global banking and markets, which encompasses investment banking, rose 7.9 percent to C$408 million from a year earlier. Underwriting and advisory fees advanced 61 percent to C$217 million.

Bank of Montreal, the country’s fourth-largest bank, also reports results today, followed tomorrow by Montreal-based National Bank of Canada. Royal Bank of Canada, the first to report, posted record profit of C$2.38 billion on Aug. 22 as investment banking lifted earnings.

Toronto-Dominion Bank, the country’s largest lender, and Canadian Imperial Bank of Commerce report Aug. 28.

Scotiabank raised its quarterly dividend to 66 cents a share from 64 cents, joining Royal Bank of Canada in boosting its payout for the second time in a year.