Scotiabank (NYSE:BNS) has announced second quarter results for its Mexican operations and the contribution is up. The Canadian bank will get C$61-million from this division for its third quarter earnings, up 13% from the preceding quarter but still down 24% from a year ago.
The bank said provisions continue to present a challenge and are serving to offset underlying growth in interest income and the positive effect of rising deposits.
So while the earnings increase is nonetheless a good thing for Scotia, Dundee Securities analyst John Aiken pointed out that Scotiabank Mexico’s contribution remains well below that in the past as impaired loans continue to plague earnings.
He also noted that its contribution had historically been almost as high as 50% of total reported earnings for BNS’s International segment.
“However, with the weakening credit in Mexico, its proportion has been running at closer to 15% over the past few quarters.”