Mexican Jewel in the Crown of Scotiabank's International Empire

| About: The Bank (BNS)

Grupo Scotiabank of Mexico, the jewel in the crown of Bank of Nova Scotia’s (NYSE:BNS) international banking empire, reported its first quarter earnings Wednesday, and earned some muted praise from TD Newcrest analyst Jason Bilodeau.

“Overall decent results in our view,” said Mr. Bilodeau, who rates Scotiabank a “Buy” with a C$56.00 target price.

Net income fell 3% from prior year levels, but was up 20% after allowing for the effect of tax loss carry-forwards that were not available this time round. Grupo Scotiabank’s profits translate into C$80-million in Scotiabank’s second quarter. The Mexican unit saw mortgages grow 12% and credit cards up 26%. Credit conditions are deteriorating in Mexico but the overall level of provisions is barely changed at 3.1% of loans compared to 3% last quarter.

For the whole of Scotiabank’s international business, TD expects near-term volatility to reflect “evolving tax rates, ongoing investment, the onset of acquisition, Canadian dollar strength and local market conditions.” Over the medium-term, the bank’s overseas operations should enjoy “superior operating growth,” said Mr. Bilodeau.