Entering text into the input field will update the search result below

Scotiabank's Q2 profit jumps 40%

May 31, 2011 12:49 PM ETBNS
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Short Only

Seeking Alpha Analyst Since 2009

Proactiveinvestors is a leading multi-media news organisation, investor portal and events management business with offices in New York, Sydney, Toronto, Frankfurt and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of listed companies across the globe daily. We are one of the fastest growing financial media portals in the world. The group also operates hugely successful “investor forums” where three or four companies present to an audience of high net sophisticated investors, fund managers, hedge funds, private client brokers and analysts. Ian Mclelland founded Proactiveinvestors in 2006 as a way to channel his own views on companies small and mid-cap public companies. What started as a hobby quickly turned into a full time job as the website's readership exploded. One2One forums were added later in 2006, and within two years the company had expanded its operations into Canada and Australia. In 2009 the company expanded into Germany and finally into the US in 2010. Proactiveinvestors is now one of the fastest growing global financial media organizations in the world receiving more than one million visitors per month, with investor forums held across the globe on a regular basis.

The Bank of Nova Scotia (Scotiabank) (NYSE:BNS) (TSE:BNS) announced Tuesday a 40% increase in second quarter profits, mainly due to strong growth in its international banking and global wealth management divisions, as well as $286 million accounting gain.

For the three months ending April 30, the third-largest bank in Canada reported a net income of $1.54 billion, or $1.36 per share, up from last year's $1.1 billion, or $1.02 per share.

The bank said that it benefited from a $286 million, or 26 cent per share, accounting gain due to two recent acquisitions, including the remaining 82% stake in DundeeWealth, as new Canadian accounting standards required all acquisitions to be recorded at fair value.

A gain of $260 million was recognized on the re-valuation of the bank's original 18% stake in DundeeWealth, it said.

Excluding these gains, earnings were $1.10 per share, beating analyst estimates by one cent.

Total revenue jumped 17% to $4.52 billion from $3.87 billion a year earlier. Provisions for credit losses, or money the bank sets aside to cover bad loans, were $262 million, a 22% drop from last year's $338 million.

The company attributed its succes during the quarter to increased profits from wealth management and international banking, offset by higher non-interest expenses and lower trading activity.

International banking's bottom line increased 68% to $402 million, as strong commercial and retail lending, particularly in Asia, Peru, Chile and the Caribbean, helped push income forward. The division benefited from the acquisition of Puerto Rico's R-G Premier Bank.

"International Banking's business . . . has benefitted from widening margins in certain key markets. In addition, recent acquisitions continue to provide a meaningful contribution to overall results," said president and CEO, Rick Waugh.

Scotiabank's wealth management segment saw profits rise to $489 million from $199 million in the year-ago period, helped by the acquisition of the remaining 82% of DundeeWealth. This also pushed assets under management to more than $100 billion.

Meanwhile, Canadian banking reported a 2% drop in net income to $444 million as Scotia saw higher wholesale funding costs and a consumer preference for lower yielding variable rate mortgages.

The Scotia Capital unit also recorded an 8% drop in net income to $357 million, largely due to lower lending volumes, especially corporate loans and acceptances.

However, total revenue reported by global corporate and investment banking within the unit was virtually unchanged from last year, as lower lending volumes were offset by higher investment banking revenues, including record results from Scotia Waterous.

Scotiabank's shares on the Toronto Stock Exchange responded well to the company's quarterly results, increasing 1.2% to $59.69 per share.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.