Scotiabank profit beats estimates

Dividend hiked by 11 per cent

TORONTO — Bank of Nova Scotia reported better-thanexpected fourth-quarter profit on Tuesday on lower provisions, with Canadian lending and wealth management boosting earnings, and lifted its dividend by 11 per cent.

Canada's third-largest lender announced a dividend hike to $1 a share, its first in eight quarters, and became the first major bank to do so following the lifting of restrictions by the country's financial regulator this month.

Scotiabank will also buy back 24 million shares, or around two per cent of its outstanding shares, it said.

Canadian banks and investors have been hoping for an improvement in nonmortgage lending, as earnings beats over past quarters have been driven by home loans and the release of loan-loss reserves set aside last year.

Scotiabank's non-mortgage lending in Canada grew

3.9 per cent, compared with a 13 per cent increase in home loans. In its international business, non-mortgage loans were flat, versus eight per cent growth in residential lending.

"Earnings and the dividend increase were higher than anticipated," Barclays analyst John Aiken said in a note.

"Overall, we believe that Scotia reported a solid quarter but we anticipate that its return of capital will still fall to the lower end of its peers as the remainder of the group reports through the week."

Scotiabank took provisions of $168 million during the quarter, down from

$1.1 billion a year ago. Excluding the impact of provisions and taxes, the bank posted adjusted profit of $3.6 billion, up four per cent from a year ago.

While net interest income in Canada did rise seven per cent due to stronger lending, it was tempered by a decline in margins, as loan growth remained skewed to residential mortgages, which have lower rates.

Margins also fell in the international business, despite policy rate hikes in some of the countries the bank does business in, also due to the loan mix.

Earnings were boosted by higher fees in Canadian banking and wealth management, helping offset weakness in the capital markets unit.

Net income excluding oneoff items rose to $2.72 billion, or $2.10, in the three months ended Oct. 31, compared with $1.9 billion, or $1.45, a year earlier. Analysts had expected $1.90 a share, according to IBES data from Refinitiv.