Scotiabank hikes dividend as profit beats expectations

The Bank of Nova Scotia was the first out of the gate in bank earnings season to hike their dividend, announce share buybacks, and report an earnings beat in their fourth quarter results on Tuesday.

Scotiabank said it would be raising its quarterly dividend by 10 cents per common share to $1.00 after the Office of the Superintendent of Financial Institutions (OSFI) lifted restrictions on dividend hikes earlier this month. The first dividend pay-out will come on Jan. 27 in the upcoming year.

The bank also reported $2.56 billion in net income in the three months ending Oct. 31, compared to $1.94 billion from this time last year, benefitting from lower credit loss provisions due to an improving credit quality picture and optimistic economic outlook. Earnings per share rose to $1.97, beating analyst expectations of $1.90 and jumping from $1.42 in the same period last year.

On an improving macroeconomic backdrop, the company’s international banking earnings improved, coming in at $528 million compared to $263 million from a year ago. In the release, the bank stated its provision for credit losses shrank to $168 million from $380 million in the previous quarter reported in July.

“We ended the year with strong fourth quarter earnings and exceeded our medium-term financial targets in fiscal 2021. Our diversified business model demonstrated its resilience through the pandemic, and the Bank is well positioned to achieve its full earnings power in the upcoming year…” said Scotiabank president and chief executive Brian Porter. “As we close out 2021, it is clear that our sharpened footprint and our significant investments in our digital capabilities have positioned the Bank for a very bright future.”

Leading up to the announcement, analysts such as Gabriel Dechaine from National Bank of Canada predicted a “dividend growth tsunami” from the banks, expecting a 10 per cent increase from Scotiabank.