The turnaround at Bank of Nova Scotia’s international division, which focuses on Latin America, is gaining traction.
The unit’s adjusted earnings increased by 74% year over year to C$614 million ($480 million) in the fiscal fourth quarter, according to Toronto-based Scotiabank. Overall profit for the three months ended Oct. 31 exceeded analyst expectations.
The international subsidiary of Scotiabank is profiting from the global commodities price boom, which is boosting business loan growth in the Latin American regions where the company operates. While consumer lending in the region is still weak, Scotiabank is seeing growth in mortgages and has kept costs in check, cutting non-interest expenditures by 3.1 percent from the previous quarter.
“International banking is showing good signs of recovery,” Scott Chan, an analyst at Canaccord Genuity Group Inc., said in an interview. “They’re getting a nice commodities tailwind that benefits a lot of the countries they’re in.”
The company’s total loans and acceptances increased by 2.2 percent from the third quarter, the first quarterly increase since the third quarter of fiscal 2020. According to Chan, the unit should see a lift next year as interest rates rise in those regions, widening loan margins.
The bank, which had been temporarily barred by regulators from increasing its dividend or buying back shares along with Canada’s other top lenders, increased its quarterly payout by 11 percent to C$1 per share and announced a plan to buyback 24 million shares. This equates to around 2% of the bank’s outstanding equity and would cost about C$1.95 billion at current share prices.
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