Canadian financial services provider Bank of Nova Scotia (BNS,BNS.TO) reported Tuesday a profit for the first quarter that increased 12 percent from last year, reflecting strong revenue growth across businesses and geographies along with good contributions from acquisitions. Both adjusted earnings per share and quarterly revenues topped analysts' expectations.
The bank also provided earnings growth guidance for the full-year 2013, declared a 5.3 percent increase in quarterly dividend.
According to the company, the results also reflect higher net interest income, growth in wealth management and transaction-based banking revenues, increased contributions from associated corporations and stronger trading revenues. Further, the increases were partly offset by higher operating expenses and provisions for credit losses.
"We are beginning the year with strong results. The Bank's diversity across businesses and geographies continues to contribute to solid top-line revenue growth. Once again we saw organic growth in all four business lines along with good contributions from acquisitions, particularly ING DIRECT in Canada and Banco Colpatria in Colombia," CEO Rick Waugh said.
Halifax, Canada-based Bank of Nova Scotia or Scotiabank, Canada's third largest bank, reported net income attributable to common shareholders of C$1.50 billion or C$1.25 per share for the first quarter, higher than C$1.34 billion or C$1.20 per share in the year-ago quarter.
Excluding items, adjusted earnings for the quarter was C$1.27 per share, compared to last year's C$1.22 per share.
On average, 15 analysts polled by Thomson Reuters expected the bank to report earnings of C$1.25 per share for the quarter. Analysts' estimates typically exclude special items.
On a taxable equivalent basis, total revenue for the quarter was C$5.26 billion, up 12 percent from C$4.69 billion in the prior-year quarter. Excluding the real estate gain recorded last year, revenues increased 15 percent. Ten Wall Street analysts had a consensus revenue estimate of C$5.04 billion for the quarter.
On a taxable equivalent basis, net interest income for the quarter grew 17 percent to C$2.78 billion from C$2.38 billion, and non-interest revenue was C$2.48 billion, up from C$2.31 billion in the year-ago quarter. Meanwhile, provision for income taxes grew to C$508 million from C$481 million last year.
Segment wise, Canadian banking had a very strong first quarter, with net income rising 21 percent to C$574 million, driven by strong revenue growth amid strong asset growth in most businesses. There was solid contribution from ING DIRECT and the launch of Scotiabank American Express credit cards.
International banking net income grew 12 percent to C$466 million, reflecting good contribution from Banco Colpatria, strong increase in asset and deposit volumes in high-growth Latin American businesses.
Global wealth management net income increased 7 percent to C$310 million, with strong sales from wealth management and insurance businesses and improved market conditions.
Global banking and markets had a strong quarter with net income growing 28 percent to C$399 million, with strong contributions across the business platform.
Scotiabank's productivity ratio for the quarter was flat at 53.5 percent, while return on equity remained at 16.6 percent, down from 19.8 percent in the year-ago quarter.
As at January 31, 2013, the bank's Basel III all-in Tier 1 ratio was 10.3 percent and Total capital ratio was 13.5 percent. Common equity Tier 1 capital ratio, on an all-in basis, was 8.2 percent, well above the 7 percent minimum.
Scotiabank also declared a 5.3 percent higher quarterly dividend on its common shares of C$0.60 per common share for the second quarter, payable on April 26, to shareholders of record at the close of business on April 2, 2013.
Looking ahead to fiscal 2013, Scotiabank continues to expect adjusted earnings growth in a range of 5 to 10 percent, and return on equity between 15 and 18 percent, with productivity ratio maintained at less than 56 percent.
BNS closed Monday's regular trading session at $59.23, down $0.22 on a volume of 0.41 million shares. In the past 52-week period, the stock has been trading in a range of $48.45 to $59.74.
On the Toronto Stock Exchange, BNS.TO closed at C$60.87, down C$0.32 on a volume of 1.31 million shares. The stock has been trading in a range of C$60.55 to C$61.45 in the past 52 weeks.
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