Bank of Nova Scotia reported robust first-quarter earnings, surpassing expectations despite a higher provision for credit losses. The Canadian bank’s income reached 2.17 billion Canadian dollars ($1.61 billion), or C$1.68 per share, compared to 1.72 billion, or C$1.35, in the previous year. Adjusted earnings were C$1.69 per share, exceeding analysts’ forecast of C$1.61.
Revenue Growth and Financial Metrics
The bank reported a 5.9% increase in revenue for the three-month period ending Jan. 31, amounting to C$8.43 billion. Net interest income rose to C$4.77 billion, while noninterest income reached C$3.66 billion. The total provision for credit losses stood at C$962 million, reflecting growth in the retail portfolio and macroeconomic challenges.
Credit Quality and Portfolio Composition
Gross impaired loans rose to C$6.12 billion by January’s end, driven by commercial formations in the transportation sector within the Canadian banking segment, and retail formations in Chile, Mexico, and Peru in the international banking division. Analysts are monitoring Canada’s banking sector closely for credit risk, particularly in commercial real estate and household stress amid higher interest rates on mortgage renewals.
Regulatory Environment and Capital Position
Scotiabank’s common equity tier 1 ratio was at 12.9% by the end of January, slightly down from the prior quarter. The country’s banking regulator maintained the CET1 target for major banks at no less than 11.5% of risk-weighted assets, despite economic uncertainties.
Overall, Bank of Nova Scotia’s first-quarter performance demonstrates resilience and growth in its operations across both Canadian and international markets.