Scotiabank's Q4 profit up 9%, to $2.01 billion

Scotiabank is reporting a nine per cent increase in fourth-quarter net income, compared with the same time last year.
Scotiabank is reporting a nine per cent increase in fourth-quarter net income, compared with the same time last year. (Nathan Denette/The Canadian Press)

Scotiabank is reporting a nine per cent increase in fourth-quarter net income, compared with the same time last year, with a slight decline in provisions for credit losses and strong operating performance in its main business segments.

It had $2.01 billion of net income for the three months ended Oct. 31, up from $1.84 billion a year earlier. That amounted to $1.57 per share, up eight per cent from $1.45 per share in the fourth quarter.

Net income at the Canadian business segment was $954 million, up from $837 million a year earlier. The international segment had $619 million of net income, up from $564 million. Its global banking and capital markets segment had $461 million of net income, up from $325 million during the comparable period last year.

For the full 2016 financial year, ended Oct. 31, Scotiabank had $7.37 billion of net income, or $5.77 per diluted share, up from $7.21 billion up from $5.67 per share in fiscal 2015.

Royal Bank will report its results on Wednesday, followed by CIBC and TD Bank on Thursday. Bank of Montreal will wrap up the earnings parade on Dec. 6.

Credit losses fall

Scotiabank's provision for credit losses was $550 million, down $1 million from a year earlier. For the full year, provisions for credit losses totalled $2.41 billion, up from $1.94 billion in fiscal 2015, with all of the increases in the first two quarters.

The bank's chief risk officer Stephen Hart said he's confident that the bank has moved past the key issues surrounding the decline in crude prices.

"Our good results were achieved alongside a focused effort to advance the bank's strategic agenda including investments in digital capabilities to drive an even greater customer experience and more efficient operations," Scotiabank president and CEO Brian Porter said in the bank's announcement.

In a phone call with analysts, Porter dismissed fears that president-elect Donald Trump's antagonism to Mexico and NAFTA will hurt its economy..

"It would appear the market is discounting a bigger impact to Mexico than we believe is realistic," he said.

"We remain confident in our medium-term growth objectives to Mexico, and we will continue to actively and prudently manage our businesses. We remain committed to the bank's overall medium-term objectives, including those for both international banking and the Pacific Alliance that we provided at our investor day in Mexico City."

The Toronto-based bank recorded $278 million in restructuring charges in its fiscal second quarter, as it took a number of initiatives across the organization — including work on digital technologies.

Scotiabank's revenue for the fourth quarter was $6.75 billion, up from $6.13 billion. For the full year, revenue was $26.3 billion, up $2.3 billion from fiscal 2015.

Moves into Apple Pay

During the summer, it began to offer Apple Pay — a form of electronic payment through Apple devices — for its credit and debit cards.

It also teamed with Atlanta-based Kabbage to begin offering an automaker loan process to existing business customers in Canada and Mexico.

Kabbage uses data analytics to determine a borrower's creditworthiness in minutes, removing the need to visit a bank branch, fill out paperwork and wait days for a decision.

At the end of October, Scotiabank had 3,113 branches worldwide, down 13 from the end of July and down 64 from the end of October 2015. The number of employees stood at 88,901, up from 88,783 at the end of July and down from 89,214 at the end of the 2015 financial year.