Scotiabank Q2 Results Top Estimates, Approves Share Buyback, Dividend

(RTTNews) - Canada's Bank of Nova Scotia (BNS, BNS.TO) or Scotiabank reported Tuesday higher profit in its second quarter with increased revenues and margin strength. Adjusted earnings per share and revenues topped analysts' estimates. The financial services provider also announced up to 12 million stock repurchase and quarterly dividend.

For the second quarter, net income attributable to common shareholders grew to C$1.70 billion from C$1.47 billion a year ago. Quarterly earnings per share were C$1.39, a 14 percent increase from C$1.22 last year. The prior year results were adjusted to reflect the adoption of new IFRS standards in 2014.

Adjusted earnings per share, which excluded certain items, were C$1.40, compared to C$1.23 a year ago. On average, 13 analysts polled by Thomson Reuters expected earnings per share of C$1.31 for the quarter. Analysts' estimates typically exclude one-time items.

The company attributed the increase in net income to good volume growth, higher interest margins, positive operating leverage and the favourable impact of foreign currency translation. These were partly offset by increased provisions for credit losses and a higher income tax rate.

Total revenues, on a taxable equivalent basis or TEB, increased 10 percent to C$5.81 billion from last year's C$5.30 billion. Ten analysts estimated revenues of C$5.57 billion for the quarter.

The company noted that higher net interest income from asset growth and improved net interest margin, stronger non-interest revenues, including higher net gains on investment securities and the positive impact of foreign currency translation contributed to the growth in revenue.

Second-quarter net interest income on TEB basis amounted to C$3.05 billion, 10 percent higher than last year's C$2.78 billion, improved interest margin and growth in lending assets primarily in International Banking and Canadian Banking. Core banking margin, on a TEB basis, was 2.42 percent, higher than 2.30 percent a year ago.

TEB non-interest revenue was C$2.76 billion, compared to C$2.51 billion in the prior year. Net fee and commission revenues were up 6 percent from the same period last year.

Provision for credit losses increased to C$375 million from last year's C$343 million, primarily due to higher provisions in International Banking.

Return on equity was 16.3 percent, versus 16.5 percent in the previous year.

Brian Porter, Scotiabank President and CEO, said, "We had strong results this quarter across our businesses, particularly in Canadian Banking and Global Wealth & Insurance. We continue to focus on deepening customer relationships to deliver results and grow all of our businesses. As well, expense growth was prudently managed."

Separately, Scotiabank announced its intention to repurchase up to 12 million of its common shares. This represents approximately one percent of the around 1.22 billion Common Shares issued and outstanding as of May 23.

Further, the board approved a dividend of 64 cents per share for the quarter ending July 31, payable on July 29, 2014, to shareholders of record as of July 2. The company also approved dividend on non-cumulative preferred shares.

Scotiabank shares gained C$0.04 or 0.06 percent on Monday, and settled at C$68.