Overseas growth helps Scotiabank, BMO beat profit estimates

[TORONTO] Canadian lenders Bank of Nova Scotia and Bank of Montreal reported better-than-expected quarterly earnings, helped by resilient performances at their domestic businesses and overseas growth.

Rivals Royal Bank of Canada and Canadian Imperial Bank of Commerce have also recently reported earnings that beat analyst expectations as worries have eased over Canada's housing market and stalling talks to renegotiate the North American Free Trade Agreement.

Scotiabank, Canada's third-biggest lender, reported earnings per share of C$1.86(S$1.93) for the first quarter, up from C$1.57 a year earlier. Analysts had expected C$1.68 per share, Thomson Reuters I/B/E/S data showed.

The bank reported net income of C$1.1 billion in the quarter through January, up 12 per cent from a year ago, as profit margins improved and as less funds were set aside to cover bad loans. Net income at its international business surged 16 percent to C$667 million.

Scotiabank's core tier 1 ratio, a key measure of its financial strength was 11.2 per cent, the highest of Canada's five biggest banks which Chief Executive Brian Porter said gave it the option of making acquisitions or returning capital to shareholders.

Scotiabank has focused its international growth strategy on the Pacific Alliance, a Latin American trading bloc comprising Mexico, Peru, Chile and Columbia, where it saw loan growth of 10 per cent or more during the period.

Some analysts have expressed concern that a failure to renegotiate the North American Free Trade Agreement (Nafta) could impact the bank's Mexican business but Porter said he expected that market to remain resilient even if talks fail.

"Given the country's extensive network of free trade agreements, Mexico is well positioned to adjust to any NAFTA outcome," he said on a conference call.

Bank of Montreal, Canada's fourth-biggest lender, reported earnings per share excluding one-off items of C$2.12 per share in the quarter ended Jan 31, down 7 per cent from a year earlier when it benefited from a gain on the sale of a business in the United States. Analysts had on average forecast earnings of C$2.06 per share, Thomson Reuters I/B/E/S data showed.

BMO's US personal & commercial business reported net income, excluding one-off items, of C$321 million, up 23 per cent from a year ago.

REUTERS