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Scotiabank Profit Declines 14% on Job Cuts, Venezuela Costs

Scotiabank Profit Declines 14% on Job Cuts, Venezuela Costs

Posted by Juan Gavasa on December 05, 2014

Bank of Nova Scotia, Canada’s third-largest lender by assets, said fourth-quarter profit fell 14 percent on costs from cutting 1,500 jobs and writing down assets in Venezuela.

Net income for the period ended Oct. 31 slid to C$1.44 billion ($1.26 billion), or C$1.10 a share, from C$1.68 billion, or C$1.29, a year earlier, the Toronto-based lender said today in a statement. Adjusted profit, which excludes one-time items, was C$1.39 a share, missing the C$1.40 average estimate of 11 analysts surveyed by Bloomberg.

Chief Executive Officer Brian Porter has been working to cut costs at Scotiabank, which has retail and commercial banking operations in more than 55 countries in Latin America, the Caribbean and Asia. Scotiabank took a C$342 million charge in the quarter tied to cutting jobs, closing international branches, legal provisions and bad Caribbean loans that lowered earnings by 22 cents a share. The bank first disclosed the costs Nov. 4.

“We expect earnings growth to moderate somewhat in 2015 as a result of a continued low-rate environment and ongoing investments in technology and other business initiatives,” Porter, 56, said in the statement. “The headwinds that we have experienced over the last few quarters are likely to persist into the first half of 2015, with more robust growth expected in the latter part of the year.”

Revenue Climbs

Scotiabank has gained 1.7 percent this year, the second-worst performance of the eight-company Standard & Poor’s/TSX Composite Banks Index, which has advanced 9.3 percent.

Revenue rose 6.4 percent to C$5.75 billion from a year earlier, according to the statement. The bank set aside C$574 million for bad loans, up from C$321 million.

Canadian banking profit fell 13 percent to C$483 million and international banking earnings declined 31 percent to C$316 million, the bank said. Global wealth and insurance income rose to C$327 million from C$313 million a year earlier, the bank said.

Global banking and markets, which includes Scotiabank’s investment-banking business, fell 3 percent to C$327 million, the lender said. Trading revenue decline 32 percent to C$277 million, led by declines in equities and fixed-income, while underwriting and advisory fees surged 75 percent to C$212 million.

“Pretty much right in-line here,” Jason Bilodeau, an analyst with Macquarie Capital Markets Canada, said in a note to clients. “Segment wise, things are mixed, but nothing too far out of line.”

For the fiscal year, Scotiabank posted profit of C$7.3 billion, or C$5.66 a share, a 10 percent increase from C$6.6 billion, or C$5.11, a year earlier.

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