Bank of Nova Scotia reveals profit drop

Final of the big five Canadian banks reveals its second quarter results – and bad loans have taken their toll

Bank of Nova Scotia reveals profit drop
After four of the five big Canadian banks revealed their second quarter results last week, the Bank of Nova Scotia has today completed the set – with bad loans taking their toll on the company’s profits.

According to its release today, second quarter profits slipped by 12 per cent largely due to increased losses related to energy loans as well as restructuring charges as the company moves towards a digital banking offering.

Bloomberg reports that the company’s net income to the period ending April 30 slipped to $1.58 billion – from $1.8 billion during the same quarter last year.

Breaking down the results, its Canadian and international banking arms enjoyed year-on-year profits – up 18 per cent to $977 million. This includes the company’s domestic insurance and wealth management units. However, this was offset by $278 million in restructuring charges. According to chief executive officer Brian Porter, the company has been looking to realign its banking operations with an increasing number of customers looking to do their banking online.

In addition, the bank set aside $752 million for soured loans during the quarter – that’s a rise from $448 million during the same quarter one year earlier. Impaired gas and oil loans reached $351 million at the end of April, a rise from $336 million during the previous quarter and just $92 million one year earlier.

In a statement announcing the results, CEO Brian Porter was primarily positive about the future.

“The strength of our results this quarter underscores the continued strong performance of both our Canadian banking and international banking businesses,” he said. “Partly offsetting our earnings growth were elevated loan losses in the energy sector, which are expected to decline beginning next quarter.”