Bank posts 28% profit jump and raises quarterly dividend
Scotiabank's Scott Thomson sees a Canada that international investors are finally betting on again and his bank's second-quarter results suggest he has reason to believe it.
Thomson told analysts Wednesday that foreign direct investment hit nearly $100bn last year, the Financial Post reported.
It was the highest level since 2015 and the first time in a decade that inflows exceeded outflows.
Canadian pension funds, which "historically looked outside of the borders," are now "increasingly looking inside the borders," he said.
Thomson credited Prime Minister Mark Carney's "business-friendly government" as a key driver, citing pipeline negotiations with Alberta, carbon emissions talks, and airport privatisation discussions as signals of increased capital deployment ahead.
He also cited Canada's position as an oil exporter with prices above US$90 per barrel, the Canadian Press reported.
The price environment enables "significant fiscal stimulus" to support provinces affected by trade disruption or affordability pressures, he said.
Thomson said CUSMA would not be dismantled, telling the Canadian Press that despite possible sector-specific tariffs, "this regional trading bloc is increasingly important to the US."
Scotiabank posted adjusted net income of $2.65bn for the quarter ended April 30, up 28 percent year over year, with adjusted earnings per share of $2.02 — above the analyst consensus of roughly $1.93.
Revenue totalled $9.84bn, up from $9.08bn a year earlier.
Jefferies analyst John Aiken called it a "solid beat" showcasing strong domestic retail lending.
Canadian banking posted net income of $935m, up 53 percent year over year, while global wealth management earned $476m, up 19 percent, and global banking and markets reported $457m, up 11 percent.
The bank raised its quarterly dividend by four cents to $1.14 per share, payable July 29.
Not everything pointed upward.
Chief risk officer Shannon McGinnis said provisions for credit losses on impaired loans are "slightly elevated relative to our initial outlook," the Financial Post reported.
The quarter's PCLs came in at $1.2bn, lower than $1.39bn a year ago but above the prior quarter's $1.17bn.
She attributed the increase primarily to one corporate account in international banking and said PCLs should still trend downward in the second half, albeit more gradually than originally anticipated.
McGinnis told analysts the macroeconomic environment has "evolved meaningfully since the start of the year," the Canadian Press reported, with elevated energy costs, trade uncertainty, and higher unemployment continuing to pressure consumers and businesses.
Statistics Canada's latest business conditions survey reinforced that caution.
Some 64.3 percent of businesses expected cost-related obstacles over the next three months, up from 58.9 percent in the first quarter, with inflation the most commonly flagged concern at 48.8 percent.
Over one-third expected US tariffs to negatively affect operations over the next 12 months, led by manufacturers at 54.0 percent.
Despite that, 66.8 percent said they remained optimistic about the year ahead.
