Is the outlook on trade tensions brightening?
Scotiabank announced stronger-than-expected financial results for the third quarter on Tuesday morning, reducing the amount it set aside for potential loan losses and earning higher interest than the same time last year.
The banking giant said its adjusted net income had risen to $2.518 billion for the third quarter, with adjusted diluted earnings per share (EPS) jumping from $1.63 to $1.88.
The result was spurred by a surge in Scotiabank’s Canadian banking unit, which saw adjusted earnings spike by 56% over the prior quarter – hitting $959 million – although that figure was down 2% compared with the same time last year.
Its global wealth management arm saw adjusted earnings rise by 13%, rising to $427 million, while global banking and markets posted an increase of 29% in reported earnings, to $473 million.
Meanwhile, lower provisions for potentially souring loans suggests Scotiabank’s outlook on the tariff war with the United States could be improving.
The bank set aside $1.04 billion in loan loss provisions during the third quarter, lower than average analyst expectations of $1.17 billion, with BMO also stashing less than expected for credit losses in its Q3 earnings, announced Tuesday.
Scotiabank president and chief executive officer Scott Thomson said the results reflected a “very strong quarter” for the bank and underlined healthy prospects looking ahead.
“We reported improving revenue growth which helped drive another quarter of positive operating leverage and pushed out return on equity meaningfully higher compared to the prior year,” Thomson said in prepared comments. “We did this all while maintaining a strong balance sheet and buying back shares.”
Scotiabank and Bank of Montreal (BMO) were the first of Canada’s major lenders to report their third-quarter earnings.
Analysts will be closely watching the Q3 reports of the country’s four other banking giants – Royal Bank of Canada (RBC), Canadian Imperial Bank of Commerce (CIBC), Toronto-Dominion Bank (TD), and National Bank – to see whether their outlook on the US trade war is also brightening.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
