Bank of Nova Scotia lifts dividend; Q1 earnings slip amid market volatility

Reflecting the volatile market conditions, Bank of Nova Scotia (BNS) Tuesday reported a decline in its first-quarter earnings which also missed analysts’ forecast. Meanwhile, the bank raised its quarterly dividend by 2 cents, bringing some cheer to the shareholders.

Adjusted net income, excluding acquisition-related costs, dropped 6% to C$1.75 per share in the January quarter from C$1.87 per share a year earlier and missed market estimates. Reported profit declined to C$2.11 billion or C$1.71 per share from C$2.25 billion or C$1.86 per share in the first quarter of 2018.

Meanwhile, net interest income moved up 8.6% annually to C$4.27 billion, driving total revenues higher by 7.3% to C$7.6 billion. Non-interest income was up 5.6% compared to the year-ago period. There was a 270-basis point decline in return on equity, to 13.5%.

“This quarter also saw good progress related to the integration of recent acquisitions which is proceeding as expected. While significant market volatility impacted some of our business lines, we still experienced strong growth. In addition, credit quality remains strong and in line with recent quarters,” said CEO Brian Porter.

Meanwhile, the bank raised its quarterly dividend by 2 cents to 87 cents, bringing some cheer to shareholders

In the Canadian Banking segment, profitability was hit by higher non-interest expenses and provision for credit losses, which more than offset an increase in net interest income. Meanwhile, International Banking operations registered higher earnings on the back of solid loan/deposit growth and inputs from recent acquisitions.

There was a double-digit decline in earnings at the Global Banking and Markets segment, hurt by lower fixed income trading revenues and net interest income, and higher non-interest expenses.

Looking ahead, the bank has laid down strategies to tide over the current market volatilities and drive growth in the remainder of the year, with focus on integrating the recent acquisitions.

Also see: Bank of Montreal posts solid Q1 results

During the first quarter, the management raised the quarterly dividend by 2 cents to 87 cents per share, which represents a 6% cumulative growth from last year.

After slipping to the lowest level in nearly three years, the bank’s shares bounced back in December last year and maintained a steady uptrend in the New York Stock Exchange since then. The stock has gained about 7% so far this year.

 

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