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(Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail)
(Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail)

Scotiabank profit climbs 17 per cent Add to ...

Bank of Nova Scotia , the last of Canada's big six banks to report its first-quarter profits, earned $988-million during the period, up 17 per cent from a year ago.

Its results topped the Street's forecast, concluding a period in which the Canadian banking sector has far surpassed analysts' expectations. Scotiabank's five major rivals collectively earned more than $4.3-billion in the three months ended January 31, up from $2.4-billion a year ago.

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Scotiabank chief executive Rick Waugh noted that "we are still in the early days of the recovery," and said the bank continues to operate cautiously.

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Its Canadian banking business brought in record profits of $560-million, up 28 per cent from a year ago, while earnings from its international operations declined this quarter.

Strong trading revenues again provided a boost, masking some of the damage done by higher provisions for soured loans. Many of the banks have been benefiting from unusually high trading revenues in recent quarters, something that analysts fear is unsustainable.

Scotiabank's provision for credit losses was $371-million this quarter, up $90-million from a year ago, but down $49-million from the prior quarter.

"Provisions for credit losses remain within our expectations for this stage of the credit cycle and there is evidence of stabilization as demonstrated by the decline in provisions from the previous quarter," Mr. Waugh said.

Profit margins on corporate loans, and Canadian mortgages and personal lines of credit were all up.

Scotiabank's results were hurt by a higher tax rate of 33.6 per cent, up from 17.9 per cent a year ago.

"We were a little surprised that Scotiabank's earnings did not exceed consensus by a higher margin, given the fact that [loan loss]provisions came in $100-million below the Street's expectations," Barclays Capital analyst John Aiken wrote in a note to clients. "However, Scotia did finish earnings season off in style and we believe the outperformance on earnings against consensus should benefit its valuation as it had lagged the group through this earnings season."

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