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The Bank of Montreal and Scotiabank buildings are seen in downtown Toronto on Friday, July 26, 2013.Michelle Siu/The Canadian Press

Canada's big banks continue to find ways to keep their profit machines humming, but growth is being driven increasingly by cost cutting and riskier activities rather than traditional lending.

Bank of Nova Scotia and Bank of Montreal kicked off the banks' fourth-quarter reporting season with strong results that defied the lacklustre domestic economy in which they operate.

Scotiabank reported that its quarterly profit rose to $1.8-billion, up 8 per cent from last year after accounting for the sale of its stake in asset manager CI Financial Corp. in 2014.

BMO's profit rose to $1.2-billion, up 13 per cent over last year. The lender also boosted its quarterly dividend by 2 cents a share, to 84 cents, and announced its intention to repurchase up to 15 million of its shares.

The generally upbeat results appeared out of line with Canada's slow economic activity. Statistics Canada reported that the country's gross domestic product rose at an annualized rate of just 2.3 per cent in the three months ended Sept. 30 – and it shrank in September.

"Notwithstanding that we may have more modest GDP growth, we can still grow quite profitably here in Canada and abroad," said Sean McGuckin, Scotiabank's chief financial officer.

While activity in the mortgage market has slowed, he pointed to opportunities in areas such as wealth management, commercial lending and credit cards.

Scotiabank also increased its loan exposure to the struggling energy sector by 4 per cent from the past quarter. Loans now total $16.5-billion, after additional support to pipelines and oil refineries.

However, moving into areas that are more sensitive to economic downturns has caught the eye of at least one rating agency.

Moody's Investors Service last month put Scotiabank on review for a potential credit-rating downgrade, noting that the bank "has taken significant measures to increase its profitability that signal a fundamental shift away from the bank's traditionally low-risk appetite."

Canada's big banks had begun 2015 with warnings about challenging times ahead – and the full-year results from Scotiabank and BMO suggest they are indeed dealing with slowing growth over all.

For the full year, Scotiabank reported a profit of $7.2-billion, a 3-per-cent increase from the previous year. BMO reported a profit of $4.4-billion in 2015, up just 1.7 per cent.

To deal with this new reality, Scotiabank and BMO – like their peers – have been focusing on cutting expenses amid a period of tremendous change in consumer behaviour as traditional banking moves away from branches.

"This year, the bank made a number of strategic investments in technology that will transform and simplify the way customers do business with us," Brian Porter, Scotiabank's chief executive officer, said during a conference call with analysts. "Compared to just a year ago, these new technologies allow the bank to deliver a more seamless customer experience and will drive future growth."

On Tuesday, the bank announced that it had appointed Ignacio (Nacho) Deschamps as strategic adviser, global digital banking, effective Jan. 4. Mr. Deschamps, formerly CEO of BBVA Bancomer, Mexico's largest bank, will help prioritize Scotiabank's digital transformation.

During the fourth quarter, Scotiabank shed 1,140 jobs and closed 34 branches and offices. BMO, meanwhile, shed 890 full-time employees in Canada and the United States while focusing on expanding its online and mobile banking services.

"We will continue to make investments in areas that will generate top-line benefits in fiscal 2016, including innovations in channels, expanding the smart branch and building online capabilities to drive digital sales," BMO CEO Bill Downe said in a conference call with analysts.

BMO also announced Tuesday that it had completed its acquisition of GE Capital's transportation finance unit, giving the bank the largest truck and trailer financing arm in North America. The deal reflects efforts by Canadian banks to add higher-yielding assets.