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A Scotiabank branch on Bay Street South of Queen Street in Toronto in this file photo. The bank reported its latest earnings Tuesday.Ryan Carter/The Globe and Mail

Bank of Nova Scotia handily beat earnings expectations in the third quarter, posting a $1.77-billion profit that was boosted by strong wealth management operations, resilient Canadian retail lending and an asset sale in its international division.

Although the bank's net income came in lower than the $2.05-billion reported during the same period in 2012, last year's profit included a major gain from the sale of the bank's headquarters in downtown Toronto. Stripping out that gain, profit last year was $1.44-billion.

The bank's adjusted earnings per share, which do not include the sale of Scotia Plaza and other one-time gains and charges, amounted to $1.39 in the third quarter. Analysts expected $1.31 per share.

Scotiabank boosted its quarterly dividend to 62 cents per share, up from 60 cents. The move was widely expected.

Much like Bank of Montreal, which kicked off earnings season early Tuesday morning, Scotiabank's wealth management unit stole the spotlight last quarter, with profit up 18 per cent to $327-million. The division's bottom line benefited from strong mutual fund fees as well as higher commissions earned through ScotiaMcLeod, the bank's retail brokerage.

The bank's Canadian retail division, which accounts for the bulk of its profits, also reported strong results, posting a record profit of $590-million. However, this figure is propped up by the acquisition of ING Bank Canada last year.

But even after excluding the benefits of this deal Scotiabank's Canadian retail operation performed well with revenues up 6 per cent. Organic lending growth also jumped 6 per cent for residential mortgages and 9 per cent for personal loans and credit cards.

Core earnings from international banking suffered this quarter, with the unit relying on a $150-million after tax gain from an asset sale to shore up its profit. Stripping out one-time items, expenses were a problem, climbing 9 per cent, while revenues were up 7 per cent. However, the international division's growth remains promising: retail and commercial loan growth climbed 12 per cent and 9 per cent, respectively.

While Scotiabank stressed that revenues were up across all its units, expenses also climbed higher. Excluding the sale of Scotia Plaza, revenues were up 15 per cent from the year prior while expenses jumped 14 per cent, eating into the gains.

The bank's provisions for credit losses also fell by a hefty $88-million in the quarter, which means part of the bank's profit hike came from accounting changes, rather than hard cash.

Unlike some of its rivals, Scotiabank has been optimistic about the strength of Canadian banking in the near-term. Last quarter, incoming CEO Brian Porter said he expected the bank's Canadian assets to continue growing at healthy rates because the country's housing market remained stable and the prospects for auto financing were booming.

Because the Canadian market has been difficult to predict, some investors haven't been so sure of this thesis. This crowd has been able to look to the growing international operation for comfort. Net income from the bank's international division is approaching the profit posted by its Canadian operation and Scotiabank has invested heavily in Latin America, where growth has outpaced Canada's. Recent expansions in countries such as Peru and Colombia set the stage for bigger profits in the region.

Such potential not only offsets the bank's reliance on Canada, but also cushions the blow from abandoning the acquisition of a minority stake in a Chinese bank.

In July, Scotiabank announced it pulled out of its deal to buy 19.99 per cent of Bank of Guangzhou in southern China for $719-million. Although the deal would have let the bank tap China's third-largest urban market, Scotiabank walked away "in light of changing conditions" after warning for months that it would not wait forever for political approval.

The question now is whether Latin America can stay hot and continue putting up double-digit retail and commercial loan growth. Investors are falling out of favour with numerous emerging markets, such as Indonesia and India, and it isn't clear yet whether Latin America can buck the trend.