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bank earnings

A man walks past a Scotiabank branch on Bloor Street West in Toronto in this file photo.Darren Calabrese/The Globe and Mail

Bank of Nova Scotia hiked its dividend by nearly 4 per cent as third-quarter profit climbed faster than expected.

Canada's third-largest lender by assets reported profit of $2.1-billion for the quarter that ended July 31, up 7 per cent from $1.96-billion a year ago.

The bank earned $1.66 per share, up from $1.54 a share in the same quarter last year.

Adjusted to exclude certain items, the bank earned $1.68 per share. Analysts surveyed by Bloomberg were expecting $1.64 a share.

Scotiabank's dividend increased by 3 cents a share to 79 cents per share.

"We are pleased with our results," said chief executive officer Brian Porter, in a news release, pointing to "strong performance of our underlying businesses, combined with high capital levels."

Scotiabank's common equity tier 1 ratio – one measure used to assess the strength of a bank's capital – rose to 11.3 per cent, from 10.5 per cent a year ago.

Return on equity remained flat at 14.8 per cent compared with the third quarter of 2016.

The bank also generated higher profit from each of its three main business lines. Earnings in Scotiabank's core Canadian retail arm rose 12 per cent to $1.05-billion, though 4 per cent of the increase came from higher gains on the sale of real estate.

In the international division, which includes operations in Mexico, Peru, Chile and Colombia, profit climbed 16 per cent higher than it was a year ago, to $614-million.

And the global banking and markets division bucked a recent trend of declining capital markets earnings by posting profit of $441-million, up 5 per cent from the same quarter a year ago. Higher contributions from the bank's equities business helped drive the improved results.

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