Scotiabank Misses Estimates on Higher Than Expected Provisions
Scotiabank, one of Canada’s largest banks, reported earnings that missed analysts’ estimates due to higher than expected provisions for loan losses. The bank reported a net income of $1.3 billion for the quarter ended October 31, 2023, down from $1.5 billion in the same period a year earlier.
Impact of COVID-19
The bank’s results were impacted by the ongoing COVID-19 pandemic, which has caused economic disruption and increased loan losses. The bank set aside $1.2 billion in provisions for loan losses, up from $890 million in the same period a year earlier. The bank said the increase was due to higher loan losses in its Canadian and international banking businesses.
Revenue and Expenses
Revenue for the quarter was $5.9 billion, down from $6.2 billion in the same period a year earlier. The bank said the decrease was due to lower net interest income and lower non-interest income.
Expenses for the quarter were $4.6 billion, up from $4.3 billion in the same period a year earlier. The bank said the increase was due to higher provisions for loan losses and higher operating expenses.
Outlook
The bank said it expects the economic environment to remain challenging in the near term, and that it will continue to monitor the situation closely. The bank said it is well-positioned to manage through the current environment and is focused on delivering long-term value for its shareholders.
Share Price
The bank’s shares were down 2.3% in trading on the Toronto Stock Exchange following the earnings announcement. The bank’s shares have fallen more than 10% since the start of the year.
Dividend
The bank said it will maintain its quarterly dividend of $0.86 per share. The dividend is payable on December 31, 2023, to shareholders of record at the close of business on December 10, 2023.
Capital Position
The bank said its capital position remains strong, with a Common Equity Tier 1 ratio of 11.2%. The bank said it is well-positioned to support its customers and communities through the current environment.
Conclusion
Scotiabank reported earnings that missed analysts’ estimates due to higher than expected provisions for loan losses. The bank’s results were impacted by the ongoing COVID-19 pandemic, which has caused economic disruption and increased loan losses. The bank said it expects the economic environment to remain challenging in the near term, and that it will continue to monitor the situation closely. The bank’s shares were down 2.3% in trading on the Toronto Stock Exchange following the earnings announcement. The bank said it will maintain its quarterly dividend of $0.86 per share and that its capital position remains strong.