Scotiabank's Latin America push outpaces BMO's U.S. efforts

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Bank of Nova Scotia's focus on Latin America proved a better bet than Bank of Montreal's U.S. push in the fiscal third quarter.

Scotiabank's earnings topped analysts' estimates on a surge in profit in its international-banking division, fueled by a sharpened focus on Latin America. Bank of Montreal, meanwhile, fell short of expectations as growth was more muted at its U.S. personal-and-commercial banking division, which includes Chicago-based BMO Harris Bank.

"It's hard to ignore the fact that the trade tensions are creating, first of all, volatility in the markets, as you know well, but also some suppression of growth," Bank of Montreal Chief Executive Darryl White said Tuesday on a conference call with analysts. "Our customer base in Canada and the U.S. continues to spend and continues to expand, I would say, a little bit more prudently than perhaps they might have six or 12 months ago."

At Scotiabank, the international-banking division earned C$902 million ($682 million), up 90% from a year ago, when results were pared by acquisition costs. Adjusted profit in the division was up 20%, the biggest gain among the Toronto-based lender's three main segments. CEO Brian Porter has been focusing on the stable Latin American markets of Mexico, Chile, Colombia and Peru, with a recent acquisition in Chile helping drive growth as the Toronto-based lender retreated from other areas.

At smaller competitor Bank of Montreal, which has focused on the U.S. for greater growth under White, the earnings increase at its U.S. retail bank cooled to 1.1%, the smallest expansion since the fourth quarter of fiscal 2017. Still, profit from the Toronto-based bank's overall U.S. operations, which include capital markets and wealth management in the country, was up 17% from a year ago.

Scotiabank had adjusted earnings of C$1.88 a share for the three months through July 31, topping analysts' average estimate of C$1.85, while Bank of Montreal's adjusted earnings of C$2.38 fell short of the C$2.49 estimate. The miss was driven by higher loan-loss provisions as Canadian consumer losses rose with the migration to a new collections platform, the bank recorded a single large loss from an impaired Canadian commercial loan in the health-care sector and set-asides for performing loans were increased.

Bloomberg News