Bank of Nova Scotia capped a busy earnings week for Canada's banks Friday, continuing the trend set by its peers as it beat expectations despite significantly higher loan-loss provisions.
Its fiscal third-quarter earnings fell to $852 million, or 79 cents a share, down 7.8% from a year earlier. However, this exceeded the mean estimate by analysts in a Thomson Reuters survey.
Analysts said, however, that after three days of strong gains on the euphoria generated by the healthy earnings reports from the country's other big banks, share prices were unlikely to have much more upside.
"Expectations have risen significantly from before the start of earnings season," Dundee Securities analyst John Aiken said in a note.
Royal Bank of Canada, Toronto-Dominion Bank and National Bank of Canada on Thursday all reported third-quarter results that beat expectations, and earlier in the week Bank of Montreal also surprised positively. Only Canadian Imperial Bank of Commerce fell short of expectations, though its results were better than a year earlier.
Toronto's Bank of Nova Scotia said its loan-loss provisions rose to $507 million in the quarter, an increase of 248% from a year earlier.
With the exception of Bank of Montreal, the Canadian banks all reported bigger loan-loss provisions in the latest quarter. Bank of Nova Scotia said its provisions reflected increased reserves in all three of its business lines — Canadian banking, Scotia Capital and international banking.
Still, Aiken noted that a specific provision of $426 million was below the mean expectation of $450 million though above his own estimate of $402 million. "While this is reasonably positive, it is not as significant as the host of banks reporting yesterday," he added.
Much as Royal Bank and Toronto-Dominion did, Scotia said trading revenue soared in the quarter, coming in at $470 million, more than double the year-earlier number and helping the bank to a record $3.48 billion in total revenues. On Thursday, Royal Bank reported record trading revenues of $1.46 billion, and TD reported $579 million.