TORONTO -- Bank of Nova Scotia's profit was weighed down in its latest quarter by mounting provisions for bad loans and its Latin American operations.
The Toronto-based bank revealed Tuesday that its third-quarter profit slipped to $1.30 billion from $1.98 billion a year ago, while its provisions for credit losses totalled $2.18 billion for the quarter, up from $713 million in the year prior and $1.85 billion last quarter.
鈥淲e know that structural damage has been done to the economy. It's going to require a lot of quarters of clean up from here, but we do view this quarter's PCL as our high-water mark,鈥� Daniel Moore, the bank's chief risk officer, told a conference call with financial analysts.
鈥淲e see it decline substantially from here, and we're well provisioned on the balance sheet to cover our current estimate of future net write-offs.鈥�
His remarks came as the bank said its profit amounted to $1.04 per diluted share for the quarter ended July 31 compared with $1.50 per diluted share a year earlier.
Revenue totalled $7.73 billion, up from $7.66 billion in the same quarter last year.
On an adjusted basis, Scotiabank says it earned $1.04 per diluted share in the quarter, down from an adjusted profit of $1.88 per share in the same quarter last year.
Analysts on average had expected an adjusted profit of $1.11 per share, according to financial markets data firm Refinitiv.
The bank was 鈥渟ignificantly鈥� impacted by operations in its Latin American markets, which were late to experience the spread of COVID-19, executives said.
Scotiabank's international banking operations lost $28 million, compared with a profit of $844 million a year ago.
鈥淭here is a lag effect, but we are already seeing clear signs that Pacific Alliance countries are in a recovering path and following the positive trend we're seeing in North America,鈥� said Ignacio Deschamps, the company's group head of international banking and digital transformation.
He has seen mining exports and copper prices rise above pre-COVID levels in Chile, electricity consumption rebound in Peru and Columbia and manufacturing come back in Mexico.
While countries in the region may have low levels of GDP, they have had active monetary policies to support a recovery from the pandemic, he said.
鈥淚n Peru and Chile, for example, governments have allowed workers to disperse up to 25 per cent of their pension in Peru and 10 per cent in Chile, which is a very material support of $20 billion in Chile and $10 billion in Peru that is helping workers,鈥� Deschamps added.
鈥淪o overall, there is a lag effect, but we are going to see an improvement.鈥�
Despite the Canadian economy slowly recovering, the bank is also feeling impacts of the pandemic at home.
Scotiabank's Canadian banking operations reported a profit $429 million in its latest quarter, down from $910 million in the same quarter last year.
The bank's global wealth management business earned $324 million, up from $306 million in the same quarter last year.
Global banking and markets earned $600 million, up from $374 million a year ago.
This report by The Canadian Press was first published Aug. 25, 2020
