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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Bank Nova Scot | LSE:BNV | London | Ordinary Share | CA0641491075 | COM NPV |
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0.00 | 0.00% | 0.00 | - |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:1045Q Bank of Nova Scotia 29 August 2000 Third Quarter: Scotiabank reports record earnings - the best quarterly results in its 168-year history Net income of $548 million, up $151 million or 38% year-over-year Earnings per share $1.05, up 40% from 1999 Return on equity climbed to 19.8%, up from 15.3% for same period last year Dividend increased by four cents to 28 cents per common share Toronto, Aug. 29 - Scotiabank has delivered its best quarter on record. Continuing its consistent growth trend over the past decade, Scotiabank reported third quarter net income of $548 million, up $151 million or 38% from the same period last year. Earnings per share climbed a significant 40% to $1.05, while return on equity (ROE) rose sharply to 19.8%,up from 15.3% a year ago. In addition, for the nine month period ended July 31, 2000, net income was $1,429 million or 24% higher than the same period a year ago. Earnings per share climbed to $2.72 from $2.17, while ROE improved to 17.8% from 15.3%. Further, performance in the third quarter also substantially exceeded the preceding quarter with income up $83 million or 18% from $465 million; earnings per share up to $1.05 from $0.88 and ROE up to 19.8% from 17.7%. The productivity ratio also showed a marked improvement to 54%, from 58%, quarter-over-quarter. Reflecting the Bank's strong performance, the Board of Directors today announced an increase in the quarterly dividend of four (4) cents to 28 cents per common share, payable on October 27, 2000 to shareholders of record as at the close of business on October 3, 2000. "Scotiabank has delivered a very good quarter, with all of the Bank's major business lines making a substantial contribution to our results," said Peter Godsoe, Scotiabank's Chairman and Chief Executive Officer. "We are well positioned to continue to deliver sustained growth in our core earnings, reflecting the strength of our diversified operations, our above-average efficiency and our focus on anticipating and meeting the evolving needs of our customers," he said. "Domestic Banking, including Wealth Management, led the record quarter, growing 15% quarter-over-quarter and 49% year-over-year, thanks to continued growth in assets, higher retail and commercial fee income, a substantial rise of 33% in retail brokerage revenue and the sale of the Bank's stock transfer business," said Mr. Godsoe. "International Banking continued its solid record of growing earnings, with net income rising 10% in the quarter and 25% year-over-year. Strong revenue growth of 7% in the Caribbean along with the sale of Solidbank, in the Philippines, were the largest contributors to the quarterly increase, while higher earnings in all regions led to the substantial growth year-over-year. "On the wholesale side, Scotia Capital generated very strong revenue growth of 17% over last quarter and 30% year-over-year. Growth in business volumes and margins, as well as higher underwriting and credit fee income, were the major contributors," Mr. Godsoe added. Special items recorded this quarter included the sales of the Bank's stock transfer business and the Bank's 40% investment in Solidbank. These items contributed $0.11 in earnings per share to the third quarter results. Even excluding special items, earnings were $495 million or $0.94 per share, a robust 25% increase over the same quarter last year. The adjusted ROE rose to 17.8%. "Within the Canadian marketplace, we are using a combination of traditional branches, specialised sales forces and world-class technology to enhance service delivery. By continuously developing innovative new financial solutions, and putting customers first, we are providing increased value and choice for personal and business clients," said Mr. Godsoe. For example, all of Scotiabank's Canadian branches now operate with Forms-Free Teller, a paperless banking system, which electronically processes and automatically balances all routine, in-branch transactions. Customers benefit from greater convenience and speed of service -- no forms to fill in and quicker turn-around times for routine transactions. From the business perspective, it allows the Bank to maximise efficiencies and improve customer service, with staff spending more time with customers providing the value-added advice and services they want. Mr. Godsoe said other examples, introduced during the quarter, included: Scotiabank's launch of a new sales-focused structure to further strengthen customer relationships and increase sales. The initiative includes a world-class contact management and sales tracking/reporting system, called Sales Builder; the introduction of the Scotia Simple Switch program, giving customers a quick and easy way to transfer their pre-authorised transactions from another financial institution; Scotiabank VISA card for small business -- a no-fee VISA card combined with a competitive line of credit; a five-year variable mortgage, capped at 0.25% below the fixed five-year mortgage rate, coupled with an accelerated prepayment schedule to help customers secure significant long-term savings; Scotia Partners Portfolio -- four new mutual fund portfolios, which include 16 leading third-party mutual funds; a partnership between e-Scotia and Creditwave, a Canadian e-commerce company to allow small and medium-sized businesses to receive and provide instant online credit to their customers; an agreement with Halifax-based TIM Dealer Services to provide auto dealerships across Canada with an internet-based credit application and approval system. Internationally, Scotiabank: implemented new sales delivery platforms in Bahamas, Barbados and Trinidad and Tobago; joined forces with the Export Development Corporation to launch the Scotia Americas Capital Equipment Program for small and medium-sized businesses in Argentina, Chile, El Salvador, Jamaica and Trinidad and Tobago; announced its intention to acquire up to 100% control of Banco Sud Americano in Chile. In addition, Scotiabank had a number of other achievements during the quarter, including: Scotia Capital was co-lead manager and book runner on the $1 billion initial public debt offering for Hydro One Inc.; Scotia Capital was named Canada's top underwriter of IPOs for 1999 by Investment Executive and ranked number one for IPO sales by The Globe and Mail; Scotia Capital was the only Canadian firm, out of three, to execute the largest equity forward contract in Canadian history for BCE Inc.; In the U.S., Scotia Capital's deal with Calpine Construction Finance Company, was named Project Finance Deal of the Year by Investment Dealer digest; Euromoney named Scotia Capital the number one Canadian Bank for currency research and number one for trading strategies; Scotiabank, as ranked by relative industry global performance, was judged the world's best bank in the University of Oxford's Templeton College's "Templeton Global Performance Index"; Scotiabank was named one of Canada's top 100 employers and one of the 10 best employers for women by Canada's best-selling career author, Richard Yerema, in his book, Canada's Top 100 Employers, released in June. Review of operating performance Revenues The quarter's strong results were driven by excellent revenue growth. Total revenues -- comprised of net interest income and other income -- rose to $2,375 million in the third quarter, a significant increase of 22% over last year. Net interest income Higher lending volumes and a stronger interest margin generated a substantial year-over-year increase in net interest income, which climbed by 20% to $1,385 million. Both foreign currency and Canadian currency interest profits were up year-over- year. In Canada, growth in residential mortgage loans of 6%, along with higher securities income, combined for an increase in Canadian currency profits. Internationally, net interest income rose primarily through loan growth in the United States, and continued strength in the Bank's Caribbean operations. As well, income from Banco Sud Americano, Chile, was consolidated for the first time in the preceding quarter, contributing to the year-over-year improvement. Other income Other income climbed by 26% in the third quarter to $990 million, a significant gain over the same quarter last year. The growth was very broad based, led by wealth management-related revenues, including a 33% rise in retail brokerage fees. Double-digit revenue gains were also achieved in credit-related fees, trading revenues and underwriting fees. Gains on investment securities were $115 million versus $89 million last year, as the Bank continued to take advantage of favourable equity markets. Included in these gains was $21 million relating to the sale of the Bank's 40% stake in Solidbank, in the Philippines. As well, other income included $61 million from the sale of the Bank's stock transfer business. Expenses Continued focus on expense management resulted in a substantial improvement in the productivity ratio to 54% in the quarter (55.9% excluding special items), versus 60.4% in the third quarter last year. Scotiabank has the leading productivity ratio amongst its Canadian bank peers. Total expenses were $1,310 million in the third quarter, an increase of 9% over the same period last year. Excluding Banco Sud Americano's expenses, the growth was 6%. The majority of this increase arose from higher performance-driven compensation consistent with better performances in trading and retail brokerage. Credit quality The current forecast for the annual specific provision for credit losses is $765 million, an increase of $100 million from the previous forecast. This was primarily related to higher provisions required for several accounts in North America and is a reflection of the Bank's traditional conservative approach to provisioning. The third quarter's specific provision for credit losses was $227 million, up from $108 million a year ago, and $177 million in the preceding quarter. Net impaired loans remained relatively unchanged. The allowance for credit losses exceeded the gross amount of impaired loans by $163 million, or (0.1)% of total loans and acceptances, an improvement of $32 million over the last quarter. The Bank continues to maintain a substantial general provision of $1,300 million. Balance sheet Total assets as at July 31, 2000, were $243 billion, up 7% or $16 billion from a year ago. Increases in securities and assets purchased under resale agreements accounted for $10 billion of the increase, and the consolidation of Banco Sud Americano contributed almost $4 billion. Solid gains were achieved in both personal and business loans. Residential mortgages in Canada grew by over $2 billion as customer demand remained strong. Prior to securitisations, personal loans increased by 8% reflecting the strong Canadian economy. The Bank's business loans portfolio had a year-over-year increase of 7%, with higher volumes across many of the Bank's operations. In the Bank's investment securities portfolio, the surplus of market value over book value grew again this quarter to $751 million, up $102 million over April 30, 2000. The higher surplus arose primarily in the Bank's emerging market portfolio. On the deposit side, the Bank posted solid growth in its market-leading stock- indexed GICs, accompanied by double-digit gains in current account balances, enabling a reduction in more expensive wholesale deposits. Capital The Bank is very well capitalised. Total shareholders' equity was $12.5 billion as at July 31, 2000, compared to $12 billion at the end of the preceding quarter, an increase of $464 million or 4%, due principally to earnings retention of $402 million. The Bank's Tier 1 capital ratio climbed to 8.5%, up from 8.4% in the prior quarter, and the Bank's total capital ratio was 12.1% compared to 12%. These capital ratios are among the best of the other Canadian banks, and remain well in excess of the minimum targets of 7% and 10% set by the Bank's regulator. Outlook "2000 is shaping up as another good year for economic growth in Canada and the United States. The upswing in the global economy continues, with broadening recovery in Asia and increasing momentum in Latin America. These strengthening conditions are expected to support continued earnings growth for our Bank," said Mr. Godsoe. Performance Highlights Scotiabank ----------------------------------------------------------------------- For the three months ended ----------------------------------------------------------------------- July 31(1) April 30 July 31 (Unaudited) 2000 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (millions) $548 $465 $397 Earnings per share $1.05 $0.88 $0.75 Return on equity 19.8% 17.7% 15.3% Productivity ratio 54.0% 58.0% 60.4% ------------------------------------------------------------------------- For the nine months ended --------------------------------------------------------------------- July 31(2) July 31 (Unaudited) 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (millions) $1,429 $1,149 Earnings per share $2.72 $2.17 Return on equity 17.8% 15.3% Productivity ratio 56.7% 59.1%(2) -------------------------------------------------------------------------- 1. Excluding special items recorded in the three month period ended July 31, 2000, net income was $495 million, earnings per share was $0.94, return on equity was 17.8%, and the productivity ratio was 55.9%. 2. Excluding special items recorded in the third quarter, for the nine month period ended July 31, 2000, net income was $1,376 million, earnings per share was $2.61, return on equity was 17.1%, and the productivity ratio was 57.4%. Excluding the special item recorded in the first quarter of 1999, for the nine month period ended July 31, 1999, the productivity ratio was 59.9%. Interim Consolidated Statement of Income Scotiabank ------------------------------------------------------------------------- For the three For the nine months ended months ended ------------------------------------------------------------------------- (Unaudited) July 31 April 30 July 31 July 31 July 31 ($ millions) 2000 2000 1999 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Interest income Loans $3,182 $2,898 $2,565 $8,833 $8,004 Securities 577 537 480 1,664 1,378 Deposits with banks 252 208 212 666 730 ----------------------------------------------------- 4,011 3,643 3,257 11,163 10,112 ----------------------------------------------------- ----------------------------------------------------- Interest expense Deposits 2,118 1,929 1,720 5,979 5,501 Subordinated debentures 77 78 81 237 232 Other 431 373 300 1,141 879 ----------------------------------------------------- 2,626 2,380 2,101 7,357 6,612 ----------------------------------------------------- Net interest income 1,385 1,263 1,156 3,806 3,500 Provision for credit losses 227 177 108 539 476 -------------------------------------------------- Net interest income after provision for credit losses 1,158 1,086 1,048 3,267 3,024 -------------------------------------------------- -------------------------------------------------- Other income Deposit and payment services 158 154 152 467 452 Investment management and trust 178 219 144 577 451 Credit fees 168 141 136 468 389 Investment banking 201 218 181 554 520 Net gain on investment securities 115 147 89 333 241 Securitisation revenues 52 49 45 156 113 Other 118 60 39 245 177 ----------------------------------------------------- 990 988 786 2,800 2,343 ----------------------------------------------------- ----------------------------------------------------- Net interest and other income 2,148 2,074 1,834 6,067 5,367 ----------------------------------------------------- ----------------------------------------------------- Non-interest expenses Salaries 661 670 583 1,916 1,715 Pension contributions and other staff benefits 91 91 96 264 257 Premises and equipment, including depreciation 270 269 250 786 762 Other 288 302 267 862 786 ----------------------------------------------------- 1,310 1,332 1,196 3,828 3,520 ----------------------------------------------------- ----------------------------------------------------- Income before the undernoted: 838 742 638 2,239 1,847 Provision for income taxes 272 263 228 767 661 Non-controlling interest in net income of subsidiaries 18 14 13 43 37 ----------------------------------------------------- Net income $ 548 $ 465 $ 397 $ 1,429 $1,149 ----------------------------------------------------- ----------------------------------------------------- Preferred dividends paid $ 27 $ 27 $ 27 $ 81 $ 81 ----------------------------------------------------- Net income available to common shareholders $ 521 $ 438 $ 370 $ 1,348 $1,068 ------------------------------------------------------------------------- Certain comparative amounts in these financial statements have been reclassified to conform with current period presentation. Condensed Consolidated Balance Sheet Scotiabank ------------------------------------------------------------------------- As at ------------------------------------------------------------------------- (Unaudited) July 31 April 30 July 31 ($ millions) 2000 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash resources $19,043 $21,082 $19,626 Securities 36,891 37,968 33,350 Loans 161,364 158,873 147,820 Other assets 25,826 26,854 26,603 ------------------------------------------ Total assets $243,124 $244,777 $227,399 ------------------------------------------ ------------------------------------------ Deposits - Personal $68,588 $68,875 $64,962 - Business and governments 74,742 75,271 65,437 - Banks 24,395 24,965 26,099 ------------------------------------------ Total deposits 167,725 169,111 156,498 Other liabilities 57,578 58,274 53,909 Subordinated debentures 5,327 5,362 5,451 Equity - Preferred 1,775 1,775 1,775 - Common 10,719 10,255 9,766 ------------------------------------------ Total liabilities and equity $243,124 $244,777 $227,399 ------------------------------------------ ------------------------------------------ ------------------------------------------------------------------------- Components of Net Income and Average Assets Scotiabank ------------------------------------------------------------------------- For the three For the nine months ended months ended ------------------------------------------------------------------------- July 31 April 30 July 31 July 31 July 31 (Unaudited) 2000 2000 1999 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net Income ($ millions) By business line: Domestic Banking $234 $203 $157 $626 $482 International Banking 104 95 83 275 213 Scotia Capital 211 162 176 536 587 Other(1) (1) 5 (19) (8) (133) ----------------------------------------------------- $548 $465 $397 $1,429 $1,149 ----------------------------------------------------- ----------------------------------------------------- By geography: Canada $377 $340 $255 $962 $769 United States 66 87 100 269 330 Other International 142 119 121 360 339 Corporate adjustments (37) (81) (79) (162) (289) ----------------------------------------------------- $548 $465 $397 $1,429 $1,149 ----------------------------------------------------- ----------------------------------------------------- Average Assets ($ billions) By business line: Domestic Banking $89 $89 $86 $89 $85 International Banking 32 31 26 30 26 Scotia Capital 103 98 92 98 99 Other(1) 17 18 19 19 20 ----------------------------------------------------- $241 $236 $223 $236 $230 ----------------------------------------------------- ----------------------------------------------------- By geography: Canada $142 $141 $133 $141 $133 United States 42 38 34 39 38 Other International 55 54 52 53 54 Corporate adjustments 2 3 4 3 5 ----------------------------------------------------- $241 $236 $223 $236 $230 ---------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------------------------- (1) Represents corporate adjustments and smaller operating segments, including Group Treasury. Capital and Common Share Information Scotiabank ------------------------------------------------------------------------- As at ------------------------------------------------------------------------- July 31 April 30 July 31 (Unaudited) 2000 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Capital ratios Tier 1 8.5% 8.4% 8.0% Total 12.1% 12.0% 11.5% Common shares outstanding (millions) 496.4 495.2 493.8 Book value per share $21.60 $20.71 $19.78 Market value per share $37.55 $33.75 $31.35 ------------------------------------------------------------------------- For the three months ended ------------------------------------------------------------------------- July 31 April 30 July 31 (Unaudited) 2000 2000 1999 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Common dividends paid Total (millions) $119.1 $118.8 $103.7 Per share $0.24 $0.24 $0.21 ------------------------------------------------------------------------- This report includes forward-looking statements about objectives, strategies and expected financial results. Such forward-looking statements are inherently subject to risks and uncertainties beyond the Bank's control, including, but not limited to, economic and financial conditions globally, regulatory developments in Canada and elsewhere, technological developments and competition. These and other factors may cause the Bank's actual performance to differ materially from that contemplated by forward-looking statements, and the reader is therefore cautioned not to place undue reliance on such statements. A live Internet broadcast of the Bank's analysts' conference call will begin at 3:00 p.m. today. The web broadcast will include both audio and slide presentations by Bank executives, and the subsequent question and answer period. The full presentation will be available on the web at about 5:00 p.m. today. Please visit www.scotiabank.ca for more information about the broadcast. Scotiabank is one of North America's premier financial institutions, with more than $243 billion in assets and approximately 41,000 employees worldwide. It is also Canada's most international bank with more than 1,700 branches and offices in over 50 countries on six continents. Scotiabank is on the world wide web at http://www.scotiabank.ca For further information: Sabi Marwah, Executive Vice-President and Chief Financial Officer, +1 (416) 866-6808; Kevin Harraher, Vice-President, Investor Relations, +1 (416) 866-5982; Pam Agnew, Director, Public Affairs, +1 (416) 866-7238
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