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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:4648G Bank of Nova Scotia 1 March 2000 SCOTIABANK'S POSITIVE EARNINGS MOMENTUM CONTINUES IN FIRST QUARTER Calgary, February 29 - Scotiabank's positive earnings momentum continued into the new millennium with first quarter net income of $416 million, up $48 million or 13% over the same period a year ago. Earnings per share increased to $0.79 in the first quarter from $0.69 a year ago, and return on equity increased to 15.9% from 14.8% in the first quarter of last year. "The new fiscal year began very well, with all of our business lines contributing to our success," said Peter Godsoe, Scotiabank's Chairman and Chief Executive Officer. "Our domestic banking operations, including wealth management, led the increase in earnings, achieving strong loan and deposit growth and large gains in brokerage revenues. International banking also performed well, due to steady growth in the Caribbean and the broadening economic recovery in Asia." Domestic banking led earnings growth "Domestically, we achieved solid growth in our core retail lending business, particularly in mortgages and credit cards," Godsoe said. "Due to the efforts of our branch teams and credit specialists, residential mortgages rose by $3.6 billion or 8% over the same period a year ago, while credit card volumes were up by 11%. "On the deposit side," he continued, "strong sales of products such as our market-leading stock-indexed GICs led to a 6% increase in personal deposits year over year. In wealth management, where we have focused on integrating our operations, revenues were up 26% year over year." Building on this momentum, Scotiabank expanded its investment offerings for this year's RRSP season, by introducing a new U.S. stock-indexed GIC, adding two new index mutual funds and launching the Scotia RRSP Catch-Up Line of Credit to follow up on the innovative Scotia RRSP Catch-Up Loan. In a recent survey, 70 per cent of Scotia Mutual Funds recorded above-average performances within their categories in 1999 -- among the best ratings by any mutual fund family in Canada. Providing e-commerce solutions "We are continuing to use leading-edge technologies to provide e-commerce solutions for our customers," Godsoe said. "Scotiabank is now the premier banking partner on Microsoft Canada's portal Web site, MSN.ca, and we are working with Microsoft to develop personalised financial services portals -- the equivalent of 'front doors' to the Web." During the quarter, the Bank also joined Identrus, an alliance of international financial institutions that offers companies a secure, world-wide framework for doing business on the Internet. Scotia Capital achieves top-tier ranking in loan syndication While the earnings of Scotia Capital, the Bank's corporate and investment banking division, were up slightly from the fourth quarter, they declined by $69 million year over year, primarily due to a large one-time gain and higher recoveries recorded in the prior year. "The Scotia Capital reorganisation is proceeding extremely well, and customers are pleased with the new, integrated approach to their business," Godsoe said. "And once again, Scotia Capital achieved top-tier ranking in the Canadian and U.S. loan syndication markets. We remain the leading bank - and the only Canadian bank -- in the top 10 in the important U.S. market." Caribbean franchise fuels international earnings The Bank's international operations performed well in the first quarter, achieving a significant increase in net income year over year. Earnings were particularly strong in the Caribbean, due to growth in lending volumes and revenues and a stable margin. Profitability also continued to improve in Asia. "Internationally, our Caribbean network maintained its track record of consistent growth, and our Asian results also continued to improve," Godsoe said. "In Latin America, we are laying the foundation for longer-term earnings growth, by investing resources in high-potential markets where there is rising demand for financial services. In December, we increased our stake in Banco Sud Americano in Chile to a majority position of 61% and later this year, we expect to exercise our option to increase our stake in Mexico's Grupo Financiero Inverlat." Providing community support Building on its tradition of supporting educational institutions, Scotiabank donated $2.5 million to the University of Waterloo in November to create a software engineering degree program and expand its computer courses to prepare more people for high-technology careers. "We need strong growth in our high-tech capabilities to help keep Canada's competitive edge," said Godsoe. "In an era of globalisation and enormous scientific change, it is important to train, challenge and utilise the best and brightest resources in software and computer science so Canada can be a world leader." Financial results Highlights for the first quarter compared with the preceding quarter include: - net income of $416 million, an increase of 4%; - earnings per share of $0.79, up from $0.76; - return on equity of 15.9%, versus 15.3%. Net interest income was $1.158 billion this quarter, a decline of 2% or $24 million from the first quarter last year. The reduction was primarily due to securitisations which resulted in a transfer of net interest income to other income. Canadian currency interest profits, excluding the effect of securitisations, increased through good growth in consumer lending, particularly in residential mortgages and credit cards. Steady loan growth in the United States, United Kingdom and Caribbean operations, as well as a slightly higher interest margin, led to a rise in underlying foreign currency interest profits. However, the translation effect of a stronger Canadian dollar resulted in a decrease in the Canadian equivalent of foreign currency profits. The overall interest margin was 2.08% in the first quarter, up from 2.04% in the same quarter a year ago. Other income for the first quarter was $822 million, up $15 million or 2% year over year. However, excluding a one-time gain of $77 million on the sale of securities recorded last year, a much higher rate of growth of 12% was achieved. Wealth management revenues increased by 26%, driven primarily by stronger retail and discount brokerage fees reflecting the buoyant stock market. Credit-related fees, including acceptance and standby loan commitment fees, grew by $34 million or 27%. Securitisation revenues almost doubled to $55 million as a result of transactions effected last year. Gains on investment securities were $71 million this quarter versus $115 million last year. Investment banking revenues were $135 million, a decline of $35 million from the same period a year ago, due to lower underwriting fees and trading income. One of Scotiabank's competitive strengths is its superior expense management. The Bank's productivity ratio -- non-interest expenses as a percentage of total revenues -- was 58.6% in the first quarter, basically unchanged from a year ago. This ratio, a key measure of cost effectiveness, continues to be one of the best among Canadian banks. Total expenses were $1.186 billion, an increase of 4% over the same period a year ago. Salaries and other staff benefits were $667 million, up $33 million or 5%, primarily from higher incentives and performance-related compensation. However, base salary costs were lower due to efficiencies achieved during the past year. The Bank continues to invest in different areas of business development and technology, including expanding its e-commerce capabilities. This year's forecast for the annual specific provision for credit losses is $540 million. The first quarter's specific provision for credit losses was $135 million, one-quarter of the estimated annual specific provision, up from $1 million a year ago. There was no change to the general provision in the first quarter, compared to a $150 million increase in the general provision in the same quarter a year ago. As at January 31, 2000, the Bank's general provision was $1.3 billion -- the highest among the Canadian banks. Net impaired loans as a percentage of total loans and acceptances were -0.1% at January 31, 2000, a ratio that remained unchanged from the preceding quarter. The allowance for credit losses exceeded the gross amount of impaired loans by $181 million as at January 31, 2000, $25 million better than last quarter and a much larger improvement of $469 million compared to a year ago. Total assets were $232 billion as at January 31, 2000, unchanged from a year ago. However, adjusting for the first-time inclusion of the $3.5 billion in assets of Scotiabank's newest foreign subsidiary -- Banco Sud Americano in Chile -- the $8.7 billion in assets securitised by the Bank last year, and the translation of foreign assets into a stronger Canadian dollar, assets grew by almost 5%. Residential mortgages, (excluding the effect of securitisations), rose by 8% and personal lending activity increased due in part to the successful Scotia Total Equity Plan introduced last year. The surplus of market value over book value in the Bank's investment securities portfolio grew to $543 million, up substantially from $300 million at the end of the immediately preceding quarter. The larger surplus arose primarily in North American equity securities and, to a lesser extent, in the Bank's emerging market portfolio. The Bank continued to build its capital base during the quarter. Total shareholders' equity grew by $221 million to $11.6 billion, 2% higher than the preceding quarter. The Bank's Tier 1 capital was $11.7 billion at quarter end, up from $11.5 billion. The Tier 1 capital ratio was a strong 8.0%, relatively unchanged from the preceding quarter, notwithstanding the consolidation of Banco Sud Americano this quarter. The Bank's total capital ratio was 11.7% compared to 11.9% in the prior quarter. These capital ratios remain well in excess of the minimum targets of 7% and 10% set by the Bank's regulator. The Board of Directors today announced a quarterly dividend of $0.24 per common share, payable on April 26, 2000 to shareholders of record as of the close of business on April 4, 2000. Note to Editors: In addition to providing live access to its annual meeting and telephone conference call with analysts via the Internet, Scotiabank will also provide access for investors to a telephone re-broadcast of the analysts' call. The conference call is scheduled for 2:00 p.m. (Mountain time) and will include a presentation from Bank executives to analysts and the subsequent question-and- answer period. The telephone re-broadcast of the analysts' call will be available at approximately 5:00 p.m. (Mountain time) by calling +1 (416) 640-1917 and entering the password 5443 (Number sign). Performance Highlights Scotiabank ---------------------------------------------------------------------- ---------------------------------------------------------------------- For the three months ended ---------------------------------------------------------------------- January 31 October 31 January 31 (Unaudited) 2000 1999 (1) 1999 ---------------------------------------------------------------------- Net income (millions) $416 $402 $368 Earnings per share $0.79 $0.76 $0.69 Return on equity 15.9% 15.3% 14.8% Return on assets 0.72% 0.70% 0.62% Productivity ratio 58.6% 59.8% 56.1% (2) ---------------------------------------------------------------------- (1) The above financial results have been prepared in accordance with Canadian generally accepted accounting principles (GAAP), other than the accounting for the one-time increase to the general provision for credit losses of $550 million ($314 million after tax), recorded as a direct charge to retained earnings in the quarter ending October 31, 1999, which is in accordance with the accounting requirements specified by the Superintendent of Financial Institutions Canada under the Bank Act. Had the one-time increase to the general provision been recorded in accordance with Canadian (GAAP) as a charge to the Statement of Income, the above financial results in the quarter ending October 31, 1999, would have been as follows: provision for credit losses $7 million, provision for income taxes ($30) million, net income $88 million, net income per common share $0.12, return on common shareholders' equity 2.5%, return on assets 0.15%. Further details are available in Note 20 of the October 31, 1999, Consolidated Financial Statements presented in the 1999 Annual Report. (2) Excluding a one-time gain on the sale of securities of $77 million, the productivity ratio was 58.3%. Interim Consolidated Statement of Income Scotiabank ---------------------------------------------------------------------- ---------------------------------------------------------------------- For the three months ended ---------------------------------------------------------------------- (Unaudited) January 31 October 31 January 31 ($ millions) 2000 1999 (1) 1999 ---------------------------------------------------------------------- Interest income Loans $2,753 $2,650 $2,808 Securities 550 496 441 Deposits with banks 206 213 287 -------------------------------------- 3,5 3,359 3,536 -------------------------------------- Interest expense Deposits 1,932 1,783 1,994 Subordinated debentures 82 82 76 Other 337 322 284 -------------------------------------- 2,351 2,187 2,354 -------------------------------------- Net interest income 1,158 1,172 1,182 Provision for credit losses 135 159 259 -------------------------------------- Net interest income after provision for credit losses 1,023 1,013 923 -------------------------------------- Other income Deposit and payment services 155 150 154 Investment management and trust 180 153 147 Credit fees 159 154 125 Investment banking 135 186 170 Net gain on investment securities 71 102 115 Securitisation revenues 55 42 29 Other 67 53 67 -------------------------------------- 822 840 807 -------------------------------------- Net interest and other income 1,845 1,853 1,730 -------------------------------------- Non-interest expenses Salaries 585 582 556 Pension contributions and other staff benefits 82 73 78 Premises and equipment, including depreciation 247 245 251 Other 272 356 251 Restructuring provision for National Trustco Inc. - (20) - -------------------------------------- 1,186 1,236 1,136 -------------------------------------- Income before the undernoted: 659 617 594 Provision for income taxes 232 206 215 Non-controlling interest in net income of subsidiaries 11 9 11 -------------------------------------- Net income $416 $402 $368 -------------------------------------- -------------------------------------- Preferred dividends paid $27 $27 $27 -------------------------------------- Net income available to common shareholders $389 $375 $341 ---------------------------------------------------------------------- Certain comparative amounts in these financial statements have been reclassified to conform with current period presentation. (1) Refer to footnote (1) on Performance Highlights page. Condensed Consolidated Balance Sheet Scotiabank ---------------------------------------------------------------------- ---------------------------------------------------------------------- As at ---------------------------------------------------------------------- (Unaudited) January 31 October 31 January 31 ($ millions) 2000 1999 1999 ---------------------------------------------------------------------- Cash resources $17,911 $17,115 $20,745 Securities 36,946 33,969 30,899 Assets purchased under resale agreements 14,329 13,921 11,140 Loans 136,733 131,938 140,246 Other assets 26,502 25,748 29,467 -------------------------------------- Total assets $232,421 $222,691 $232,497 -------------------------------------- Deposits - Personal $67,251 $65,715 $63,6 - Business and governments 68,815 64,070 67,275 - Banks 26,507 26,833 34,314 -------------------------------------- Total deposits 162,573 156,618 165,198 Other liabilities 52,880 49,293 51,067 Subordinated debentures 5,341 5,374 5,236 Equity - Preferred 1,775 1,775 1,775 - Common 9,852 9,631 9,221 -------------------------------------- Total liabilities and equity $232,421 $222,691 $232,497 -------------------------------------- Components of Net Income and Average Assets Scotiabank ---------------------------------------------------------------------- ---------------------------------------------------------------------- For the three months ended ---------------------------------------------------------------------- January 31 October 31 January 31 (Unaudited) 2000 1999 (1) 1999 ---------------------------------------------------------------------- Net Income ($ millions) By business line: Domestic Banking $189 $167 $168 International Banking 76 83 50 Scotia Capital 163 158 232 Other(2) (12) (6) (82) -------------------------------------- $416 $402 $368 -------------------------------------- By geography: Canada $245 $320 $272 United States 116 13 128 Other International 99 124 100 Corporate adjustments (44) (55) (132) -------------------------------------- $416 $402 $368 -------------------------------------- -------------------------------------- Average Assets ($ billions) By business line: Domestic Banking $88 $88 $84 International Banking 27 27 26 Scotia Capital 95 92 104 Other(2) 20 19 22 -------------------------------------- $230 $226 $236 -------------------------------------- -------------------------------------- By geography: Canada $140 $136 $132 United States 36 35 39 Other International 51 52 57 Corporate adjustments 3 3 8 -------------------------------------- $230 $226 $236 -------------------------------------- -------------------------------------- (1) Refer to footnote (1) on Performance Highlights page. (2) Represents corporate adjustments and smaller operating segments, including Group Treasury. Capital and Common Share Information Scotiabank ---------------------------------------------------------------------- ---------------------------------------------------------------------- As at ---------------------------------------------------------------------- January 31 October 31 January 31 (Unaudited) 2000 1999 1999 ---------------------------------------------------------------------- Capital ratios Tier 1 8.0% 8.1% 7.2% Total 11.7% 11.9% 10.6% Common shares outstanding (millions) 494.7 494.3 492.8 Book value per share $19.92 $19.49 $18.71 Market value per share $29.55 $33.60 $32.50 ---------------------------------------------------------------------- For the three months ended ---------------------------------------------------------------------- January 31 October 31 January 31 (Unaudited) 2000 1999 1999 ---------------------------------------------------------------------- Common dividends paid Total (millions) $118.6 $118.5 $103.4 Per share $0.24 $0.24 $0.21 ---------------------------------------------------------------------- For further information: please contact Shelley Jourard, Senior Manager, Public Affairs, in Calgary at +1 (403) 5-5443; or Jane Shannon, Senior Consultant, Public Affairs in Toronto at +1 (416) 933-1795 (BNS.) END QRFUUUGWWUPUUBG
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