Posted on 11/28/2023 1:18:23 PM PST by george76
Bank of Nova Scotia ... the Canadian lender missed fourth-quarter profit estimates as uncertain economic climate prompted it to set aside more funds to guard against bad loans.
Scotiabank kicks off Canadian banks' earning season, wrapping up a financial year marked with economic uncertainty, rising credit loss provisions as more consumers struggle to pay off their mortgages, layoffs to cut costs, and rising expenses.
The bank's shares fell nearly 5% in early trading, dragging down Canada's main stock index (.GSPTSE).
Lenders have been bracing for a surge in loan defaults as effects of the central bank's monetary policy tightening flow through and the economy flirts with a recession.
...
For the fourth quarter, Scotiabank increased its provision for credit losses to C$1.26 billion ($927.90 million) from C$529 million a year earlier, as a result of unfavourable economic outlook and "continued uncertainty around the impact of higher interest rates."
Income from its Canadian unit, its biggest, fell 30.8%, while expenses rose 10% on an adjusted basis, driven by higher salaries and other costs.
The bank said adjusted net income fell 36% to C$1.67 billion or C$1.26 per share, well below analysts' forecast of C$1.65 per share, according to LSEG data.
"A very challenging quarter for Scotiabank at first look driven by a notable jump in loan losses in Canadian retail lending, weaker revenue, and higher expenses, each of which we believe will be concerning for investors," KBW analyst Mike Rizvanovic said.
...
The bank said last month it would cut about 2,700 jobs globally, or about 3% of its workforce. Its efforts to streamline operations resulted in a restructuring charge of C$258 million, Scotiabank said.
Net interest income inched up, as aggressive rate hikes by the Bank of Canada allowed the lender to charge higher interest on loans.
(Excerpt) Read more at reuters.com ...
Net income was down -34% YoY.
EPS looks to be lowest since 2020.
Probably nothing.
Canadian home loans are all variable rate (fixed for a few years at a time, then variable) so the rising interest rate environment will hit any banks or other bag-holders hard.
Given the insane prices of housing (especially in the big cities and suburbs) there will be lots of jingle mail heading the banks’ way (that is keys, not Santa’s sleigh :-) ).
The Scotiabank branch in the small Canadian town where I summer is open two days a week, four hours a day.
Bns Stock price is below what it was 5 years ago
Dividends are now 7%
Royal bank and td are the 2 best Canadian banks
The very small Canadian town where I live only has 1 bank. A Scotiabank, which has informed us it will be closing in Sept of next year. Leaving us with no bank.
However, in small-town Ontario having access to a local bank is critical for merchants and business owners.
Scotiabank pulling out of town means driving between 80-100 km to access basic banking services.
People in Northern Ontario are already paranoid thinking that nobody gives a hoot about them. They may be correct.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.