“While impaired loan formations slowed somewhat in the quarter, they remain elevated, particularly in Scotia’s retail portfolios.”
The second earnings beat in a row was notable given the bank’s track record of misses in prior years, said National Bank analyst Gabriel Dechaine in a note.
He said he continues to view 2024 as a “no growth” year for Scotiabank, as the bank has somewhat guided as it works through a company-wide strategic shift.
“We believe weak loan growth and higher credit losses are some of the more important headwinds for the bank, which may extend into 2025.”
The bank could also breach its guidance on its loss rate as it’s already almost at the top end, he said.
Will Scotiabank raise its dividend?
Given Scotiabank’s focus on its strategic plan, the bank skipped its customary second quarter dividend boost, saying it expects to resume increases next year as growth picks up.
Scotiabank said its net income attributable to equity holders for its Canadian banking business totalled $1.01 billion, down from $1.06 billion a year earlier primarily due to a higher provision for credit losses and non-interest expenses, partly offset by higher revenues.
Meanwhile, it said its international banking operations earned net income attributable to equity holders of $671 million, up from $636 million in the same quarter last year.