Newspaper article The Canadian Press

Despite Headwinds, Scotiabank and BMO Report Higher Fourth-Quarter Results

Newspaper article The Canadian Press

Despite Headwinds, Scotiabank and BMO Report Higher Fourth-Quarter Results

Article excerpt

Scotiabank, BMO see quarterly profits grow


TORONTO - Despite a slew of warnings that oilpatch woes and the sluggish economy could weigh on the earning results of Canada's big banks, Scotiabank and the Bank of Montreal both saw their fourth-quarter profits rise from a year ago.

Scotiabank (TSX:BNS) reported Tuesday that it grew its fourth-quarter net income by 28 per cent to $1.843 billion, bringing the total for the 2015 financial year to nearly $7.3 billion.

On a per-share basis, Scotiabank's profit for the three months ended Oct. 31 amounted to $1.45, up from $1.10 per share a year earlier and ahead of the consensus analyst estimate compiled by Thomson Reuters.

Revenue for the quarter rose to $6.125 billion, compared with $5.747 billion during the same period last year. For the year, revenue totalled $24.049 billion.

But Edward Jones analyst Jim Shanahan said he remains concerned about the outlook for the bank's growth and profitability, noting that impaired loans to the oil and gas sector -- while manageable -- continued to rise.

Scotiabank said loans to the oilpatch that are unlikely to be repaid in full totalled $165 million, up from $96 million in the previous quarter and $44 million a year ago when oil prices were more than double current levels.

"Credit costs were somewhat elevated but investors may be more concerned about the continued increases in exposure to oil and gas loans," Shanahan said in a note to clients, pointing out that outstanding loans to clients in the oil and gas industry grew to $16.5 billion, up $700 million from the previous quarter and $3.6 billion higher compared to a year ago.

The energy sector represented 10 per cent of Scotiabank's total lending to business and government, Shanahan said.

Meanwhile, the bank has trimmed its ranks by 1,140 staff since the end of July. At the end of the fourth quarter, Scotiabank had 89,214 employees, down from 90,354 at the end of the previous quarter.

Most of the slimming -- 1,014 positions -- took place in its Canadian operations. …

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