(March 6 – 09:40 ET) – Bank of Nova Scotia is reporting strong results for the first quarter ending January 31.

Scotiabank’s net income came in at $510 million, up $94 million or 23%. Earnings per share reached 97¢, up from 79¢ and beating analyst estimates of 93¢.

These results pushed ROE to 17%, up from 15.9%. The bank also announced that it is increasing the quarterly dividend from 28¢ a share to 31¢ a share.

Total revenues climbed to $2.4 billion, up 20% over last year. Net interest income was $1.37 billion this quarter, up 18% from the first quarter last year. Other income grew significantly to just over $1 billion in the quarter, up 23%. Investment banking accounted for most of the increase with a $129 million growth in its revenues due to strong results in derivatives, securities trading, foreign exchange and underwriting. Total operating expenses were up just 6% over last year.

Credit quality was good, although there was deterioration in the United States. Impaired loans rose to $1.08 billion from $(181) million a year earlier and $(61) million at the end of the last quarter.

“We’re pleased to begin the new fiscal year with record results, meeting or exceeding virtually all of our targets,” said Peter Godsoe, chairman and CEO. “Earnings momentum remained strong across almost all businesses, with broad-based revenue gains of 20% over last year. Expense control was also a key factor in the quarter.

Commenting on the deterioration in the bank’s U.S. operations during the quarter, Godsoe said, ” We have taken strong corrective action to put this behind us, including a very conservative approach to the classification of loans as impaired and reserving for loan losses. We are confident that these steps, combined with our solid earnings momentum, will enable us to meet our key performance targets for the year.”

Scotiabank says that on the wealth management side there was solid growth in credit fees and transaction-based revenues, as well as mutual funds and investment management. However, a slowdown in trading activity in the retail brokerage operations, and lower revenues following the sale of the stock transfer and corporate trust businesses offset those strengths.

Scotia Capital earned $120 million this quarter, down $43 million or 26% from last year. Total revenues rose by $184 million or 37% to $677 million, driven by gains in the majority of Scotia Capital’s operations. Global Trading revenues were up 65%, and there was also strong growth in interest and fee income in lending operations, as well as institutional equities and underwriting.

International Banking net income rose $39 million or 50% to $115 million in the first quarter, representing 23% of the bank’s earnings. The Caribbean and Central America contributed $66 million, up $12 million or 22%, due to good top line revenue growth spread across virtually all markets, and lower loan losses.

The bank offers a relatively buoyant economic outlook, saying, the recent weakening in the U.S. economy has temporarily dampened global growth prospects, though it expects lower interest rates and fiscal stimulus should help revive activity in the second half of 2001. Scotiabank insists that Canada and Mexico are likely to outperform the U.S. this year and that the bank expects that it will achieve the performance targets set for 2001.
-IE Staff