Scotiabank raises dividend as Q3 profit drops to $1.94B

Scotiabank raised its dividend even as it reported its third-quarter profit slipped compared with a year ago, partially due to a hit from acquisition-related costs.

The bank said Tuesday it will raise its quarterly dividend by three cents to 85 cents per share.

The increase came as Scotiabank reported a third-quarter profit of $1.94 billion or $1.55 per diluted share, down from $2.10 billion or $1.66 per diluted share a year ago.

Scotiabank reported adjusted earnings—which exclude one-time costs—of $2.26 billion or $1.76 per diluted share in the quarter, up from $2.12 billion or $1.68 per diluted share a year ago.

The bank managed to just beat analysts’ expectations for a profit of $1.75 per share, according to Thomson Reuters Eikon.

“Year-to-date investments to strengthen the bank are enabling us to deliver an excellent customer experience, and are reflected in our third-quarter results,” Scotiabank chief executive Brian Porter said in a statement.

Scotiabank recorded about $320 million in after-tax acquisition-related costs during the quarter.

The bank has been on a multi-billion-dollar spending spree in recent months, focusing much of its attention on rapid expansion in Latin America.

The bank purchased a 68% stake in Chilean banking operation BBVA Chile for $2.9 billion late last year and Citibank’s consumer and small and medium enterprise operations in Colombia in January for an undisclosed amount.

It also bought Canadian investment manager Jarislowsky Fraser for $950 million in February, and a controlling interest in Peru’s Banco Cencosud for about $130 million in May.

Most recently, the bank announced a big play to expand its customer base in May with a deal to acquire physician-focused financial adviser MD Financial Management for $2.5 billion, which is expected to close this fall.

The bank’s international segment earned $475 million, down from $672 million in the same quarter last year.

Scotiabank’s Canadian banking operations earned $1.13 billion, up from nearly $1.05 billion a year ago.

Global bank and capital markets earned $441 million, in line with a year ago.

Scotiabank’s provision for credit losses—or the money set aside to cover bad loans—was $943 million compared with $573 million a year ago.

The bank’s common equity Tier 1 capital ratio is 11.4% and dropped 60 basis points during the quarter, mainly because of acquisition costs.