BUSINESS

Scotiabank CEO Brian Porter Says Cheap Oil Is Good For Canada And The World

08/28/2015 03:16 EDT | Updated 08/28/2015 03:59 EDT
CP

TORONTO — Concerns about the prolonged decline in the value of crude have left a dark cloud hanging over the banks, but the chief executive of Scotiabank is stressing the positive impacts of oil prices on parts of the country's economy.

"Mining and oil and gas make up less than eight per cent of Canada's GDP,'' Brian Porter told analysts during Scotiabank's quarterly earnings conference call Friday.

"Many of the other industries that make up more than 90 per cent of Canada's GDP will benefit from lower commodity prices,'' said Porter, citing automotive manufacturing and agriculture as examples.

"And lower commodity prices should ultimately be supportive of higher global growth.''

Scotiabank reported $1.847 billion of third-quarter net income Friday, capping off what analysts have described as a solid quarter for the banks despite a flurry of concerns in recent months about how oilpatch woes might affect the lenders.

Scotiabank's net profits for the three months ended July 31 amounted to $1.45 per share. That was down from $2.351 billion or $1.85 per share in net income in last year's third quarter, which included an unusual item in its Canadian banking operations from the sale of most of Scotiabank's investment in CI Financial.

Excluding $555 million in one-time gains in last year's third quarter, Scotiabank's net income last year was worth $1.40 per share.

The bank also announced its dividend will rise to 70 cents per share, up two cents, starting with the Oct. 28 payment.

Canadian banking contributed $863 million to Scotiabank's net income in this year's third quarter — up $112 million or 15 per cent if the CI Financial transaction is excluded but down $436 million or 35 per cent from last year with the special gain.

International banking contributed $537 million, up $51 million or 10.5 per cent as a result of strong loan growth across Latin America, higher fee income and contributions from investments and a positive impact from foreign currency translation.

The bank's global banking and markets division saw a 20 per cent decline in net income, which fell by $92 million from a strong quarter last year to $375 million.

Scotiabank says it received a lower contribution from investment banking and Asia lending and it took higher provisions for credit losses.