Bank of Montreal and Bank of Nova Scotia , Canada's third and fourth largest banks, missed analysts' estimates for quarterly profit on Tuesday as they set aside more funds to cover for bad loans.
, Canada's third and fourth largest banks, missed analysts' estimates for quarterly profit on Tuesday as they set aside more funds to cover for bad loans.
The bank's earnings were also affected by severance costs of C$162 million and C$83 million in legal provisions at its capital markets unit. Chief Financial Officer Tayfun Tuzun said the costs were a one-quarter phenomenon, but would drive expense savings of C$200 million next fiscal year. Income declined at home for both banks, leading to a 5% and 12% fall in BMO and Scotia's Canadian personal and commercial banking segment.
Analysts were encouraged by an improvement in Scotia's capital position to 12.7% and improved expense management.The aggressive hikes have also allowed banks to charge higher rates and boost their net interest income, the difference between what banks earn on loans and pay on deposits. At Scotiabank net interest income fell to C$4.58 billion, from $4.68 billion a year ago, largely hurt by lower corporate lending and lower loan fees.
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