The wealth division of Scotiabank, the second of the Big Six to report earnings, outperformed the bank's other businesses in the third quarter.
Scotiabank reported third quarter net income of $1.77 billion compared with net income of $2.05 billion in the same period last year or $1.44 billion excluding a one-off gain of $614 million from the sale of the Scotia Plaza property in Toronto last year.
On an adjusted basis, stripping out the Scotia Plaza sale and other extraordinary items, diluted earnings per share grew 12%. Like Bank of Montreal, which reported earnings earlier in the day, Scotia’s wealth management division outperformed the bank’s overall results with net income rising 18% year-on-year to $327 million.
"We are very satisfied with our results and our top-line revenue growth this quarter, reflecting the value of our diversified business model," said Rick Waugh, Scotiabank CEO. "Canadian banking and global wealth management had strong earnings growth while contributions by international banking and global banking and markets were more moderate.”
The global wealth management (GWM) division reported net income attributable to equity holders of $327 million this quarter, an increase of $49 million or 18% from a year earlier. Net income increased due to strong broad-based results in both the wealth management and insurance businesses. There were higher contributions from the investment in CI Financial due to improved performance and the impact of a non-recurring $12 million deferred tax charge last year.
Growth in wealth management was driven by higher assets under management (AUM) and assets under administration (AUA) from net sales and improved financial market conditions. Return on economic equity was 17.7% compared to 14.1% last year. The division also benefited from strong mutual fund fees as well as higher commissions earned through ScotiaMcLeod, the bank’s retail brokerage.
Quarter over quarter, net income attributable to equity holders was up $1 million due to stronger wealth management results, partially offset by lower insurance earnings. Return on economic equity decreased to 17.7% from 18.5% due mainly to capital allocation for recent acquisitions.
On a year-to-date basis, net income attributable to equity holders increased by $103 million or 12% due to stronger results across the wealth management and insurance businesses. Growth in wealth management was driven by higher AUM and AUA from net sales, and improved financial markets. Return on economic equity increased to 17.8% from 14.3% last year.
