http://www.morningstar.com/earnings/52688122-bank-of-nova-scotia-bns-q2-2013.aspx

Bank of Nova Scotia BNS
Q2 2013 Earnings Call Transcript

Transcript Call Date 05/28/2013

Sean McGuckin - EVP and CFO: Good afternoon and Welcome to the presentation of Scotia Bank's 2013 Second Quarter Result. I am Sean McGuckin, Chief Financial Officer. Rick Waugh, our CEO will lead off with the highlights of the quarter. Next, I will go over the financial results, including a review of business line performance. Rob Pitfield, our Chief Risk Officer, will then discuss credit quality and market risk. Rob will be followed by Brian Porter our President who will provide an outlook for each of our business lines for the remainder of 2013. We will then be glad to take your questions.

Also in the room with us to take your questions is Scotiabank's business line Group Head. We have Anatol von Hahn from Canadian Banking; Dieter Jentsch from International Banking; Chris Hodgson from Global Wealth Management; and Mike Durland and Steve McDonald from Global Banking and Markets. As with prior calls we also have joining us Sabi Marwah, Vice Chairman and Chief Operating Officer; Jeff Heath, our Group Treasurer and Stephen Hart, our Chief Credit Officer.

Before we start, I would like to refer you to Slide 2 of our presentation, contains Scotiabank's caution regarding forward-looking statements. Over to you, Rick.

Rick Waugh - CEO: Thanks, Sean. We are pleased to report a strong second quarter driven by good revenue growth and solid contributions from all our business lines. Net income was over C$1.6 billion, representing growth of 10% year-over-year. Diluted earnings per share were C$1.23 for the quarter, up 7% from last year. Return on equity remained strong at 16.2%.

Revenue grew by 11% from last year. Excluding acquisitions, revenue growth was 7% and was specifically attributed to asset growth, higher fee income and stronger wealth management and insurance revenues. We delivered positive operating leverage and we continue to put a priority on expense management. The credit environment remains stable and as expected provisions grew in line with asset growth and portfolio mix, particularly in Latin America. Impaired loan formations have continued to decline and Canadian retail delinquency has improved as Rob will discuss shortly. Our capital is strong. Our Basel III all in common equity Tier 1 ratio increased by 40 basis points, with 8.6% this quarter.

Looking at the first half of the year, revenue and earnings growth has been solid. Canadian Banking had revenue growth across several categories. The acquisition of ING Direct is performing well, in addition to strong customer growth in credit card, deposits, in payment services and in wealth management. International Banking results were also driven by strong revenue growth, particularly Latin America, higher contributions from associated companies, investment gains and acquisitions partly offsetting was increased PCL and as I said, they grew in line with expectations.

Global Wealth Management had a very good quarter with both our wealth management and our insurance businesses contributing strong sales, both domestically and internationally. Improved marketing conditions were primary drivers. And finally, global banking and markets saw stronger revenues in the lending, fixed income and equity businesses partly offset by lower precious metals and commodity revenues.

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