Thursday, March 08, 2007

Scotiabank Expects Canada to Remain as Main Profit Source

  
Bloomberg, Erik Schatzker and Adriana Arai, 8 March 2007

Bank of Nova Scotia Chief Executive Officer Richard Waugh said he expects Canadian consumer banking to remain the company's chief source of profit for at least the next five years, after international earnings came close to taking top spot last quarter.

The bank's domestic business will stay ahead in part because Waugh wants to make an acquisition in Canada to expand in asset management. At the same time, Scotiabank is hunting for more purchases in Latin America after buying banks in Peru and Costa Rica over the past year.

``We'll see roughly the current mix of business,'' Waugh said in an interview today in Mexico City, where Bank of Nova Scotia owns the country's sixth-largest bank. ``But an acquisition could change that.''

Canada's third-biggest bank this week reported a 20 percent increase in fiscal first-quarter profit, led by growth in markets such as Mexico and the Dominican Republic. The Toronto- based company generated almost a third of its earnings in 50 countries outside Canada, a greater share than any of its domestic competitors. Domestic banking profit accounted for 36 percent of earnings.

Waugh, 59, said Scotiabank has no intention of expanding into new countries, and will focus on growing where it currently does business. He said he wants the bank to remain ``diversified,'' and won't follow international rivals such as Citigroup Inc. in seeking to produce more than half of its profit abroad.

``We're staying in the countries we're already in,'' Waugh said. ``Our major thrust in the Americas is to be a full-service bank, that's retail and wholesale.''

The bank reports results in three major units: Canadian consumer banking, which had profit of C$363 million; international consumer banking, which had profit of C$318 million; and investment banking, which contributed C$296 million in the quarter.

While acquisitions have come easily in some markets, Mexico has proved ``very tough,'' Waugh said. Grupo Financiero Banorte SA, the only one of Mexico's top six banks that's publicly traded, has resisted takeover approaches.

As a result, Scotiabank is resigned to invest in its existing business. The company plans to open at least 100 more branches in Mexico, including 85 this year, each at a cost of $300,000 to $500,000, Waugh said. Scotiabank ended 2006 with about 465 Mexican branches.
;