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The Bank of Nova Scotia saw its net income jump from last year to $2.59 billion in the third quarter, largely fuelled by growth in its international and Canadian banking segments. Despite the growth, the Canadian bank shored up provisions for credit losses.

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Adjusted earnings rose four per cent year over year to $2.10 per share in the three months ending July 31. Analysts had been expecting $2.11 per share. While profit edged up since the same period last year, it slipped quarter over quarter from the $2.76 billion recorded in the three months ending April 30.

“The quarter saw (earnings per share) growth of four per cent and a return on equity of 15.4 per cent,” Scotiabank chief executive Brian Porter said in a press release accompanying the results. “Strong credit quality, while growing the loan book across all business lines, prudent expense management and resilient customers were positive highlights against the backdrop of a more challenging macro environment this quarter.”

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Scotiabank’s earnings in its international banking business jumped 28 per cent to an adjusted net income to $625 million on higher net interest income, loan growth and expense management. The bank added that earnings in this segment benefited from lower income taxes and credit loss provisions.

Earnings in Scotiabank’s Canadian banking segment grew 12 per cent year over year on net interest income growth to $1.21 billion, fuelled in large part by a 14-per-cent boost in both loan and net interest margin growth. A shared expectation among analysts leading into earnings season was that the Bank of Canada’s rate hikes would help fuel the net interest margin expansion among Canada’s banks.

The bank’s provisions for credit losses, a measure that assesses how much is set aside for loans that may not be repaid in full, stood at $412 million in the third quarter from the $219 million it set aside in its second quarter. The bank noted its provisions for credit loss ratio rose nine basis points quarter over quarter due to a “less favourable macroeconomic forecast” and lower performing releases seen last quarter.

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