The Bank of Nova Scotia reported its third-quarter profit fell compared with a year ago as the amount it set aside to cover bad loans climbed higher.Canada’s biggest banks report their third-quarter earnings this week, covering the three months that ended July 31, as unemployment rates in Canada and the United States tick higher and as high borrowing costs weigh more heavily on consumers and businesses.
The bank’s share price fell $1.70 or 2.1 per cent to $79.59 on the Toronto Stock Exchange on Thursday.The bank set aside higher loan loss provisions of nearly $1.1-billion, anticipating that more customers could default on loans as high interest rates and a slowing job market put pressure on households and businesses.
The bank’s provisions for impaired loans, which are already past due, jumped 31 per cent higher to $970-million, as more borrowers fell behind on payments. Many of those customers were in three of Scotiabank’s key markets in Latin America: Colombia, Chile and Peru. Provisions also increased for Canadian banking clients, mostly on car loans as well as credit card balances.
Provisions for credit losses, or money the bank sets aside to cover soured loans, rose to $906-million from $492-million a year earlier. The bank attributed the increase, in part, to the need for provisions from clients struggling with extended high interest rates.
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