Scotia sticks to 40-50% payout ratio range: CFO

The Bank of Nova Scotia raised its dividend to 55 cents per share, as its net income in the first quarter increased 15 percent.

“We have a return on equity of over 19 percent. We generate a lot of capital at Scotiabank,” Executive vice president and CFO Sean McGuckin tells BNN. He says the bank looks at its dividend on a regular basis and has a payout ratio of 40-50 percent and it tries to stay within that range.

In the first quarter, McGuckin says Scotia generated $800 million in capital internally. “Having that strong capital base allows us to increase our dividend to reward our shareholders to share in that growth.”

Net interest margins at the all-bank level were squeezed slightly. But McGuckin notes that Scotiabank is one of the few where margins increased at the Canadian banking levels.

“We’re starting to see that the consumer preference is really to fixed rate mortgages, which have a higher spread than variable rate mortgages. So if that trend continues, we may see a lot less pressure on the margins and we may see it turn around.”