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Scotiabank hikes dividend as profit climbs

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Profit rose 15 percent at Bank of Nova Scotia (BNS-T) in the first quarter, driven by higher lending at its Canadian and international branches.

Scotiabank, Canada's third-largest bank by assets, made $1.44 billion, or $1.23 per share. That compared to net income of $1.25 billion, or $1.11 per share last year.

Revenue rose 11 percent to $4.65 billion.

The bank increased its quarterly dividend 3 cents, or 6 percent, to 55 cents. Scotiabank is the third bank to increase its dividend this quarter after Royal Bank of Canada and Toronto-Dominion Bank made the same move last week.

The earnings beat analysts' forecasts for the quarter. Factoring out one-time items, Scotiabank's adjusted earnings were $1.20 a share. On average, analysts were expecting first-quarter profit of $1.15 a share.

Net income was boosted by a $94 million after-tax real estate gain from the recent sale of its offices in Calgary, the bank said.

An increase in mortgages and loans in the bank's Canadian operations helped push profit up five percent in that business to $475 million. Across the sector, banks have seen strong performances from their Canadian banking operations this quarter, as higher lending income has made up for weaknesses in other divisions.

"Canadian banking had an excellent quarter… with higher volumes and increased transaction-based revenues," Scotiabank chief executive officer Rick Waugh said in a statement.

Profit in the international banking division also rose, climbing 9 percent to $391 million on higher lending revenue. Scotiabank is the most international of Canada's banks with branches in Canada, Mexico, South America and Asia.

"While we continue to watch global economic conditions closely, diversification across our business and focus on high growth international economies have continued to contribute to our results," Waugh said.

However, profit fell at the global banking and markets division, which includes the renamed capital markets operations. The bank made $311 million, down 11 percent from the same quarter a year ago.

While trading income rebounded since the fourth quarter, it was still below the lofty levels seen a year ago when uncertainty in Europe pushed revenue from bond trading to record levels.

Scotiabank's global wealth management division made $288 million, up 28 percent in the quarter.

Scotiabank reported a Tier 1 capital position of 11.4 percent, down from 12.2 percent at the end of October. The bank's capital position was impacted by the recent purchase of a stake in Columbia's Banco Colpatria. But in February, in a move to boost its capital levels, the bank sold $1.66 billion worth of common shares, which will result in improved capital ratios next quarter.

Scotiabank is also exploring the sale of its headquarters in Toronto, with a rumoured price tag for the office tower at more than $1 billion, in an effort to put more capital on its books.

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