May 28 (Reuters) - Bank of Nova Scotia (BNS.TO), opens new tab on Tuesday reported better than expected quarterly earnings, boosted by rises in brokerage revenue in Canada and mutual fund fees overseas and by higher capital markets income.
The bank said net income at its global wealth management unit rose 8% in February-April, its second quarter, driven by a 6% increase in Canada and a 19% rise in international markets, which span across Latin America, the Caribbean and Central America. Income from its capital markets segment rose 7%.
Scotiabank, Canada's third largest bank by assets, has laid out a new plan under CEO Scott Thomson to focus on growth in flourishing markets such as Mexico and the United States and possibly exit underperforming markets such as Colombia
However, higher loan loss provisions weighed on its Canadian business, its biggest income generator, while loans in its home market declined 1% and deposits grew 7%. In its international business, net income fell 2%.
The lender has deliberately slowed its mortgage lending amid elevated risks by being more selective while taking on new clients and instead focused on growing deposits to reduce its reliance on wholesale funding from larger investors.
"We are executing on our commitment to balanced growth as our deposit momentum continues," CEO Thomson said in a statement.
The top Canadian banks, which make up over 90% of the overall banking market share, have been struggling amid high interest rates that have weighed on consumers paying mortgages and credit card bills. That in turn has forced the banks to set aside more funds in case of loan defaults, weighing on profits.
Provisions for credit losses for Scotiabank increased to C$1 billion ($733.94 million) in the quarter from C$709 million in the year-ago period.
Rivals reporting results later in the week are also expected to set aside bigger reserves, while investors are awaiting commentary on how the lenders will navigate a prolonged high interest-rate environment that has dented credit growth.
Scotiabank's net interest income - the difference between what lenders earn on loans and pay out on deposits - rose to C$4.69 billion in the quarter, compared with C$4.46 billion a year earlier.
Its profit declined to C$2.11 billion, or C$1.58 per diluted share, for the three months ended April 30, from C$2.16 billion, or C$1.69 per diluted share, a year earlier.
Analysts were expecting C$1.56 per share, according to LSEG data.
($1 = 1.3630 Canadian dollars)
Reporting by Arasu Kannagi Basil in Bengaluru and Nivedita Balu in Toronto; Additional reporting by Manya Saini; Editing by Shinjini Ganguli and Susan Fenton
