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Scotiabank profit plunges 40% as bad loans more than double amid COVID-19

Scotiabank posted a profit Tuesday morning of $1.32 billion in the three months up to the end of April, a fall of more than 40 per cent from last year’s level as the bank had to set aside twice as much money for bad loans.

The bank’s provisions for credit losses totalled nearly $1.85 billion for the quarter. That’s up by 111 per cent compared to the $873 million worth of bad loans the bank revealed in the same three months last year, well before the COVID-19 pandemic crushed the economy.

Scotia is the first of Canada’s big banks to reveal its financial performance through the current pandemic, numbers which will be closely scutinized as they are considered to be a bellwether for the broader economy. That’s because pain at other businesses tends to show up on the books of the banks that lend to them.

Canada’s other big banks — Royal, TD, CIBC and BMO — will report earnings in the next few days.

On an adjusted basis, Scotiabank’s profit for the quarter came in at $1.04 per diluted share. That’s well down from $1.70 per diluted share a year ago, but ahead of the 98 cents that analysts who cover the bank were expecting.

Scotiabank CEO Brian Porter says the bank’s results were significantly impacted by the COVID-19 pandemic, but added it is well positioned from a capital and liquidity perspective and appropriately reserved for potential credit losses.

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