Noah Zivitz

Managing Editor, BNN Bloomberg

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Bank of Nova Scotia announced a pair of moves on Tuesday to reward its shareholders after the country's banking regulator lifted its pandemic-era ban on dividend hikes and share buybacks.

Scotia said it will take advantage of that newfound freedom by raising its quarterly dividend 11 per cent to $1.00 per share and launching a program to repurchase up to 24 million of its shares. Those moves were made possible after the Office of the Superintendent of Financial Institutions said on Nov. 4 it was ending a temporary prohibition on dividend hikes and buybacks that was designed to shield the financial system from the ravages of COVID-19. 

And those shareholder-friendly announcements landed on Tuesday alongside a surge in full-year and fiscal fourth-quarter profits.

Bank of Nova Scotia said it earned $9.96 billion in fiscal 2021, compared to $6.85 billion in 2020. 

For the fiscal fourth quarter, which ended Oct. 31, Scotia's net income climbed to $2.56 billion from almost $1.9 billion a year earlier. On an adjusted basis, the bank earned $2.10 per share; analysts expected $1.91 on average. 

“Overall, we believe that Scotia reported a solid quarter but we anticipate that its return of capital will still fall to the lower end of its peers as the remainder of the group reports through the week,” said Barclays Capital Analyst John Aiken in a report to clients. 

Scotia benefited in the latest quarter from continued improvement in credit quality, as total provisions for loan losses fell to $168 million from $380 million in its fiscal third quarter. 

Profit from the bank's sprawling international operations more than doubled in the quarter to $528 million from $263 million a year earlier. 

Meanwhile, Scotia's core Canadian banking division saw profit climb 59 per cent year-over-year to $1.24 billion amid a release of $96 million that had previously been set aside for loans that could go bad. 

Profit growth was more muted in the bank's other divisions. Scotia's net income from global banking and markets rose nine per cent year-over-year to $502 million, while earnings in the wealth management business rose 19 per cent to $387 million. 

"Our diversified business model demonstrated its resilience through the pandemic, and the Bank is well positioned to achieve its full earnings power in the upcoming year," said Brian Porter, Scotia's president and chief executive, in a release. 

"As we look forward to 2022, we expect to deliver strong growth across all our business lines, with optionality and multiple avenues to grow.