(Bloomberg) -- Bank of Nova Scotia reported fiscal first-quarter earnings that topped analysts’ estimates as the recovering Canadian economy allowed it to set aside less for potential loan losses.

• Scotiabank set aside a total of C$764 million ($605 million) in the three months through January to protect against souring loans. That’s down from C$1.13 billion in the fourth quarter, signaling that Canada’s third-largest lender by assets is confident that government programs and a recovering economy will keep consumers and businesses afloat.

Key Insights

• Scotiabank’s Canadian banking division has held up even as the Covid-19 pandemic lingers on. Profit in the unit rose 6.9% last quarter as lower provisions and non-interest expenses helped results.
• The company has sold some operations and has been making efforts to keep costs under control during the pandemic. Scotiabank cut non-interest expenses by 4.8% from a year earlier.
• Even as results have held up at home, Scotiabank has had more of a struggle abroad. It reported a 18% decline in profit from its Latin America-focused international unit on lower interest and fee income and higher provisions for credit losses.

Market Reaction

• Scotiabank shares have risen 4.8% this year, compared with a 5.9% gain for the S&P/TSX Commercial Banks Index.

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• Net income rose 3.1% to C$2.4 billion, or C$1.86 a share. Excluding some items, profit was C$1.88 a share, more than the C$1.57 analysts had estimated.
• Click here for more on Scotiabank’s first-quarter results.

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