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Dec 3, 2020

Scotiabank CEO plots path back to full profitability, share buybacks

Scotiabank CEO says government COVID measures having intended impact


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The chief executive officer of the Bank of Nova Scotia says share buybacks are in store as part of the lender’s two-pillar capital strategy going into 2021.

Brian Porter said in an interview Thursday that along with organically growing its domestic and international operations, Scotiabank will repurchase shares once the Office of the Superintendent of Financial Institutions lifts its ban on the practice.

The federal regulator has prohibited Canadian banks from share repurchases and dividend hikes since March as a financial stability safeguard during the pandemic.

Scotiabank shares have bounced off their initial plunge in March, but still remain about 10 per cent lower compared to the stock price in late February – leaving them at an “inexpensive” and “attractive” level, according to Porter. 

“I think the marketplace got way too concerned about Latin America, and I think that’s probably very easy to do in a period like this,” Porter said.

Latin American countries where Scotiabank operates have experienced varying degrees of economic hardship brought on by the pandemic. However, Porter said he feels certain nations have avoided excessive economic damage, including Chile, which he said “had a pretty good COVID” -- notwithstanding more than 15,000 deaths attributed to the virus in that country, according to Johns Hopkins University’s global tracker.

“Mexico wasn’t so bad despite some of the headlines. Colombia was fine. Peru had a more difficult time,” Porter said. “These countries are coming back and when they come back – they come back quickly, and that’s what I think the market is underestimating.”

In Scotiabank’s fiscal fourth-quarter results that were released Tuesday, its international operations significantly rebounded with a $353-million adjusted profit, compared to a mere $4-million in the prior quarter.

Porter said he expects that rebound across the bank’s operations to continue into next year.

He said he views 2021 as a “transition year” before returning to full profitability in fiscal 2022.