Scotiabank hurt in Q4, but expects better 2009

Three-month Scotiabank TSX trading

The Bank of Nova Scotia released depressed results for a previously disclosed difficult fourth quarter, but is predicting a better fiscal 2009, president and CEO Rick Waugh said Tuesday.

While the world economy will continue to face difficulty in 2009, the bank is expecting "moderate overall growth," he said in a news release announcing the quarterly and fiscal 2008 results.

The bank said it took $642 million in writedowns in the fourth quarter, more than the $595 million it announced on Nov. 19. The collapse of U.S. investment bank Lehman Brothers was a big factor.

The report knocked the bank's stock down 7.1 per cent or $2.47 to $32.38.

The writedowns cut profit for the fourth quarter ended Oct. 31 to $315 million (28 cents a diluted share), compared with $954 million (95 cents) in the year earlier quarter.

Scotiabank fourth quarter Statistic 2008 2007 Return on equity 6% 21% Provision for taxes $2 million $204 million Provision for credit losses $630 million $270 million Quarterly dividend per share 49 cents 47 cents Source: Bank of Nova Scotia

Revenue was $2.49 billion, compared with $3.08 billion.

The bank said profit would have been flat, except for the writedowns.

It went out of its way to emphasize that the quarterly dividend, 49 cents a share, was safe. "The overall strength of our capital and core earnings continues to allow us to generate sustainable dividends for shareholders," Waugh said.

The provision for credit losses rose to $630 million in 2008 from $270 million. The most of the provision arises from Canadian business, the international provision is growing more quickly.

In an indication of how the economic downturn is affecting government finance, the bank said it took a $2 million provision for income tax in the quarter, compared with $204 million in the 2007 quarter.

For the full year, profit was $3.14 billion ($3.05 a diluted share), compared with $4.05 billion ($4.01) a year earlier.

Revenue was $11.88 billion, compared with $12.49 billion.

Scotiabank stock fell $1.60 to $33.25 in early afternoon TSX trading. The 52-week range is $28.83 to $53.27.