Canadian lender Scotiabank's profit jumps in first quarter

Canada's Bank of Nova Scotia on Tuesday reported a rise in first-quarter profit, as the higher interest rates helped the lender earn more on loans. Profit for the three months ended Jan. 31 was nearly C$2.20 billion ($1.6 billion) or C$1.68 per share.

Canada's Bank of Nova Scotia on Tuesday reported a rise in first-quarter profit, as the higher interest rates helped the lender earn more on loans.

Profit for the three months ended Jan. 31 was nearly C$2.20 billion ($1.6 billion) or C$1.68 per share. Last year, the bank had reported a profit of C$1.76 billion or C$1.35 per share. Thanks to a string of rate hikes by the Bank of Canada that allowed lenders to charge higher rates of interest on loans, which in turn boosted their net interest income (NII) - the difference between what banks earn on loans and what they pay out on deposits.

NII for Scotiabank grew nearly 5% to C$4.77 billion. Elevated borrowing costs, however, have raised threats of customers defaulting on their loans, and banks are responding by building bigger buffers to guard against such potential loan losses.

Scotiabank's provision for credit losses was C$962 million, versus C$638 million a year earlier. ($1 = 1.3507 Canadian dollars)