UPDATE 1-Scotiabank profit beats, but loan loss provisions jump two-fold

(Compares with estimates, adds segment details)

May 26 (Reuters) – Bank of Nova Scotia on Tuesday reported quarterly profit that beat analysts’ estimates due to a strong performance in the capital markets business, but the bank’s loan loss provisions jumped two-fold.

Provisions for loan losses at Scotia more than doubled to C$1.85 billion ($1.33 billion) from a year earlier as it set aside more money to meet future losses.

Canadian banks are expected to face loan defaults as the coronavirus pandemic drives the world into a recession, leaving small and medium-sized businesses scrambling to meet their debt payments.

The bank said commercial and corporate performing loan provisions increased by C$275 million, hurt by the poor macroeconomic outlook and a plunge in oil prices that impacted the energy sector globally.

Adjusted net income at its global wealth management segment rose 3% to C$314 million, while profit at the global banking and markets business jumped 25% to C$523 million.

Canada’s third-biggest lender said net income fell to C$1.24 billion, or C$1 per share, in the quarter ended April 30, from C$2.13 billion, or C$1.73 per share, a year earlier.

On an adjusted basis, the lender earned C$1.04 per share, compared with analysts’ estimate for profit of C$0.98 per share, according to IBES data from Refinitiv. ($1 = 1.3874 Canadian dollars) (Reporting by Abhishek Manikandan in Bengaluru; Editing by Devika Syamnath)

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