Scotiabank expects ‘high single digit’ growth in foreign business after year of weaker gains
The Bank of Nova Scotia on Tuesday downplayed the toll that recent unrest in Latin America is likely to take on the lender’s business, saying that fallout from protests in Chile is expected to have a limited impact and highlighting that economic growth will be stable or improving in other key markets.
Scotiabank president and CEO Brian Porter said the Pacific Alliance countries of Chile, Colombia, Mexico and Peru — which are a major focus for the bank — “have proven resilient in the past, and we are confident any issues will be resolved constructively.”
“We have over 30 years’ experience in the region and we remain committed to supporting our customers and are very confident in the long-term prospects for the region,” Porter said during a conference call to discuss the bank’s latest earnings.
The Pacific Alliance has recently been hit by protests over inequality in Chile and by slowing economic growth in Mexico, which on Monday was revealed to have entered a recession during the first half of 2019. Colombia has also recently experienced anti-government rallies and Peru underwent a political crisis after the president there dissolved congress.
These issues affect Scotiabank more than Canada’s other big banks because of its greater presence in the region, with the Pacific Alliance making up 23 per cent of Scotiabank’s adjusted earnings for the year ended Oct. 31, the Toronto-based lender’s annual report showed.
The Pacific Alliance countries are attractive to Scotiabank, Canada’s third-largest lender, because of faster economic growth in recent years and their relatively younger and underserved banking populations. Porter said that they are forecasting economic growth of above two per cent on average for the region.
“In the Pacific Alliance, the outlook for 2020 is for an improvement in GDP growth in Mexico and Colombia, stable growth in Peru and a modest slowing of growth in Chile due to local political developments,” he added.
The comments came after Scotiabank reported fourth-quarter financial results that were in-line with analyst expectations, but were affected by global economic uncertainty and the bank’s recent acquisitions and sales of international assets.