(Bloomberg) -- Bank of Nova Scotia’s Latin American push boosted Canada’s most globally focused lender, with a Chilean acquisition helping fuel record earnings from international banking. At the same time, the bank is retreating from parts of the Caribbean, where it has operated for more than a century.

• Scotiabank’s international-banking division had the biggest profit gain among the lender’s three main segments in the fiscal fourth quarter, the Toronto-based bank said Tuesday in a statement. The 22 percent increase is the largest in three years.
• However, Scotiabank said in a separate statement that it’s selling banking operations in nine "non-core" Caribbean markets to Republic Financial Holdings Ltd. Its divisions in Jamaica and Trinidad & Tobago will sell their insurance operations. It also missed earnings estimates overall.

Key Insights

• Chief Executive Officer Brian Porter has been targeting Mexico, Peru, Colombia and Chile as priority areas in the past six years. His C$2.9 billion purchase of Banco Bilbao Vizcaya Argentaria SA’s 68 percent stake in a Chilean lender, which closed in July, can be credited for part of those international banking gains.
• The global footprint isn’t without risks, as National Bank Financial analyst Gabriel Dechaine highlighted. “While the outlook is positive in Chile, Mexico is generating investor concerns around the business climate under the new Obrador government,” he said in a Nov. 19 note.
• Scotiabank’s busiest year for takeovers isn’t over. The bank is waiting to close its C$130 million purchase of 51 percent of Peruvian consumer lender Banco Cencosud and Banco Dominicano del Progreso in the Dominican Republic. The buying spree also included C$3.54 billion for Canadian money managers Jarislowsky Fraser and MD Financial Management, as well as acquiring Colombian businesses from Citigroup Inc.
• The company now gets 32 percent of annual earnings from outside its home country.

Market Reaction

• Scotiabank shares have fallen nearly 14 percent this year through Monday’s close, the worst performer among Canada’s six-largest lenders and lagging the 6.9 percent decline of the eight-company S&P/TSX Commercial Banks Index.

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• Scotiabank is the first big Canadian bank to report quarterly results. The six lenders are expected to increase adjusted per-share earnings by 10 percent from a year earlier, the median of analysts’ estimates compiled by Bloomberg Intelligence. Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank report later this week.
• Net income for the period ended Oct. 31 rose 9.7 percent to C$2.27 billion, or C$1.71 a share, from C$2.07 billion, or C$1.64, a year earlier. Adjusted earnings, which exclude some items, were C$1.77 a share, missing the C$1.78-a-share estimate of 12 analysts surveyed by Bloomberg.
• Earnings rose in all three main business segments, with Canadian banking climbing 4.5 percent and Scotia’s global banking and markets division rising 6.4 percent.
• Read the quarterly statement here.

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