* EPS C$1.62 vs C$1.46
* Bank expects acquisition opportunities in next year
* Bank has stress tested against 50 pct house price declines
* Canadian head plays down concerns over Home Capital
(Adds shares, comment from Canadian banking head)
By Matt Scuffham
TORONTO, May 30 Bank of Nova Scotia
beat analyst expectations for second-quarter results on Tuesday,
helped by a strong performance from its international business.
Scotiabank, which has the biggest foreign presence of any
Canadian bank, is focusing its international strategy on the
Pacific Alliance, a Latin American trade bloc comprising Mexico,
Peru, Chile and Colombia.
"Our operations in the Pacific Alliance region had a
particularly strong performance in the quarter," Chief Executive
Brian Porter said.
Scotiabank said earnings per share, excluding one-off items,
rose to C$1.62, compared with C$1.46 a year earlier. Analysts
had on average forecast earnings of C$1.56 per share, Thomson
Reuters I/B/E/S data showed.
"Scotia did better than forecast with results in
international a standout, a distinct positive given that these
operations are the bank's key differentiator," said Barclays
analyst John Aiken.
The bank's core tier 1 capital ratio, a measure of its
financial strength, was 11.3 percent at the end of the quarter
on April 30, among the highest of major Canadian banks.
Porter said that gave the bank flexibility to make
"There will be opportunities to do that over the course of
the next year, I suspect," he told analysts on a conference
call. "When we see something that's on strategy we'll take a
hard look at it."
Porter said acquisition opportunities were more likely to be
in the bank's international business than in Canada.
Shares in Canada's financial services companies
hit a five-month low earlier this month after credit ratings
agency Moody's downgraded the country's banks on May 10, citing
concerns over record levels of household debt and Canada's hot
Scotiabank's Chief Risk Officer Daniel Moore said the bank
had stress-tested its resilience against a 50 percent drop in
house prices in Toronto and Vancouver and found that losses
would be "very manageable."
Its Canadian banking head, James O'Sullivan, played down
concerns Home Capital Group's problems could impact the
broader financial system, following similar comments from other
Canadian banks last week.
"I think the issues are quite isolated and specific to that
company. They're a small lender, they are an important lender to
a certain segment, but the word I've been reading is
idiosyncratic and that's a view we'd share," he said.
Scotiabank reported net income of C$2.1 billion ($1.6
billion), compared with C$1.6 billion a year earlier.
Its shares were up 0.6 percent at 1300 EDT (1700 GMT).
($1 = 1.3472 Canadian dollars)
(Reporting by Matt Scuffham; editing by Meredith Mazzilli and