Bank of Nova Scotia sets lofty growth targets for Pacific Alliance

Canada’s third-largest bank, Bank of Nova Scotia (TSE:BNS, Mkt cap 64.11B, P/E 9.39, Div/yield 0.70/5.26, EPS 5.67, Shares 1.20B) has set double-digit growth targets in four Pacific Alliance countries, the Financial Post reports.

The lofty growth objectives for Mexico, Chile, Colombia and Peru are at odds with recent market volatility and low oil and commodity prices.

Dieter Jentsch, group head of international banking at Bank Nova Scotia, said the optimistic outlook of central bankers in those countries played a large part in the bank setting the targets.

“Our growth rates are in line with what the central banks are forecasting. It has moderated from historical growth, but is at levels that will allow us to operate pretty successfully,” Jentsch said.

Scotia forecasts that it earnings from Peru will increase by 10 to 12%, despite it – like Chile – being exposed to mining and commodity prices.

“It does have a large mining industry, but this year’s GDP will be enhanced by 100 to 140 basis points, notwithstanding the reduction in commodity prices, because they have three large mines coming on production and the costs of production are low,” Jentsch said last week during a conference call with the media.

He highlighted how Scotia has long had a presence in the Pacific Alliance countries, allowing it to build established partnerships and processes as a means to help the bank “flag” potential risks.

Jentsch stressed that the job of the bank is not to avoid risk but to manage risk, claiming that “we have the proper risk appetite and systems in place to be very effective and successful.”

He suggested that the single biggest opportunity for Scotia lies in Mexico, due to its large economy and a banking penetration of less than 40%.

The Bank of Nova Scotia, also known as Scotiabank, is a Canadian diversified financial institution, based in Toronto. The Bank offered a range of financial services, including retail, commercial, corporate and investment banking to more than 21 million customers in more than 55 countries around the world. Scotiabank has 4 business segements: Canadian Banking, International Banking, Scotia Capital and Global Wealth Management. The Canadian Banking segment provided a range of banking and investing services to more than 7.7 million customers across Canada, through a network of 1,190 branches, 3,869 automated banking machine (ABMs), as well as telephone, Internet banking and third-party channels. International Banking includes Scotiabank’s retail and commercial banking operations in more than 55 countries outside Canada. Global Wealth Management (GWM) consists of wealth management insurance and Global Transaction Banking businesses. More from Reuters »

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