Bank of Nova Scotia earned $1.5 billion in its fourth quarter, a nearly one-third increase over the same period last year and capping a record annual profit for the bank in 2012.
Scotiabank was the last of Canada's big banks to release its financial results for a quarter that saw increased profits across the board for the year.
Despite the improvement in 2012 however, bank earnings are expected to be under pressure next year as the growth in retail banking, a key strength over the past several years, is expected to slow amid record debt levels and a cooling housing market.
Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd., said that although the banks may have shown growth compared with 2011, the trend is for slower growth in retail.
"Retail is not necessarily going to do a great deal I think in terms of expectations for these Canadian banks over the next 12 months," Watson said.
"It is not going to be the driver in terms of bank performance if we continue to see a bit of a slowdown here in the Canadian economy."
Watson called the banks' recent performance in retail banking impressive, especially given the low interest rate environment which has squeezed margins, but said the sector is slowing.
But investment banking and wealth management are going to have to become the drivers if the sector is going to continue to show strength, he added.
"That's probably where you're going to have to see the growth, with retail being relatively flat," he said.
Combined, the six big Canadian banks — Royal Bank (TSX:RY), TD Bank (TSX:TD), Scotiabank (TSX:BNS), CIBC (TSX:CM), Bank of Montreal (TSX:BMO) and National Bank (TSX:NA) — earned roughly $30 billion for 2012 on about $107 billion in revenue.
The results topped the $25 billion on $98 billion in revenue in 2011.
Scotiabank's fourth-quarter profit amounted to $1.18 per diluted share on $4.86 billion in total revenue, up from a profit of $1.2 billion or 97 cents per share on $4.23 billion in revenue a year ago.
On an adjusted basis, the bank reported a profit of $1.21 per share, up from $1 per share in the same quarter last year.
The average analyst expectation was for $1.18 in adjusted earnings per share and revenue of $4.79 billion, according to estimates compiled by Thomson Reuters.
"Scotiabank had strong overall results this year with record net income and revenues and very good contributions from each of our four business lines," chief executive Rick Waugh said in a statement.
"The bank is well positioned to continue to deliver growth in all business lines."
Waugh noted that Scotiabank's four main business lines will now report to Brian Porter, who was named Scotiabank's president in October — widely seen as part of the bank's planning for an orderly transition to a new executive leadership.
Scotiabank is Canada's most international bank and, as group head for international banking, Porter oversaw all of its personal, small business and commercial banking operations in more than 55 countries outside of Canada.
Canadian banking at Scotiabank earned $481 million, up from $419 million in the quarter, while international banking earned $453 million, up from $371 million.
Global wealth management earned $300 million, up from $262 million, while Global banking and markets earned $396 million compared with $243 million.
Provisions for credit losses at the quarter amounted to $321 million, up from $281 million a year ago, due in part to an increase at Scotiabank's international operations.
For the 2012 financial year ended Oct. 31, the bank earned nearly $6.5 billion or $5.22 per share, up from $5.33 billion or $4.53 per share the previous year.
Revenue was $19.7 billion, up from $17.3 billion in 2011.
The bank closed a deal last month to buy ING Bank of Canada from its Dutch parent company for $3.13-billion in a move to beefed up Scotiabank's domestic position.
ING Direct is expected to operate separately and maintain its 1,000 employees under the deal. However, the name is expected to eventually change.