May 28 (Reuters) - Bank of Nova Scotia ( BNS ) on

Tuesday reported better than expected quarterly earnings,

boosted by rises in brokerage revenue in Canada and mutual fund

fees overseas and by higher capital markets income.

The bank said net income at its global wealth management

unit rose 8% in February-April, its second quarter, driven by a

6% increase in Canada and a 19% rise in international markets,

which span across Latin America, the Caribbean and Central

America. Income from its capital markets segment rose 7%.

Scotiabank, Canada's third largest bank by assets, has

laid out a new plan under CEO Scott Thomson to focus on growth

in flourishing markets such as Mexico and the United States and

possibly exit underperforming markets such as Colombia.

However, higher loan loss provisions weighed on its Canadian

business, its biggest income generator, while loans in its home

market declined 1% and deposits grew 7%. In its international

business, net income fell 2%.

The lender has deliberately slowed its mortgage lending

amid elevated risks by being more selective while taking on new

clients and instead focused on growing deposits to reduce its

reliance on wholesale funding from larger investors.

"We are executing on our commitment to balanced growth

as our deposit momentum continues," CEO Thomson said in a

statement.

The top Canadian banks, which make up over 90% of the

overall banking market share, have been struggling amid high

interest rates that have weighed on consumers paying mortgages

and credit card bills. That in turn has forced the banks to set

aside more funds in case of loan defaults, weighing on profits.

Provisions for credit losses for Scotiabank increased to

C$1 billion ($733.94 million) in the quarter from C$709 million

in the year-ago period.

Rivals reporting results later in the week are also expected

to set aside bigger reserves, while investors are awaiting

commentary on how the lenders will navigate a prolonged high

interest-rate environment that has dented credit growth.

Scotiabank's net interest income - the difference between

what lenders earn on loans and pay out on deposits - rose to

C$4.69 billion in the quarter, compared with C$4.46 billion a

year earlier.

Its profit declined to C$2.11 billion, or C$1.58 per diluted

share, for the three months ended April 30, from C$2.16 billion,

or C$1.69 per diluted share, a year earlier.

Analysts were expecting C$1.56 per share, according to

LSEG data.

($1 = 1.3630 Canadian dollars)