06:33 AM EDT, 08/27/2024 (MT Newswires) -- The Bank of Nova Scotia ( BNS ) on Tuesday reported lower adjusted earnings for the third quarter but said its recent strategic investment in Keycorp will boost near term profitability and help it grow business across North America.

Scotia earlier this month agreed to acquire an approximate 14.9% pro-forma ownership stake in KeyCorp, a premier U.S. based financial services company operating across 15 states. The total cash consideration was near US$2.8 billion.

On Tuesday, Scotiabank reported adjusted net income for the third quarter was $2,191 million and adjusted diluted EPS was $1.63, down from $1.72 last year.

The year earlier figure provided by the bank is different from that provided by Capital IQ so it is difficult to tell if Scotia beat the forecast or not. Scotia itself noted results for fiscal 2023 have been restated to reflect the IFRS 17 basis of accounting for insurance contracts.

Among units, Canadian Banking generated adjusted earnings of $1.1 billion this quarter, up 6%. It said the results reflect solid revenue growth from continued deposit momentum and net interest margin expansion, a third consecutive quarter of positive operating leverage, partly offset by an increase in provision for credit losses compared to the prior year.

International Banking generated adjusted earnings of $709 million, up 10%. Solid revenue growth, driven by strong margin expansion, and continued expense discipline were partly offset by higher provision for credit losses. Year-to-date positive operating leverage remains strong, reflecting the significant impact of productivity initiatives in the region.

Global Wealth Management adjusted earnings were $418 million, up 11% year over year. Solid revenue growth, driven by higher fee-based client assets, outpaced expense growth resulting in positive operating leverage for the quarter. Additionally, assets under management of $364 billion grew 10% year over year.

Global Banking and Markets reported earnings of $418 million, down 4% year over year. Higher revenues, driven by Corporate and Investment Banking, were more than offset by higher provision for credit losses and investments to support business growth.

Of other highlights, Adjusted return on equity was 11.3% compared to 12.1% a year ago. reported a Common Equity Tier 1 (CET1) capital ratio(3) of 13.3%, up from 12.7% last year.

The provision for credit losses was $1,052 million, compared to $819 million, an increase of $233 million. The provision for credit losses ratio increased 13 basis points to 55 basis points.

"Through a continued challenging environment, we achieved quarter over quarter EPS growth from balanced business line results while further strengthening our balance sheet," Scott Thomson, president and chief executive officer, said in a statement.

"We have also taken an important early step towards our long-term vision of delivering sustainable, profitable growth through a strategic investment in KeyCorp, increasing the capital deployed to our identified priority markets," he said. "We expect that this transaction will enhance near-term profitability, grow and diversify our well-established U.S. business, and create future strategic optionality for Scotiabank as we expand our presence in the North American corridor."