Bank of Nova Scotia Friday reported a lower profit for the third quarter as it increased loan loss provisions.

Scotiabank said net income fell to $931 million, or 87¢ a share, for the quarter ended July 31, compared with $1.01 billion, or 98¢ a share, a year earlier,

Despite the drop, the bank’s quarterly earnings still exceeded analysts’ expectations of 84¢ a share, according to Reuters Estimates.

The bank said it had record revenues for the second consecutive quarter on higher net interest income and strong trading, offset by increases in provisions against bad loans.

Total revenue (on a taxable equivalent basis) was a record $3,843 million this quarter, up $366 million, or 11%, from the same period last year.

Scotiabank said provisions for credit losses rose to $554 million from $159 million.

“Record quarters from Canadian banking and Scotia Capital and a solid contribution from international banking have allowed Scotiabank to continue to deliver strong core earnings through challenging conditions,” CEO Rick Waugh said in a news release.

Canadian banking net income for the quarter was a record $500 million, up $37 million, or 8%, from the same quarter last year, while net interest income was boosted by higher loan volumes and improved lending spreads.

International banking’s net income in the third quarter was $312 million,a drop of $23 million, or 7%, from last year.

Scotia Capital contributed record net income of $470 million this quarter, an increase of $173 million, or 58%, from the third quarter of 2008.

Tier I capital was 10.4%, up from 9.8% a year earlier.

Return on equity was 18.0%, compared to 21.0% in the year earlier period.

The dividend was unchanged at 49¢ a share.

IE