Bank of Nova Scotia posted lower second quarter profit as increased loan loss provisions offset record revenues, the bank said Thursday.

The bank said net income was $872 million, or 81¢ a share, for the quarter ended April 30, compared with $980 million, or 97¢ a share, a year earlier.

Scotiabank said provisions for credit losses rose to $489 million from $153 million.

Total revenue (on a taxable equivalent basis) was a record $3,673 million, up $401 million or 12% from the same quarter last year.

“The increase was attributable to growth in net interest income, strong capital markets revenues, higher securitization and transaction-based revenues, and the positive impact of foreign currency translation,” the bank said.

“Solid underlying performances in Canadian and international banking and a record quarter from Scotia Capital allowed us to earn through higher credit provisions and a challenging economic environment,” CEO Rick Waugh said in a release.

Canadian banking net income for the quarter was $410 million, down $12 million or 3% from the same quarter last year.

“Canadian banking recorded solid year-over-year growth in net interest income due to an increase in average assets — including mortgages, personal
loans and credit card volumes. The business line also saw strong growth of 10% or $8 billion in personal deposits,” Waugh said.

International banking’s net income in the second quarter was $332 million, a decrease of $3 million or 1% from last year and $56 million, or 14% below last quarter. Excluding the positive impact of foreign currency translation, net income decreased $47 million from last year.

Scotia Capital contributed net income of $328 million this quarter, an increase of $73 million or 29% from the second quarter of 2008.

“Scotia Capital had a record quarter due to widening loan spreads and increased customer activity in corporate and investment banking, strong trading results — including in our fixed income and foreign exchange businesses — record results in ScotiaMoccatta, our world-class precious metals business, and a reduction in expenses,” Waugh said.

IE