Bank of Nova Scotia missed fiscal fourth-quarter profit estimates as the company set aside more money than expected for potentially souring loans.

Provisions for credit losses totaled $1.26 billion (US$925 million), more than the $870 million analysts had expected. The Canadian lender earned US$1.26 a share on an adjusted basis, it said in a statement Tuesday, short of the $1.67 average estimate of analysts in a Bloomberg survey.

The Toronto-based bank was hit by higher-than-forecast provisions for loan losses in both its Canadian and Latin American operations, which have been plagued by economic turmoil, and also reported lower capital-markets earnings as trading slowed in the quarter.

The results come just two weeks before Scotiabank is set to unveil a revamped strategy under Chief Executive Officer Scott Thomson, who took charge at the bank in February and has promised to focus on profitable growth and delivering shareholder returns. But as he looks to put a longterm plan in place, he must navigate high expenses, slower loan growth in Canada and slumping results in Scotiabank's international operations, where credit losses returning to pre-pandemic levels have dragged down its lending portfolios in Chile and Peru.  

Thomson has already begun to put his stamp on the bank, bringing in new leaders for its Canadian and international divisions as well as its wealth-management business in recent months.

And, in October, Scotiabank said it would dismiss three per cent of its staff and write down the value of an investment in China's Bank of Xi'an Co. Those steps, along with the cost of exiting real estate and other contracts early, led to after-tax charges totaling $594 million that were recorded in the fourth quarter, countered by a gain of CUS$319 million related to the sale of a stake in Canadian Tire Corp.'s financial-services business.

Scotiabank, the country's third-largest bank by assets, is the first of Canada's biggest lenders to report financial results for the three months through October, with the country's other large banks recording their results for the final fiscal quarter of the year throughout the week.