Scotiabank reports Latam has fiscal power to tackle crisis: Group Head, International Banking

Latin America is lagging behind Canada in its economic recovery because the pandemic took place later there, but the region is following the positive trends seen in North America, according to Ignacio (Nacho) Deschamps, Group Head, International Banking and Digital Transformation at Scotiabank.

Deschamps was speaking on the Bank’s Q3 Conference Call on Tuesday, where it reported adjusted earnings of $53 million for its International Banking division.

Deschamps highlighted substantial growth in mining exports in Chile, the recovery of electricity consumption in Peru and Colombia to pre-COVID levels, and a significant increase in Mexico’s manufacturing sectors as signs that the Pacific Alliance countries are on the right path.  

These countries have strong fundamentals and have responded in a comprehensive way to stimulate their economies, Deschamps said, while low levels of debt-to-GDP gave them fiscal power to respond.

“I would like to leave you with three messages. First, that we have reshaped our footprint in our business, we feel we are in the right markets, and we are committed to our International Banking strategy. Second, we expect this to be the quarter with the highest PCL (provision for credit losses) in International Banking. And third, you will see our earnings improving in Q4 and beyond.”

Brian Porter, President and CEO of Scotiabank, said he too has faith in the region’s resiliency.

“As we look ahead, the substantial stimulus provided by policy actions, and the steady reopening of economies combined with a strong rebound in prices for important commodities such as oil, copper and gold are positive for our outlook in the Pacific Alliance,” Porter said during the Conference Call.

“Our current outlook, which was updated after Q3, is for a return to positive GDP growth in 2021 with growth averaging 5.3%. This represents an improvement from our previous forecast of 3.7%.

“We are confident that the Pacific Alliance countries will prove to be as resilient today as they have been in the past.”