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Bank of Nova Scotia beat analyst estimates with first quarter earnings released Tuesday, and raised the quarterly dividend by nearly three per cent.

But executives acknowledged that low oil prices are causing more energy companies to trip covenants on their loans, leading to negotiations with the bank.

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“Just because someone trips a covenant doesn’t mean they’re seconds away from default,” Stephen Hart, chief risk officer at Scotia, said on a morning conference call with analysts. He said such negotiations are aimed at improving the position of Canada’s third-largest bank when it comes to recovering funds, even in the event the borrower is unable to adjust its business model and continue to operate.

Canadian banks are beginning to see the impact of the oil rut on their portfolios, including corporate lending books and consumer loans. Pockets of unsecured lending, including credit card debt and some auto loans, are expected to be the hardest hit with the unemployment rate in Alberta now above the national average.