By Elieen Bircher

(SP) Toronto - The Bank of Nova Scotia (TSX: BNS) reported first quarter profit of C$.91, compared to C$.80 in the year-ago period for a gain of 17 per cent, surprising analysts.

Scotiabank attributed the strong first-quarter results to gains in mortgage sales and deposits.

The Bank, which is Canada's third-largest, reported earnings of C$988 million, compared to C$842 million in the first quarter of last year.

Analysts were looking for BNS to report earnings of around C$.88 per share.

The results came on top of an increase in loan loss reserves of C$371 million from C$281 million a year earlier but despite the increase, they were down from C$420 million in the fourth quarter of last year.

Scotiabank Chief Executive Rick Waugh explained that, "Provisions for credit losses remain within our expectations for this stage of the credit cycle and there is evidence of stabilization, as demonstrated by the decline in provisions from the previous quarter."