Nov 28 (Reuters) - Bank of Nova Scotia on Tuesday forecast its earnings will rise "marginally" in 2024, after the Canadian lender missed fourth-quarter profit estimates as a murky economic climate prompted it to set aside more funds to guard against bad loans.

Scotiabank kicks off Canadian banks' earning season, wrapping up a financial year marked with economic uncertainty, rising credit loss provisions as more consumers struggle to pay off their mortgages, layoffs to cut costs, and rising expenses.

Lenders have been bracing for a surge in loan defaults as effects of the central bank's monetary policy tightening flow through and the economy flirts with a recession.

The lender said earnings in the 2024 fiscal year to Oct. 31 would be impacted by "slowing economic growth across its markets and increasing regulatory capital requirements" but it would also benefit from interest-earning assets.

"Provision for credit losses are expected to increase, mainly from sequential growth in non-performing loans throughout 2024 driven by a challenged macroeconomic outlook," the bank said.

For the fourth quarter, Scotiabank increased its provision for credit losses to C$1.26 billion ($927.90 million) from C$529 million a year earlier, citing unfavorable economic outlook and "continued uncertainty around the impact of higher interest rates."

Income from its Canadian unit, it's biggest, fell 30.8%, while expenses rose 10% on an adjusted basis, driven by higher salaries and other costs.

The bank said adjusted net income fell 36% to C$1.67 billion or C$1.26 per share, well below analysts' forecast of C$1.65 per share, according to LSEG data.

"A very challenging quarter for Scotiabank at first look driven by a notable jump in loan losses in Canadian retail lending, weaker revenue, and higher expenses, each of which we believe will be concerning for investors," KBW analyst Mike Rizvanovic said.

The bank said last month it would cut about 2,700 jobs globally, or about 3% of its workforce. Its efforts to streamline operations resulted in a restructuring charge of C$258 million, Scotiabank said.

It also booked impairment charges of C$273 million related to its investment in China's Bank of Xi'an.

A gain of C$319 million from the sale of its equity interest in Canadian Tire's Financial Services business helped offset some of the hit, the bank said.

Net interest income inched up, as aggressive rate hikes by the Bank of Canada allowed the lender to charge higher interest on loans.

The metric - which measures the difference between what banks earn on loans and pay out on deposits - rose 1% to C$4.67 billion.

($1 = 1.3579 Canadian dollars) (Reporting by Niket Nishant in Bengaluru and Nivedita Balu in Toronto; Editing by Krishna Chandra Eluri and Tomasz Janowski)