Sohrab Movahedi, an analyst from BMO Capital, maintained the Hold rating on Bank Of Nova Scotia. The associated price target remains the same with C$81.00.
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Sohrab Movahedi has given his Hold rating due to a combination of factors influencing the Bank of Nova Scotia’s performance. The bank’s operating earnings per share exceeded expectations, driven by lower provisions for credit losses in Canadian Banking and strong trading results in Global Banking and Markets. However, despite these positive results, the adjusted return on equity remained below the medium-term target, indicating room for improvement.
Another factor contributing to the Hold rating is the bank’s strategic shift towards developed markets, which may pose challenges in maintaining growth momentum. While the bank offers a peer-leading dividend yield, its high dividend payout ratio could limit future capital allocation flexibility. Additionally, management remains cautious about credit quality trends, despite a strong balance sheet with a solid CET1 ratio and liquidity coverage. These mixed signals suggest a balanced outlook, justifying the Hold recommendation.
In another report released today, Barclays also maintained a Hold rating on the stock with a C$86.00 price target.