Scotiabank Q1 Profit Rises 14%, Smashes Estimates

Bank of Nova Scotia (TSE: BNS) beat profit expectations in Q1 2022 thanks to strong commercial and mortgage loan growth.

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Earnings & Revenue

Net income came in at C$2.74 billion for Q1 2022 (C$2.14 per diluted share), up from C$2.40 billion (C$1.86 per share) for Q1 2021.

Excluding one-time items, Scotiabank earned C$2.76 billion (C$2.15 per share), compared to C$2.42 billion (C$1.88 per share) in the prior-year quarter. Analysts expected adjusted earnings of C$2.05 per share.

Provisions for credit losses fell to C$222 million from C$764 in the first quarter of 2021.

Adjusted net income from Canadian banking rebounded strongly, rising 32% year-on-year to C$1.21 billion.

Adjusted profit in international banking operations was C$552 million, an increase of 38% from a year ago.

Global wealth management brought in C$415 million, down from C$421 million a year ago, while global banking and markets brought in C$561 million, down from C$543 million.

Revenue decreased 0.3% to C$8.05 billion, and beat estimates of C$7.86 billion.

Management Commentary

Scotiabank president and CEO Brian Porter said, “2022 has started well reflecting the full earnings power of the Bank, with very strong operating results in all our four business lines. This quarter had strong loan growth, along with good fee income growth.”

Porter added that during the quarter, Scotiabank was named Bank of the Year in Canada by The Banker magazine for the third consecutive year.

In addition, the bank has been recognized for Best Corporate Sustainability Strategy at the ESG Investing Awards 2022 for its work addressing climate risk, and promoting gender and racial equality.

Wall Street’s Take

Following the results, Canaccord Genuity analyst Scott Chan kept a Buy rating on BNS with a C$100 price target. This implies 7.2% upside potential.

The rest of the Street is bullish on BNS with a Moderate Buy consensus rating based on five Buys and two Holds. The average Bank of Nova Scotia price target of C$99 implies 6.1% upside potential to current levels.

TipRanks’ Smart Score

BNS scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong chances to beat the overall market.

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