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Bank Of Nova Scotia (TSE:BNS)
TSX:BNS
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Bank Of Nova Scotia
(TSX:BNS)70Outperform
Positive Factors
Earnings
The Bank of Nova Scotia reported adjusted cash EPS of $1.76, above consensus at $1.65, indicating strong earnings performance.
Trading Revenue
The company's Global Banking & Markets division experienced a near-record trading revenue, significantly surpassing expectations.
Negative Factors
Credit Risk
Higher provisions for credit losses in Canadian and International Banking indicate increased caution regarding credit risk.
Bank Of Nova Scotia (BNS) vs. S&P 500 (SPY)
Market Cap
$89.23B
Dividend Yield6.24%
Average Volume (3M)3.83M
Price to Earnings (P/E)14.1
Beta (1Y)1.07
Revenue Growth3.72%
EPS Growth-17.99%
CountryCA
Employees89,483
SectorFinancial
Sector Strength93
IndustryBanking
Share Statistics
EPS (TTM)5.06
Shares Outstanding1,245,532,000
10 Day Avg. Volume4,354,071
30 Day Avg. Volume3,832,672
Financial Highlights & Ratios
PEG Ratio7.01
Price to Book (P/B)N/A
Price to Sales (P/S)3.14
Price to Cash Flow (P/CF)3.10
P/FCF Ratio1.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$79.85Price Target Upside13.65% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Bank Of Nova Scotia Business Overview & Revenue Model
Company DescriptionFounded in 1832, Canada-based Bank of Nova Scotia provides various financial products and services, including personal, commercial, corporate, and investment banking. It operates through the following segments: Canadian Banking, International Banking, Global Banking and Markets, and Global Wealth Management.
How the Company Makes MoneyScotiabank generates revenue primarily through interest income and non-interest income. Interest income is earned from the various lending activities such as personal loans, mortgages, and commercial loans. Non-interest income comes from service charges, fees for wealth management and investment banking, as well as trading revenues. The bank also benefits from its international operations, particularly in Latin America and the Caribbean, which contribute to its diversified earnings. Strategic partnerships and acquisitions also play a role in bolstering its service offerings and expanding its market reach, thereby enhancing its revenue streams.
Bank Of Nova Scotia Financial Statement Overview
Summary
Bank of Nova Scotia's financial health is generally robust, with steady revenue growth and a solid equity base. However, challenges in maintaining profit margins and generating cash from operations suggest areas for improvement. The high leverage is typical for banks but poses risks if not managed carefully.Income Statement
The Bank of Nova Scotia has demonstrated steady revenue growth, with a revenue increase of 5.76% in the latest year. However, profit margins have been under pressure, with gross and net profit margins showing a declining trend due to increased operational costs. The absence of EBIT and EBITDA data in the latest period limits a more comprehensive margin analysis.75
Positive
Balance Sheet
The balance sheet indicates a strong equity base with a debt-to-equity ratio of 3.65, reflecting high leverage typical of the banking industry. The return on equity stands at 9.42%, indicating effective use of equity to generate profits, while the equity ratio of 5.83% highlights a significant reliance on liabilities to fund assets.80
Positive
Cash Flow
The cash flow statement reveals a significant decline in operating cash flow, although the company maintains positive free cash flow. The free cash flow to net income ratio is stable, but the operating cash flow to net income ratio has decreased significantly, signaling potential issues in cash generation from core operations.68
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 33.62B | 31.79B | 31.15B | 30.91B | 31.29B | Gross Profit |
| 33.62B | 31.79B | 31.15B | 30.91B | 31.29B | EBIT |
| 0.00 | 8.69B | 28.12B | 12.49B | 8.32B | EBITDA |
| 0.00 | 0.00 | 14.20B | 14.00B | 9.70B | Net Income Common Stockholders |
| 7.76B | 7.41B | 9.92B | 9.62B | 6.78B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 108.17B | 140.83B | 119.31B | 120.05B | 116.50B | Total Assets |
| 1.41T | 1.41T | 1.35T | 1.18T | 1.14T | Total Debt |
| 300.67B | 313.81B | 310.86B | 245.66B | 7.41B | Net Debt |
| 236.81B | 223.50B | 244.96B | 159.34B | -69.06B | Total Liabilities |
| 1.33T | 1.33T | 1.27T | 1.11T | 1.07T | Stockholders Equity |
| 82.37B | 76.93B | 73.22B | 70.80B | 68.13B |
| Cash Flow | Free Cash Flow | |||
| 15.16B | 31.28B | 16.37B | -13.27B | 55.89B | Operating Cash Flow |
| 15.65B | 31.72B | 16.94B | -12.81B | 56.66B | Investing Cash Flow |
| -7.45B | -30.04B | -11.29B | 14.70B | -56.46B | Financing Cash Flow |
| -8.84B | 16.71B | -4.58B | -2.78B | 28.13B |
Bank Of Nova Scotia Technical Analysis
Negative
70.26
Price Trends
73.77
Negative
74.29
Negative
69.03
Positive
Market Momentum
-0.73
Positive
31.04
Neutral
47.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BNS, the sentiment is Negative. The current price of 70.26 is below the 20-day moving average (MA) of 72.20, below the 50-day MA of 73.77, and above the 200-day MA of 69.03, indicating a neutral trend. The MACD of -0.73 indicates Positive momentum. The RSI at 31.04 is Neutral, neither overbought nor oversold. The STOCH value of 47.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:BNS.
Bank Of Nova Scotia Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Performance Comparison
TSE:BNS
Bank Of Nova Scotia
70.26
7.06
11.17%
BMO
Bank Of Montreal
99.40
11.26
12.78%
CM
Canadian Bank of Commerce
58.17
11.42
24.43%
RY
Royal Bank Of Canada
115.13
20.39
21.52%
TD
Toronto Dominion Bank
59.24
1.87
3.26%
NTIOF
National Bank of Canada
81.07
3.91
5.07%
Bank Of Nova Scotia Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -2.73% | Next Earnings Date: May 27, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of strong financial performance and strategic advancements, particularly in Global Wealth Management and Global Banking and Markets. However, it was tempered by elevated credit loss provisions, uncertainties due to potential tariffs, and challenges in Canadian Banking earnings. Despite these challenges, the overall tone was cautiously optimistic about managing through uncertainties and focusing on strategic growth.Highlights
Strong Start to 2025 with Revenue Growth
Adjusted earnings for the quarter were $2.2 billion or $1.76 per share, with a 15% year-over-year growth in noninterest revenue. The bank's capital ratio improved by approximately 140 basis points since the end of 2022.
Global Wealth Management Momentum
Earnings were up 23% year-over-year, driven by higher mutual fund fees and wealth advisory revenues. Assets under administration reached record levels, exceeding $730 billion.
Global Banking and Markets Performance
Earnings were up 33% year-over-year, with capital markets revenue up 41%. The segment achieved a #1 rank in debt capital markets in Canada and #11 in the U.S.
International Banking Solid Results
Reported earnings of $657 million, with a productivity ratio improvement to 51% due to 4% revenue growth and disciplined 1% expense growth.
Strategic Investment in KeyCorp
The investment in KeyCorp is immediately accretive to earnings growth and return on equity metrics.
Lowlights
Elevated Provisions for Credit Losses
Provisions for credit losses remain high at approximately $1.2 billion, reflecting higher interest rates, inflation, and geopolitical uncertainty.
Canadian Banking Earnings Decline
Earnings in Canadian Banking were down 6% year-over-year due to higher loan loss provisions and expenses.
Impact of Potential Tariffs
The announcement of potential tariffs has increased macroeconomic uncertainty, with the base case scenario including modest tariff risk.
Challenges in Primary Client Growth
Primary client growth in Canadian Retail has decelerated due to a notable immigration slowdown.
Company Guidance
In Scotiabank's 2025 first-quarter call, Scott Thomson, the CEO, highlighted strong financial outcomes driven by the bank's strategic initiatives. Scotiabank reported adjusted earnings of $2.2 billion, or $1.76 per share, with a notable 15% year-over-year increase in noninterest revenue. The bank's capital ratio improved by approximately 140 basis points since the end of 2022, with an additional $1.6 billion in allowances for credit losses. The bank also achieved a 4% year-over-year deposit growth, reducing its loan-to-deposit ratio to 105%. Global Wealth Management earned $414 million, with assets under administration reaching $730 billion. Global Banking and Markets experienced a 33% year-over-year increase, driven by a 54% contribution from capital markets. Scotiabank's Canadian Banking showed solid revenue growth, despite higher credit provisions, and International Banking demonstrated diversified revenue growth with a productivity ratio improvement to 51%. The bank anticipates 2025 earnings growth towards the higher end of its 5% to 7% range, excluding potential tariffs.Bank Of Nova Scotia Corporate Events
Business Operations and StrategyFinancial Disclosures
Scotiabank Reports Q1 Earnings Amid Strategic Portfolio Adjustments
Neutral
Feb 25, 2025
Scotiabank reported a significant drop in its first-quarter net income to $993 million, primarily due to a $1,355 million impairment loss from the sale of its banking operations in Colombia, Costa Rica, and Panama. Despite this, the bank’s adjusted net income rose to $2,362 million, with strong performances in Global Wealth Management and Global Banking and Markets. The bank continues to focus on its North American markets and simplifying its international portfolio, as evidenced by recent strategic moves.
Stock BuybackDividendsBusiness Operations and Strategy
Scotiabank Declares Dividend and Updates Share Purchase Plan
Positive
Feb 25, 2025
Scotiabank has announced a dividend of $1.06 per share on its outstanding common shares, payable on April 28, 2025, to shareholders recorded by April 1, 2025. The bank has decided to continue purchasing common shares on the open market rather than issuing new shares from its treasury, with all associated costs covered by the bank. This decision reflects Scotiabank’s strategic approach to managing shareholder value and market operations.
Business Operations and Strategy
Scotiabank Revamps Business Segment Reporting for Improved Strategy Execution
Neutral
Jan 28, 2025
Scotiabank has updated its Supplementary Financial Information package, reflecting changes in business segment presentation effective as of November 1, 2024. These changes, which do not affect the bank’s consolidated financial results, are intended to align with its strategy and improve decision-making on pricing and capital allocation. The update affects the bank’s methodology for funds transfer pricing and the reporting of minority investments, aiming for higher liquidity ratios and better comparability across periods.
Scotiabank Transfers Operations to Davivienda, Secures Strategic Stake
Jan 6, 2025
Scotiabank has entered into an agreement with Davivienda, transferring its banking operations in Colombia, Costa Rica, and Panama in exchange for a 20% ownership stake in the combined entity. This move aligns with Scotiabank’s strategic plan to enhance profitability and operational efficiency in its non-core markets, while also allowing it to maintain a presence in these regions through a mutual referral agreement.
Scotiabank Boosts U.S. Presence with KeyCorp Investment
Dec 27, 2024
Scotiabank has completed its acquisition of an additional 10% ownership stake in KeyCorp, bringing its total investment to 14.9% and marking a strategic move into the U.S. market. This investment, valued at approximately $2.8 billion, aligns with Scotiabank’s goal of reallocating capital to North America while enhancing shareholder returns.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.