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Bank Of Nova Scotia (TSE:BNS)
TSX:BNS
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Bank Of Nova Scotia
(TSX:BNS)
71Outperform
Positive Factors
Earnings Growth
Management remained steadfast in its ability to achieve the high-end of its 5-7% EPS growth guidance, which is seen as attainable due to improving funding costs providing a tailwind.
Financial Performance
The Bank of Nova Scotia demonstrated a strong balance sheet and liquidity position, which is beneficial for navigating potential economic uncertainties.
Trading Revenue
The Global Banking & Markets division reported near-record trading revenue, significantly surpassing forecasts and contributing to the company's financial success.
Negative Factors
Canadian Banking Earnings
Canadian Banking earnings were below estimates due to lower risk-adjusted margins and negative operating leverage.
Credit Risk
Higher provisions for credit losses in Canadian and International Banking indicate increased caution regarding credit risk.
Loan Growth Challenges
The bank's loan balance in International Banking declined by 2% year-over-year, indicating challenges in that segment.
Bank Of Nova Scotia (BNS) vs. S&P 500 (SPY)
Market Cap
$86.70B
Dividend Yield6.03%
Average Volume (3M)6.70M
Price to Earnings (P/E)13.7
Beta (1Y)0.97
Revenue Growth3.72%
EPS Growth-17.99%
CountryCA
Employees88,722
SectorFinancial
Sector Strength87
IndustryBanks - Diversified
Share Statistics
EPS (TTM)1.76
Shares Outstanding1,245,532,000
10 Day Avg. Volume5,042,614
30 Day Avg. Volume6,698,730
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$76.34Price Target Upside9.67% Upside
Rating ConsensusHold
Number of Analyst Covering9
Bank Of Nova Scotia Business Overview & Revenue Model
Company DescriptionThe Bank of Nova Scotia provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally. It operates in four segments: Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets. The company offers financial advice and solutions, and day-to-day banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small, medium, and large businesses, including automotive financing solutions to dealers and their customers. It also provides wealth management advice and solutions, including online brokerage, mobile investment, full-service brokerage, trust, private banking, and private investment counsel services; and retail mutual funds, exchange traded funds, liquid alternative funds, and institutional funds. In addition, the company offers international banking services for retail, corporate, and commercial customers; and lending and transaction, investment banking advisory, and capital markets access services to corporate customers. Further, it provides online, mobile, and telephone banking services. The company operates a network of 954 branches and approximately 3,766 automated banking machines in Canada; and approximately 1,300 branches and a network of contact and support center internationally. The Bank of Nova Scotia was founded in 1832 and is headquartered in Halifax, Canada.
How the Company Makes MoneyScotiabank generates revenue through various streams, primarily from its core banking services. Personal and commercial banking forms a significant portion of its earnings, which includes interest income from loans and mortgages, and fees from accounts and transactions. The wealth management division contributes through advisory services, management fees, and investment products. Corporate and investment banking provides income through underwriting, advisory fees, and trading activities. Additionally, the bank earns from its international operations, which diversify its revenue sources and mitigate country-specific risks. Strategic partnerships and acquisitions also play a critical role in expanding its market reach and enhancing profitability.
Bank Of Nova Scotia Financial Statement Overview
Summary
The Bank of Nova Scotia maintains a robust financial position with strong revenue growth and stable cash flows. While profitability margins appear pressured, the bank's solid equity base and cash flow suggest resilience. However, high leverage remains a strategic focus area to mitigate potential financial risks in fluctuating market conditions.Income Statement
The Bank of Nova Scotia has shown stable revenue growth over the years, with a notable increase in total revenue for the TTM compared to previous years. However, the net profit margin has been fluctuating, and the EBIT margin for the TTM is lower compared to historical figures, indicating some operational challenges. Overall, the income statement reflects steady revenue growth but with potential profitability pressures.―
Balance Sheet
The company's balance sheet is characterized by strong equity, with a relatively stable debt-to-equity ratio. The equity ratio is moderate, reflecting a solid foundation amidst high total assets. However, the total debt remains high, which could pose risks if economic conditions change unfavorably. The bank's strong equity position provides a cushion, but leveraging remains an area to watch.70
Cash Flow
The Bank of Nova Scotia demonstrates a strong cash flow position, with a healthy free cash flow to net income ratio and consistent operating cash flow. The free cash flow has grown, indicating efficient capital management. The discrepancy between operating cash flow and net income ratio suggests solid cash generation capabilities, which is a positive indicator of liquidity and financial health.―
| 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 |
| 8.80B | 8.69B | 28.12B | 12.49B | 8.32B | EBITDA |
| 10.56B | 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
Positive
69.61
Price Trends
67.71
Positive
70.63
Negative
69.41
Positive
Market Momentum
0.44
Negative
65.46
Neutral
97.04
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:BNS, the sentiment is Positive. The current price of 69.61 is above the 20-day moving average (MA) of 66.35, above the 50-day MA of 67.71, and above the 200-day MA of 69.41, indicating a bullish trend. The MACD of 0.44 indicates Negative momentum. The RSI at 65.46 is Neutral, neither overbought nor oversold. The STOCH value of 97.04 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
69.61
8.63
14.16%
BMO
Bank Of Montreal
97.63
8.94
10.08%
CM
Canadian Bank of Commerce
63.72
17.55
38.01%
RY
Royal Bank Of Canada
121.27
22.97
23.37%
TD
Toronto Dominion Bank
63.96
11.76
22.53%
NTIOF
National Bank of Canada
88.20
7.96
9.92%
Bank Of Nova Scotia Earnings Call Summary
Earnings Call Date:Feb 25, 2025
(Q1-2025)
| % Change Since: -2.11%|
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.Q1-2025 Updates
Positive Updates
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.
Negative Updates
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 Projects $62 Million Earnings Contribution from KeyCorp
Positive
Apr 28, 2025
Scotiabank announced an expected net income contribution of CAD $62 million from its ownership interest in KeyCorp for Q2 2025, reflecting its share of KeyCorp’s Q1 2025 net income. After adjusting for amortization of acquired intangible assets, the adjusted net income contribution is projected to be CAD $71 million. This announcement highlights Scotiabank’s strategic investments and their impact on its financial performance, indicating a positive contribution to its earnings from KeyCorp.
Spark’s Take on TSE:BNS Stock
According to Spark, TipRanks’ AI Analyst, TSE:BNS is a Neutral.
The Bank of Nova Scotia shows a stable financial position with strong revenue growth and cash flow, providing resilience despite profitability pressures. The stock’s reasonable valuation and high dividend yield add attractiveness, while technical indicators suggest caution with bearish momentum. Strategic advancements are notable, but elevated credit loss provisions and macroeconomic uncertainties remain risks.
To see Spark’s full report on TSE:BNS stock, click here.
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.
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.