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Bank Of Nova Scotia (TSE:BNS)
TSX:BNS

Bank Of Nova Scotia (BNS) AI Stock Analysis

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Bank Of Nova Scotia

(TSX:BNS)

Rating:71Outperform
Price Target:
The Bank of Nova Scotia's stock is supported by strong financial performance, reasonable valuation, and strategic initiatives highlighted in the recent earnings call. Despite technical indicators suggesting caution with some bearish momentum, the bank's robust dividend yield and solid financial foundation offer resilience against market fluctuations. Key risks include high leverage and credit loss provisions, but the bank's strategic focus on growth and risk management provides an optimistic outlook.
Positive Factors
Balance Sheet and Liquidity
The Bank of Nova Scotia demonstrated a strong balance sheet and liquidity position, which is beneficial for navigating potential economic uncertainties.
Dividend Increase
Scotiabank announced a 4% dividend increase, which is viewed positively given management’s decision to pause.
Global Banking & Markets Performance
Global Banking and Markets exceeded expectations with a 23.1% year-over-year increase in adjusted profit before taxes and provisions.
Negative Factors
Canadian Banking Earnings
Canadian Banking earnings were below estimates due to lower risk-adjusted margins and negative operating leverage.
Canadian NIM
Canadian NIM slipped but management expects we’ve reached the trough.
Credit Risk
Higher provisions for credit losses in Canadian and International Banking indicate increased caution regarding credit risk.

Bank Of Nova Scotia (BNS) vs. iShares MSCI Canada ETF (EWC)

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 Earnings Call Summary

Earnings Call Date:May 27, 2025
(Q2-2025)
|
% Change Since: 1.63%|
Next Earnings Date:Aug 26, 2025
Earnings Call Sentiment Neutral
While the bank demonstrated strong financial performance metrics and strategic initiatives such as dividend increases and share buybacks, the earnings call highlighted significant challenges, including increased provisions for credit losses and macroeconomic uncertainties. The positive achievements were balanced by notable lowlights, leading to a cautious outlook.
Q2-2025 Updates
Positive Updates
Strong Financial Metrics
Adjusted earnings for the quarter were $2.1 billion or $1.52 per share. The CET1 ratio increased by 30 basis points to 13.2%, and liquidity metrics remained strong.
Dividend and Share Buyback
Scotiabank announced an increase in quarterly dividends by $0.04 to $1.10 per share and launched a share buyback program for 20 million shares.
Global Wealth Management Growth
Earnings from Global Wealth Management rose 17% year-over-year to $405 million, driven by asset growth and higher net interest income.
Positive Operating Leverage
The bank delivered positive operating leverage for the fifth straight quarter, with year-to-date positive operating leverage of 2%.
Negative Updates
Increased Provisions for Credit Losses
The provision for credit losses increased to approximately $1.4 billion, with a PCL ratio of 75 basis points, primarily due to higher-performing loan provisions.
Canadian Banking Earnings Decline
Earnings in Canadian Banking were $613 million, down 31% year-over-year, impacted by significant performing PCLs and a slight decline in pre-tax pre-provision profit.
Macroeconomic Uncertainty
The bank faces ongoing global economic uncertainty, particularly related to trade tensions and tariffs, impacting credit outlook and client behavior.
Company Guidance
During Scotiabank's 2025 Q2 Results Call, Scott Thomson, the President and CEO, highlighted the bank's strategic focus amidst global economic uncertainty. The bank reported adjusted earnings of $2.1 billion, or $1.52 per share, and demonstrated strong balance sheet metrics with a Common Equity Tier 1 (CET1) ratio of 13.2%, an increase of 30 basis points quarter-over-quarter. Liquidity metrics remained robust, and the bank built almost $200 million in allowances, cumulating $1.8 billion since the end of 2022. Despite a challenging macroeconomic backdrop, the bank increased its quarterly dividend by $0.04 to $1.10 per share and announced a share buyback program for 20 million shares. The loan-to-deposit ratio improved to 104%, marking the tenth consecutive quarter of improvement, and Canadian Banking deposits grew 5% year-over-year. Scotiabank maintained its focus on client primacy, with Canadian retail advisors making 20% more client calls compared to the prior quarter. The bank also continued its investment in AI to enhance productivity, with over 70% of commercial client emails now processed by AI. Although the year-to-date return on equity (ROE) was down slightly, the bank remains committed to achieving a 14%-plus ROE over the medium term and expects to grow earnings per share (EPS) by 5% to 7% in fiscal 2025.

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
65
Positive
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
70
Positive
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.
Cash Flow
75
Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
44.76B33.62B31.79B31.15B30.91B31.29B
Gross Profit
44.76B33.62B31.79B31.15B30.91B31.29B
EBIT
3.85B8.80B8.69B28.12B12.49B8.32B
EBITDA
1.75B10.56B0.0014.20B14.00B9.70B
Net Income Common Stockholders
6.73B7.76B7.41B9.92B9.62B6.78B
Balance SheetCash, Cash Equivalents and Short-Term Investments
192.62B108.17B140.83B119.31B120.05B116.50B
Total Assets
1.44T1.41T1.41T1.35T1.18T1.14T
Total Debt
309.12B300.67B313.81B310.86B245.66B7.41B
Net Debt
238.92B236.81B223.50B244.96B159.34B-69.06B
Total Liabilities
1.35T1.33T1.33T1.27T1.11T1.07T
Stockholders Equity
84.80B82.37B76.93B73.22B70.80B68.13B
Cash FlowFree Cash Flow
17.39B15.16B31.28B16.37B-13.27B55.89B
Operating Cash Flow
17.74B15.65B31.72B16.94B-12.81B56.66B
Investing Cash Flow
-11.51B-7.45B-30.04B-11.29B14.70B-56.46B
Financing Cash Flow
-5.89B-8.84B16.71B-4.58B-2.78B28.13B

Bank Of Nova Scotia Technical Analysis

Technical Analysis Sentiment
Positive
Last Price72.91
Price Trends
50DMA
68.27
Positive
100DMA
69.88
Positive
200DMA
70.21
Positive
Market Momentum
MACD
1.20
Negative
RSI
75.36
Negative
STOCH
75.90
Neutral
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 72.91 is above the 20-day moving average (MA) of 70.57, above the 50-day MA of 68.27, and above the 200-day MA of 70.21, indicating a bullish trend. The MACD of 1.20 indicates Negative momentum. The RSI at 75.36 is Negative, neither overbought nor oversold. The STOCH value of 75.90 is Neutral, 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
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
BMBMO
77
Outperform
$75.71B13.4810.01%4.33%15.63%66.95%
TSBNS
71
Outperform
$90.81B14.728.00%5.83%3.72%-17.99%
64
Neutral
$12.67B9.747.58%17015.08%12.21%-6.96%
CMCM
$64.29B12.2213.23%3.93%
RYRY
$181.73B14.4514.39%3.23%
TDTD
$118.51B9.8914.27%4.39%
$36.61B11.7315.64%3.42%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:BNS
Bank Of Nova Scotia
72.91
13.17
22.04%
BMO
Bank Of Montreal
104.81
21.91
26.43%
CM
Canadian Bank of Commerce
68.41
23.49
52.29%
RY
Royal Bank Of Canada
128.86
29.56
29.77%
TD
Toronto Dominion Bank
68.22
16.31
31.42%
NTIOF
National Bank of Canada
93.46
11.58
14.14%

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.