Scotiabank Beats Estimates as Wealth Management, Global Profits Grow

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KEY TAKEAWAYS

  • The Bank of Nova Scotia reported second-quarter earnings that narrowly beat analyst estimates, but profits fell year-over-year.
  • Uncertainty around interest rate cuts and inflation in the U.S. and abroad has impacted bank earnings in recent quarters.
  • Scotiabank also declared a quarterly dividend of C$1.06 per share.

The Bank of Nova Scotia (BNS) reported second-quarter earnings that narrowly beat analyst expectations Tuesday amid what the bank’s chief executive called a “backdrop of ongoing macroeconomic uncertainty.”

Total revenue increased year-over-year to 8.35 billion Canadian dollars ($6.13 billion), up from last year’s mark of C$7.91 billion and narrowly above the C$8.30 billion analysts expected, according to estimates compiled by Visible Alpha.

While still beating analyst estimates, profit fell to C$2.09 billion, or C$1.57 per share, from the C$2.15 billion and C$1.68 per share Scotiabank reported last year. Analysts expected net income of C$2.05 billion, or C$1.55 per share.

Wealth Management, International Profits Grow

Scotiabank saw net income increase in its wealth management division and its international operations, while profit dropped about 4% year-over-year in the bank’s Canadian operations thanks to higher provision for credit losses (PCL) and expenses.

“The Bank delivered solid results this quarter against a backdrop of ongoing macroeconomic uncertainty, reporting positive operating leverage driven by revenue growth and continued expense discipline,” Scotiabank Chief Executive Officer (CEO) Scott Thomson said in a statement.

Analysts from Bank of America wrote in a note earlier this month that a number of factors like uncertainty on the future of inflation, rising credit card debt, and interest rates in the U.S. and abroad have led many investors to be cautious when it comes to investing in bank stocks.

Scotiabank Declares Quarterly Dividend

The bank also declared a quarterly dividend of C$1.06 per share, set to be paid out on July 29 to shareholders of record on July 3. This will be the fourth consecutive quarter in which Scotiabank pays out a C$1.06-per-share dividend.

Scotiabank and a number of other Canadian banks report earnings to close out the month. Last week, Toronto-Dominion Bank (TD) reported earnings that also beat estimates.

Scotiabank shares on the New York Stock Exchange (NYSE) were up 0.9% to $48.23 about 90 minutes before the opening bell but are down slightly since the start of 2024.

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Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

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