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Scotia Bank (BNS) Q3 Earnings Disappoint, Provisions Escalate
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The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2020 (ended Jul 31) adjusted net income of C$1.3 billion ($950 million), down 47% year over year. Results excluded certain one-time items.
Escalating provisions and a decline in revenues were on the downside. However, lower expenses along with strong capital and profitability ratios were driving factors.
Revenues Rise, Expenses Fall
Total revenues were C$7.7 billion ($5.6 billion) in the quarter, up nearly 1% year over year. The upswing stemmed from a rise in non-interest income.
Net interest income was C$4.3 billion ($3.1 billion), down 2.8% from the prior-year quarter. Non-interest income climbed 6% from the year-ago quarter to C$3.5 billion ($2.6 billion).
Adjusted non-interest expenses were C$4 billion ($2.9 billion), down 4.1% year over year.
Adjusted provision for credit losses more than doubled to C$2.2 billion ($1.6 billion) on a year-over-year basis on the coronavirus crisis.
Strong Balance Sheet
As of Jul 31, 2020, Scotia Bank’s total assets were C$1.17 trillion ($0.86 trillion), down 6.2% from the prior quarter. Deposits came in at C$768 billion ($561 billion), down 3.7% sequentially. Total loans were C$620.6 billion ($453.6 billion), down 1.7% year over year. Assets under administration were up 2.2% from the year-ago quarter to C$503 billion ($367.6 billion).
Healthy Capital and Profitability Ratios
As of Jul 31, 2020, Common Equity Tier 1 ratio was 11.3% compared with 11.2% as of Jul 31, 2019. Further, total capital ratio was 14.9% compared with the prior-year figure of 14.8%.
Return on equity for the reported quarter was 8.3% compared with the year-earlier quarter’s 11.5%.
Our Viewpoint
A diversified product mix and strong capital position will help Scotia Bank grow organically as well as through acquisitions. Though mounting expenses and the coronavirus pandemic’s impact are concerning, the export-driven economy of Canada will likely benefit from the anticipated recovery of the U.S. economy, in turn, aiding the company’s sustainable growth over the long run.
Performance & Earnings Release Dates for Other Canadian Banks
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2020 (ended Jul 31) adjusted net income was C$1.26 billion ($921 million), down 20.4% year over year.
Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report) will announce results on Aug 27.
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Scotia Bank (BNS) Q3 Earnings Disappoint, Provisions Escalate
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2020 (ended Jul 31) adjusted net income of C$1.3 billion ($950 million), down 47% year over year. Results excluded certain one-time items.
Escalating provisions and a decline in revenues were on the downside. However, lower expenses along with strong capital and profitability ratios were driving factors.
Revenues Rise, Expenses Fall
Total revenues were C$7.7 billion ($5.6 billion) in the quarter, up nearly 1% year over year. The upswing stemmed from a rise in non-interest income.
Net interest income was C$4.3 billion ($3.1 billion), down 2.8% from the prior-year quarter. Non-interest income climbed 6% from the year-ago quarter to C$3.5 billion ($2.6 billion).
Adjusted non-interest expenses were C$4 billion ($2.9 billion), down 4.1% year over year.
Adjusted provision for credit losses more than doubled to C$2.2 billion ($1.6 billion) on a year-over-year basis on the coronavirus crisis.
Strong Balance Sheet
As of Jul 31, 2020, Scotia Bank’s total assets were C$1.17 trillion ($0.86 trillion), down 6.2% from the prior quarter. Deposits came in at C$768 billion ($561 billion), down 3.7% sequentially. Total loans were C$620.6 billion ($453.6 billion), down 1.7% year over year. Assets under administration were up 2.2% from the year-ago quarter to C$503 billion ($367.6 billion).
Healthy Capital and Profitability Ratios
As of Jul 31, 2020, Common Equity Tier 1 ratio was 11.3% compared with 11.2% as of Jul 31, 2019. Further, total capital ratio was 14.9% compared with the prior-year figure of 14.8%.
Return on equity for the reported quarter was 8.3% compared with the year-earlier quarter’s 11.5%.
Our Viewpoint
A diversified product mix and strong capital position will help Scotia Bank grow organically as well as through acquisitions. Though mounting expenses and the coronavirus pandemic’s impact are concerning, the export-driven economy of Canada will likely benefit from the anticipated recovery of the U.S. economy, in turn, aiding the company’s sustainable growth over the long run.
Bank of Nova Scotia The Price and Consensus
Bank of Nova Scotia The price-consensus-chart | Bank of Nova Scotia The Quote
Scotia Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Release Dates for Other Canadian Banks
Bank of Montreal’s (BMO - Free Report) third-quarter fiscal 2020 (ended Jul 31) adjusted net income was C$1.26 billion ($921 million), down 20.4% year over year.
Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report) will announce results on Aug 27.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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