Back to top

Image: Bigstock

Scotia Bank (BNS) Q2 Earnings Increase Y/Y as Provisions Fall

Read MoreHide Full Article

The Bank of Nova Scotia (BNS - Free Report) reported second-quarter fiscal 2021 (ended Apr 30) adjusted net income of C$2.46 billion ($1.95 billion), which surged 85.5% year over year. Results excluded certain one-time items.

Significant fall in provisions, marginal rise in loan balance and lower expenses were positives. Further, strong capital and profitability ratios were the driving factors. However, decline in net interest income and lower deposit balance were headwinds.

Adjusted Revenues & Expenses Fall

Total revenues were C$7.74 billion ($6.15 billion), down 2.8% year over year. The decline was mainly due to fall in net interest income.

Net interest income was C$4.18 billion ($3.32 billion), down 5.5%. Non-interest income rose marginally from the year-ago quarter to C$3.56 billion ($2.83 billion).

Non-interest expenses were C$4.02 billion ($3.19 billion), down 6.5% year over year.

Provision for credit losses plunged 73.1% to C$496 million ($394 million).

Strong Balance Sheet

As of Apr 30, 2021, Scotia Bank’s total assets were C$1.13 trillion ($0.92 trillion), down 3.3% from the prior quarter. Deposits came in at C$756.7 billion ($616 billion), decreasing 1.6%.

Net customer loans and acceptances were C$623.8 billion ($507.8 billion), up nearly 1% from the previous quarter.

Assets under administration were up 19.7% from the year-ago quarter to C$571 billion ($464.8 billion).

Solid Capital and Profitability Ratios

As of Apr 30, 2021, Common Equity Tier 1 ratio was 12.3% compared with 10.9% as of Apr 30, 2020. Further, total capital ratio was 15.7% compared with the prior-year figure of 14.0%.

Adjusted return on equity was 14.9%, up from 8.2% in the year-earlier quarter.

Our Take

A diversified product mix and strong capital position will help Scotia Bank to grow organically as well as through acquisitions. Though the coronavirus pandemic’s impact is concerning, the export-driven economy of Canada is likely to benefit from the anticipated recovery of the U.S. economy, in turn, aiding the company’s growth over the long run.

Bank of Nova Scotia The Price, Consensus and EPS Surprise

Bank of Nova Scotia The Price, Consensus and EPS Surprise

Bank of Nova Scotia The price-consensus-eps-surprise-chart | Bank of Nova Scotia The Quote

Scotia Bank currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Performance of Other Canadian Banks

Bank of Montreal’s (BMO - Free Report) second-quarter fiscal 2021 (ended Apr 30) adjusted net income of C$2.10 billion ($1.67 billion) increased significantly year over year. The company recorded an improvement in revenues and lower provisions, which supported results to an extent. However, an increase in expenses was a headwind.

Canadian Imperial Bank of Commerce’s (CM - Free Report) second-quarter fiscal 2021 (ended Apr 30) adjusted earnings per share came in at C$3.59, up substantially from the prior-year quarter. Results benefited from rise in non-interest income and substantial fall in provisions. However, higher costs and fall in net interest income were headwinds.

Royal Bank of Canada (RY - Free Report) reported second-quarter fiscal 2021 (ended Apr 30) net income of C$4 billion ($3.2 billion), up significantly from the prior-year quarter’s figure. The bank witnessed revenue growth and lower provisions. However, higher expenses, along with decline in deposit balances, were on the downside.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Published in