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Scotia Bank (BNS) Stock Down 4.5% Despite Q3 Earnings Growth
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The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2022 (ended July 31) adjusted net income of C$2.61 billion ($2.04 billion), which rose 2% year over year. Results excluded certain one-time items.
Higher net interest income driven by rising rates and improving loan demand mainly supported the results. Moreover, the balance sheet position remained strong during the quarter.
However, lower non-interest income and a rise in expenses were the headwinds. Further, an increase in provisions on worsening economic outlook hurt the financials. Perhaps these concerns weighed on investor sentiments and the company’s shares tanked 4.5% following the earnings release.
After considering non-recurring items, net income was C$2.59 billion ($2.02 billion), up 2% from the prior-year quarter.
Adjusted Revenues & Expenses Increase
Total revenues were C$7.8 billion ($6.09 billion), up marginally year over year. The rise was driven by an increase in net interest income.
Net interest income was C$4.68 billion ($3.65 billion), which grew 10.9% from the prior-year quarter. Non-interest income declined 11.8% to C$3.12 billion ($2.44 billion).
Non-interest expenses were C$4.17 billion ($3.26 billion), up 2.3%.
Provision for credit losses increased 8.4% to C$412 million ($321.7 million). The rise reflects an increase in loan balance and a deteriorating economic outlook.
Balance Sheet Strong
As of Jul 31, 2022, Scotia Bank’s total assets were C$1.29 trillion ($1.01 trillion), up slightly from the prior quarter. Deposits were C$879.6 billion ($687.1 billion), increasing marginally.
Net loans and acceptances were C$733.2 billion ($572.7 billion), up 3.5% from the previous quarter.
Capital and Profitability Ratios Solid
As of Jul 31, 2022, Common Equity Tier 1 ratio was 11.4% compared with 12.2% as of Jul 31, 2021. Further, total capital ratio was 15% compared with the prior-year figure of 15.7%.
Adjusted return on equity was 15.4%, up from 15.1% in the year-earlier quarter.
Our Take
A diversified product mix and strong capital position are expected to help Scotia Bank grow organically and through acquisitions. However, concerns related to macroeconomic conditions make us apprehensive.
Bank of Nova Scotia The Price, Consensus and EPS Surprise
Some other Canadian banks expected to announce results soon are Bank of Montreal (BMO - Free Report) , Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report) .
Canadian Imperial Bank of Commerce and Toronto-Dominion are scheduled to report quarterly figures on Aug 25, while Bank of Montreal is slated to report on Aug 30.
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Scotia Bank (BNS) Stock Down 4.5% Despite Q3 Earnings Growth
The Bank of Nova Scotia (BNS - Free Report) reported third-quarter fiscal 2022 (ended July 31) adjusted net income of C$2.61 billion ($2.04 billion), which rose 2% year over year. Results excluded certain one-time items.
Higher net interest income driven by rising rates and improving loan demand mainly supported the results. Moreover, the balance sheet position remained strong during the quarter.
However, lower non-interest income and a rise in expenses were the headwinds. Further, an increase in provisions on worsening economic outlook hurt the financials. Perhaps these concerns weighed on investor sentiments and the company’s shares tanked 4.5% following the earnings release.
After considering non-recurring items, net income was C$2.59 billion ($2.02 billion), up 2% from the prior-year quarter.
Adjusted Revenues & Expenses Increase
Total revenues were C$7.8 billion ($6.09 billion), up marginally year over year. The rise was driven by an increase in net interest income.
Net interest income was C$4.68 billion ($3.65 billion), which grew 10.9% from the prior-year quarter. Non-interest income declined 11.8% to C$3.12 billion ($2.44 billion).
Non-interest expenses were C$4.17 billion ($3.26 billion), up 2.3%.
Provision for credit losses increased 8.4% to C$412 million ($321.7 million). The rise reflects an increase in loan balance and a deteriorating economic outlook.
Balance Sheet Strong
As of Jul 31, 2022, Scotia Bank’s total assets were C$1.29 trillion ($1.01 trillion), up slightly from the prior quarter. Deposits were C$879.6 billion ($687.1 billion), increasing marginally.
Net loans and acceptances were C$733.2 billion ($572.7 billion), up 3.5% from the previous quarter.
Capital and Profitability Ratios Solid
As of Jul 31, 2022, Common Equity Tier 1 ratio was 11.4% compared with 12.2% as of Jul 31, 2021. Further, total capital ratio was 15% compared with the prior-year figure of 15.7%.
Adjusted return on equity was 15.4%, up from 15.1% in the year-earlier quarter.
Our Take
A diversified product mix and strong capital position are expected to help Scotia Bank grow organically and through acquisitions. However, concerns related to macroeconomic conditions make us apprehensive.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Schedule of Other Canadian Banks
Some other Canadian banks expected to announce results soon are Bank of Montreal (BMO - Free Report) , Canadian Imperial Bank of Commerce (CM - Free Report) and The Toronto-Dominion Bank (TD - Free Report) .
Canadian Imperial Bank of Commerce and Toronto-Dominion are scheduled to report quarterly figures on Aug 25, while Bank of Montreal is slated to report on Aug 30.