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Bank of Nova Scotia (BNS) Q1 Earnings Decline Y/Y, Revenues Up
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The Bank of Nova Scotia's (BNS - Free Report) adjusted net income for fiscal first-quarter 2024 (ended Jan 31) was C$2.21 billion ($1.63 billion), which declined nearly 6% year over year. Results excluded certain one-time items.
A rise in expenses, a surge in provisions for credit losses and a lower loan balance hurt results. However, higher non-interest income, net interest income and solid capital ratios were tailwinds.
After considering non-recurring items, net income was C$2.2 billion ($1.62 billion), up 25.1% year over year.
Adjusted Revenues Rise, Expenses Increase
Total revenues were C$8.43 billion ($6.21 billion), up 5.9% year over year.
Net interest income (NII) was C$4.77 billion ($3.51 billion), which increased 4.6%. Further, non-interest income grew 7.7% to C$3.66 billion ($2.69 billion).
Non-interest expenses were C$4.74 billion ($3.49 billion), up 6.2%.
Provision for credit losses rose to C$962 million ($707.9 million) from C$638 million reported in the prior-year quarter. The rise reflects a deteriorating economic outlook.
Balance Sheet Weak
As of Jan 31, 2024, BNS’ total assets were C$1.39 trillion ($1.03 trillion), down 1.3% sequentially. Deposits were C$939.8 billion ($691.6 billion), which fell 1.3% from the previous quarter.
Net loans and acceptances were C$759.9 billion ($559.2 billion), down 1.2% from the previous quarter.
Capital Ratios Solid, Profitability Ratios Deteriorate
As of Jan 31, 2024, the Common Equity Tier 1 ratio was 12.9% compared with 11.5% as of Jan 31, 2023. Further, the total capital ratio was 16.7% compared with the prior-year figure of 15.2%.
Adjusted return on equity was 21.8%, down from 23% in the year-earlier quarter.
Our Take
A diversified product mix and strong capital position are expected to help Bank of Nova Scotia grow organically and through acquisitions. However, concerns related to macroeconomic conditions and rising expenses make us apprehensive.
Bank of Nova Scotia (The) Price, Consensus and EPS Surprise
Bank of Montreal’s (BMO - Free Report) adjusted earnings per share for fiscal first-quarter 2024 of C$2.56 declined 16.3% year over year.
A significant rise in provision for credit losses, along with higher adjusted expenses, primarily hurt BMO’s results. However, an increase in NII and non-interest income was tailwind.
Royal Bank of Canada’s (RY - Free Report) fiscal first-quarter (ended Jan 31) adjusted net income of C$4.06 billion decreased 5% year over year.
Results of RY were adversely impacted by higher expenses and provisions. However, a rise in revenues and solid capital ratios acted as headwinds.
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Bank of Nova Scotia (BNS) Q1 Earnings Decline Y/Y, Revenues Up
The Bank of Nova Scotia's (BNS - Free Report) adjusted net income for fiscal first-quarter 2024 (ended Jan 31) was C$2.21 billion ($1.63 billion), which declined nearly 6% year over year. Results excluded certain one-time items.
A rise in expenses, a surge in provisions for credit losses and a lower loan balance hurt results. However, higher non-interest income, net interest income and solid capital ratios were tailwinds.
After considering non-recurring items, net income was C$2.2 billion ($1.62 billion), up 25.1% year over year.
Adjusted Revenues Rise, Expenses Increase
Total revenues were C$8.43 billion ($6.21 billion), up 5.9% year over year.
Net interest income (NII) was C$4.77 billion ($3.51 billion), which increased 4.6%. Further, non-interest income grew 7.7% to C$3.66 billion ($2.69 billion).
Non-interest expenses were C$4.74 billion ($3.49 billion), up 6.2%.
Provision for credit losses rose to C$962 million ($707.9 million) from C$638 million reported in the prior-year quarter. The rise reflects a deteriorating economic outlook.
Balance Sheet Weak
As of Jan 31, 2024, BNS’ total assets were C$1.39 trillion ($1.03 trillion), down 1.3% sequentially. Deposits were C$939.8 billion ($691.6 billion), which fell 1.3% from the previous quarter.
Net loans and acceptances were C$759.9 billion ($559.2 billion), down 1.2% from the previous quarter.
Capital Ratios Solid, Profitability Ratios Deteriorate
As of Jan 31, 2024, the Common Equity Tier 1 ratio was 12.9% compared with 11.5% as of Jan 31, 2023. Further, the total capital ratio was 16.7% compared with the prior-year figure of 15.2%.
Adjusted return on equity was 21.8%, down from 23% in the year-earlier quarter.
Our Take
A diversified product mix and strong capital position are expected to help Bank of Nova Scotia grow organically and through acquisitions. However, concerns related to macroeconomic conditions and rising expenses 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
BNS currently carries a Zacks Rank #3 (Hold). 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) adjusted earnings per share for fiscal first-quarter 2024 of C$2.56 declined 16.3% year over year.
A significant rise in provision for credit losses, along with higher adjusted expenses, primarily hurt BMO’s results. However, an increase in NII and non-interest income was tailwind.
Royal Bank of Canada’s (RY - Free Report) fiscal first-quarter (ended Jan 31) adjusted net income of C$4.06 billion decreased 5% year over year.
Results of RY were adversely impacted by higher expenses and provisions. However, a rise in revenues and solid capital ratios acted as headwinds.