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Bank of Nova Scotia (BNS) Q2 Earnings Fall on Higher Provisions

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The Bank of Nova Scotia's (BNS - Free Report) second-quarter fiscal 2024 (ended Apr 30) adjusted net income was C$2.11 billion ($1.55 billion), which declined 2.6% year over year.

A rise in expenses and a surge in provisions for credit losses hurt the results. However, higher revenues, an increase in loan balance and solid capital ratios were tailwinds.

After considering non-recurring items, net income was C$2.09 billion ($1.54 billion), down 2.5% from the prior-year quarter.

Adjusted Revenues Rise, Expenses Increase

Total revenues were C$8.35 billion ($6.08 billion), up 5.5% year over year.

Net interest income was C$4.69 billion ($3.46 billion), which increased 5.2%. Likewise, non-interest income grew 5.8% to C$3.65 billion ($2.69 billion).

Non-interest expenses were C$4.69 billion ($3.46 billion), up 3.1%.

Provision for credit losses jumped 42% to C$1 billion ($737 million). The rise reflects a deteriorating economic outlook.

Balance Sheet Strong

As of Apr 30, 2024, Bank of Nova Scotia’s total assets were C$1.4 trillion ($1 trillion), up marginally on a sequential basis. Deposits were C$942 billion ($686.6 billion), which rose slightly from the previous quarter.

Net loans were C$753.5 billion ($459.2 billion), up 1.3%.

Capital and Profitability Ratios Solid

As of Apr 30, 2024, the Common Equity Tier 1 ratio was 13.2%, up from 12.3% as of Apr 30, 2023. Further, the total capital ratio was 17.1%, up from the prior-year figure of 16.2%.

Adjusted return on equity was 11.3%, down from 12.3% in the year-earlier quarter.

Our Take

A diversified product mix and strong capital position are expected to keep supporting Bank of Nova Scotia. 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 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 & Earnings Release Schedule of Other Canadian Banks

Toronto-Dominion Bank (TD - Free Report) reported second-quarter fiscal 2024 (ended Apr 30) adjusted net income of C$3.79 billion ($2.79 billion), which increased 2.2% from the prior-year quarter.

Results benefited from higher non-interest income and growth in loans and deposit balance. However, an increase in expenses and provision for credit losses were the undermining factors for TD.

Royal Bank of Canada’s (RY - Free Report) second-quarter fiscal 2024 (ended Apr 30) numbers are scheduled to be announced on May 30.

Over the past seven days, the Zacks Consensus Estimate for RY’s quarterly earnings has been revised almost 1% down.

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Bank of Nova Scotia (The) (BNS) - free report >>

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