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Scotia Bank (BNS) Q2 Earnings Disappoint, Provisions Escalate
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The Bank of Nova Scotia (BNS - Free Report) reported second-quarter fiscal 2020 (ended Apr 30) adjusted net income of C$1.4 billion ($1 billion), down 39% year over year. Results exclude certain one-time items.
Escalating expenses and provisions were on the downside. However, increase in revenues, along with strong capital and profitability ratios, was a driving factor, boosting investors’ optimism, which led shares to rise 10.7%, following the release.
Revenues Rise, Partially Muted by Elevated Expenses & Provisions
Total revenues came in at C$8 billion ($5.7 billion) in the quarter, up 5.3% year over year. This upswing stemmed from rise in net interest as well as non-interest income.
Net interest income came in at C$4.4 billion ($3.2 billion), up 4.8% from the prior-year quarter. Non-interest income climbed 2.9% from the year-ago quarter to C$3.5 billion ($2.5 billion).
Adjusted non-interest expenses came in at C$4.3 billion ($3.1 billion), up 7.5% year over year.
Adjusted provision for credit losses more than doubled to C$1.8 billion ($1.3 billion) on a year-over-year basis on the coronavirus crisis.
Strong Balance Sheet
As of Apr 30, 2020, Scotia Bank’s total assets were C$1.25 trillion ($0.91 trillion), up 17.9% from the prior-year quarter. Deposits came in at C$797.7 billion ($580 billion), increasing 12% year over year. Total loans were C$647.9 billion ($471.1 billion), up 8.6% year over year. Assets under administration were down 3.4% from the year-ago quarter to C$530.9 billion ($386 billion).
Healthy Capital and Profitability Ratios
As of Apr 30, 2020, Common Equity Tier 1 ratio came in at 10.9% compared with 11.1% as of Apr 30, 2019. Further, total capital ratio came in at 14% compared with the prior-year tally of 14.7%.
Return on equity for the reported quarter came in at 8.2% compared with the year-earlier quarter’s 13.6%.
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 concerns, 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, Consensus and EPS Surprise
ICICI Bank’s (IBN - Free Report) fourth-quarter fiscal 2020 (ended Mar 31) net income was INR12.21 billion ($161 million), up 26% from the INR9.69 billion ($128 million) witnessed in the prior-year period. Excluding coronavirus-related provisions, net income would have been INR32.60 billion ($431 million).
Deutsche Bank (DB - Free Report) delivered first-quarter 2020 net income of €66 million ($72.8 million), significantly down from the year-ago quarter’s €201 million. Also, the German lender reported adjusted profit before taxes of €303 million ($334.3 million), up 13% year over year.
UBS Group AG (UBS - Free Report) recorded first-quarter 2020 net profit attributable to shareholders of $1.6 billion compared with the prior-year quarter’s $1.14 billion. The company’s performance was supported by higher net interest income (up 18% year over year), along with rise in net fee and commission income (up 22%). However, higher expenses were deterrents.
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Image: Bigstock
Scotia Bank (BNS) Q2 Earnings Disappoint, Provisions Escalate
The Bank of Nova Scotia (BNS - Free Report) reported second-quarter fiscal 2020 (ended Apr 30) adjusted net income of C$1.4 billion ($1 billion), down 39% year over year. Results exclude certain one-time items.
Escalating expenses and provisions were on the downside. However, increase in revenues, along with strong capital and profitability ratios, was a driving factor, boosting investors’ optimism, which led shares to rise 10.7%, following the release.
Revenues Rise, Partially Muted by Elevated Expenses & Provisions
Total revenues came in at C$8 billion ($5.7 billion) in the quarter, up 5.3% year over year. This upswing stemmed from rise in net interest as well as non-interest income.
Net interest income came in at C$4.4 billion ($3.2 billion), up 4.8% from the prior-year quarter. Non-interest income climbed 2.9% from the year-ago quarter to C$3.5 billion ($2.5 billion).
Adjusted non-interest expenses came in at C$4.3 billion ($3.1 billion), up 7.5% year over year.
Adjusted provision for credit losses more than doubled to C$1.8 billion ($1.3 billion) on a year-over-year basis on the coronavirus crisis.
Strong Balance Sheet
As of Apr 30, 2020, Scotia Bank’s total assets were C$1.25 trillion ($0.91 trillion), up 17.9% from the prior-year quarter. Deposits came in at C$797.7 billion ($580 billion), increasing 12% year over year. Total loans were C$647.9 billion ($471.1 billion), up 8.6% year over year. Assets under administration were down 3.4% from the year-ago quarter to C$530.9 billion ($386 billion).
Healthy Capital and Profitability Ratios
As of Apr 30, 2020, Common Equity Tier 1 ratio came in at 10.9% compared with 11.1% as of Apr 30, 2019. Further, total capital ratio came in at 14% compared with the prior-year tally of 14.7%.
Return on equity for the reported quarter came in at 8.2% compared with the year-earlier quarter’s 13.6%.
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 concerns, 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, 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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Foreign Banks Performance
ICICI Bank’s (IBN - Free Report) fourth-quarter fiscal 2020 (ended Mar 31) net income was INR12.21 billion ($161 million), up 26% from the INR9.69 billion ($128 million) witnessed in the prior-year period. Excluding coronavirus-related provisions, net income would have been INR32.60 billion ($431 million).
Deutsche Bank (DB - Free Report) delivered first-quarter 2020 net income of €66 million ($72.8 million), significantly down from the year-ago quarter’s €201 million. Also, the German lender reported adjusted profit before taxes of €303 million ($334.3 million), up 13% year over year.
UBS Group AG (UBS - Free Report) recorded first-quarter 2020 net profit attributable to shareholders of $1.6 billion compared with the prior-year quarter’s $1.14 billion. The company’s performance was supported by higher net interest income (up 18% year over year), along with rise in net fee and commission income (up 22%). However, higher expenses were deterrents.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>