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Bank Of Nova Scotia: Earnings Did Not Disappoint

David Butler profile picture
David Butler


  • Bank of Nova Scotia delivered on its first quarter earnings.
  • The bank offers a good dividend at a good valuation.
  • The bank does have exposure to the overpriced housing market within areas of Canada, but it has good capital.
  • With the market fluctuating over trade war potential, BNS may provide entry points below $60.

I wrote recently about the consistency of Bank of Nova Scotia's (NYSE:BNS) financial performance. I also wrote about the very nice dividend yield. On February 27th, the bank reported its first quarter earnings results. It delivered on revenue, net income, and earnings applicable to shareholders. The bank continues to capitalize on Canadian, as well as international operations. Overall, I continue to think the stock offers a great addition to anyone seeking a stable investment for their portfolio.


Bank of Nova Scotia, or Scotiabank, delivered revenue growth of 3.2% year over year. Total revenues of a little over $7 billion were comprised of an 8% increase in net interest income of $3.9 billion, and a 2.2% pullback in non-interest income of $3.15 billion. The bank managed to bring down its non interest expenses by 5%, which helped grow net income by 16.3% to $2.3 billion. It all boils down to $2.25 billion in net income attributable to common shareholders. Regarding diluted earnings, that's $1.86 per share. That's roughly an 18.5% increase year over year.

Within Canadian operations, net income (attributable to shareholders) increased 12% to $1.102 billion. The bank noted the main cause being higher gains on interest income (not to mention lower taxes). Within international banking, incomes rose 16% to $667 million as the bank continues to develop its foreign businesses. Much of this is coming from their increased loans in South American markets. Interestingly enough, their "global banking" segment experienced a 3% decrease in income.

This quarter continues the company's consistent trend of financial success. Between 2013 and 2017, the bank increased revenues by 27% to $23.93 billion. Canadian banks, much like United States banks, stand to gain from rising rates bolstering their interest income. I would point out, however, that the severity of those rate hikes seems likely to be less extreme than some have thought. The Canadian

This article was written by

David Butler profile picture
Bit of a stock nerd. Contributor for SeekingAlpha and Jim Cramer's Real Money. I like earnings, and have very little time for chart analysis. It doesn't matter how many squiggles a chart has if the company doesn't drive meaningful earnings per share.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (5)

05 Mar. 2018
I am not aware the CDN $ dropped over 30% verses the $ US over the past 5 years. Something does not add up.
06 Mar. 2018
Five years ago the CAD was at par with the US dollar. Now the US dollar costs approx. 30% more than a Canadian dollar!
Matthew Brown profile picture
Sounds like you should do some light reading before making pronouncements like this. The author should have made note of that as well.
It's probably important to note that the shares appreciation, in CDN $$ is over 30% in the last 5 years.
05 Mar. 2018
For once an author acknowledges that the share appreciation over the last 5 year, not counting dividends, has only been 4.5%. I do not care about all the other metrics. Abysmal performance, worst of the bunch. What are the Directors doing about it? Rec. to buy Can. Tires.
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