AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Bank of nova scotia stock prices1/14/2024 ![]() Higher personnel costs and spend on certain technology projects primarily drove the expense growth in the quarter. And going forward, we will be cognizant of the need to pace loan growth, particularly in less profitable product segments. Rapid loan growth, coupled with high cost funding sources has adversely impacted profitability. This includes the company moving beyond mortgages and auto loans into commercial loans and initiatives in Latin America that should improve the bank's efficiencies over time, as highlighted by management during the recent conference call: Looking forward, BNS possesses a number of durable attributes that should enable it to move on from present headwinds. However, this was partly offset by strong growth in the advisory business, which sets up BNS for potentially stronger results down the road should equity and fixed income markets stabilize.Īlso encouraging, Scotiabank's Canadian Banking segment is benefitting from margin expansion and strong asset and deposit growth, specifically in business lending and personal deposits, and International Banking generated 20% higher adjusted earnings driven by loan growth. This drove down the value of BNS's assets under management and thereby impacted fee income. Moreover, BNS's global wealth management unit saw adjusted earnings decline by 6% compared to the prior year period, due to market volatility, as most investors are likely well aware. This was driven by net interest income slipping from the prior quarter, due to higher funding costs, while management also set aside more for credit losses amidst economic uncertainty. This is reflected by fiscal Q1 2023 revenue falling by 0.9% YoY to C$7.98 billion, and an adjusted return on equity falling by 240 basis points YoY to 13.4%. Of course, no stock goes down after quarterly earnings without some headwinds being baked into the price. At the same time, BNS enjoys above-average profits, as reflected by its A+ profitability grade and net income margin of 33% over the trailing 12 months, surpassing the 27% sector median. This multi-cylinder approach is a key differentiator for the bank, enabling it to both opportunistically capture growth areas while mitigating the impact of any underperforming unit. It's also the third-largest Canadian bank by assets, and is the country's most international bank, with around 40% of its revenue coming from international regions, primarily in Central and South America. ![]() Scotiabank is older than most banks in North America, with a history dating back to the 19th century. ![]() This article highlights what makes this a great buy-the-drop opportunity on this high-quality stock. This brings me to The Bank of Nova Scotia ( NYSE: BNS) ("Scotiabank"), which has seen its price crater by over 5% on recent earnings results. That's why earnings season is a great time to look for bargains, as the market tends to react to the extreme either one way or the other, depending on just three months' worth of results. This, however, may sound easier said than done, as when high-quality names are flying high, it may seem that nothing can bring them down. One of the great ways to achieve investment success is to buy above-average companies at below-average prices. ![]()
0 Comments
Read More
Leave a Reply. |