Market News

Scotiabank Stock (TSE:BNS) Dives on Disappointing Q1-2023 Earnings

Earlier today, The Bank of Nova Scotia (TSE:BNS) (NYSE:BNS), also known as Scotiabank, reported its Fiscal Q1-2023 financial results, which missed revenue and earnings-per-share (EPS) expectations. As a result, the stock is about 5% lower so far today.

BNS’ revenue reached C$7.98 billion compared to the consensus estimate of about C$8.28 billion. Also, its adjusted earnings per share were C$1.85, missing the C$2.02 consensus estimate and down from the C$2.15 per share recorded in the same period last year.

Its provisions for credit losses increased from C$222 million to C$638 million as the bank set aside more money and exercised caution. Another negative thing to note is BNS’ adjusted return on equity, which fell to 13.4% in Q1 2023 compared to 15.9% in the prior year.

Analyzing its segments, Scotiabank’s Canadian Banking segment saw a net income of $1.087 billion for the quarter, 9.5% lower compared to last year’s figure of $1.2 billion. The decline is due to elevated provisions and non-interest expenses, but this was somewhat offset by higher revenues.

In contrast, the company’s International Banking segment saw net income rise year-over-year to C$654 million compared to C$545 million in Q1 2022. The improvement was due to loftier net interest income and non-interest income, partly offset by the same negative factors that affected the Canadian Banking segment.

Additionally, its Global Wealth Management and Global Banking and Markets segments both experienced a 7% drop in net income to C$385 million and C$519 million, respectively.

Lastly, the “Other” segment experienced a larger net loss than last year, with losses of C$334 million compared to C$67 million in the prior-year period.

Is BNS Stock a Buy, According to Analysts?

According to analysts, BNS stock comes in as a Hold based on two Buys, eight Holds, and one Sell rating assigned in the past three months. Nonetheless, the average BNS stock price target of C$80.86 implies 18.9% upside potential.


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