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Bank of Nova Scotia (BNS) Declines 4.1% on Lower Q4 Earnings

The Bank of Nova Scotia's BNS shares lost 4.1 % following the release of its fiscal fourth-quarter (ended Oct 31) and fiscal 2023 results. Adjusted net income was C$1.67 billion ($1.23 billion), which declined 36% year over year. Results excluded certain one-time items.

A rise in expenses, a significant surge in provisions for credit losses and a lower loan balance hurt the results. However, higher non-interest income, net interest income and solid capital ratios were tailwinds.

After considering non-recurring items, net income was C$1.39 billion ($1.02 billion), down 33.8% from the prior-year quarter.

Adjusted Revenues Rise, Expenses Increase

Total revenues were C$8.31 billion ($6.12 billion), up 8.9% year over year.

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Net interest income was C$4.67 billion ($3.44 billion), which increased 1.1%. Further, non-interest income grew 21% to C$3.64 billion ($2.68 billion).

Non-interest expenses were C$4.53 billion ($4.07 billion), up 22.1%.

Provision for credit losses significantly rose to C$1.26 billion ($925 million) from C$529 million reported in the prior-year quarter. The rise reflects a deteriorating economic outlook.

Balance Sheet Weak

As of Oct 31, 2023, Bank of Nova Scotia’s total assets were C$1.41 trillion ($1.02 trillion), up 1.1% sequentially. Deposits were C$952.3 billion ($687.4 billion), which fell marginally from the previous quarter.

Net loans and acceptances were C$769.5 billion ($555.4 billion), down marginally from the previous quarter.

Capital and Profitability Ratios Solid

As of Oct 31, 2023, the Common Equity Tier 1 ratio was 13% compared with 11.5% as of Oct 31, 2022. Further, the total capital ratio was 17.2% compared with the prior-year figure of 15.3%.

Adjusted return on equity was 8.9%, down from 15% in the year-earlier quarter.

Our Take

A diversified product mix and strong capital position are expected to help Bank of Nova Scotia grow organically and through acquisitions. 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 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 #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Schedule of Other Canadian Banks

Some other Canadian banks expected to announce results soon are Bank of Montreal BMO, Canadian Imperial Bank of Commerce CM and The Toronto-Dominion Bank TD.

Canadian Imperial Bank of Commerce and Toronto-Dominion are scheduled to report quarterly figures on Nov 30, while Bank of Montreal is scheduled to report quarterly figures on Dec 7.

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Bank Of Montreal (BMO) : Free Stock Analysis Report

Toronto Dominion Bank (The) (TD) : Free Stock Analysis Report

Canadian Imperial Bank of Commerce (CM) : Free Stock Analysis Report

Bank of Nova Scotia (The) (BNS) : Free Stock Analysis Report

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