Bank Of Nova Scotia Q2: Earnings Miss, Higher Provision For Credit Losses & More

Bank of Nova Scotia BNS reported Q2 FY23 adjusted EPS of C$1.70, which declined from C$2.18 a year ago. Adjusted EPS of $1.26 missed the Street view of $1.31.
Revenue remained broadly flat Y/Y at C$7.93 billion, with net interest income at C$4.47 billion (flat Y/Y). Revenue of $5.865 billion missed the consensus of $5.99 billion.
The bank witnessed double-digit Y/Y customer deposit growth in the quarter, which outpaced loan growth.
Adjusted net income declined to C$2.17 billion from C$2.77 billion in the quarter.
Canadian Banking's adjusted net income declined 10% Y/Y to C$1.06 billion owing to higher provisions for credit losses and non-interest expenses.
International Banking's adjusted net income rose 6% Y/Y to C$650 million on higher revenues and favorable foreign exchange translations.
Global Wealth Management's adjusted net income fell 13% Y/Y to C$359 million due to lower mutual fund fees and brokerage revenues.
The provision for credit losses stood at C$709 million vs. C$219 million a year ago.
Common Equity Tier 1 (CET1) capital ratio expanded around 80 basis points vs. the prior quarter to 12.3%.
Adjusted return on equity stood at 12.4% vs. 16.4% the prior year.
The Liquidity Coverage Ratio (LCR) stood at 131% at quarter end, compared to 122% in the prior period.
In Q1 2023, BNS recognized an additional income tax expense of C$579 million, reflecting the present value of the amount payable for the Canada Recovery Dividend.
Dividend: The company increased its quarterly dividend per share by C$0.03 to C$1.06, payable on July 27, 2023, to shareholders of record as of July 5, 2023.
Price Action: BNS shares are trading lower by 1.52% at $48.44 on the last check Wednesday.

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