Scotiabank Beats The Odds: Solid Revenue Growth & Capital Strength Highlight Q2 Earnings

Bank of Nova Scotia BNS reported second-quarter fiscal 2024 revenue growth of 5.5% year-over-year to C$8.347 billion, beating the consensus of C$8.256 billion.

For the quarter, net interest income was C$4.694 billion, and non-interest income was $3.653 billion.

Adjusted EPS of C$1.58 declined from C$1.69 a year ago and above the consensus of C$1.56.

BNS reported a Common Equity Tier 1 (CET1) capital ratio of 13.2%, up from 12.3% last year.

Canadian Banking’s net income declined 4% year over year to C$1.01 billion, with revenue growth outpacing expenses, leading to positive operating leverage. Credit loss provisions rose, and deposits increased by 7% year over year.

International Banking’s adjusted net income rose C$33 million YoY, driven by higher net interest income and the positive impact of foreign currency translation.

Global Wealth Management’s adjusted net income increased 8% Y/Y to C$387 million, reflecting higher mutual fund fees and brokerage revenues.

Global Banking and Markets earnings stood at C$428 million, up 7% YoY, reflecting higher fee-based revenue and lower provision for credit losses.

The provision for credit losses stood at C$1.007 billion vs. C$709 million a year ago, and the ratio increased from 17 basis points to 54 basis points.

Gross impaired loans increased to C$6.399 billion as at April 30, from C$6.119 billion last quarter, reflecting new formations in the International retail portfolios, mainly Chile and Mexico, and International commercial.

Adjusted return on equity stood at 11.3% vs. 12.3% the prior year.

“The Bank delivered solid results this quarter against a backdrop of ongoing macroeconomic uncertainty, reporting positive operating leverage driven by revenue growth and continued expense discipline. We are executing on our commitment to balanced growth as our deposit momentum continues, while maintaining strong capital and liquidity metrics,” commented Scott Thomson, President and CEO of Scotiabank.

Price Action: BNS shares are trading higher by 1.51% at $48.50 premarket at the last check Tuesday.

Image: Unsplash/ Alexander Grey