Scotiabank Earnings Preview: What to Expect

Bank of Nova Scotia (BNS), Canada’s third-largest bank by total assets, will report its Q3 financial results on August 24, before the opening bell.

Over the past year, the bank’s stock has jumped by more than 40%, and is currently trading close to C$80. (See Bank of Nova Scotia stock charts on TipRanks)

Analysts are expecting Scotiabank to post adjusted EPS of C$1.90 in the third quarter of 2021, indicating a growth of 82.7% from the prior-year quarter (C$1.04 per share). The estimated revenue is C$7.74 billion, which would be a very little increase from the second quarter of 2020 (C$7.73 billion).

Points to Watch

Economic activity has picked up during the past few months. Scotiabank’s diverse business platform of Canadian and international banking is likely to have helped provide top-line stability in the third quarter.

As Canadians have increased savings, this has likely resulted in more deposits. Strong mortgage and commercial activity probably drove the company’s loan balance in the reporting quarter.

The robust wealth effects from stocks markets and the housing market have likely continued, boosting Global Banking and Markets revenues in the coming quarter. International banking performance has a good chance to have been boosted by improved provisions for credit losses.

On August 15, RBC Capital analyst Darko Mihelic maintained a Buy rating on BNS with a price target of C$86. This implies for 7.9% upside potential.

The rest of the Street is cautiously optimistic on BNS with a Moderate Buy consensus rating based on five Buys and four Holds. The average Bank of Nova Scotia price target of C$87.43 implies 9.8% upside potential to current levels.

TipRanks’ Smart Score

BNS scores a perfect 10 on TipRanks’ Smart Score rating system, indicating that the stock returns should outperform the overall market.