Earlier today, The Bank of Nova Scotia (TSE:BNS) (NYSE:BNS), also known as Scotiabank, reported its Fiscal Q3-2023 financial results, which missed revenue and earnings-per-share (EPS) expectations. Nonetheless, the stock is rallying today.
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BNS’ revenue reached C$8.09 billion compared to the consensus estimate of about C$8.16 billion. Also, its adjusted earnings per share were C$1.73, missing the C$1.74 consensus estimate and down from the C$2.10 per share recorded in the same period last year. One of the reasons for its drop in profits was a lower net interest margin of 2.1% compared to 2.22% last year.
Further, its provisions for credit losses nearly doubled from C$412 million to C$819 million (C$57.4 million higher than analysts were expecting) as the bank set aside more money and exercised caution. Another negative thing to note is BNS’ adjusted return on equity, which fell to 12.2% in Q3 2023 compared to 15.4% in the prior year.
There are positives, though. First, the bank’s Common Equity Tier 1 (CET1) capital ratio (a liquidity ratio) came in at 12.7% compared to 11.4% last year, meaning that liquidity has improved. Also, the Global Banking and Markets segment saw earnings growth of 15% due to a strong performance in capital markets.
Relative to expectations, Scotiabank’s earnings results were better than Bank of Montreal’s (TSE:BMO) (NYSE:BMO), as BMO’s earnings per share of C$2.78 missed the C$3.13 consensus estimate earlier today by a much larger margin.
Is BNS Stock a Buy, According to Analysts?
According to analysts, BNS stock comes in as a Hold based on one Buy, five Holds, and one Sell rating assigned in the past three months. Nonetheless, the average BNS stock price target of C$70.38 implies 9.9% upside potential.
