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1. Company Snapshot

1.a. Company Description

The Bank of Nova Scotia provides various banking products and services in Canada, the United States, Mexico, Peru, Chile, Colombia, the Caribbean and Central America, and internationally.It operates in four segments: Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets.The company offers financial advice and solutions, and day-to-day banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small, medium, and large businesses, including automotive financing solutions to dealers and their customers.


It also provides wealth management advice and solutions, including online brokerage, mobile investment, full-service brokerage, trust, private banking, and private investment counsel services; and retail mutual funds, exchange traded funds, liquid alternative funds, and institutional funds.In addition, the company offers international banking services for retail, corporate, and commercial customers; and lending and transaction, investment banking advisory, and capital markets access services to corporate customers.Further, it provides online, mobile, and telephone banking services.


The company operates a network of 954 branches and approximately 3,766 automated banking machines in Canada; and approximately 1,300 branches and a network of contact and support center internationally.The Bank of Nova Scotia was founded in 1832 and is headquartered in Halifax, Canada.

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1.b. Last Insights on BNS

The Bank of Nova Scotia's recent performance has been driven by strong quarterly earnings, with EPS growth fueled by robust trading revenue and disciplined cost management. The Caribbean division delivered impressive returns, highlighting the bank's evolving strengths. A bullish thesis on the stock cites its attractive valuation, with trailing and forward P/E of 17.11 and 11.35, respectively. The bank's digital expansion and international growth push have also garnered optimism. Additionally, its new cash management platform, launched in October 2025, signals a heightened commitment to supporting cross-border trade services. UBS maintains a Buy rating with a price target of C$94.

1.c. Company Highlights

2. Scotiabank's Q4 Results Exceed Expectations

Scotiabank reported strong Q4 earnings of $2.6 billion or $1.91 per share, beating analyst estimates of $1.83 per share. The bank's revenue grew 12% year-over-year, driven by a 1% increase in net interest income and an 8% rise in non-interest income. The net interest margin was down 2 basis points, but the bank's efficiency ratio improved by 180 basis points to 54.3%. Earnings per share (EPS) grew 10% for the full year, with adjusted diluted EPS reaching $7.09.

Publication Date: Dec -20

📋 Highlights
  • Q4 Earnings Surge: Scotiabank reported Q4 earnings of $2.6 billion ($1.93/share), up 23% YoY, with full-year EPS growing 10% to $7.09.
  • ROE Improvement: Return on equity jumped to 12.5% (up 190 bps YoY), reflecting enhanced profitability and efficiency.
  • Efficiency Gains: Efficiency ratio dropped 180 bps to 54.3%, driven by cost discipline and revenue growth.
  • Global Wealth Growth: Global Wealth Management earnings rose 17% to $453 million, fueled by higher brokerage revenues and mutual fund fee growth.
  • Capital Strength: CET1 ratio hit 13.2% after repurchasing 10.8 million shares in fiscal 2025, supporting future growth and buybacks.

Segment Performance

The Global Wealth Management segment delivered earnings of $453 million, up 17%, driven by higher brokerage revenues and strong mutual fund fee growth. The Global Banking and Markets segment reported earnings of $519 million, up 50%, driven by a 24% increase in revenue. International Banking delivered earnings of $638 million, up 3%, driven by higher capital markets revenues.

Outlook and Guidance

The bank expects to generate strong earnings growth in 2026, underpinned by growth in both net interest income and non-interest revenue. The bank's CFO mentioned that double-digit EPS growth is expected next year, driven by mid-single-digit growth in Canadian Banking, high single-digit growth in Wealth, and modest growth in International Banking and Global Banking and Markets. Analysts estimate revenue growth of 4.8% for next year.

Valuation and Dividend Yield

Scotiabank's current P/E Ratio is 17.27, and the P/TBV is around 1.49. The bank's dividend yield stands at 4.31%, making it an attractive option for income investors. With a focus on organic growth and strategic priorities, the bank is well-positioned to drive long-term value creation.

Key Drivers of Growth

The bank's growth is driven by its corridor strategy, focusing on Wealth and Global Banking and Markets. The bank is building an Americas-connected bank, focusing on cash management, corporate investment banking, and markets. Key drivers of revenue and earnings growth in 2026 include net interest margin expansion, fee income growth, and market performance.

Deposit Growth and Net Interest Margin

The bank has seen a 7% increase in day-to-day savings and 14% in retail savings. The bank's net interest margin expanded by 4 basis points in the quarter, driven by deposit growth and repricing. The bank expects continued modest expansion in NIM in 2026, driven by good quality deposit growth in the Canadian bank, margin expansion on the mortgage book, and growth in its global transaction banking (GTB) operations.

3. NewsRoom

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Scotiabank Previews This Week's GDP Data in Canada

13:17

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Westshore Terminals Investment Announces C$165 Million Credit Facility

12:31

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Why Bank of Nova Scotia (BNS) is Poised to Beat Earnings Estimates Again

Feb -19

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Scotiabank Says Canada's Housing Conditions Continue to Cool

Feb -19

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Scotiabank Says Weak Canadian Home Sales Are Building Pent-Up Demand

Feb -18

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Scotiabank ESG Exit From Elbit Puts Focus On BNS Valuation

Feb -18

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Scotiabank Sees Net Debt-to-GDP Ratio Edging Higher This Year Among Canada's Provinces

Feb -17

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Scotiabank Notes Markets Barely React to Soft Canadian CPI

Feb -17

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.87%)

6. Segments

Canadian Banking

Expected Growth: 4.5%

- The Canadian Banking segment is driven by a growing Canadian economy, increasing digital adoption, and a focus on customer experience, which is expected to drive loan and deposit growth, thereby contributing to the segment’s growth.

International Banking

Expected Growth: 7.2%

- This segment is expected to drive growth through its extensive network of branches and subsidiaries, particularly in the Americas and Asia, where there is a growing demand for corporate and commercial banking, transaction banking, and treasury services.

Global Banking and Markets

Expected Growth: 4.5%

- The Global Banking and Markets segment is expected to grow, fueled by increasing corporate and investment banking, markets, and research demands from corporate, government, and institutional clients, driven by the need for financial products and advisory services, particularly in emerging markets.

Global Wealth Management

Expected Growth: 8.6%

estimated CAGR, driven by increasing demand for wealth management services from high net worth clients, expanding presence in emerging markets, and strategic acquisitions to enhance capabilities and expand geographic reach.

Other

Expected Growth: 7.4%

- The "Other" segment, comprising revenues from investments in other companies, gains on sale of real estate, and miscellaneous income, is driven by strategic investments, divestitures, and growing miscellaneous income, positioning the segment for continued growth.

7. Detailed Products

Personal Banking

Personal banking services for individuals, including chequing and savings accounts, credit cards, loans, and investment products.

Credit Cards

A range of credit cards with different features, benefits, and rewards programs.

Mortgages

Mortgage solutions for homebuyers, including fixed and variable rate mortgages, and mortgage insurance.

Investments

A range of investment products, including mutual funds, exchange-traded funds, and portfolio management services.

Business Banking

Business banking services for small businesses and commercial clients, including cash management, credit, and trade finance solutions.

Commercial Banking

Commercial banking services for large corporations, including cash management, credit, and trade finance solutions.

Wealth Management

Wealth management services, including investment advice, portfolio management, and estate planning.

International Banking

International banking services for individuals and businesses, including cross-border banking, trade finance, and cash management solutions.

8. The Bank of Nova Scotia's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Bank of Nova Scotia is medium due to the presence of alternative financial institutions and digital payment systems. However, the bank's strong brand and customer loyalty mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the bank's large customer base and diversified product offerings, making it difficult for individual customers to negotiate better terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the bank's significant scale and negotiating power, allowing it to dictate terms to its suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the significant regulatory barriers and capital requirements to enter the banking industry, making it difficult for new players to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established banks and financial institutions in the market, leading to intense competition for customers and market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 80.31%
Debt Cost 8.85%
Equity Weight 19.69%
Equity Cost 8.85%
WACC 8.85%
Leverage 407.93%

11. Quality Control: The Bank of Nova Scotia passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
CIBC

A-Score: 7.0/10

Value: 4.7

Growth: 5.9

Quality: 5.1

Yield: 8.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Scotiabank

A-Score: 6.9/10

Value: 5.0

Growth: 4.9

Quality: 4.2

Yield: 9.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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JPMorgan Chase

A-Score: 6.6/10

Value: 5.6

Growth: 5.2

Quality: 6.5

Yield: 5.0

Momentum: 8.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
NatBank

A-Score: 6.5/10

Value: 3.7

Growth: 6.4

Quality: 4.9

Yield: 6.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Citigroup

A-Score: 6.4/10

Value: 6.3

Growth: 4.7

Quality: 4.4

Yield: 6.0

Momentum: 9.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Bank of America

A-Score: 6.0/10

Value: 5.4

Growth: 5.2

Quality: 4.9

Yield: 4.0

Momentum: 7.5

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

104.25$

Current Price

104.25$

Potential

-0.00%

Expected Cash-Flows