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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. Bank of Nova Scotia's Q3 Results Exceed Expectations

The Bank of Nova Scotia reported strong Q3 results, with adjusted earnings of $2.5 billion or $1.88 per share, up 15% year over year, beating analyst estimates of $1.73 per share. The bank's return on equity was 12.4%, up 110 basis points compared to the same quarter last year. The net interest margin expanded by 13 basis points year over year, mainly due to lower funding costs from Central Bank rate cuts.

Publication Date: Aug -27

📋 Highlights
  • Adjusted Earnings Surge: Q3 adjusted earnings hit $2.5B ($1.88/share), up 15% YoY, driven by 110 bps ROE improvement to 12.4%.
  • Provision Reduction: Total PCLs fell to $1B (55 bps), with impaired PCLs down 6 bps to 51 bps QoQ, reflecting improved credit performance.
  • Canadian Banking Growth: Retail deposits rose 6% YoY, and Mortgage Plus boosted multi-product relationships, while PCLs dropped 32 bps QoQ to 40 bps.
  • Margin Expansion: Interest margin widened 13 bps YoY due to lower funding costs, despite 3% loan decline and flat deposits.
  • Strategic Capital Allocation: Bank aims for 15–20 bps quarterly capital generation through 2026, with $20M share buyback authorization and focus on 4.45–4.5% stable NIM.

Segment Performance

The Canadian Banking segment saw improved results driven by better credit performance and revenue growth, with a focus on building deeper multi-product relationships with clients. Global Wealth Management continued its positive momentum, with strong results across all businesses, and net fund inflows demonstrating the strategy is working. International Banking earnings were up 21% year over year, driven by solid execution and improved profitability metrics.

Credit Performance

The provision for credit losses was $562 million, stable at 139 basis points. Impaired PCL ratio came in at 51 basis points, down six basis points quarter over quarter. Phil Thomas discussed impaired PCLs, stating that they were below guidance but still require caution, citing uncertainty in the macroeconomic environment.

Valuation and Dividend Yield

With a P/TBV ratio of 1.25 and a dividend yield of 6.41%, the bank's valuation appears reasonable. The bank's NIM is expected to remain stable between 4.45% to 4.5% for the foreseeable future. The bank's strong capital position and commitment to maintaining a strong balance sheet support its ability to continue paying a healthy dividend.

Growth Prospects

The bank is pivoting to growth, with significant growth expected in 2026 and 2027, driven by operating leverage, commercial optimization, and traction in retail. Aris Bogdaneris mentioned that commercial loan growth is expected to start next quarter, which could drive a rebound in PTPP growth. The bank's Global Transaction Banking business is a key engine for growth, with a focus on wallet share and returns.

Outlook

Raj Viswanathan expects internal capital generation to be around 15-20 basis points per quarter through 2026. The bank's strategic priorities include optimizing capital and liquidity, focusing on productivity initiatives, and investing in its businesses to deliver improved client experiences and capabilities to drive sustainable future growth.

Management's Guidance

Francisco Aristeguieta discussed the bank's strategy, focusing on client selection and improving asset mix. Despite client deselection, the bank is growing at 3% revenue and 6% earnings, with a goal to maintain a 2% return on risk-weighted assets.

3. NewsRoom

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Reassessing Scotiabank’s Valuation After Its Strong 2025 Share Price Rally

Dec -05

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TSX Closer: Sets Fresh Record Close On Improved Commodity Prices and Optimism Around Economy

Dec -04

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Correction To TSX Closer: Up For the First Time This Week, Back To Near Last Friday's Record Close

Dec -04

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Scotiabank Poll: Trusted Advice Tops List of Needs for First-Time Homebuyers

Dec -04

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TSX Closer: Up For the First Time This Week, Back To Near Last Friday's Record Close

Dec -03

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Bank of Nova Scotia Price Target Raised to $97 at RBC

Dec -03

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TSX Close: Down Two Successive Sessions; But National Bank Still Bullish On Energy Sector

Dec -02

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How Investors Are Reacting To Bank of Nova Scotia (TSX:BNS) Strong Earnings and Leadership Changes

Dec -02

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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: 6.9/10

Value: 5.2

Growth: 5.2

Quality: 5.2

Yield: 8.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Scotiabank

A-Score: 6.8/10

Value: 5.3

Growth: 4.9

Quality: 4.1

Yield: 9.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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JPMorgan Chase

A-Score: 6.7/10

Value: 5.3

Growth: 5.2

Quality: 6.5

Yield: 5.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Citigroup

A-Score: 6.2/10

Value: 6.7

Growth: 4.7

Quality: 4.4

Yield: 5.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Bank of America

A-Score: 6.2/10

Value: 5.6

Growth: 5.3

Quality: 5.0

Yield: 5.0

Momentum: 7.5

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
NatBank

A-Score: 6.1/10

Value: 4.0

Growth: 4.7

Quality: 4.9

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

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

99.26$

Current Price

99.26$

Potential

-0.00%

Expected Cash-Flows