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Key Morningstar Metrics for Bank of Nova Scotia
What We Thought of Bank of Nova Scotia’s Earnings
Bank of Nova Scotia BNS reported decent underlying results, with net revenue increasing 11.1% from last year to C$9.37 billion. However, net income fell to C$993 million from C$2.2 billion last year due to a C$1.36 billion loss on the sale of its Colombia, Costa Rica, and Panama operations.
Why it matters: Looking past the impairment expense, this was a decent quarter for the bank. That said, it relied on strong performance from its more volatile global wealth management and global banking and markets segments to offset weakness in Canadian banking.
Net income from Canadian banking (the firm’s largest segment) declined 6% to C$973 million. The decrease came despite a 6% increase in revenue, as the business was pressured by net interest margin compression and higher credit costs.This was more than offset by the global wealth management segment seeing a 23% increase in net volume, while global banking and markets saw a 33% increase, thanks to market activity and appreciation.
The bottom line: We maintain our fair value estimate of C$77 per share. We see the stock as only modestly undervalued following its weak performance so far in 2025.
We would like to see better performance in Canadian banking, which had its second sequential decline in net income. Rising credit costs remain a headwind, and we expect charge-offs to be slightly higher in 2025 before falling in 2026 and beyond.While the bank did have to take a loss, we have a favorable view of the strategic intent behind the sale of some of its Latin American assets. The bank will benefit from the improved focus, particularly as it has recently increased its investment in the United States through the KeyCorp stake.
Scotiabank Stock vs. Morningstar Fair Value Estimate
Source: Morningstar Direct. Latest price as of 10:51 AM EST. Data as of Feb. 26, 2025.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.