Bank of Nova Scotia (BNS.US), the first of Canada's six major banks to report its fiscal second-quarter results for 2026 (ended April 30), announced quarterly total revenue of CAD 9.837 billion, surpassing analyst estimates of CAD 9.73 billion. Adjusted net profit was CAD 2.652 billion, a 27.99% increase from CAD 2.072 billion in the same period last year. Adjusted earnings per share were CAD 2.02, a 32.89% rise from CAD 1.52 a year earlier and above the average analyst expectation of CAD 1.94.
The bank's Canadian banking segment performed better than anticipated, exceeding market forecasts as the company focuses on enhancing profitability in this core division. Net income from domestic banking totaled CAD 935 million (approximately USD 676 million), higher than the average estimate of CAD 914 million from analysts in a recent survey and a significant increase from CAD 613 million in the prior year. The international banking unit reported net income of CAD 736 million, exceeding market expectations of CAD 679 million and representing a 3.1% year-over-year increase.
Chief Executive Officer Scott Thomson stated in the announcement that the results benefited from "strong revenue growth, margin expansion, and another quarter of positive operating leverage." He also noted that Bank of Nova Scotia remains on track to achieve its return on equity target of 14% or higher by fiscal 2027.
Regarding credit provisions, the bank set aside CAD 1.22 billion for loan loss provisions this quarter, above the average market expectation of CAD 1.11 billion. Additionally, the bank announced an increase in its quarterly dividend on Wednesday, raising it by 4 cents to CAD 1.14 per share.
On asset disposals, the bank recognized a loss of USD 434 million (USD 377 million after tax) in the first quarter of 2026 following the completion of sales of its banking operations in Colombia, Costa Rica, and Panama.
Earlier this year, Thomson described fiscal 2026 as a "pivotal year" for the Canadian banking business, indicating expectations for double-digit profit growth as the bank advances cost reductions, attracts more low-cost deposits, and sells multiple product types to clients. This forms a key part of the bank's broader strategic overhaul, which also relies on expanding capital markets operations in the United States and improving profitability in its sizable international banking unit, particularly in markets facing economic challenges like Mexico and Chile.
Despite Canadian bank stocks performing strongly this year and significantly outperforming the broader market, RBC Capital Markets analyst Darko Mihelic noted in a report earlier this month that Bank of Nova Scotia's valuation is among the lowest of its peers. He stated this reflects the bank's lower return on equity compared to competitors, challenges in expanding its domestic Canadian operations, and significant work still required in its international business. He added, "We view the new plan as credible, but execution remains uncertain."
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