Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) shares climbed higher on Tuesday after the company reported strong earnings for the first quarter. Shares are up 6% since closing on Friday.
- Bank of Nova Scotia reported a 32% increase in year-over-year adjusted earnings for Canadian banking
- The company increased its loan portfolio across the board, with profit beating estimates
- Profit came in at $2.15 per share, beating estimates of $2.04
- The bank continues to revamp its international portfolio, acquiring the remaining stake in Scotiabank Chile for $1.3 billion
What happened to Scotiabank stock in Q1?
Bank of Nova Scotia, better known as Scotiabank, saw shares climb as another positive earnings report hit the books. The biggest win was in the company’s loans sector, where gains from the still-hot mortgage industry have now spread to other areas.
Government and commercial loans rose 8.2% year over year internationally, and 16% in Canada. Net income rose 14% to $2.74 billion or $2.15 per share, beating estimates of $2.04 per share. This all points to a positive sign for reopening, analysts say, and it seems the Omicron variant didn’t hurt as much as previously thought.
Scotiabank also reported adjusted earnings of $1.2 billion, a 32% increase year over year. Higher revenues came in thanks to the strong loan growth and increased customer activity. Internationally, adjusted earnings increased 38% year over year.
What did Scotiabank management say?
This quarter demonstrates Scotiabank CEO Brian Porter’s commitment to the focus on international expansion. The CEO has been getting rid of non-performers to open up larger, promising markets. And this could be the year that shareholders really feel that strength.
2022 has started well reflecting the full earnings power of the Bank, with very strong operating results in all our four business lines. This quarter had strong loan growth, along with good fee income growth…During the quarter, Scotiabank was named the Bank of the Year in Canada by The Banker magazine for the third consecutive year, further solidifying our role as a Leading Bank in the Americas.
CEO Brian Porter
What’s next for Scotiabank stock?
As mentioned, it looks like investors should look forward to more news on the international front. And shareholders already got a taste of this on Monday. Scotiabank announced it would acquire the remaining 16.8% stake in Scotiabank Chile for $1.3 billion. It now boasts 100% ownership, paying half in cash and the other in shares. The company believes it will add $35 million per quarter in profit “immediately” and boost earnings per share.
Shares of Scotiabank are up 2% on Tuesday, and 6% from Friday at close. Shares are up 3% year to date, and 21% in the last year. Analysts give it a consensus target price of $97.30, providing an upside of 5% as of writing. You can also pick up a dividend of 4.36%.
