Scotiabank (TSX: BNS) is the fourth largest of the Big Six Canadian bank stocks. It is often referred to as “The International Bank” because of its significant international footprint, particularly in Latin America. Today, I want to discuss Scotiabank’s recent performance and explain why I’m looking to stash more shares of the bank stock.
How has Scotiabank performed in the first three quarters of 2023?
Shares of Scotiabank have jumped 1% month over month as of early afternoon trading on Tuesday, September 5. The bank stock is still down 1% so far in 2023. Moreover, its shares have declined 8.7% year over year. Investors can see more of its recent and past performance with the interactive price chart below.
The S&P/TSX Composite Index was down 103 points in early afternoon trading at the time of this writing. Experts and analysts have continued to warn of less-than-ideal economic conditions that could spill over into the stock market. Moreover, recent reports indicate that the Bank of Canada (BoC) is looking to halt interest rate hikes as economic conditions worsen.
Should investors be happy with Scotiabank’s recent earnings?
Scotiabank released its third-quarter (Q3) fiscal 2023 earnings on August 29. The bank reported adjusted net income of $2.22 billion, or adjusted diluted earnings per share (EPS) of $1.73 — down from $2.61 billion, or $2.10 per diluted EPS, in the previous year. Like its peers, Scotiabank’s earnings were weighed down by a significant increase in provisions set aside for credit losses. This was partially offset by a spike in net interest income.
The Canadian Banking segment reported adjusted net income of $1.06 billion — down 13% compared to Q3 2022. This segment was powered by higher revenues but still weighed by a spike in provisions for credit losses. Meanwhile, the International Banking segment posted adjusted net income of $635 million, which was in line with the prior year. Scotiabank’s Global Wealth Management segment posted adjusted net income of $373 million, which was down 3% compared to Q3 2022. Finally, the Global Banking and Markets segment achieved net income growth of 15% to $434 million on the back of stronger revenue and improved foreign currency translation.
Provisions set aside for credit losses reached $819 million — up from $412 million in the previous year. Meanwhile, the provision for credit losses ratio rose 20 basis points to 42 basis points.
In the first nine months of fiscal 2023, Scotiabank delivered adjusted net income of $6.76 billion compared to $8.13 billion for the same period in fiscal 2022.
Here’s why you should jump on broader volatility right now
Shares of Scotiabank currently possess a price-to-earnings ratio of 10. That puts this bank stock in favourable value territory compared to its industry peers. Meanwhile, this bank stock last announced a quarterly dividend of $1.06 per share. That represents a very tasty 6.5% yield. Scotiabank stock offers very nice value and terrific income compared to its peers at the time of this writing. Now is a great time to take advantage of this bout of volatility.
