After ending 2024 on a solid note with 20% gains, Bank of Nova Scotia (TSX:BNS), or Scotiabank, has turned volatile in 2025. So far this year, BNS stock has lost nearly 10% of its value, currently trading at $69.61 per share and trimming its market cap to $86.7 billion. The broader TSX, meanwhile, is still in the green.
As one of Canada’s Big Five banks, Scotiabank plays a critical role in the country’s financial system and offers one of the highest dividend yields in the sector, which currently stands at 6.1%. But is that enough to justify buying in now?
In this article, let’s take a closer look at Scotiabank’s recent performance, its long-term fundamentals, and whether the current dip presents a smart entry point for value and income-focused investors.
What’s hurting BNS stock in 2025
One key factor weighing on BNS and other bank stocks this year could be the U.S. Federal Reserve’s recent change in monetary policy direction. After cutting interest rates three times in the second half of 2024, the Fed recently turned cautious amid persistent inflationary pressures and stronger-than-expected economic data. The American central bank has warned of the risks of moving too quickly on further rate cuts, suggesting a more patient approach in 2025.
However, the good news is that more rate cuts in Canada and the United States aren’t completely off the table. The Fed’s latest economic projections suggest that it might further slash interest rates this year, though likely at a slower pace than previously expected. For large banks like Scotiabank, a gradual easing cycle could still provide support to loan growth and improve consumer credit appetite over time, which could help BNS stock regain momentum as borrowing activity picks up.
Financial growth remains strong
That brings us to the part investors should really be paying attention to: how Scotiabank is actually performing beneath the surface.
In its most recent quarter ended January 2025, the bank’s revenue rose 11% YoY (year over year) to $9.4 billion. Its adjusted net profit for the quarter also came in strong at $2.2 billion, up nearly 6% YoY. Even more encouraging, its profits rose over 12% from the previous quarter, showing that Scotiabank is gaining traction despite a rocky start to the year for the stock.
Is Scotiabank stock a buy below $70?
In the latest quarter, the bank’s global banking and markets segment kicked off the year with a 33% YoY earnings jump with strength in capital markets and higher advisory fees. These gains helped offset pressure in Canadian and International Banking, which faced higher provisions for credit losses.
Now, here’s where things get more interesting. Rather than worrying about short-term challenges, Scotiabank remains focused on long-term strength as it focuses on its core North American markets while streamlining its international operations.
Moreover, further interest rate cuts could really turn the tide in its favour. A more supportive rate environment would ease borrowing costs, boost credit demand, and improve the bank’s margins. Given these strong long-term fundamentals, BNS stock’s current dip might just be offering long-term investors more value than risk.
