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Research Alert: Bank Of Nova Scotia: Q2 Fy 26 Earnings Beat As Roe Improves

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

BNS reported a solid Apr-Q earnings beat with operating EPS of CAD2.02 vs CAD1.52 the prior year and CAD0.08 above consensus, while adjusted ROE improved 270 bps to 13.2%, the highest since early 2023. Revenue of CAD9.84B rose 8% due to continued net interest margin expansion to 2.49% (+18 bps) and 13% growth in non-interest income to CAD4.32B. The bank demonstrated effective expense management with the productivity ratio improving significantly to 52.5% from 55.7%, capturing the full benefit of revenue growth while controlling costs at CAD5.19B. However, credit challenges persist as gross impaired loans reached a cyclical high of 0.99% from 0.90%, marking the 14th consecutive quarter of deterioration due to Canadian Banking and International corporate portfolios. The Business segment's performance was broad-based with Canadian Banking leading at CAD935M (+53%), International Banking generating CAD736M (+3%), and strong contributions from Global Wealth Management and Global Banking and Markets.

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