$BNS.TO

Bank of Nova Scotia Q2 EPS Diluted of $2.02, compared to $1.52

Bank of Nova Scotia Q2 Diluted EPS $2.00, Compared to $1.48 a Year Ago

TSX Closer: The Index Falls From a Record Close Ahead of Canada's Banks Earnings Season

The resources-heavy Toronto Stock Exchange closed lower on Tuesday, falling off the record high set a day earlier on some profit taking and weaker commodity prices, while nagging economic concerns continue to weigh, with Canada's big banks facing rising insolvencies amid a weak housing market and National Bank saying Ottawa's trade-diversification target has a scale problem.The S&P/TSX Composite Index fell 177.02 points, or 0.5%, to 34,653.87. Most sectors were higher, led by the Battery Metals Index, up 5.5%, and Base Metals, up 2%, despite a lower gold price. Decliners were led by Info Tech, down 1.6%, and Health Care, down 1.3%.Financials was also down 0.5% ahead of the start of bank earnings season on Wednesday.Profits at Canada's largest banks are expected to have increased despite trade tensions, the Middle East conflict and broader economic uncertainty, but now face tougher tests as more consumers struggle to pay debts and a subdued housing market weighs on their core domestic business, according to a Reuters preview.The big banks; Royal Bank of Canada (RY.TO), Toronto-Dominion Bank (TD.TO), Bank of Montreal (BMO.TO), Bank of Nova Scotia (BNS.TO), Canadian Imperial Bank of Commerce (CM.TO) and National Bank of Canada (NA.TO), which together control more than 90% of the market, are expected to report strong second-quarter earnings starting on Wednesday, helped by trading revenue and their capital markets businesses, Reuters said."Banks have been beating expectations consistently for the past two years, With credit losses stubbornly elevated and margin expansion potentially stalling this quarter, the onus falls on the capital markets business to deliver, yet again," National Bank analyst Gabriel Dechaine is cited as saying.On the economy, National Bank said Statistics Canada's 2025 goods exporter data underscore the scale problem embedded in Ottawa's ambition to double non-U.S. exports within the next decade. The bank cited a chart that shows Canada counts nearly 48,000 goods exporting enterprises, but 82% of them employ fewer than 50 workers despite accounting for only 14.3% of total goods exports, while firms with 500 or more employees represent a tiny fraction of exporters but close to 60% of export value."This is not a marginal complication. Diversification is not simply a matter of redirecting shipments away from the U.S. market; it requires financing, compliance capacity, distribution networks, foreign-market intelligence, currency-risk management and the ability to withstand a long sales cycle before new relationships become profitable," National Bank said."For smaller firms, the constraint is structural because many are embedded in North American supply chains built around proximity, recurring customer relationships, integrated logistics and production specifications that are not easily replicated overseas."National Bank added: "The irony is that Ottawa's target may be easier to meet in aggregate than in substance. Canada can raise non-U.S. export values through commodities and other scale-intensive sectors where global demand is deep and output is more readily redirected across markets. But that path does less for the employment-intensive parts of the export base, where supply-chain links are stickier and diversification costs are proportionally higher. The result is a policy tension that could be masked by headline GDP. A resource-led export pivot may improve the arithmetic of diversification while smaller exporters face higher costs, thinner margins and greater risk of lost capacity. If building scale is part of the desired outcome, then trade policy cannot be separated from the domestic incentives that shape firm size, including the small-business tax kink highlighted in our MCIA/RBI work."Of commodities, gold edged lower by midafternoon Tuesday even as the dollar and yields fell as fresh U.S. strikes on Iran heightened concerns over the progress of peace talks between the two countries. Gold for July delivery was down US$16.90 to US$4,539.50 per ounce.Also, West Texas Intermediate crude oil closed lower on uncertainty around geopolitical tensions across the Middle East. WTI crude oil for July delivery closed down US$2.71 to settle at US$93.89 per barrel, while July Brent oil was last seen up US$3.40 to US$99.54.

Canadian Banks Still Priced For Positive EPS Surprises, National Bank Says in a Q2 Preview

Bank stocks are up 13% so far this year, outperforming the S&P/TSX by 550 basis points, notes National Bank in its second-quarter earnings preview of the sector.Analyst Gabriel Dechaine writes that since the end of the first-quarter reporting season, Canadian banks have outperformed the market by 800 bps."Betting against the banks has been unwise, with them consistently beating expectations over the past two years," he warns, adding that, trading at 14x on forward EPS, the group is priced for positive EPS surprises or revisions. Barring a margin or credit surprise, the onus falls on the Capital Markets to deliver this outcome, which isn't impossible considering several favorable market conditions.Dechaine's top picks are Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO).The U.S. loan growth factor would also be supportive of BMO (BMO.TO), considering the importance of its U.S. P&C segment's top-line expansion towards achieving the 12% ROE mark sometime in 2027, Dechaine adds.Price: $251.72, Change: $-0.71, Percent Change: -0.28%

CIBC Says Strong Earnings From Banks Due to Capital Markets in Q2 Preview, Downgrades National Bank

CIBC recommends investors rotate money out of banks into lifecos, even as it expects a strong second-quarter earnings from the sector when it starts reporting on May 27. Analyst Paul Holden, who notes that the strong earnings will be predominately based on capital markets activity, has also downgraded National Bank (NA.TO) to neutral.Holden says the credit outlook is incrementally worse and he is getting more cautious on credit losses given the weakness in Canadian unemployment, a soft housing market in the GTA, and industry credit metrics. Loan growth is expected to remain muted and net interest margin is also likely to be less of a tailwind this quarter. "We would not be surprised to see the banks report EPS beats again this quarter, but perhaps like the U.S. banks, capital markets-driven beats will no longer be good enough to drive the stocks higher."National Bank is downgraded to neutral from outperform, with Holden pointing out that "two years' worth of returns were delivered in three months". The stock is up ~20% in the past three months and is now trading at the highest multiple in the group (9% premium on F2027 consensus). Fiscal 2028 consensus estimates are giving full credit for ROE expansion, Holden adds.BMO (BMO.TO) is Holden's only outperformer-rated bank as there is still upside potential to consensus estimates relative to its 15% ROE target. "With the recovery in U.S. commercial loan growth, there is also a possibility that U.S. balance sheet growth comes in higher than expected. We also think the relative skew to the U.S. can help with impaired PCLs in the near term."BMO is trading at a 5% discount to the group average P/E and a strong quarter that demonstrates continued progress towards ROE targets should help the stock.Price: $203.95, Change: $-0.69, Percent Change: -0.34%

TD Bank Upgraded, Royal Bank Downgraded at Raymond James

Toronto-Dominion Bank (TD.TO) was upgraded to Outperform from Market Perform, and Royal Bank of Canada (RY.TO) was downgraded to Market Perform from Outperform at Raymond James.Analyst Stephen Boland raised his price target on TD to $152.50 from $141, and on Royal Bank to $265.50 from $248.Boland increased his targets on Bank of Montreal (BMO.TO) to $227 from $214 (Outperform), Bank of Nova Scotia (BNS.TO) to $120 from $117 (Outperform), CIBC (CM.TO) to $157.50 from $148.50 (Market Perform), and National Bank of Canada (NA.TO) to $206.50 from $200 (Market Perform)."We believe TD is reasonably valued relative to improving fundamentals and have increased confidence in management's ability to execute on its strategic priorities," the analyst said in a note to clients."TD also benefits from above-average US exposure, where the NIM and loan growth outlook are more favourable than in Canada," Boland said."We continue to view RBC as a scaled, diversified franchise with a lower-volatility earnings profile," the analyst said. "However, those same attributes may limit relative upside this quarter.""In a stronger trading revenue environment, RBC's greater exposure to rates and credit trading may benefit less than peers with higher exposure to equities, currencies, and commodities," Boland said."With RY trading at roughly a one-turn P/E premium to the peer group (excl. RY), we believe the stock is priced to execute, and the absence of a larger trading revenue uplift could limit near-term upside."

Scotia Wealth Management to Offer Services to SBI Canada's High-Net-Worth Clients

Scotia Wealth Management, part of the Bank of Nova Scotia or Scotiabank (BNS.TO), has entered an agreement to offer wealth management services to high-net-worth clients of State Bank of India subsidiary SBI Canada Bank, Scotiabank said Monday.The arrangement positions both SBI Canada and Scotia Wealth Management to deliver more coverage for clients locally in Canada while supporting their financial needs, according to Scotiabank."We share a similar approach with SBI Canada, putting our clients at the centre of what we do," said Amit Brahme, vice president of strategic cultural segments at Scotia Wealth Management."SBI Canada has a legacy of building trust within the Indian community in Canada, and we are excited to work together to solve their clients' complex wealth needs," Brahme added.

TSX Closer: A Lower Close Amid Uncertainty Over Peace Talks; Rosenberg Research On Canadian Banks

The Toronto Stock Exchange was back in negative territory Thursday with both the Base Metals and Energy sectors lower, and amid reports Iran is still reviewing a peace proposal put forward by the United States, while the two nations wrestle over talks to end the war.The S&P/TSX Composite Index closed down 125.2 points to 33,856.62, as Base Metals, down 1.7%, and Energy, down 1.4%, led decliners. In contrast, the Battery Metals Index led gainers, rising 7.8%.Reflecting the overall negative tone to the market, the Financial sector lost 0.4% even as Rosenberg Research published a note entitled 'Canadian Banks: Quality at a Premium Price' in which it said secular market themes continue to support Canadian banks' premium valuations, as the sector benefits from rising global interest in non-U.S.-dollar, commodity-based economies.Key takeaways from the note written by Mehmet Beceren, Senior Markets Strategist at Rosenberg, include the idea that Canadian banks are benefiting from more than bank fundamentals. As heavyweights in the Canadian equity index, the Big Six are getting a side benefit from global flows into Canada as investors seek exposure to hard assets, commodities, oil, gold, and non-U.S.-dollar markets, Beceren said.Another takeaway is that the quality premium is defensible. "Valuations are not cheap relative to history, but high profitability and supportive thematic tailwinds justify higher multiples in a market that continues to re-rate quality earnings," Beceren added.Of commodities, West Texas Intermediate crude oil fell for a third-straight session, but rose off the day's low on uncertain prospects for a potential peace deal between the United States and Iran. WTI crude oil for June delivery closed down $0.27 to settle at US$94.81 per barrel, after earlier touching US$89.85. July Brent oil was down $0.67 to US$100.60Gold had risen for a third-straight session by midafternoon Thursday on optimism a deal to end the war on Iran may be near, cutting into oil prices and pushing the dollar lower amid easing fears the supply shock around the war would boost inflation and force higher interest rates. Gold for June delivery was up $20.60 to US$4,714.00 per ounce, after rising by US$125,80 on Wednesday.

Scotiabank Up Near 0.5% In US Premarket As Comments On Expected Contribution From KeyCorp's Q1 Earnings

Scotiabank (BNS.TO, BNS) was at last look up near 0.5% in US premarket trade after announcing Friday that the expected net income contribution from its ownership interest in KeyCorp will be approximately C$77 million in Q2 2026.In a statement it said this contribution represents the bank's share of KeyCorp's Q1 2026 net income, includes acquisition-related and other accounting impacts, is net of the bank's associated funding costs and is reported on a one-month lag.Adjusting for the amortization of acquired intangible assets of approximately C$8 million, the bank's adjusted net income contribution from KeyCorp will be approximately C$85 million.Scotiabank will release its second quarter financial results and host an earnings conference call on May 27, 2026.Shares in BNS were down $0.64 or 0.6% at $102.79 in Canada yesterday.

OSFI's Annual Risk Outlook Flags Key Risks For Financial Sector, Regulator's Response

The Office of the Superintendent of Financial Institutions (OSFI) on Tuesday said it will focus on achieving "resilience in stress" for the Canadian banking sector.In its 2026-2027 Annual Risk Outlook, released on Tuesday, the regulator flagged real-estate secured lending risks, non-bank financial institution risks, liquidity and funding as the key issues facing the financial sector.Housing and mortgage pressures have increased in some parts of the country. Risks outside the traditional banking system have also expanded, including in areas where non-bank lenders and investment funds are taking on more borrowing. Global uncertainty may also impact confidence in funding markets."Although cost and availability of funding have remained stable, the speed at which a liquidity event could unfold remains a key concern," the report noted.To mitigate these risks, OSFI's supervisory work will include reviewing contingency funding and recovery plans at banks. "We will assess how internationally active institutions consider geopolitical shocks in their plans. We will also focus on the ability of institutions to report liquidity and funding positions under short timelines, including cross-border exposures," the agency said.OSFI will continue to advance work on liquidity-risk guidance for deposit-taking institutions throughout 2026. The most recent revisions to liquidity adequacy requirements will take effect on May 1, 2026, targeting specific retail deposit categories. The regulator will release further updates to liquidity adequacy requirements for consultation as part of the second quarterly release on May 21.OSFI also plans to release a draft internal liquidity adequacy assessment process guidance for consultation as part of the May quarterly release.Price: $202.70, Change: $+1.16, Percent Change: +0.58%