The Bank of Nova Scotia, or Scotiabank, is a leading international bank in Canada. The bank offers a wide range of products and services in the areas of private and corporate banking, asset management, private banking, corporate and investment banking, and capital markets.

The bank has a presence across Canada (more than 50% of sales), followed by the USA, the Caribbean and Central America, the Pacific Alliance and international markets such as Europe, Asia and Australia.

It ranks third in the United States and Canada in terms of market share. Scotiabank is through Canadian Banking (38% of Net Income for the last six months), International Banking (~ 20%), Global Wealth Management (~ 16%), Global Banking and Markets (~ 22%), and Other (~ 4 .) active%) segments.

The bank serves more than 11 million customers through a network of 952 branches and more than 3,500 ATMs. The international banking business serves over 10 million private, corporate and business customers through more than 1,400 branches and established franchise companies.

As the leading financial services provider on the American continent, Scotiabank serves more than 21 million customers and had assets of 1,136 billion US dollars at the end of the year.

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Plant data

Sales growth & market presence

Scotiabank is diversified across business areas and regions, which reduces risk and volatility. The bank generates almost 90% of its income in its six core markets of Canada, the USA, Mexico, Peru, Chile and Colombia. It has now concentrated its geographic presence in 30 countries, up from 54 in 2013.

The bank is poised to grow thanks to strong earnings momentum in private, commercial, and asset businesses. Scotiabank is also strengthening its core Canadian banking business with the wealth management business.

The bank is increasing its size and market share in key markets through strategic use of capital. It also invests in technology to strengthen its digital banking and improve customer experience and efficiency. Scotiabank achieved a digital adoption rate of 58% and total digital sales of 26%.

With a rich history spanning 185 years, the bank has built a deep institutional knowledge base, leadership skills and strong customer loyalty.

An increase in both retail and corporate banking should drive growth in Scotiabank’s Canadian banking business, while international banking should benefit from its focus on the high-growth markets of Mexico, Peru, Chile and Colombia. These countries have young and dynamic populations with enormous untapped potential. The bank is growing both organically and through successful acquisitions, as evidenced by its strong track record of integrating companies.

Scotiabank’s Canadian and international banking operations were negatively impacted by an increased provision for loan losses due to COVID-19. However, quarterly results improved due to the bank’s diversified business platform and the economic recovery in its core markets.

The bank also saw a strong rebound in fee income, lower loan loss provisions, and solid asset and deposit growth. Both AUM and AUA rose 19% and 20%, respectively, compared to the previous year. Provisions for loan losses were $ 496 million versus $ 1,846 million, a decrease of more than 70%. Sales have increased 7% + CAGR over the past decade.

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Dividends

Scotiabank has paid dividends every year since it was founded in 1832. The bank has seen impressive dividend growth of ~ 6% CAGR over the past decade. It has an attractive dividend yield of 4.5% and has seen dividend growth for more than 40 years. The CET1 rate is currently 12.3%, making it the strongest in the last five years.

A strong balance sheet, capital and liquidity ratio offers flexibility in the use of capital in the form of dividend distributions and share buybacks. The bank has also grown its profits at a rate of more than 3% CAGR over the past decade.

The bank is a dividend aristocrat. Scotiabank currently has a payout ratio of 57% and a target payout range of 40% to 50%. Most recently, it increased its dividend by 3.5% in 2019. However, the bank has suspended share buybacks and dividend increases as part of the COVID-19 measures. April 2021, no common shares repurchased.

Scotiabank remains well capitalized to support its strategic growth plans. The strong performance in the capital market business and the advisory pipeline should be a tailwind for the annual financial statements. The bank’s international banking business was also boosted by the strong economic recovery across the Pacific Alliance.

Scotiabank’s fee-based business model also offers transparency about cash flows. The diversified presence and access to high-quality growth markets are a unique differentiator. In the medium term, the bank is aiming for EPS growth of over 7%. Scotiabank expects future growth due to a strong customer orientation, a strong capital market offer and a growing presence in America.

Scotiabank (BNS) historic return
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competition

Canada’s private and commercial banking segments are highly competitive.

Scotiabank competes with other leading Canadian banks such as TD Bank, Royal Bank, Bank of Montreal, Canadian Imperial Bank of Commerce, and National Bank.

National Bank is one of the six largest commercial banks in Canada, while CIBC serves 11 million retail, small business, commercial, corporate and institutional customers in Canada, the US and worldwide.

The Bank of Montreal is the eighth largest bank in North America by assets.

Bottom line

As the 10th largest foreign banking organization by wealth in the United States and a leading global financial institution, Scotiabank is known for its quality of integrity, customer service, and wide range of products and services.

The bank expects solid growth in Canada over the next two years, driven by rebound effects and high commodity prices, strong wealth effects from stocks and the real estate market.

The US is also expected to grow faster than Canada. The bank’s diversified exposure to high quality banking markets also positions it well for strong growth potential and superior returns.

Scotiabank (BNS) Historic Pe
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