Stock Analysis Bank of Nova Scotia (BNS)

 

Scotiabank is a Canadian-based financial company and is the third largest bank in Canada. Our business consists of 4 divisions. These are Canadian Banking, Global Wealth Management, Interantional Banking, Global Banking and Markets. We provide a wide range of financial services to individuals, families and their communities. He is in charge of personal and regional banking services and asset management, corporate investment and capital markets. There are approximately 97,000 employees and the assets under management are approximately $1.4 trillion. Our shares are traded on the Toronto Stock Exchange and New York Stock Exchange.

1. Canadian Banking

Canandian Banking provides financial counseling and banking solutions to more than 10 million small business and commercial banking customers. It has 953 branches and more than 3,632 automated banking machines (ABMs).

The Canadian Banking sector's net income fell 53% year-on-year. Sales decreased by 6%, interest income decreased by 4% compared to the previous year, and non-interest income decreased by 13%. It appears to be the impact of reduced economic activity by COVID-19. The loan size grew by 5%, and the deposit size grew by 10%.

Net income in this segment is on the decline for the fifth consecutive quarter.

2. Global Wealth Management

Global Wealth Management provides customized long-term investment solutions. The service is available in 14 countries and aims at managing risk and long-term returns with a specialized investment strategy.

Net profit in the Global Wealth Management segment increased 6% year-on-year. As mutual fund sales increased, sales grew 2% year over year.

Net profit in this segment is on a solid trend. The ratio of return on investment capital is maintained at about 13-14%.

3. International Banking

International Banking (IB) provides financial products and banking solutions to clients. It serves more than 15 million individual and corporate customers, with more than 1,900 offices in Latin America, the Caribbean and Central America in Mexico, Peru, Chile and Colombia.

The International Banking sector's net income fell 96% year-on-year. Reduced margins and low non-interest profits reduced sales by 16%.

Net income in this segment is on the decline for the fifth consecutive quarter.

4. Global Banking and Markets

GBM provides banking overall business and capital markets services to corporate, government and institutional investors. Services are available in Canada, Mexico, the United States, Latin America, Europe, Asia and Australia. We are providing services such as intercompany banking transactions, investment services, bonds and stock registration and sales, trading, currency exchange services, and raw material derivatives trading.

Net income in the GBM segment increased by 60% year-over-year. Trading and investment trading volume has grown rapidly and has risen. Sales increased 43% year-on-year, non-interest income increased 57% and interest income increased 11%. Loans grew by 18% and deposits by 46%.

Net income in this segment is on the rise for the fifth consecutive quarter. The return on investment capital is growing from about 13% to 17.5%.

Its turnover is $1.5 billion (Canadian $) and 90% comes from North America. Our assets are divided into 45% in Canada, where our headquarters is located, 34% in the US, 14% in Europe, and 7% in Asia.

Banks' net income margin in the interest sector is falling as the base rate is lowering due to low growth around the world. As a result, the company's interest income has been on a decline for the fifth consecutive quarter. Growth in the non-interest sector is offsetting the decline in net income in the interest sector, and growth is expected to continue going forward.

Its dividend yield is currently between about 6-7% and the average 5-year dividend growth rate is 6.61%. The dividend payout ratio is 53.25%. Due to the low growth in net profit, dividends are also expected to be paid in a smooth manner.