Fees Start to Retreat While Loan Growth Remains Strong for Scotiabank in the Second Quarter of 2022

Narrow-moat-rated Bank of Nova Scotia reported decent fiscal second-quarter earnings. Adjusted earnings per share were CAD 2.18, representing growth of 15% year over year but only 1% quarter over quarter. This was a solid beat compared with the CapIQ consensus estimate of CAD 1.96. The biggest reason for the quarterly earnings beat was provisioning, which came in roughly flat with first-quarter results at a cost of only CAD 219 million, and the PCL ratio was also flat, remaining at only 13 basis points. We would expect these numbers to start normalizing higher eventually, but predicting the timing of such a normalization in credit remains difficult.