Analyst Note| Eric Compton, CFA |
Narrow-moat rated Bank of Nova Scotia reported decent fiscal first-quarter earnings. Adjusted earnings per share were CAD 1.88 for the quarter, soundly beating Factset consensus of CAD 1.24. This represented year-over-year EPS growth of 3%, as adjusted revenue was up 1% and adjusted expenses were down 2%. Provisioning was also back down to prepandemic levels. This largely aligns with our view that the Canadian banks will be fine and that better results should be returning in 2021. We are increasing our fair value estimate to CAD 71/USD 56 per share from CAD 70/USD 54. As the pandemic has further played out and we are more confident in vaccine distribution and economic resilience, we will also be lowering our uncertainty rating for Scotiabank back down to medium from high.