BN

Bank of Nova Scotia

BNS
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Bank of Nova Scotia AI Insights

Informational only. Not investment advice.
As of 2026-01-16

Snapshot

  • Interest expense TTM of 36.1B nearly equals total revenue of 37.1B - net interest margin severely compressed in current rate environment.[Interest Expense TTM]
  • Dividend payout ratio 7Y avg of 59% vs industry median 30% - generous yield but limits capital flexibility with 4.1x debt/equity.[Dividend Payout Ratio Avg 7yr]
  • P/B TTM of 1.5x on tangible book of 60.8B; trading at 25% premium to tangible equity despite ROE of 10.3% near industry median.[P/B Ratio TTM]

Watch Triggers

  • Net Margin TTM: Falls below 18% or rises above 25% — Signals whether rate environment is improving or credit losses accelerating.
  • Dividend Payout Ratio: Exceeds 65% for 2 consecutive quarters — Would indicate FCF no longer covers dividend, forcing cut or capital raise.
  • Interest Expense TTM: Declines 10%+ from current 36.1B — Early signal of margin expansion as funding costs normalize.

Bull Case

P/E of 10.9x below industry median 12.6x with stable 6.4% dividend yield (4.32/share TTM) offers income floor while waiting for rate normalization.

P/E RatioDividends Paid Per Share TTM

1.46T asset base with 77B common equity provides scale advantages; ROE 10.3% at industry median despite margin headwinds.

Total Assets TTMROE TTM

Bear Case

Interest expense at 97% of revenue leaves minimal buffer for credit losses; 246B net debt with 4.1x debt/equity amplifies rate sensitivity.

Interest Expense TTMDebt to EquityNet Debt TTM

ROIC of 2.0% vs 3.8% industry median signals poor capital deployment; 373M restructuring charges TTM suggest ongoing efficiency challenges.

ROIC TTMRestructuring and M&A TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

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Forward Thesis

Net margin compression likely to persist until rate cycle turns, capping ROE below 12%.

1-3ymed
  • Interest expense 97% of revenue TTM
  • Net margin 21% vs 26% industry median
  • Elevated debt load at 315B total
Interest Expense TTM: 36.1BNet Margin TTM: 21.0%Total Debt TTM: 314.9B

Dividend sustainability intact near-term but growth constrained by capital requirements.

1-3yhigh
  • FCF TTM of 5.1B covers 5.4B dividends
  • 59% payout ratio leaves thin buffer
  • Preferred issuance of 1.4B signals capital needs
Free Cash Flow TTM: 5.1BDividends Paid Per Share TTM: 4.32Net Preferred Stock Issuance: 1.4B
Valuation Context
Caveats

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