05 December 2011

Scotiabank Q4 2011 Earnings

TD Securities, 5 December 2011

Last Friday before the open, the bank reported Core Cash (f.d.) EPS of $1.08 versus TD Securities at $1.09 and consensus of $1.08.


Slightly positive. With some helpers, Scotia delivered a basically in line result. The results were fairly balanced across the segments; importantly, we note continued progress in the International segment consistent with our expectations for above-average medium-term growth. We trimmed our estimates nominally, around lower near-term NIMs, but strong volumes, acquisitions and what we expect to be some increased expense discipline should help deliver reasonably good bottom-line growth in 2012. Overall, we continue to view Scotiabank as one of the best fundamental stories in the group. At current levels, we believe valuations are reasonably attractive and we reiterate our Buy rating.


Sounds like some increased focus on harvesting recent growth/investment in 2012. We have agreed with Scotia’s decision to continue to press strategic investments/capital deployment over the past 24 months with an eye to building out the platform for medium-term growth. Efforts should continue in 2012, but management is suggesting a slight shift to harvesting returns over the coming year with some diminution in project spending and build-out which should manifest itself in better operating leverage and some better bottom-line earnings.