The Bank Of Nova Scotia (BNS Quick QuoteBNS - Free Report) , also known as Scotiabank, is scheduled to report first-quarter fiscal 2022 results (ended Jan 31, 2022) on Mar 1, before market open. BNS’ earnings are anticipated to have improved from the year-ago period’s actuals, while revenues indicate a fall from the year-ago quarter’s reported figure.

In the last reported quarter, a drastic decline in provisions and higher non-interest income primarily drove the results. Moreover, the balance sheet position remained strong. However, a decrease in net interest income and higher expenses were headwinds.

Over the trailing four quarters, Scotiabank’s earnings surpassed the consensus estimate on all occasions, the average being 12.11%.

BNS’ activities in the to-be-reported quarter were inadequate to instill analysts’ confidence in its stock. Evidently, the Zacks Consensus Estimate for earnings in the fiscal fourth quarter of $1.63 has moved 2.4% south in the past 30 days.

The figure indicates an 11.6% rise from the year-ago quarter’s reported figure. The consensus estimate for revenues is pegged at $6.16 billion, suggesting a decline of 1.9% from the year-ago quarter’s reported figure.

Factors at Play

During the November-January period, the global economy witnessed an encouraging recovery from the pandemic, supported by the revival of economic activity and high vaccination rates.

Scotiabank’s diversified business platform consisting of Canadian Banking, International Banking, Global Wealth management as well as Global Banking and Markets is likely to have offered some top-line stability in the quarter to be reported.

BNS’ focus on secured lending, higher-quality unsecured retail lending and maintenance of high-quality corporate and commercial loan book is likely to have driven loan growth in the quarter to be reported. Moreover, the pandemic the changed spending habits of many Canadians with lower spending and increased savings. This is likely to have driven deposits for Scotiabank and also expected to have aided its balance-sheet expansion.

Moreover, with the likely central bank rate hikes and Scotiabank’s recovering loan volumes plus cost cuts followed by its recent restructuring initiatives, its net interest margin might have seen a boost in the to-be reported quarter.

Rise in customer adoption of digital channels and process automation within International Banking as a result of the bank’s focus on restructuring and simplifying processes will likely lead to expense savings in the segment.

Robust asset management and private banking volume growth along with continued momentum across advisory businesses is likely to have continued, boosting Scotiabank’s Global Wealth Management revenues in the quarter to be reported.

Amid low interest rates and recovery in economic conditions, corporates’ plans to raise capital on debt and share issuance were high in the to-be-reported quarter. Scotiabank is expected to have benefited from a high level of deal-making during the quarter under review as companies resorted to mergers and acquisitions to tide over the changing operating environment, and benefit from low interest rates and abundance of capital. This is likely to have driven advisory revenues for BNS, boosting Global Banking and Markets segment earnings.

With continued improvement in the macroeconomic condition during the fiscal first quarter, changes in business mix and a more favorable credit outlook, BNS’ credit loss provisions are likely to have improved.

However, growing technology and business development costs to support growth will likely hurt the bottom-line expansion.

Here is what our quantitative model predicts:

Scotiabank does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP:  Scotiabank has an Earnings ESP of 0.00%.

Zacks Rank: Scotiabank currently carries a Zacks Rank of 3.

Bank of Nova Scotia The Price and EPS Surprise

Bank of Nova Scotia The price-eps-surprise | Bank of Nova Scotia The Quote

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Performance of Foreign Banks

Mitsubishi UFJ Financial (MUFG Quick QuoteMUFG - Free Report) reported profits attributable to owners of parent for the third quarter of fiscal 2021 (ended Dec 31) of ¥1.07 billion ($9.42 billion), up 76.3% year over year.

Increased gross profits, higher trust fees along with net fees, and commissions and decreased credit costs drove the upside for MUFG. A rise in general and administrative expenses and a decline in loan and deposit balances acted as headwinds.

UBS Group AG (UBS Quick QuoteUBS - Free Report) reported fourth-quarter 2021 net profit attributable to shareholders of $1.3 billion, down 18% from the prior-year quarter’s level.

UBS’ performance was affected by higher expenses. Nonetheless, a 9% year-over-year increase in net fee and commission income along with a 9% rise in net interest income acted as a tailwind. Also, net credit loss release was a support.

Itau Unibanco Holding S.A. (ITUB Quick QuoteITUB - Free Report) posted recurring earnings of R$7.16 billion ($1.28 billion) for fourth-quarter 2021, up 32.9% year over year. Including non-recurring items, net income came in at R$6.23 billion ($1.12 billion), down 17.9%.

ITUB’s results benefited from higher revenues and a stronger credit portfolio. However, increased non-interest expenses, cost of credit charges and a non-performing loan ratio acted as headwinds.