丰业银行2025年第二季度收益回顾：准备金积累能否增强信心？

2023A2024A2025E2026E6.476.476.647.486.546.476.8231,847.033,806.037,014.038,776.211.1x11.1x10.8x9.6x - John Aiken, CFA * | Equity Analyst(416) 847-7376 | jaiken@jefferies.comJoe Ng, CFA * | Equity Analyst(416) 847-7396 | jng4@jefferies.comAria Samarzadeh, CFA * | Equity Analyst(416) 847-7398 | asamarzadeh@jefferies.com The Long View: ScotiabankInvestment Thesis / Where We DifferNear term, Scotia's earnings are expected to be modest. That said, buoyedby Scotia's restructuring charges in 2023, along with capital reallocation tostronger risk-adjusted return businesses, earnings are expected to grow by5-7% in 2025 and 7%+ thereafter over its five-year plan. And, while a dividendyield north of 5% may be a compelling yield to wait for, its payout ratio remainselevated and well above its 40-50% range, suggesting dividend growth couldremain fairly restrained over the immediate horizon.Base Case,C$75, +5%Our base-case price target of $75 for BNS is basedon an 10.0x forward P/E against FY26E EPS of$7.48.Sustainability MattersTop Material Issues:1)Product Design and Lifecycle Management:contributing to environmental and social impacts throughtheir lending practices and considering ESG factors and risk exposure when underwriting loans.2)Employee Diversity & Inclusion:Fostering a diverse and inclusive workplace to attract top talent andbuild long-term value.Company Targets:1) Target of 40% reduction of scope 1 and 2 GHG emission in their own operations by 2030 from 2016levels.2) Target of $350 billion of climate related finance for client related projects and objectives by 2030.3) Target of 40% women in VP+ roles by 2025 globally.Questions to Management:1) What actions are the company taking to achieve its diversity & inclusion goals?2) What is the strategy for carbon-intensive lending portfolios; what is the near-term & long-term plan forlending?Please see important disclosure information on pages 9 - 15 of this report.This report is intended for Jefferies clients only. Unauthorized distribution is prohibited. Upside Scenario,C$82, +14%Scotia's pivot of allocating greater capital to NorthAmerica improves the bank's return on capital riskprofile, and improves profitability, resulting in anupside scenario of $82, based on a 10% increaseto its FY26E EPS, against an 10.0x multiple. Downside Scenario,C$61, -15%Despite the shift away from Latin America, weakeconomies in the region continue to weigh oncreditquality in Scotia's International Bankingsegment, resulting in a downside scenario of $61,based on a 10% decline to its FY26E EPS, againsta 9.0x multiple.CatalystsWiththe capital shift to North America andbusinesses with stronger risk-adjusted returns,the improved profitability and reduced credit risk,profile results in a re-rating to Scotia's valuationmultiple. 2 Increased Allowances on Performing Loans Weighs onEPS Miss, But Overall Results SolidSecond-Quarter Results: PositiveOutlook: NeutralEarnings quality:Overall, earnings quality was mixed but fairly high given that Scotia earned throughhigher provisions and lower trading revenues, albeit aided by higher advisory fees and a slightly lowertax rate.Operating leverage/performance:While sequential core expenses declined, it was at a slower pacethen the drop in revenues. Consequently, Scotia saw negative operating leverage in the quarter.Risk:While its exposure to LatAm will continue to generate greater volatility, Scotia is takingmeasures to mitigate some risks emanating from the region. That said, this is offset by the bank'sstrong regulatory capital ratio..Q2-25 EARNINGS PER SHARE OVERVIEW(in C$ millions)Pre-taxAfter-taxEPSvs. Q1-25vs. Q2-24Reported$2,572$2,032$1.3357.7%(15.6%)Adjustments:Impact of adjustments$0.19Adjusted Core Earnings$2,572$1,898$1.52(13.3%)(3.6%)vs. JEF - Above/(Below)$1.473.4%vs. Consensus - Above/(Below)$1.54(1.3%)Source: Company reports, Jefferies estimatesBNS reported adjusted EPS of $1.52, below consensus of $1.54 but above our estimate of $1.47.While Scotia missed expectations, it was largely on the back of increasing allowances on performingloans as the economic outlook has admittedly deteriorated. We estimate that this impacted EPS byover $0.05 against consensus expectations. Outside that, the results were solid, notably with ongoinggrowth in its International segment and an increase in its capital ratio allowing for the first dividendincrease in two years.On the credit front, provisions were up materially, up 20% sequentially to $1,398MM, as Scotia addedto allowances on performing loans. However, impaired provisions were up on sequential basis (2bpsas a percentage of average loans) while gross impaired loans actually declined in the quarter (bothpersonal and commercial). We note that impaired loan formations were down across its majorcategories. Juxtaposed against the weaker credit performance, Scotia's capital ratio improved by30bps to 13.2% while the strength in earnings allowed for a 3.6% lift in the dividend, the first increasein