BANK OF NOVA SCOTIA $63 - Toronto symbol BNS

BANK OF NOVA SCOTIA $63 (Toronto symbol BNS; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.2 billion; Market cap: $75.6 billion; Price-to-sales ratio: 3.4; Dividend yield: 4.3%; TSINetwork Rating: Above Average; www.scotiabank.com) reported that its earnings rose 2.6% in the quarter ended January 31, 2015, to $1.65 billion from $1.61 billion a year earlier. Per-share profits gained 2.3%, to $1.35 from $1.32, on more shares outstanding. Revenue rose 3.9%, to $5.9 billion from $5.6 billion.

Earnings at the Canadian banking division (which supplies 50% of total earnings) fell 1.7%, mainly because the bank sold most of its shares in mutual fund provider CI Financial (Toronto symbol CIX) in 2014. Excluding CI and adjusting for changing tax rates, this division’s earnings rose 6% due to steady loan and deposit growth. Higher stock markets also increased the value of the assets its wealth management business administers.

The international division (25% of total earnings) saw its profits fall 1.9% on higher loanloss provisions in Colombia and negative foreign exchange rates. However, earnings at the securities trading business (25%) rose 4.1% on higher stock and foreign exchange trading volumes.

Bank of Nova Scotia set aside $463 million to cover potential bad loans in the latest quarter, up 30.1% from $356 million a year earlier. That’s mainly because it’s loaning more funds to consumers in Canada and Latin America.

The bank also increased its dividend by 3.0%. The new annual rate of $2.72 a share yields 4.3%. The stock trades at 11.2 times the bank’s projected 2015 earnings of $5.65 a share.

Bank of Nova Scotia is a buy.

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