The Bank is a full-service financial institution, active in both domestic and international markets. In Canada the Bank provides a full range of retail, commercial, corporate, investment and wholesale banking services.
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Doing some number crunching, here are the ratios I use when assessing banks:
Nonperforming Loans / Total Assets: 0.5%
Allowance for Credit Losses / Nonperforming Loans: 48%
Average Total Equity / Average Assets: 30.5%
Price-to-Tangible Book Value: ~3
Tangible Common Equity Ratio (median ratio for banks is 8.60%): 9.80%
Reserves-to-Loans Ratio: 8.8%
Capital Adequacy Ratio: 10.13
Net Charge-offs to Average Loans: 0.49%
Tier 1 Capital Ratio: 11.80%
Translated into English, this shows a stable bank, that has strong fundamentals, and like other major Canadian banks, didn’t require government injection of capital as even in 2008, they remained profitable, as leverage and capital ratios in Canada are much more ‘safely’ regulated.
Scotiabank has been paying dividends since inception, and since IPO, with 5 year dividend growth rate at 9.26% and a payout ratio of 47.
However, this isn’t just a stalwart with a good dividend payout. It operates in many more markets than meets the eye, in fact worldwide giving it room for growth in emerging markets. Operations range in North America, South America, Caribbean, Europe & Middle East, and Asia/Pacific. BNS entered Brazil in 2010 through acquisition, as well as penetrating Chile and Columbia through acquisitions and providing wholesale services in those areas also.
Exposure worldwide has increased in most of them, with a few exceptions and total exposure increased around 20% from 2009, with exposure in Columbia for example quadrupling. All and all, expansion is continuing so room for growth ahead.
A point that I don’t like is the Price to t.b.v of ~3.
Outperform call near 52-wk high won’t make me a score leader any time soon, however, I like the fundamentals and direction. I might put my money where my mouth is and go long in my portfolio also.