National Bank Financial upgraded Bank of Nova Scotia to Outperform from Sector Perform and raised its price target to C$142 from C$128, citing the bank’s early achievement of its 14% Return on Equity target for fiscal 2027.
The upgrade follows a quarter in which Scotiabank’s capital markets segment delivered a 350-basis-point increase in ROE versus an average of 70 basis points across other divisions. The Canadian banking business reported a 10% year-to-date increase in pre-provision, pre-tax earnings, including an 11% rise in the third quarter of fiscal 2026. Net interest margins expanded by 8 basis points year-to-date, while net fee revenue grew 9%.
Provisions for impaired credit losses fell 10% quarter-over-quarter, reflecting improvements in both Canadian and international operations, despite an additional provision related to a wholesale default in Brazil. The bank’s exposure to sectors facing higher tariff risks amid U.S.-Canada trade tensions remained below 1%.
Scotiabank reported diluted earnings per share of C$2.28 and revenue of C$10.54 billion for the third quarter of 2026. The stock has gained 58% over the past year and currently trades at US$93.10, slightly below its 52-week high of US$93.44. The shares offer a dividend yield of 3.44%, supported by 54 consecutive years of dividend payments.
