Quick Read
- BNS stock traded near its 52-week high after beating Q4 2025 earnings expectations.
- Scotiabank completed a major deal with Davivienda, refocusing its Latin American operations.
- Analysts rate BNS as ‘Hold,’ with valuations at multi-year highs and limited upside forecast.
- Dividend yield remains attractive at around 4.5%, but payout ratio is high.
BNS Stock Hits New Heights: Q4 2025 Earnings Beat and Davivienda Deal Redefine Scotiabank’s Trajectory
On December 2, 2025, Bank of Nova Scotia (Scotiabank, TSX: BNS, NYSE: BNS) closed just shy of its 52-week high, following a standout Q4 earnings report and a major strategic shift in Latin America. With shares trading around C$98 on the TSX and US$70 on the NYSE, BNS has delivered a 26–27% gain over the past year—firmly reclaiming its reputation as a resilient Canadian dividend heavyweight. But as the bank’s valuation climbs to multi-year highs, investors are asking: is there still room to run, or is most of the good news now priced in?
Scotiabank’s 2025 Comeback: Strong Results, Strategic Moves
Scotiabank’s Q4 2025 results surprised on the upside, with the bank reporting net income of C$2.21 billion (up from C$1.69 billion a year ago) and diluted EPS of C$1.65. On an adjusted basis, net income reached C$2.56 billion and EPS hit C$1.93, beating analyst expectations. Return on equity improved to 11% reported, and nearly 12% on an adjusted basis (Reuters, Benzinga).
The engine behind this beat? Two segments stand out:
- Global Banking & Markets: Net income jumped nearly 50% year-over-year, thanks to robust trading, underwriting, and advisory activity.
- Global Wealth Management: Earnings soared, supported by higher mutual fund fees, investment management, brokerage revenue, and interest income.
Even as Scotiabank raised loan loss provisions to C$1.11 billion (reflecting cautious management amid economic uncertainty), the bank’s overall risk profile remained well-managed. The Q4 restructuring charge of C$373 million—tied to layoffs and streamlining—signals a continued focus on efficiency and North American corridor strategy.
The Davivienda Deal: Refocused International Strategy
On December 1, 2025, Scotiabank closed the transfer of its banking operations in Colombia, Costa Rica, and Panama to Davivienda, securing roughly a 20% stake in the new Davivienda Group. This move narrows Scotiabank’s international footprint, shedding low-scale operations while maintaining upside through its sizable stake in a growing regional player.
Financially, the deal comes with a C$300 million after-tax accounting loss (mainly FX translation) to be booked in Q1 2026. However, the bank expects a 10-basis-point boost to its CET1 capital ratio due to lower risk-weighted assets. Management calls this transaction “key” to its international banking strategy, aiming for improved profitability and efficiency in the remaining markets (Newswire.ca).
Valuation: Priced for Perfection?
With BNS trading near C$98—at the upper end of its 52-week range (C$62.57–C$99)—the stock’s trailing P/E hovers around 18x, and price-to-book is close to 1.5x, matching multi-year highs. The TSX’s Big Six banks are up 32% year-to-date, outpacing the broader index, and trade at a 23% premium to their 10-year average forward P/E (Finimize, GuruFocus).
This “premium for perfection” means investors have little margin for disappointment. Even strong earnings might not drive further price gains, while any negative surprise could trigger a sharp correction. Analyst consensus rates BNS as a Hold, with an average 12-month price target of C$90.67—below current levels—though several major banks have recently raised their targets (e.g., TD Securities to C$99, CIBC to C$100).
Dividend Strength and Buybacks: Income Investors Take Note
Scotiabank remains a classic income play, offering a quarterly dividend of C$1.10 per share (C$4.40 annualized), translating to a yield of about 4.5%. The payout ratio sits at 81–82% of earnings, reflecting the bank’s commitment to returning capital to shareholders. Approved buybacks of up to 20 million shares further support the stock, though they limit retained capital for future growth or shocks.
AI and Technical Models: What’s Next for BNS?
AI-driven models from Meyka and Intellectia signal continued upward momentum but warn of overbought conditions. Meyka’s November 28 analysis sees BNS trading well above its 50-day and 200-day moving averages, with bullish MACD and ADX readings. Their models project a next-quarter average price of C$100.97 and a three-year potential around C$109.57—though these are scenarios, not guarantees.
Intellectia’s technical stack is similarly bullish in the short term, with a 1-month price prediction of US$69.44 (a minor uptick), but a wide range for 2026 (US$50–US$65 monthly averages). These projections frame potential volatility, underscoring the need for fundamental analysis alongside AI forecasts.
Business Line Highlights and Risks
For fiscal 2025, adjusted net income reached C$9.51 billion (up 10%), with adjusted EPS at C$7.09. Canadian Banking earnings were pressured by lower net interest margins and higher losses, but trends improved in Q4. International Banking saw positive leverage, boosted by the refocused strategy and the Davivienda deal. Global Wealth Management and Capital Markets delivered double-digit growth.
Risks remain:
- Valuation risk: High multiples leave little room for error.
- Housing risk: Canadian mortgage resets could pressure loan books.
- Interest-rate risk: Central banks are edging toward rate cuts, threatening net interest margins.
- Execution risk: Scotiabank must realize value from its Davivienda stake and manage integration challenges.
- High payout ratio: Generous dividends and buybacks reduce capital flexibility if the environment worsens.
Investor Decision: Buy, Hold, or Wait?
So, is BNS stock a buy? The Wall Street consensus is “Hold”—but with a few bullish outliers. For income-oriented investors comfortable with bank-sector cyclicality, Scotiabank offers an attractive yield from a large, systemically important bank. For those seeking value, the stock is no longer cheap; patience or a pullback may be warranted.
Short-term traders should brace for volatility around Q4 earnings and updates on the Davivienda integration. With technicals signaling overbought conditions, reactions could be sharp in either direction.
Ultimately, any investment in BNS should be matched to personal risk tolerance and portfolio goals, and may benefit from professional advice. The market’s message is clear: quality, capital strength, and strategic execution will determine whether Scotiabank justifies its rerating—or faces a reality check.
Scotiabank’s resurgence in 2025 is a story of strategic focus and operational resilience, but the current premium pricing means investors must be vigilant. The coming quarters will test whether the bank can sustain its earnings growth and deliver on its international ambitions—making BNS one to watch for both income seekers and market skeptics.