Bank of Nova Scotia (Scotiabank)
The Big Six bank with the biggest Latin American footprint — a higher-yield turnaround as ROE recovers.
The business
Scotiabank is one of Canada's Big Six, earning across Canadian Banking, International Banking (uniquely weighted to Latin America — Mexico, Peru, Chile, Colombia), Global Wealth Management and Global Banking & Markets.
Its recent strategy has tilted capital toward North America (including a stake in KeyCorp) and higher-return markets, working to lift a return on equity that has trailed peers.
The moat
A Big Six oligopoly position with a low-cost deposit base, plus a distinctive international franchise that few Canadian peers can match.
That international tilt is both the moat and the risk: it adds growth but also emerging-market volatility.
Related on CoinCompass: Compare Canadian chequing accounts · TFSA vs RRSP. For the underlying numbers, see Scotiabank Q2 2026 earnings summary (Quartr).
Financial snapshot
Most recent reported period : Q2 FY2026 (ended April 30, 2026). Figures reflect the review date — confirm current numbers before acting.
| Total revenue | C$9.84B (+8% YoY) |
| Net income | C$2.63B (+30% YoY) |
| Adjusted EPS | C$2.02 |
| Return on equity (ROE) | 13.1% (up from ~10%) |
| CET1 capital ratio | 13.3% |
| Quarterly dividend | C$1.14 (+C$0.04) |
Free cash flow yield & sustainable growth
Earnings yield : ≈6.7%≈ earnings yield (trailing P/E ~14.9)
Free cash flow isn't the right lens for a bank — Scotiabank is judged on earnings yield, ROE and dividend coverage.
It is the classic higher-yield value name of the group: a below-peer ROE (~13%, but recovering fast) and a discounted multiple pair with an above-average dividend yield, so you are paid to wait on the turnaround.
Sustainable growth: as ROE recovers toward the mid-teens, retained earnings can fund high-single-digit growth — but the pace depends on Latin American macro and the Canadian credit cycle.
Valuation & what to watch
BNS has long traded at a discount to RBC and often carries one of the higher dividend yields among the Big Six, reflecting a lower ROE and its emerging-market exposure.
The re-rating case rests on ROE climbing back toward peers as the North America pivot and Canadian Banking momentum (earnings up 53% YoY in Q2) play out.
Dividend
Raised the quarterly dividend C$0.04 to C$1.14 in Q2 2026; BNS typically offers one of the higher dividend yields among the Big Six, backed by a 13.3% CET1 ratio.
Risks & the bear case
- Latin American macro, currency and political risk in International Banking.
- ROE still trails RBC, CIBC and National Bank.
- Execution risk on the strategy refresh and North America pivot.
- Exposure to a slowing Canadian consumer and housing market.
Recent developments
Q2 FY2026 net income rose 30% to C$2.63B with ROE recovering to ~13% and Canadian Banking earnings up 53% YoY.
Verdict
The higher-yield turnaround within Canadian banks: a real discount and a fat dividend in exchange for a lower ROE and emerging-market risk. The bull case is ROE convergence toward peers; the bear case is that Latin America keeps the discount in place. Conviction: an income-plus-recovery idea, higher-risk than RBC.
Sources
CoinCompass is a publisher, not a registered investment adviser. This is factual information and opinion for a general audience — not a recommendation to buy or sell any security, and not individualized advice. Figures are the most recent reported at the review date and will change. The author, John Wilson, has disclosed long-term holdings in Canadian equities (including Boyd Group, Constellation Software and MTY Food Group) and may hold positions in securities discussed. Do your own research or consult a licensed professional. See our disclosures. John Wilson → · disclosures →