Scotiabank (TSX:BNS)(NYSE:BNS) stock was up 0.40% in late afternoon trading on March 12. Shares were down 2.6% over the past month. The stock dipped following the release of its first-quarter results. Is it worth buying into the post-earnings dip?
Scotiabank reported net income of $2.24 billion compared to $2.33 billion in the prior year. Diluted earnings per share fell to $1.71 over $1.86 in Q1 2018. The Canadian Banking segment experienced a 3% year-over-year decline in profit to $1.07 billion. This was partly due to lower gains in real estate.
The International Banking segment reported adjusted annual earnings growth of 18% on a constant currency basis. This increase was driven primarily by strong loan and deposit growth in the Pacific Alliance. It was one of the lone bright spots for Scotiabank in an otherwise disappointing quarter.
Canadian growth is expected to pick up in the final three quarters of 2019. Still, growth is expected to be modest for the full-year. That means Scotiabank will likely need to draw on its global segment going forward. The bank did increase its quarterly dividend by $0.02 per share to $0.87. This represents an attractive 4.7% yield.
Scotiabank stock was hovering around overbought territory for much of January and February. The reaction post-earnings have put the stock back to the mid point of its 52-week range.
Scotiabank is a solid addition for a portfolio geared for the long-term, especially considering its dividend yield is nearing 5%. Value investors will want to exercise patience and wait for a more favourable entry point.
