SGJ Sees Decline In Six Months Net Profit Despite Increase In Net Interest Income

• Scotia Group reported a net profit of $4.37Bn for its six months ending April 30, 2022 which represents a year-over-year decline of 2.5%. This was influenced by lower revenues as operating expenses remained flat. 
• Although net interest income increased 16% due to a rise in interest earned on the investment portfolio and improved retail loan volumes, revenues declined 1.6%. The decline was attributed a fall in gains on financial assets (-83.9%), other revenue (-69.4%) and net gains on foreign currency activities (-26.1%). 
• To improve its financial performance Scotia has implemented new initiatives such as  lowering the minimum opening balance requirement for mutual funds and unit trusts to $250,000. This move will allow more of its customers to add investment products to their overall financial portfolio. Additionally, its insurance arm—Scotia Insurance—launched Scotia Elevate, a new Universal Life product, which requires no medical underwriting.  These new initiatives should support its top-line performance in the coming months. 
• Scotia’s stock price has appreciated by 2.6% year-to-date to $36.95. At its present price it trades at a P/E of 13.9x, which is above the Main Market Financial Sector Average of 12.1x .

(Source: Company Financials & NCBCM Research)