Top Stock Picks — BNN Market Call

Top Stock Picks:

Bank of Nova Scotia, BNS-T, Owned by clients and personally, Last Purchase March 4 2016 $58.75

The Bank of Nova Scotia is the most international of the Canadian banks with branches in the Caribbean, Central and South America. In the most recent quarter, provisions for credit losses were up substantially, particularly with respect to the energy sector. Given BNS’s presence in markets with large commodity exposures, its premium valuation has fallen to a level investors should find more compelling. The dividend yield is now greater than 4.5%

Vermillion Energy Inc., VET-T, Owned by clients, Last Purchase March 24 2016 $43.31

Vermillion Energy has interests in oil and gas producing properties in Western Canada, France, Germany, the Netherlands and Australia as well as a substantial non-operated interest in the Corrib natural gas field off the northwest coast of Ireland. Vermillion is well managed with a solid balance sheet. At today’s commodity prices, Vermillion generates free cash flow that supports the current yield of 6%. Its geographically diversified operations should contribute to a growing production profile over the next few years.

Fortis Inc., FTS-T, Owned by clients, Last Purchase March 24 2016 $40.08

Fortis is the largest investor owned gas and electric distribution utility in Canada with operations in the US and Belize. Over the next few years, Fortis is expected to significantly increase its rate base. Two years ago, Fortis completed a transformational acquisition of UNS in Arizona. This year, the Company is engaged in another major acquisition of ITC Holdings Corp., the largest independent fully-regulated electric transmission company in the US for $11.3 billion. This will be another transformational exercise that will enhance regulatory diversity and significantly increase the geographic footprint of operations and create opportunities to enhance shareholder value.

Michael Sprung BNN Market Call Interview Market Outlook Top Stock Picks

Michael Sprung BNN Market Call Interview: Outlook and Top Stock Picks

Outlook:

North American markets have continued to advance thus far in the year at an erratic and slow pace. It is as if investors are climbing an ever steeper wall of worry as the year advances despite some positive economic news. Housing and automobile sales have proved resilient as the employment picture in the US has improved. Yet, after significant recovery since the 2008 financial crisis, investors are focusing more and more on the potential negatives on the horizon. In particular, a great deal of concern has been centered on the Federal Reserve’s intentions to either raise interest rates or leave them at the current historically low levels. In this regard, the authorities face a conundrum. Raising rates would send a signal that the economy is strong enough to contemplate a normalization of the rate structure. On the other hand, the tepid pace of the recovery with the substantial increases in debt levels (largely enticed by low interest rates), combined with the very strong current value of the US dollar, creates the fear that any increase in rates could stall the economy.

In addition, a growing political backlash against globilization and free trade is evident in both Europe and the US. More immediate concerns are also growing over the implications of a possible Brexit (Britain leaving the European Union) that will be decided in a referendum in two weeks time. In Asia, massive debt levels within the shadow banking system in China are also making investors nervous. The fact that Japan deferred a sales tax increase also indicates that that economy continues to languish.

After a number of years of expansion fueled by debt, we could be entering a period of deleveraging that will stall global economic growth for a period and potentially caused markets to decline and volatility to increase. Investors should be prepared to take advantage in these circumstances to invest in well financed, well managed companies.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Scotiabank raises dividend following profit jump in Q1

Scotiabank, formally known as the Bank of Nova Scotia (TSE:BNS, Mkt cap 70.05B, P/E 10.13, Div/yield 0.70/4.88, EPS 5.67, Shares 1.20B) is Canada’s third-largest lender by assets. Today Scotiabank raised its quarterly dividend 2.9% to 72 cents a share after posting a 5% jump in fiscal first-quarter profit, the Financial Post reports.

Net income for the period ended Jan. 31 climbed to $1.81 billion, or $1.43 a share, from $1.73 billion, or $1.35, 12 months previous, the Toronto-based bank revealed in a statement.

Scotiabank raised quarterly dividend

Scotiabank raised its quarterly dividend 2.9% to 72 cents a share after posting a 5% jump in fiscal first-quarter profit

Adjusted to exclude items, Scotiabank said it earned $1.44 a share, surpassing the $1.42 average estimate of 15 analysts surveyed by Bloomberg.

“We delivered strong earnings to start 2016 with solid top line growth in both our Canadian banking and our international- banking businesses,” Chief Executive Officer Brian Porter said in the statement. “Mexico, Peru, Chile and Colombia continued to deliver robust loan, deposit and fee growth.”

Loan-loss provisions, or money the bank sets aside to cover bad loans, rose to $539 million from $463 million a year earlier. Scotiabank said the increase was, in part, due to higher provisions in the oil and gas sector.

The performance of Canada’s big banks in the first fiscal quarter of the year has been decidedly mixed. Last week, the country’s largest lender by assets, Royal Bank of Canada, reported flat results that fell short of analyst expectations, with returns diminished by the fallout from lower oil prices.

Toronto-Dominion Bank, second-largest by assets, also fell short of analysts’ expectations. Meanwhile, Bank of Montreal and Canadian Imperial Bank, fourth and fifth in size respectively, posted higher-than-expected earnings.

Scotiabank said earnings in its Canadian banking operations rose 7% to $875 million in Q1, while international banking earnings rose 21% toC$505 million. Global banking and markets results fell 9% due, in part, to higher loan-loss provisions.

“The Bank’s diversified business model has delivered growth despite continued volatility in the markets and some moderation in select areas of our operations,” Ported added.

The Bank of Nova Scotia, also known as Scotiabank, is a Canadian diversified financial institution, based in Toronto. The Bank offered a range of financial services, including retail, commercial, corporate and investment banking to more than 21 million customers in more than 55 countries around the world. Scotiabank has 4 business segements: Canadian Banking, International Banking, Scotia Capital and Global Wealth Management. The Canadian Banking segment provided a range of banking and investing services to more than 7.7 million customers across Canada, through a network of 1,190 branches, 3,869 automated banking machine (ABMs), as well as telephone, Internet banking and third-party channels. International Banking includes Scotiabank’s retail and commercial banking operations in more than 55 countries outside Canada. Global Wealth Management (GWM) consists of wealth management insurance and Global Transaction Banking businesses. More from Reuters

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We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Bank of Nova Scotia Beats Profit Expectations In Q2

Bank of Nova Scotia (TSE:BNS, Mkt cap 80.74B, P/E 11.72, Div/yield 0.68/4.08, EPS 5.69, Shares 1.21B)

Bank of Nova Scotia Beats Profit Expectations Q2

Bank of Nova Scotia Beats Profit Expectations In Q2

Analysts were expecting to see rising loan provisions over the past year drag down the Bank of Nova Scotia’s quarterly earnings, but its net income for the three months to April 30 shows little signs of that draining trend.

As the Financial Post reports, the bank’s high-than-expected second-quarter earnings suggest signs of improved credit quality, which will be music to the ears of investors.

Although Scotiabank’s provisions for credit losses increased 20% compared with the same quarter last year to $448 million, they were down 3% on Q1 and some 21% lower than the fourth quarter of fiscal 2014.

In a note to clients following the results, Darko Mihelic, analyst at RBC Capital Markets, suggested the figures were cause for optimism.

He said: “We did not see any true signs of stress in credit quality. Net impaired loan formations declined both sequentially and compared to the year prior.”

Net income for the country’s third-largest lender by market capitalization stood at $1.8 billion, or $1.42 per share, which is on a par with the figure reported in the same quarter last year.

Meanwhile, its adjusted earnings showed up particularly well, coming in at $1.43 per share, surpassing the average analyst estimate of $1.39 per share.

Scotiabank paid special mention to the $829 million profit derived from its Canadian banking unit, which it said was driven higher year-on-year by a 10 basis point increase in the net interest margin.

The bank will also be pleased with the performance of both its capital markets and international segments, allowing it to announce a new program in which it plans to repurchase up to 24 million, or 2%, of its outstanding shares.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Scotiabank Scales Back Global Operations With Egypt Sale

The pattern of Canadian banks stripping back their global operations continues, with Scotiabank, formally known as the Bank of Nova Scotia (TSE:BNS, Mkt cap 78.10B, P/E 11.34, Div/yield 0.68/4.21, EPS 5.69, Shares 1.21B) announcing it has sold its loan and deposit portfolio in Egypt to the Arab African International Bank (AAIB).

Stockwatch Scotiabank Scales Back Global Operations Egypt Sale

Stockwatch – Scotiabank Scales Back Global Operations With Egypt Sale

As the Financial Post reports, Scotia has been in Egypt since 1976, with a branch in Cairo, but decelerating domestic growth, coupled with intense global regulation, are said to have played a part in the scaling back of its international business.

Scotia is not the only Canadian bank to re-assess the costs and benefits of operating abroad. In November last year, Royal Bank of Canada said a “strategic review” prompted the decision to exit the bank’s international client wealth-management business in the Caribbean.

The restructuring was part of a plan to pursue “sustainable, controlled growth and profitable scale” in its most profitable markets, officials at RBC, Canada’s largest bank by market capitalization, said at the time.

Marcelo Gomez-Wiuckstern, director of Scotia’s international banking communications, cited similar reasons behind its move away from Egypt, stressing that the decision is “purely strategic” as the bank manoeuvres its resources in the direction of its “focus priorities”.

“Our focus in this transition was to find a partner who shares our values and commitment to providing great service to our customers,” he said.

As part of the agreement, AAIB will become Scotia’s “preferred correspondent bank” in Egypt, providing banking services to customers of Canada’s third-largest bank who do business in the country, explained Gomez-Wiuckstern.

Alongside acquiring Scotia’s portfolio of deposits and loans in Egypt, AAIB procures a trade finance portfolio.

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.