Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted
Thesis Summary

Scotiabank entered the final quarter of fiscal 2026 with substantially improved operating momentum: Q3 was a record quarter, adjusted return on equity reached 14.2% and exceeded management's 14% objective, and every major business line reported year-over-year earnings growth. Canadian Banking delivered a fifth consecutive quarter of margin expansion, while Wealth Management and Global Banking and Markets produced record results. The counterweight is credit and capital sensitivity: the provision-for-credit-loss ratio was 56 basis points, gross impaired loans increased, and the CET1 ratio declined 20 basis points sequentially to 13.1% while the bank continued repurchases. A Hold recommendation is appropriate because execution is strong.

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This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.
Street view · analyst 12-month targets3 analysts · as of 18 Aug 2026
Low · most bearish analyst$75.27
Mean target$87.45
High · most bullish analyst$95.12
Our research · scenarios, merits, risks, and invalidation triggersResearch as of 2 Sep 2026
Scenarios · 12-month scenario targetsAnchored at research date
Bear CaseDownside scenario
$75.2719%

Credit costs rise above the Q2 2026 level, impaired-loan measures worsen and CET1 falls below 13.1%, weakening the evidence that recent margin, fee-income and operating-leverage improvements can be sustained.

Base CaseCentral scenario
$87.4556%
Matches the consensus mean

Operating performance remains near the Q3 run rate, with return on equity around management's 14% objective, manageable credit costs and CET1 capital near its current level.

Bull CaseUpside scenario
$95.1225%

Adjusted return on equity remains above 14%, positive operating leverage persists, credit costs remain at or below the Q3 level, and broad earnings contributions from Canadian Banking, Wealth Management, International Banking and Global Banking and Markets continue.

Scenarios are anchored to street consensus at the research date, with our probabilities and rationale.

Key Investment Merits
  • Q3 adjusted net income reached C$2.973 billion, adjusted diluted EPS increased to C$2.28 from C$1.88, and adjusted return on equity reached 14.2%.
  • Earnings growth was broad-based: Canadian Banking increased 12%, International Banking 8%, Global Wealth Management 23% and Global Banking and Markets 37% year over year.
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Key Investment Risks
  • The Q3 provision-for-credit-loss ratio was 56 basis points, while gross impaired loans rose to C$7.801 billion and the gross impaired-loan ratio increased to 100 basis points.
  • The CET1 ratio declined 20 basis points sequentially to 13.1%, reflecting risk-weighted-asset growth, recall of a synthetic risk-transfer securitization and share repurchases, partly offset by retained earnings.
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All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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AI-assisted, source-linked narrative; figures from company filings (SEC EDGAR) and market data. Dates shown per section. Not investment advice. Terms of Use.