Scotiabank is the most internationally diversified of the major Canadian banks, with over 30% of its revenues coming from its offshore operations. These are primarily located in what it describes as the Pacific Alliance group of countries. They now comprise Mexico, Peru, and Chile, as Scotiabank sold its subscale operations in Colombia, Panama, and Costa Rica in the last quarter. It received a 20% stake in Banco Davivienda, taking a $1.4 billion impairment charge in the process.
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Income Investor
Scotia was the worst-performing of the Big Six banks until TD’s recent fall from grace. This was due to Scotiabank’s exposure to what investors regarded as higher-risk areas, including Latin America, the Caribbean, and Asia. Scotiabank has taken substantial writedowns in recent years in the latter two areas, most recently $379 million on its holding in the Bank of Xian in China in the latest quarter. While Scotia did not increase its dividend at all in the last year, it still has the second-highest yield among the banks at 5.4%, while there is the possibility of further moves in North America, as Mr. Thomson has mentioned his interest in expanding in Quebec. Buy now for reasonable earnings growth, a high and sustainable yield, and a continued rerating after years of underperformance. - Gavin Graham
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BNS was first recommended here on August 29, 2007