Scotiabank (TSX:BNS) Q4 EPS Jump Reinforces Bullish Growth Narrative Despite Margin Concerns

Bank of Nova Scotia (TSX:BNS) has just posted its FY 2025 fourth quarter numbers, with revenue of about CA$8.7 billion and basic EPS of CA$1.72, alongside net income of CA$2.1 billion that reflects ongoing margin pressure versus last year. The bank has seen revenue move from CA$7.4 billion and EPS of CA$1.23 in Q4 2024 to CA$8.7 billion and CA$1.72 in Q4 2025, while trailing 12 month figures show CA$33.0 billion of revenue and EPS of CA$5.84, setting up a story where forecasts for revenue and earnings growth run headfirst into softer net profit margins and a multi year earnings drag.

See our full analysis for Bank of Nova Scotia.

With the headline numbers on the table, the next step is to weigh them against the dominant narratives around Bank of Nova Scotia, from margin concerns to growth expectations, to see which stories the latest results actually support and which they quietly undercut.

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Net Margin Slips to 22.1%

• Over the last 12 months, Bank of Nova Scotia produced about CA$33.0 billion of revenue and roughly CA$7.3 billion of net income, with net margin easing from 24.7% to 22.1% even as revenue stepped up from around CA$29.5 billion the year before.
• Bears focus on profitability pressure and slower home market growth, and the margin data gives them something concrete to point to:
  • The five year earnings trend shows a 4.9% annual decline, and the most recent 12 month margin of 22.1% is below last year’s 24.7%. This lines up with concerns about weaker profitability in Canada and potential credit costs, especially given exposure to the Canadian mortgage book.
  • At the same time, revenue has grown to CA$33.0 billion on a trailing basis and forecasts call for roughly 6.7% annual revenue growth and 8.7% annual earnings growth. This means the current margin squeeze does not yet show up as a reversal in the forward looking numbers bears are worried about.

Analysts who worry about Latin America volatility and a soft Canadian backdrop may see the margin step down as an early test of their thesis, especially with earnings still forecast to grow from here. 🐻 Bank of Nova Scotia Bear Case

Forecast 8.7% Earnings Growth

• Looking ahead, the dataset shows earnings expected to grow about 8.7% per year and revenue about 6.7% per year, from a starting point of roughly CA$6.7 billion of earnings and CA$33.0 billion of revenue over the last year.
• Supporters of the bullish story around international expansion and digital investment will see these growth rates as matching that narrative:
  • Consensus narrative highlights expansion in Pacific Alliance markets and a pivot back to growth in Canadian and International Banking. The mid single digit to high single digit growth forecasts in revenue and earnings are consistent with that sort of steady build rather than a stalled franchise.
  • The same view calls out a shift toward fee and wealth income and better operating efficiency, and the move from CA$29.5 billion to CA$33.0 billion in revenue over the last year gives bulls a hard revenue base to pair with those longer term earnings and margin improvement expectations.

For investors leaning into the growth story, the combination of mid single digit revenue expansion and faster earnings growth looks like a bridge between today’s softer margins and the higher profitability analysts are modeling. 🐂 Bank of Nova Scotia Bull Case

DCF Fair Value at CA$154.73

• On valuation, the stock trades at CA$98.72 per share versus a DCF fair value of about CA$154.73 and a P/E of 16.8 times, which is higher than the 14.3 times peer average and 11.5 times for the broader North American banks industry.
• The mix of discount to DCF and premium to peers creates a push and pull in the narratives around the stock:
  • Consensus views pointing to long term growth from international banking and wealth management are echoed in the DCF, which implies roughly 36% upside from CA$98.72. That potential upside is being weighed against the fact that investors are already paying more than typical bank multiples for the current CA$5.84 of trailing EPS.
  • Meanwhile, the 4.46% dividend yield offers a tangible return while waiting for any rerating, which can appeal both to income focused bulls who accept the higher multiple and to cautious investors who see the stock as having some valuation support even if peer comparisons stay stretched.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Bank of Nova Scotia on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? Use your own lens, pull the pieces together, and shape a complete view in just a few minutes, then Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Bank of Nova Scotia.

See What Else Is Out There

Bank of Nova Scotia’s slipping net margin, multi year earnings drag, and premium valuation versus peers highlight execution risk if growth or profitability disappoints.

If you want more upside potential without paying up for stretched multiples, use our these 925 undervalued stocks based on cash flows now to target companies priced more reasonably for their fundamentals.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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