Friday, March 12, 2010

Bank of Nova Scotia [Morningstar and Morgan Stanley Research] $BNS


Risk --We think the biggest risk facing Scotia is the future performance of its domestic and international loan portfolios. However, we think Scotia has the capital base and diversified earnings power necessary to absorb higher losses and deliver solid profitability. Additionally, we think the wave of bank nationalizations has reduced counterparty risk. As a result, we think a medium fair value uncertainty rating is appropriate.

Bulls Say

  • Scotia's international operations are a sustainable source of long-term earnings growth.
  • Scotia's extensive distribution network will allow the bank to penetrate markets and cross-sell complementary products with minimal marginal cost.
  • Scotia's management team has the financial discipline required to make successful acquisitions and create value for shareholders over the long term.

Bears Say

Morgan Stanley-

Investment thesis: We are Overweight Scotia on its skew toward high growth and emerging market
countries in Latin America, the Caribbean, and Asia. We believe Scotia’s differentiated strategy will drive
faster-than-peer-group loan growth.
Morgan Stanley Asia Limited ("Morgan Stanley") is currently acting as financial advisor to Bank of Nova Scotia ("Scotiabank") in relation to the possible acquisition by Thanachart Bank Public Co. Ltd. of 47.58% equity stake in Siam City Bank as announced on March 11, 2010.


Bank of Nova Scotia

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