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
- Greater economic weakness in developing markets increases the likelihood of above-average loan losses and slower growth in the future.
- Greater competition within the already-saturated Canadian market could make it difficult for Scotia to gain market share and increase profitability.
- As one of Canada's largest companies, Scotia's size may limit its ability to expand at an above-average rate within the country.
Morgan Stanley-
Investment thesis: We are Overweight Scotia on its skew toward high growth and emerging
marketcountries 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.
47734820
Bank of Nova Scotia
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