Scotiabank's numbers tell value tale: attractive valuation ratios and steady profitability make Bank of Nova Scotia one to watch

Money Digest, Nov, 2002

After having risen in price consistently, Canadian banks are now trading at more reasonable levels. Bank of Nova Scotia, Canada's fourth largest bank with about $300 billion in assets, is a case in point.

BNS provides commercial, corporate, international, investment, private and retail banking products and services in Canada and throughout the world. The bank offers brokerage, underwriting and investment management services through wholly owned ScotiaMcLeod. The bank also offers life and property insurance products.

Its overseas operations are strong and account for about one-fourth of all its revenues. The bank has already written off $550 million to cover its losses in Argentina and has exposure to potential bad loans (such as those to WorldCom and Adelphia) in the U.S. of about $750 million. The company's asset base is large enough to absorb a loss of this magnitude. Except for these exposures, the bank's international operations appear sound.

With a price/earning ratio of 13.4 and price/sales ratio of 1.3, the traditionally well-managed Bank of Nova Scotia is currently priced attractively. Long-term investors seeking conservative stocks with growth potential may want to consider Scotiabank for their portfolio.

Bank of Nova Scotia

TSX Symbol         BNS

Recent Price    $43.76
Price/Earnings    13.4
Price/Sales        1.3
Price/Book         1.8
Dividend Yield    3.3%