Bank of Nova Scotia (BNS:CA) (BNS)
Barclays Capital has lowered its 12 month target forecast for Bank of Nova Scotia from C$81 to C$78, reflecting a more cautious outlook on the bank’s ability to achieve its medium-term strategic objectives in the face of mounting economic challenges. While Barclays has not changed its overall rating, the downward revision signals a degree of skepticism about the near-to-mid-term growth trajectory of one of Canada’s largest financial institutions.
The adjustment comes amid concerns about a slowing Canadian economy, which is expected to weigh on consumer spending, business activity, and overall loan demand. In particular, Barclays flagged headwinds related to mortgage repricing, which could compress net interest margins as fixed-rate mortgages reset at higher rates, increasing financial strain on borrowers and potentially leading to higher credit losses.
Moreover, the bank’s international operations, particularly in Latin America, may face increased volatility due to currency risks and varying regional economic pressures. While Bank of Nova Scotia has been pursuing a strategic transformation—including digital modernization and operational efficiencies—Barclays believes these initiatives may take longer than previously expected to bear fruit, especially in the current economic environment.
Overall, the revised price target reflects a more conservative stance on earnings potential and shareholder returns in the short to medium term, while still recognizing the bank’s long-term value proposition and capital strength.
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