Q: Shocking how this bank keeps underperforming its peers. As of this writing the only big Canadian bank in the red. Any cause for concern here? I like the dividend. But not if my capital erodes… I own this along with EQB and RY which have done fantastic so it’s not to bad. What is the payout ratio on BNS relative to its peers in Canada? Thanks.
5i Research Answer:
BNS's CEO is still relatively new to the company, and it may take time to turn the ship. The valuation reflects the uncertainty, but we are not concerned on the dividend, and it should be able to boost earnings growth over the next 24 months. RY is far more conservative and this has appeased investors. We would not compare it to EQB but we do like EQB, certainly. Payout in the 65% range is higher than peers by several percentage points.