BNS & BMO post Q2 profit surge, raise dividend: TSX banks stocks to buy

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BNS & BMO post Q2 profit surge, raise dividend: TSX banks stocks to buy

BNS & BMO post Q2 profit surge, raise dividend: TSX banks stocks to buy
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Highlights

  • Bank of Nova Scotia (TSX: BNS) and Bank of Montreal (TSX: BMO) posted their Q2 FY2022 results on May 25.
  • Bank of Nova Scotia reported total revenue of C$ 7.94 billion in the latest quarter compared to C$ 7.73 billion a year ago
  • BMO stock swelled by over seven per cent year-over-year (YoY).

Bank of Nova Scotia (TSX: BNS) and Bank of Montreal (TSX: BMO) have been turning heads on the stock market after they announced increased dividends and their Q2 FY2022 results on Wednesday, May 25.

Bank of Nova Scotia said that it will pay a quarterly dividend of C$ 1.03 per common share on July 27. Bank of Montreal, on the other hand, is now set to deliver a dividend of C$ 1.39 apiece due on August 26.

BNS stock shot up by nearly three per cent to C$ 83.76 at 10: 00 AM EST on May 25 following these announcements, while BMO stock was up by nearly two to C$ 133.05.

Canadian investors can explore these two TSX financial stocks, which are dividend aristocrats and are among the biggest banks in the country. So, let us discuss their Q2 FY2022 results and stock performances.

Bank of Nova Scotia (TSX: BNS)

Bank of Nova Scotia earned a net interest income of C$ 4.47 billion in Q2 FY2022, up from C$ 4.17 billion in Q2 2021. The C$ 98-billion market cap bank reported total revenue of C$ 7.94 billion in the latest quarter compared to C$ 7.73 billion a year ago.

Scotiabank’s provision for credit losses (PCL) declined from C$ 496 million in Q2 2021 to C$ 219 million in Q1 2022. Non-interest expenses and income tax expenses increased to C$ 4.15 billion and C$ 817 million, respectively, in the latest quarter.

However, the large-cap lender posted growing net earnings of C$ 2.74 billion in Q1 2022 compared to C$ 2.45 billion in Q2 2021.

BNS stock zoomed by nearly three per cent in 52 weeks. Its Relative Strength Index (RSI), a technical indicator that indicates if a stock is on a bullish or bearish trend, was 41.95 for BNS stock on May 25, according to Refinitiv.

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Bank of Montreal (TSX: BMO)

Bank of Montreal reported a PCL of C$ 50 million in the second quarter of fiscal 2022 against C$ 60 million in Q2 2021. The C$ 89-billion market cap lender recorded increased revenue of C$ 9.31 billion in Q2 2022 compared to C$ 6.07 billion in Q2 FY2022.

The bank’s net income also surged to C$ 4.75 billion in the latest quarter compared to C$ 1.3 billion a year earlier.

BMO stock swelled by over seven per cent year-over-year (YoY). According to Refinitiv, BMO’s RSI value is 41.52, which is above the oversold mark of 30, on May 25.

 BNS and BMO: 2 TSX banks stocks to bag for dividend income

Bottomline

The price-to-earnings (P/E) ratio depicts if the stock is undervalued or overvalued in the market. These TSX banks hold a P/E ratio of 10. However, debt-to-equity (D/E) for BNS (nearly 4) and BMO (over three) suggest that they are known to mainly engage in debt financing compared to equity.

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Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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