Bank of Nova Scotia (TSX:BNS) has bounced back more than 15% from its 2025 low, stirring renewed interest among investors. Many are now weighing whether it’s the right time to buy, sell, or hold BNS shares—especially for long-term dividend-focused portfolios like TFSAs and RRSPs.
At the time of writing, the stock trades near $75 per share, a recovery from its April dip to $63. But it remains well below its early 2022 high of $93. This suggests there’s still room for upside, particularly as the bank’s strategic shift under its newer leadership begins to take shape.
A Volatile Ride—but With Potential
Over the past year, Bank of Nova Scotia’s share price has taken investors on a rollercoaster. It surged from $61 in August to $80 in November, then slid back to $63 in April, before climbing again. Despite these swings, patient investors might see long-term value—especially those seeking both steady dividends and potential capital appreciation.
One major strategic move came in 2024, when the bank spent US$2.8 billion to acquire a 14.9% stake in U.S.-based KeyCorp. This signals a clear pivot away from Latin America, where the bank has historically invested billions, and toward more stable U.S. market opportunities.
Latin America Exit: A Costly but Necessary Reset?
Bank of Nova Scotia has long focused on countries like Mexico, Peru, Chile, and Colombia, betting on their growing middle classes. While that logic still holds, the returns haven’t matched expectations.
This year, the bank exited operations in Colombia, Costa Rica, and Panama, resulting in a $1 billion impairment loss. That setback likely contributed to the stock’s weakness in Q1 2025. Any further asset sales in the region could lead to additional write-downs, which investors should watch closely.
Risks on the Horizon
There’s no shortage of risk. Rising provisions for credit losses, which hit $1.4 billion in Q2 2025—up from $1.01 billion a year ago—signal that more customers are struggling with debt amid high interest rates.
Also, trade tensions between the U.S. and Mexico could threaten the bank’s sizable exposure in both countries. Any disruptions or tariff battles may weigh on future growth, especially if inflation picks up again.
What’s Working in BNS’s Favor?
Despite the hurdles, Bank of Nova Scotia remains a profitable institution. In fiscal Q2 2025, adjusted net income held strong at $2.07 billion, just slightly below last year. International Banking, in fact, saw a 7% increase in earnings year-over-year—a sign that not all overseas bets are misfiring.
Meanwhile, if U.S.-Mexico trade talks succeed and interest rates continue to decline, BNS could benefit from a more stable operating environment heading into 2026.
Should You Buy, Sell, or Hold?
If you’re focused on income, Bank of Nova Scotia offers a dividend yield of 5.9%, making it attractive for TFSA or RRSP investors seeking passive income. For those looking at long-term capital appreciation, it may be wise to start a small position now and wait for any market pullbacks to add more.
The bank’s transformation is still in progress, and results will take time. But its strong foundation, high yield, and renewed U.S. focus make it a stock worth watching.
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