Scotiabank shows strong Q2 2026 fundamentals with stable loans and cautious outlook despite 20% returns.

Scotiabank reported a 5% year-over-year increase in net interest income for Q2 2026, supported by lower interest expenses and stable loan volumes despite an 8.4% drop in interest income. The bank maintains a conservative loan-to-deposit ratio of 78%, focusing on commercial and secured loans which help reduce credit risk and maintain high credit quality. Despite delivering over 20% returns recently, the analyst maintains a hold rating due to the stock trading above the target price and signs of potential overbought conditions, suggesting limited near-term upside. The bank's diversified assets and strong liquidity position it well to withstand macroeconomic volatility.