First National Financial Corp T.FN.P.A

Scotiabank review of earnings

[felix10]

Maintains TP of $42.

 

Scotiabank Maintains Sector Perform, $42 TP on First National After Q1

2022-04-27 01:41:09 PM ET (MT Newswires)

 

 

01:41 PM EDT, 04/27/2022 (MT Newswires) -- Scotiabank has kept its Sector Perform and $42 TP on First National Financial after the company reported its Q1 results.

 

Despite stronger-than-expected mortgage origination volumes, First National's first quarter core earnings results fell short of expectations, writes analyst Phil Hardie. The surprise was the higher-than-anticipated operating expenses driven by increased interest expenses and hedging costs. "The degree of read-through from the elevated hedging costs is unclear to us at this point; however, interest rates are likely to continue to rise," he said.

 

For 2022, management's expectation is for moderately lower originations resulting from the current rising rate cycle which is dampening affordability and housing activity. Management noted a market slowdown in home purchasing seems inevitable due to pent-up activities in the last 24 months. On commercial, FN continues to anticipate strong activities in the short term, but cautioned against the potential future rate hikes.

Scotiabank Maintains Sector Perform, $42 TP on First National After Q1 2022-04-27 01:41:09 PM ET (MT Newswires)

01:41 PM EDT, 04/27/2022 (MT Newswires) -- Scotiabank has kept its Sector Perform and $42 TP on First National Financial after the company reported its Q1 results. Despite stronger-than-expected mortgage origination volumes, First National's first quarter core earnings results fell short of expectations, writes analyst Phil Hardie. The surprise was the higher-than-anticipated operating expenses driven by increased interest expenses and hedging costs. "The degree of read-through from the elevated hedging costs is unclear to us at this point; however, interest rates are likely to continue to rise," he said. For 2022, management's expectation is for moderately lower originations resulting from the current rising rate cycle which is dampening affordability and housing activity. Management noted a market slowdown in home purchasing seems inevitable due to pent-up activities in the last 24 months. On commercial, FN continues to anticipate strong activities in the short term, but cautioned against the potential future rate hikes.