Scotiabank faces $39M Chilean tax charge: Can BNS avoid further losses?

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Scotiabank slides 1.24% to C$129.15

Highlights

Scotiabank will take a one-time accounting charge of US$39 million in its fourth quarter 2026 earnings from Chile's tax rate cut.
Fourth quarter Canadian Banking segment earnings improved 12% year over year to CA$1.1 billion, with a 3.6% dividend yield reported.
Scotiabank stock trades below short- and medium-term moving averages, with price expected between CA$127.4 to CA$130.9 and consolidation favored.

Earnings impact emerges as Chile tax cut triggers one-time charge

Scotiabank will recognize a one-time accounting charge of approximately US$39 million (CA$55 million) in its fourth quarter 2026 earnings, as detailed by Cnnchile, after the Chilean government reduced its corporate tax rate from 27% to 23%. The adjustment will affect reported and adjusted net income, with the International Banking segment—particularly Scotiabank Chile—seeing a discrete impact, according to Cnnchile. The scheduled recognition of this charge for the fiscal year ending October 31, 2026, ensures regulatory compliance as confirmed by Latercera. Meanwhile, the bank’s recent quarterly earnings for the Canadian Banking segment improved 12% year-over-year to about CA$1.1 billion, alongside a 3.6% dividend yield, as reported by Fool, though price action has remained under broader selling pressure.

Mixed momentum as resistance builds and long-term support holds

Immediate technical focus for BNS centers on the MA-20 at C$130.92 and MA-50 at C$129.7 on the hourly chart, both now acting as resistance levels following the latest move. The daily MA-200 at C$113.46 stands as a firm long-term support zone, while the Ichimoku Kijun at C$130.25 serves as immediate resistance. Momentum and oscillators are mixed: MACD is in strong buy territory, yet ADX signals continued selling pressure. RSI at 42.36 reflects a bearish tilt, with Stochastic RSI and CCI showing oversold conditions. Bull/Bear Power points to seller dominance in the intraday window.

Consolidation expected as downside risk outweighs bullish breakout

Looking ahead to the next four trading days, BNS is forecast to trade within a C$127.4 to C$130.9 volatility band relative to current levels. There is a 55% probability of further downside, while the chance of an upside move is 45%. The baseline expectation is for continued consolidation within this corridor. A bullish reversal would require a clear breakout above the immediate resistance, while risk of deeper declines increases if price loses support near C$127.4.

Anton Kharitonov, analyst at Traders Union, sees Scotiabank weakened by both a one-time charge tied to Chile’s tax rule changes and near-term technical resistance. He notes that selling pressure dominates, with price below key moving averages and sentiment driven by accounting headwinds in international operations. Further downside risk is present if C$127.4 support fails, despite some underlying strength in the Canadian Banking segment. "Until the price convincingly reclaims C$130.9, I remain cautious and prefer to stay defensive on BNS."

Earlier, analysts noted that Bank of Nova Scotia was demonstrating technical resilience and consolidating within a stable trading range despite headwinds from structural changes and upcoming tax-related adjustments. The current setup points to an increased risk of further downside in the near term, making C$127.4 a key support level for traders to monitor as price action tests the lower boundary of its projected range.

Source of Data: BNS Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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