Bank of Nova Scotia reported quarterly earnings of $1.06 per share, missing estimates of $1.14 per share. This is a decrease from $1.16 per share a year ago, adjusted for non-recurring items.

The earnings surprise was -7.02%. Previously, they had surpassed expectations with a 4.27% surprise, reporting $1.22 per share against an expected $1.17 per share.

Over the last four quarters, the company exceeded consensus EPS estimates only once. For the quarter, they reported revenues of $6.32 billion, missing estimates by 3.45%, but an increase from $6.15 billion the previous year.

Bank of Nova Scotia shares have declined by about 2.9% since the year’s start, compared to the S&P 500’s 1.3% decline. The future price movement will largely depend on management’s commentary.

The current consensus EPS estimate for the upcoming quarter is $1.28 on $6.64 billion in revenues. For the fiscal year, the projection is $4.84 on $26.3 billion in revenues.

VersaBank, in the same industry, is expected to report quarterly earnings of $0.24 per share, a 27.3% decrease year-over-year. The consensus EPS estimate hasn’t changed in the last 30 days. Expected revenues are $20.63 million, down 1.8% from last year.

Given what we’ve just seen from Bank of Nova Scotia, the latest results need to be dissected with more care than usual. A quarterly earnings per share (EPS) of $1.06, sitting a fair distance below forecasts of $1.14, makes for a 7.02% downside surprise. That’s not just a miss in isolation. It’s also a step down from this time last year, when the figure stood at $1.16, excluding the noise of any non-recurring adjustments.

In the previous quarter, the company had managed to beat expectations—posting $1.22 per share versus the expected $1.17, a 4.27% beat. That hasn’t been the norm of late. Taken over the last four periods, there’s only been one quarter where forecasts were met or surpassed. That sort of inconsistency doesn’t tend to go unnoticed, especially not in this sector.

Now, total revenue came in at $6.32 billion, which—despite being an improvement from $6.15 billion a year ago—still fell short of analyst expectations by just over three percent. So while there’s growth on paper, it’s not meeting what the market has priced in. When that happens, confidence can begin to slip fairly quickly.

From a broader perspective, the decline of about 2.9% in the share price since the year began stands out—particularly given that the S&P 500 is down just 1.3% over the same time frame. That’s a gap that doesn’t close itself. Much of the forward movement in valuation will now be influenced by what the top echelons of the company communicate, especially in terms of cost control, credit provisions, and loan book quality. These tend to have the strongest knock-on effects for implied volatility and sentiment-driven trades.

The forecast for the next quarter sits at $1.28 EPS with revenues of $6.64 billion. For the full fiscal year, analysts are looking for $4.84 and $26.3 billion respectively. Those numbers suggest optimism is still priced in, albeit not excessively so. It’s worth paying close attention to how trading volumes around options settle as we move closer to the next earnings window—any spike in open interest or skew changes could hint at re-positioning.

In a parallel line, VersaBank—also under the same umbrella of financials—is expected to report $0.24 per share, which marks a sharp 27.3% decline from the same period last year. The revenue estimate there, $20.63 million, is also down slightly. What’s telling, though, is that the forecast hasn’t budged in a month. When consensus flatlines like that, it often signals a wait-and-see mode from institutional desks.

From where we sit, implied volatility deserves scrutiny. A shallow miss or beat here no longer moves contracts in the way it once did. Instead, it’s the broader pattern—the trend in estimate revisions, the tone from the quarterly call, and most importantly how those elements shift interest rate sensitivity at the margin—that should guide positioning.

For now, any short-dated exposure may need to be trimmed, especially on names with high dividend yields where beta to financial conditions can fluctuate sharply. Larger directional moves or calendar spreads tied to results cycles may need to be reevaluated, given current pricing. It would be prudent, at the very least, to remain agile in hedging, especially as earnings volatility starts to realign with guidance rather than raw numbers.