Experts are impressed with Scotiabank’s recent earnings report and tout it as an option for long-term investment while expressing disappointment in the Bank of Montreal’s reporting.

On Tuesday, the Bank of Montreal missed expectations as capital markets revenue came in lower along with increased loan loss provisions. Meanwhile, Scotiabank also increased its loss provisions, with net income reaching $2.2 billion, up from $1.76 billion a year ago.

Rob Wessel, a managing partner at Hamilton ETFs, said Tuesday’s earnings show the two banks seem to “diverge” as the things Scotiabank did well, the Bank of Montreal did not.

“(The) Bank of Montreal pretty much missed on everything that mattered when you're looking at some of the trends,” he told BNN Bloomberg in a television interview on Tuesday.

“Bank of Montreal was so messy, it almost looked like this was a clean-up quarter.”

Meanwhile, Wessel was impressed with the Scotiabank.

“Scotiabank was better than expected and I would say one of the main reasons was credit,” he said. “In the past, the banks have been taking about six quarters in a row where they've been building reserves against their performing portfolio. Bank of Montreal took a big increase in the performing allowance, whereas (the) Bank of Nova Scotia did not and that's moderating a very significant headwind.”

“There was just a lot of stuff that was just getting a little incrementally better at Bank of Nova Scotia, and expectations were not that great.”

Mike Vinokur, portfolio manager with MV Wealth Partners with iA Private Wealth, said his firm and family own a stake in Scotiabank and was impressed with its earnings.

“Overall, pretty solid quarter,” he said in a television interview on Tuesday. “We just like what (Scotiabank President and CEO Scott Thomson) is doing and when you compare BMO – and some other Canadian banks – with Scotia you get a higher dividend yield, pretty high capital ratios and a better-growing demographic in South America.”

Vinokur said some significant changes would have to happen at BMO before he would consider an investment.

“I need to see the revenue line stabilize and start moving up in the right direction and get the expenses under control so that you can expand the margin,” he said.

Ross Healy, chairman of the Strategic Analysis Corporation and a portfolio manager at MacNicol & Associates Asset Management, said that Scotiabank provides an interesting investing option for those looking at long-term gains.

“If you're buying Scotia today, for instance, and you're looking ahead two, three, or five years, it will tend to trade towards the top of the channel again, which should give you a gain of 70 per cent plus yield,” he said in a Tuesday television interview Tuesday.

Healy believes that banks had been hoping for the Bank of Canada to lower interest rates, but since it hasn’t happened yet, leaving them in a tough spot financially.

“The market had been expecting, hoping … that interest rates would be coming down in the year and that would provide a tailwind for 2024 numbers,” he said.

“The problem is that part of the tailwind was falling rates and now it doesn't look like we're getting falling rates for a while. So now there is a, there’s a check back and an ‘Oops’ moment here.”

This marks the start of a big week for bank earnings in Canada, with the Royal Bank of Canada and National Bank set to report on Wednesday, while CIBC, TD and Laurentian report on Thursday and Canadian Western Bank closes out the week with its earnings on Friday.

Healy is particularly interested in CIBC’s reporting.

“Not being exposed to the U.S. does strike me as maybe being a little bit better and you get out from under their regulatory scrutiny, which tends to be brutal from time to time,” he said.

“They're on their way, but it's at the lower end and it also has a very nice yield, which I like.”

With files from Bloomberg News and The Canadian Press