Q3 2026 The Bank of Nova Scotia Earnings Call Transcript
Key Points
- Record quarterly earnings with EPS of $2.28, up 21% year-over-year, and ROE of 14.2%, exceeding the 14% target ahead of schedule.
- Canadian Banking ROE improved 160 basis points sequentially to 19.4%, driven by business mix improvements and fee income growth.
- Positive operating leverage for the 10th consecutive quarter, with year-to-date operating leverage of 3.9% and productivity ratio improving to 52.5%.
- Strong capital position with CET1 ratio at 13.1%, allowing for continued share buybacks and organic growth investments.
- Global Banking and Markets delivered record quarterly net income, with revenue up 32% year-over-year, driven by strong capital markets and investment banking activity.
- International Banking earnings remained above $700 million for the third consecutive quarter, with revenue growth of 7% year-over-year and improving credit performance.
- Wealth Management saw record Q3 net sales of $3 billion, up 14% year-over-year, with positive net flows for the eighth consecutive quarter.
- International Banking net interest margin declined 7 basis points sequentially due to seasonal factors, and loan growth was restrained by design in non-retail portfolios.
- Credit provisions remain elevated, with impaired PCLs at 52 basis points, though improving, and ongoing monitoring of mortgage delinquencies in Canada.
- The upcoming migration of International Banking portfolios to AIRB will reduce CET1 ratio by approximately 15 basis points in Q4, impacting capital ratios.
- Chile's announced tax rate reduction will require a one-time deferred tax asset write-down in Q4, negatively impacting earnings.
- Expenses grew 14% year-over-year, driven by higher performance-based compensation and technology investments, which could pressure future margins if revenue growth slows.
- Trade uncertainty and tariffs remain a risk, with potential impacts on credit quality and economic growth, though currently assessed as manageable.
- The 'Other' segment reported a net loss of $42 million, compared to income in the prior quarter, due to elevated investment gains last quarter.
Ladies and gentlemen, this conference is being recorded.
Good morning, and welcome to Scotiabank's Q3 '26 results presentation. My name is Meny Grauman, and I'm Head of Investor Relations here at the bank. Presenting to you this morning are Scott Thomson, Scotiabank's President and Chief Executive Officer; Raj Viswanathan, our Chief Financial Officer; and Shannon McGinnis, our Chief Risk Officer. Following our comments, we'll be glad to take your questions.
Also present to take questions are the following Scotiabank executives: Aris Bogdaneris from Canadian Banking; Jacqui Allard from Global Wealth Management; Francisco Aristeguieta from International Banking; and Travis Machen from Global Banking and Markets.
Before we start, and on behalf of those speaking today, I will refer you to slide 2 of our presentation, which contains Scotiabank's caution regarding forward-looking statements.
With that, I will now turn the call over to Scott.
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