The Bank of Nova Scotia

Scotiabank reported quarterly earnings of $3 billion and diluted EPS of $2.28, with EPS up 21% year over year. ROE was 14.2%, up 170 basis points year over year, and revenue rose 16%; net interest income increased 12% year over year and noninterest income rose 21%. Expenses grew 14% year over year, leading to pretax pre-provision profit growth of 18%, while the CET1 ratio ended at 13.1%. Guidance-wise, management said it expects the CET1 ratio to stay around 13% next quarter after about 15 basis points of pressure from international portfolios moving to AIRB, and they reiterated continued capital deployment to organic growth, buybacks and tuck-in acquisitions. In Canada, management said it expects loan growth to continue improving, card balances to further improve by year-end, and deposit mix to keep shifting toward higher-quality balances. In International Banking, management said revenue growth should stay in the 6% to 8% range over time and expense growth around 4%, with double-digit earnings in 2027 and beyond.

Scott Thomson framed the quarter as proof that the strategy is working, emphasizing stronger business mix, better capital allocation and higher-quality earnings across the franchise. He highlighted that Scotiabank hit its 14%+ ROE target earlier than expected and said 14% is not a ceiling. His tone was confident but measured, with repeated emphasis on organic growth, capital discipline, and support for the Canadian economy.

Raj Viswanathan highlighted the main financial drivers: earnings of $3 billion, EPS of $2.28, ROE of 14.2%, revenue up 16%, net interest income up 12%, noninterest income up 21%, and expenses up 14%. He noted productivity ratio improvement to 52.5%, year-to-date operating leverage of 3.9%, and CET1 of 13.1%. He also said share repurchases used 20 basis points of capital this quarter, total risk-weighted assets were $493 billion, and the planned international AIRB migration will reduce CET1 by about 15 basis points in Q4, after which the bank expects to maintain CET1 around 13%.

Analysts focused on whether Canadian Banking can move from an ~18% ROE toward the low- to mid-20s, and Aris Bogdaneris said the mix shift toward mid-market commercial, small business, better deposit mix, RAM improvement, fee growth and productivity gains should support 20%+ ROE over time. Questions also centered on International Banking’s growth and profitability; Francisco Aristeguieta said the pivot to growth is working, revenue growth can trend to 6% to 8%, expenses should stay around 4%, and earnings should be double-digit in 2027 and beyond. On credit, Shannon McGinnis said impaired PCLs are trending down as expected, tariff exposure is less than 1% of total bank loans, and current scenarios and allowances already reflect a range of outcomes.