Bank of Nova Scotia · TSX:BNS
Bank of Nova Scotia — Q1 2008 Earnings Presentation
22 slides from Bank of Nova Scotia's earnings presentation, Mar 4, 2008
Slide 1: Investor Presentation First Quarter, 2008
Investor Presentation First Quarter, 2008 March 4, 2008 1 Caution Regarding Forward-Looking Statements Our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securit
Slide 2: Overview: Q1/08 Results
Overview Rick Waugh President & Chief Executive Officer 3 Q1/08 Results Change Q1/08 Yr/Yr Qtr/Qtr Net income ($mm) $835 (18)% (12)% EPS $0.82 (19)% (14)% ROE 18.3% (380) bp (270) bp Productivity ratio 56.5% 290 bp 210 bp 4
Slide 3: Volatile Capital Markets, Core Franchises Remain Strong
Volatile Capital Markets … Core Franchises Remain Strong challenging conditions in capital markets widening credit spreads continued weak trading results Q1/08 write-downs/reserves of $238 million (pre-tax), $0.17/share strong core franchises solid market share gains in Domestic good o
Slide 4: Q1/08 - Items of Note; Impact of Forex Translation
Q1/08 - Items of Note Net EPS Income $835 Reported $0.82 million Pre-tax After-tax ($MM) ($MM) EPS Financial statement line Securities gains (52) CDOs (68) (56) (0.06) & Other Other income (16) SIVs (46) (31) (0.03) Securities gains Securities gains (39) ABCP (44) (30) (0.03) & Trading (5) Monoline
Slide 5: Scotiabank Mexico Lower Contribution in Q1
Scotiabank Mexico Lower Contribution in Q1 ($ millions) Q1/08 Q4/07 Q/Q Comments Contribution • Growth in retail assets more $117 $128 $(11) than offset by higher PCLs & (Mexican GAAP) lower government lending Canadian GAAP $(49) $(19) $(30) •Q1 includes write-down of adjustments future tax asset •Q
Slide 6: Revenue – Solid Trends in Core Businesses
Revenue – Solid Trends in Core Businesses Revenues (TEB) ($ millions) Q1/08 vs. Q1/07 revenues: down 8% NII up 3% on strong volume gains in all 3,214 3,294 businesses, partly offset by negative forex 245* 2,957 translation & MTM losses Other income down 23%, as higher wealth 1,333 1,117 manageme
Slide 7: All-Bank Net Interest Margin; Expenses Well Controlled
All-Bank Net Interest Margin % All Bank 1.93 1.91 1.86 1.87 1.79 All-Bank margin: (8) bps qtr/qtr 2.58 2.56 Domestic Domestic margin: +2 bps qtr/qtr 2.58 + lower wholesale funding costs 2.33 2.35 + higher prime-BA spreads International 4.27 4.32 4.18 International margin: (14) bps qtr/qtr 4.09 - low
Slide 8: Domestic Banking Solid Operating Performance
Domestic Banking Chris Hodgson Executive Vice-President Domestic Personal Banking 15 Domestic Banking Solid Operating Performance Net Income* ($ millions) Q1/08 vs. Q1/07 net income: up 2% + revenues up 3% 434 • strong asset growth partly offset by margin compression due to higher funding costs 361
Slide 9: Domestic Banking Strong Asset Growth Helping Revenue
Domestic Banking Strong Asset Growth Helping Revenue revenues (TEB), $ millions 1,617 Q1/08 vs. Q1/07 revenues: up 3% 111* 1,510 1,471 Retail & Small Business + strong asset & deposit growth - margin compression due to higher funding costs 903 933 Commercial Banking 944 + strong organic asset growth
Slide 10: Domestic 2008 Priorities
Domestic 2008 Priorities Drive sustainable revenue growth • Leverage acquisitions & partnerships to acquire new customers - Expanding product offers at Dundee Bank - Re-branded Travelers Leasing as “Scotia Dealer Advantage” - Western Union relationship • Build on strong momentum in wealth manageme
Slide 11: International Banking Solid Organic Growth & Acquisitions
International Banking Solid Organic Growth & Acquisitions Net Income* Q1/08 vs. Q1/07 net income: down 11% ($ millions) + revenues up 8% from strong organic volume growth, acquisitions & higher securities gains, partly offset by forex & MTM write-downs 353 - expenses up 1% 316 • higher compensation
Slide 12: International 2008 Priorities
International 2008 Priorities Drive sustainable revenue growth - Target new segments - consumer finance, affluent, small business - Expand distribution network • Add 90-100 new branches • Increase use of alternate channels Sustain focus on Mexico Pursue additional acquisition opportunities – P
Slide 13: Scotia Capital Challenging Market Conditions
Scotia Capital Challenging Market Conditions Net Income* ($ millions) Q1/08 vs. Q1/07 net income: down 36% - revenues 36% lower - reserves/write-downs of $122 million 294 - lower derivative & equity trading - lower interest recoveries + partly offset by record foreign exchange & 226 strong fixed inc
Slide 14: Scotia Capital 2008 Priorities
Scotia Capital 2008 Priorities Drive sustainable revenue growth – Leverage NAFTA capabilities – Expand client coverage globally in selected industries • e.g. energy, mining – Increase presence in infrastructure finance Capitalize on market opportunities Maintain prudent risk management 27 Risk
Slide 15: Risk Overview; Increase in Credit Losses
Risk Overview Stable credit quality Update on areas of current focus U.S. exposure manageable and well contained Some increase in market risk 29 Increase in Credit Losses Quarter over Quarter Specific Provision for Credit Losses ($ millions) 111 92 95 30 63 45 25 27 19 30 91 74 77 78 66 (10)
Slide 16: Net Impaired Loans Stable; Areas of Current Focus
Net Impaired Loans Stable Net Impaired Loans 689 ($ millions) 579 579 584 601 479 392* 239 329 357 360 245 244 215 229 208 95 35 19 53 12 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Scotia Capital Domestic International * includes $51 million addition from Desarrollo acquisition in Chile 31 Areas of Current Focus
Slide 17: U.S. Exposure Manageable and Well Contained; VaR by Risk Factor
U.S.(1) Exposure Manageable and Well Contained no direct exposure to credit cards, personal loans or sub- prime mortgages secured auto loans (GMAC): $5.7 billion • bankruptcy remote/individually secured • internally modelled to investment grade (>92% AAA) • portfolio performing at or above expec
Slide 18: Trading Revenue
Trading Revenue Q1/08 Trading Revenue* # days ($ millions) 12 10 8 6 4 2 0 (7) (6) (5) (4) (3) (2) (1) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 79% days had positive results in Q1/08 vs 86% in Q4/07 * excludes $80 million reserve taken against a monoline account 35 Outlook Rick Waugh President & Chief E
Slide 19: Outlook
Outlook Continuing to invest in three growth platforms – organic expansion – acquisitions Increased focus on cost control Expect stronger second half Maintaining 2008 financial objectives 37 Appendix 38
Slide 20: Solid Core Growth Offset by Capital Markets Volatility
Solid Core Growth Offset by Capital Markets Volatility net income available to common shareholders, $ millions Q1/07 Q4/07 Q1/08 434 361 367 353 316 282 294 226 187 Domestic International Scotia Capital Year over year Domestic: Strong asset & deposit growth, partly offset by margin compression Inter
Slide 21: Earnings in Other Segment; Trading Results Within 1 Day VaR
Earnings in Other Segment net income available to common shareholders, $ millions 41 Q1/08 vs. Q1/07 net income + higher securitization revenues + lower expenses - negative impact of financial instruments Q1/07 Q4/07 Q1/08 - $46mm SIV & $18mm CDO write-downs - lower underlying securities gains (22)
Slide 22: Moderate Net Impaired Loan Formations
Moderate Net Impaired Loan Formations (Q1/08, $ millions) Domestic Retail: formations reflect Domestic growing portfolio size; underlying credit trends remain strong - Retail 116 - Commercial 20 136 Domestic Commercial: stable credit quality International International: formations primarily in - Mex