Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — The Bank of Nova Scotia — Q4 2023 Earnings Presentation
49 slides from Bank Of Nova Scotia's earnings presentation, Nov 28, 2023
Slide 1: Investor Presentation Fourth Quarter 2023
Investor Presentation Fourth Quarter 2023 November 28, 2023
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements From time to time, our public communications include oral or written forward-looking effect of changes to accounting standards, rules and interpretations on these estimates; statements. Statements of this type are included in this document, and may be inc
Slide 3: Opening Remarks
Opening Strengthened Balance Sheet Metrics Remarks Improving Business Mix Scott Thomson Making Investments to Improve President & CEO Productivity 3
Slide 4: Fiscal 2023 Overview
Fiscal 2023 Overview Raj Viswanathan Group Head & CFO 4
Slide 5: Fiscal 2023 Financial Performance
Fiscal 2023 Financial Performance $MM, except EPS 2023 Y/Y WHOLE YEAR HIGHLIGHTS Reported Net Income $7,528 (26%) • Adjusted diluted EPS down 23% (reported down 28%) Pre-Tax, Pre-Provision Profit1 $13,176 (8%) o Higher PCLs and expenses, offset by lower provision for Diluted EPS $5.78 (28%) income t
Slide 6: Q4 2023 Financial Performance
Q4 2023 Financial Performance $MM, except EPS Q4/23 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income $1,385 (34%) (37%) • Adjusted diluted EPS down 39% (reported down 37%) Pre-Tax, Pre-Provision Profit1 $2,779 (10%) (21%) o Higher PCLs and expenses as well as lower non-interest Diluted EPS $1.02 (37%) (41
Slide 7: Strong Capital Position
Strong Capital Position Q/Q CHANGE IN CET1 RATIO (%)1 • Internal capital generation, mainly from lower RWA (excluding foreign currency translation) • Share issuances through DRIP • The estimated Q1/24 impact from the adoption of the FRTB/CVA and the 2.5% increase in capital floor is approximately -7
Slide 8: Canadian Banking
Canadian Banking $MM Q4/23 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income1 $810 (31%) (24%) • Net income1 down 31% Pre-Tax, Pre-Provision Profit2 $1,816 5% 3% o Higher PCLs as a result of performing allowance Revenue $3,329 6% 4% build and higher retail and commercial formations Expenses $1,513 8% 4% •
Slide 9: Global Wealth Management
Global Wealth Management $MM Q4/23 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income1 $327 (10%) (11%) • Net income1 down 10% Pre-Tax, Pre-Provision Profit2 $445 (9%) (10%) o International Wealth Management up 7% Revenue $1,332 3% - • Revenue up 3% Expenses $887 11% 5% o Higher brokerage and advisory reven
Slide 10: Global Banking and Markets
Global Banking and Markets $MM Q4/23 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income1 $414 (14%) (5%) • Net income down 14% Pre-Tax, Pre-Provision Profit2 $575 (13%) (2%) • Revenue in line with prior year Revenue $1,354 - 1% o Non-interest income up 11% Expenses $779 12% 3% o Net interest income down 19%
Slide 11: International Banking
International Banking Constant dollar basis1,5 Y/Y HIGHLIGHTS $MM Q4/23 Q4/22 Y/Y1 Q3/23 Q/Q1 Reported • Net income2 down 20% Net Income2 $562 $705 (20%) $638 (12%) • PTPP up 3% Pre-Tax, Pre-Provision Profit3 $1,277 $1,246 3% $1,364 (6%) • Revenue up 3% Revenue $2,799 $2,718 3% $2,851 (2%) o Net int
Slide 12: Other
Other R E P O R T E D N E T I N C O M E 1, 2 ( $ M M ) HIGHLIGHTS • Reported net loss this quarter includes adjusting items loss of $272 million compared to $503 million in Q4/22 (299) • Adjusted net loss increased $387 million from the (323) prior year, and $188 million from the prior quarter (603)
Slide 13: Risk Review
Risk Review Phil Thomas Group Head & Chief Risk Officer 13
Slide 14: Provisions and Allowances
Provisions and Allowances TOTAL ACLS1 ($MM) AND ACL RATIO2 HIGHLIGHTS • Total ACL ratio up 7 bps Q/Q to 85 bps 80 bps 75 bps 72 bps 71 bps 72 bps 75 bps 78 bps 85 bps o Performing Allowances are $4.7 billion 6,629 o Up $460MM Q/Q; ACL build mainly in 5,931 6,094 39 5,583 5,375 5,295 5,499 5,668 34 C
Slide 15: Provisions
Provisions PCLs ($MM) Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q/Q HIGHLIGHTS All-Bank • Total PCLs (65bps, up 23 bps Q/Q): Impaired 494 562 621 738 802 o Increased $437 million Q/Q driven by performing Performing 35 76 88 81 454 ACL build mainly in Canadian Banking Total 529 638 709 819 1,256 • Canadian Banki
Slide 16: Gross Impaired Loans and Net Write-offs
Gross Impaired Loans and Net Write-offs GILS ($MM) AND GIL RATIO1 HIGHLIGHTS 70 bps 74 bps • GILs increased $239 million Q/Q but remain below pre- 64 bps 62 bps 65 bps 67 bps 60 bps 58 bps pandemic levels driven by new formations in Retail Banking and International Commercial 5,305 5,487 5,726 o Can
Slide 17: Appendix
1 2 Appendix 3 4 5 17
Slide 18: Net Income and Adjusted Diluted EPS
Net Income and Adjusted Diluted EPS Net Income ($MM) and EPS ($ per share) Q4/22 Q3/23 Q4/23 Reported View Net Income Attributable to Common Shareholders Net Income attributable to common shareholders 1,949 2,086 1,245 Dilutive impact of share-based payment options and others 2 4 2 (11) Net Income a
Slide 19: Risk Adjusted Margin and NIM
Risk Adjusted Margin and NIM RISK ADJUSTED MARGIN1 ALL-BANK NIM2 3.31% 3.24% 3.18% 3.10% 3.18% 2 bps 4 bps 2.10% 2.05% 2.08% 2.06% 216 bps 1.79% 210 bps 1.94% 1.83% 1.80% 1.74% 1.60% Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q3/23 Spreads Business Mix Q4/23 All-Bank Canadian Banking International Banking C A N
Slide 20: Interest Rate Sensitivity
Interest Rate Sensitivity NET INTEREST INCOME SENSITIVITY POLICY RATE CHANGE AND OUTLOOK POLICY RATE CHANGE AND OUTLOOK • Impact of an immediate and sustained 100 bps parallel Policy Rate Change by BNS shift on net interest income (NII) over a 12-month period rate Current Forecast Policy Rate2 Fisca
Slide 21: Economic Outlook in Core Markets
Economic Outlook in Core Markets REAL GDP (ANNUAL % CHANGE) Forecast1 2010–20 2023 2024 Country 2021 2022 Average Full Full Q1 Q2 Q3E Q4F Q1F Q2F Q3F Q4F Year Year Canada 1.6 5.0 3.4 2.1 1.1 0.7 0.9 1.2 0.4 0.6 0.7 1.1 0.7 U.S. 2 2.0 5.8 1.9 1.7 2.4 2.9 2.1 2.2 1.5 1.0 0.3 0.6 0.8 Mexico2 1.3 5.7 3.
Slide 22: Digital Progress: All-Bank
Digital Progress: All-Bank • Canada: Progress across all key metrics as customer adoption of Digital continues. • Pacific Alliance: Continued digital progress with steady increase in digital and mobile customers across all countries. DIGITAL ADOPTION (%) +5% ACTIVE 8,073 8,733 8,733 9,174 7,524 DIGI
Slide 23: Digital Progress: Canada
Digital Progress: Canada DIGITAL ADOPTION (%) +8% ACTIVE 3,847 4,071 4,368 4,368 4,705 +170 bps 3,599 DIGITAL USERS (#’000) +31% 59% 61% 61% 62% 55% 50% 2019 2020 2021 2022 Q4/22 Q4/23 +1,230 bps +11% 2019 2020 2021 2022 Q4/22 Q4/23 ACTIVE 3,393 3,704 3,704 4,117 2,666 3,073 MOBILE USERS DIGITAL SAL
Slide 24: Digital Progress: Pacific Alliance
Digital Progress: Pacific Alliance +2% DIGITAL ADOPTION (%) 4,002 4,365 4,365 4,469 3,677 ACTIVE 2,717 +170 bps DIGITAL USERS (#’000) +64% 58% 58% 59% 53% 2019 2020 2021 2022 Q4/22 Q4/23 46% 35% +2,430 bps +6% 3,793 3,793 4,029 2019 2020 2021 2022 Q4/22 Q4/23 3,334 ACTIVE 2,830 MOBILE USERS 1,847 +1
Slide 25: Revenue Growth
Revenue Growth CANADIAN BANKING1 INTERNATIONAL BANKING1 Constant Dollar Basis2 +6% +3% 2,799 27 (7%) 2,851 31 3,134 3,216 3,329 2,718 28 544 611 614 +13% 829 821 (2%) 838 2,387 2,508 +9% 2,146 2,209 2,158 +1% 2,296 Q4/22 Q3/23 Q4/23 Q4/22 Q3/23 Q4/23 Retail Banking Business Banking Latin America CCA
Slide 26: Adjusted Non-Interest Expense
Adjusted Non-Interest Expense1 HIGHLIGHTS ADJUSTED NON-INTEREST EXPENSE Non-interest expenses in Q4 were impacted by pre-tax adjusting in MMs Q4/23 Q3/23 Q4/22 Q/Q Y/Y items of $806MM. The following commentary excludes those items Salaries and Benefits 1,804 1,801 1,640 - 10% Y/Y Performance & Share
Slide 27: Loans by Business Line
Loans by Business Line GLOBAL BANKING AND CANADIAN BANKING1 INTERNATIONAL BANKING1 MARKETS1 in $Bn $Bn and Constant Dollar Basis2 in $Bn 0% +0% +2% 442 447 444 176 175 172 81 88 90 7 8 8 72 74 74 95 96 94 123 126 123 8 9 9 282 277 271 20 20 20 48 51 52 Q4/22 Q3/23 Q4/23 Q4/22 Q3/23 Q4/23 Q4/22 Q3/23
Slide 28: Business Banking Loans
Business Banking Loans CANADIAN BANKING INTERNATIONAL BANKING GLOBAL BANKING AND COMMERCIAL1 COMMERCIAL & CORPORATE1 MARKETS1 in $Bn $Bn and Constant Dollar Basis2 in $Bn +11% (1%) 0% 88 90 95 98 97 96 132 132 86 94 126 84 123 123 81 18 20 17 20 +22% 21 55 +9% 56 58 57 57 (1%) 52 53 56 50 52 113 112
Slide 29: Strong Deposit Growth
Strong Deposit Growth REPORTED AVERAGE DEPOSITS BY SEGMENTS Q4/23 REPORTED AVERAGE DEPOSIT MIX in $Bn CB IB GBM GWM 2 3 Term - 699 Notice - 682 666 685 Business Business 624 22% Demand-1 591 7% 538 Personal 2% 340 337 344 353 308 294 261 2 1 $699 Bn Notice - Demand - Personal 107 126 126 129 132 Bus
Slide 30: Strong Balance Sheet Metrics
Strong Balance Sheet Metrics $Bn Q4/22 Q3/23 Q4/23 Capital Metrics CET1 Ratio1,2 11.5% 12.7% 13.0% Tier 1 Capital Ratio1,2 13.2% 14.6% 14.8% Total Capital Ratio1,2 15.3% 16.9% 17.2% TLAC Ratio1,2,3 27.4% 30.5% 30.6% Leverage Ratio4 4.2% 4.1% 4.2% TLAC Leverage Ratio3,4 8.8% 8.7% 8.6% CET1 Capital1,2
Slide 31: Macroeconomic Scenarios
Macroeconomic Scenarios SELECT MACROECONOMIC VARIABLES USED TO ESTIMATE EXPECTED CREDIT LOSSES Alternative Scenario - Alternative Scenario – Alternative Scenario – Base Case Scenario Optimistic Pessimistic Very Pessimistic As at As at As at As at As at As at As at As at Next 12 months October 31, Ju
Slide 32: Macroeconomic Scenarios
3 4 5 6 7 8 9 10 11 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2 2022Q1 in $Tn 2022 Q1 2022Q2 2022 Q2 2022Q3 2022 Q3 2022Q4 2022 Q4 2023Q1 2023 Q1 2023Q2 2023 Q2 2023Q3 2023 Q3 2023Q4 2023 Q4 2024Q1 2024 Q1 2024Q2 2024 Q2 2024Q3 2024 Q3 2024Q4 2024 Q4 2025Q1 2025 Q1 2025Q2 2025 Q2 2025Q3 2025 Q3 2025Q4 2025 Q4 202
Slide 33: Commercial Real Estate
Commercial Real Estate Portfolio comprised of Commercial Real Estate, and Contractor loans which include Engineering & Project Management and Trade Contractors LOANS OUTSTANDING1 HIGHLIGHTS Q4/22 Q3/23 Q4/23 Total Portfolio: $67.4Bn • Limited Q/Q portfolio growth primarily from Y/Y: +11% Residential
Slide 34: Canadian Retail: Loans and Provisions
Canadian Retail: Loans and Provisions 1 MORTGAGES AUTO LOANS 10 152 78 89 83 37 41 39 50 1 2 76 89 0 0 0 1 1 1 1 3 45 63 65 0 0 0 0 1 (4) (5) 31 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 LINES OF CREDIT2 CREDIT CARDS3 559 167 380 357 312 338 267
Slide 35: Canadian Residential Mortgages
Canadian Residential Mortgages Asset yields on variable rate mortgages reprice with each change to Scotiabank’s prime rate MORTGAGE PORTFOLIO1 in $Bn (Spot Balances) 26% 33% Insured Variable Mortgage Variable Portfolio Mortgages Total Total Total Outstanding Balance $290 $96 Portfolio: Portfolio: Un
Slide 36: Canadian Residential Mortgages
Canadian Residential Mortgages M O R T G A G E P O R T F O L I O 1,2 in $Bn (Spot Balances) Freehold Condos 84% ($245Bn) Freehold 161.6 22.2 Total Portfolio1,2: 57.4 139.4 30.8 $290Bn 16.0 19.5 11.3 3.5 2.8 9.6 41.4 27.3 0.3 0.7 16.7 11.0 8.9 Manitoba & Ontario BC & Territories Alberta Quebec Atlant
Slide 37: International Retail: Loans and Provisions
International Retail: Loans and Provisions CARIBBEAN AND MEXICO CHILE CENTRAL AMERICA MARKETS 148 237 132 201 WITH 138 129 158 GREATER 104 137 136 111 103 102 133 139 154 133 119 109 121 WEIGHTING 122 124 106 102 98 91 67 65 148 133 TO SECURED 51 124 128 124 108 115 72 78 93 95 105 73 96 3 62 71 45
Slide 38: Retail 90+ Days Past Due Loans
Retail 90+ Days Past Due Loans1,2 CANADA3 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Mortgages 0.12% 0.10% 0.09% 0.09% 0.11% 0.12% 0.14% 0.16% Personal Loans 0.44% 0.40% 0.42% 0.49% 0.56% 0.58% 0.63% 0.69% Credit Cards 0.69% 0.69% 0.65% 0.72% 0.70% 0.71% 0.61% 0.70% Secured and 0.17% 0.18% 0.16
Slide 39: Trading Results
Trading Results Trading 1 TRADING LOSS DAY (Q4/23) TRADING REVENUE ($MM) AND ONE-DAY TOTAL VAR (Q4/23) Results Average 1-Day Total VaR FY23: $ 15.7 MM FY22: $ 13.5 MM 20 40 18 30 16 (# OF DAYS IN QUARTER) 20 14 12 10 $MM 10 0 8 6 -10 4 -20 2 0 -30 <0 5 6 7 8 9 10 15 20 25 >25 Q4/23 DAILY TRADING REV
Slide 40: International Banking: Pacific Alliance
International Banking: Pacific Alliance1 GEOGRAPHIC FINANCIAL PERFORMANCE AND METRICS ($MM) DISTRIBUTION7 Reported (Constant Dollar Basis)2,3 Q4/23 Q3/23 Q4/22 Q/Q2 Y/Y2 as at Q4/23 Colombia Mexico Revenue $1,937 $1,985 $1,930 (2%) - 13% 37% Expenses $944 $927 $929 2% 2% REVENUE Pre-Tax, Pre-Provisi
Slide 41: International Banking: CCA
International Banking: CCA1 GEOGRAPHIC FINANCIAL PERFORMANCE AND METRICS ($MM) DISTRIBUTION7 Reported (Constant Dollar Basis)2,3 Q4/23 Q3/23 Q4/22 Q/Q2 Y/Y2 as at Q4/23 Central English Revenue $614 $611 $544 1% 13% America Caribbean 18% 67% Expenses $344 $344 $344 - - REVENUE Pre-Tax, Pre-Provision
Slide 42: Impact of Foreign Currency Translation
Impact of Foreign Currency Translation Average Exchange Rate Q4/23 Q/Q Y/Y US Dollar/Canadian Dollar 0.736 (1.8%) (2.0%) Mexican Peso/Canadian Dollar 12.85 (0.8%) (14.7%) Peruvian Sol/Canadian Dollar 2.766 1.2% (6.0%) Colombian Peso/Canadian Dollar 3,017.319 (5.4%) (10.8%) Chilean Peso/Canadian Doll
Slide 43: Non-GAAP Reconciliations
1 2 Non-GAAP Reconciliations 3 4 5 43
Slide 44: Net Interest Margin and Risk Adjusted Margin
Reconciliation for non-GAAP Financial Measures All Bank: Net Interest Margin and Risk Adjusted Margin All-Bank Caribbean and Central America ($MM) Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 ($MM) Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Average total assets1 1,332,897 1,380,008 1,390,459 1,401,515 1,409,861 Average total a
Slide 45: Pre-Tax, Pre-Provision Profit
Reconciliation for non-GAAP Financial Measures Pre-Tax, Pre-Provision Profit ($MM) Reported Basis Adjusted Basis1 Business Line Pre-tax, pre-provision profit Q4/22 Q3/23 Q4/23 Q4/22 Q3/23 Q4/23 Revenue 7,626 8,090 8,308 7,987 8,090 7,941 All-Bank Expenses 4,529 4,562 5,529 4,287 4,542 4,723 Pre-tax,
Slide 46: International Banking: Return on Equity, NIAEH
Reconciliation for non-GAAP Financial Measures International Banking: Return on Equity, NIAEH ($MM) Reported Basis ($MM) Reported Basis Return on Equity FY21 FY22 FY23 Return on Equity FY21 FY22 FY23 Mexico Chile Net Income Attributable to Common Shareholders 586 745 864 Net Income Attributable to C
Slide 47: International Banking: PCLs, Revenues, Loans, Deposits
Reconciliation for non-GAAP Financial Measures International Banking: PCLs, Revenues, Loans, Deposits ($MM) Reported Basis Constant Dollar Basis1 PCLs Q4/22 Q3/23 Q4/23 Q4/22 Q3/23 Q4/23 Pacific Alliance 298 465 455 327 458 455 Caribbean and Central America 43 27 36 45 27 36 Revenue ($Bn) Q4/22 Q3/2
Slide 48: Reconciliation for non-GAAP Financial Measures
Reconciliation for non-GAAP Financial Measures ($MM) ($MM) Canadian Banking Q4/22 Q3/23 Q4/23 Canadian Banking Q4/22 Q3/23 Q4/23 Reported Expenses 1,397 1,448 1,513 Reported NIAEH 1,170 1,062 810 Amortization of Intangibles (6) (1) - Amortization of Intangibles 4 1 - Adjusted Expenses1 1,391 1,447 1
Slide 49: Investor Relations Contacts
John McCartney, Senior Vice-President 416-863-7579 john.mccartney@scotiabank.com Investor Sophia Saeed, Vice-President Relations 416-933-8869 Contacts sophia.saeed@scotiabank.com Rebecca Hoang, Director 416-933-0129 rebecca.hoang@scotiabank.com 49
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