Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — Scotiabank — Q2 2022 Earnings Presentation
39 slides from Bank Of Nova Scotia's earnings presentation, May 25, 2022
Slide 1: Investor Presentation Second Quarter 2022
Investor Presentation Second Quarter 2022 May 25, 2022
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements Forward-looking statements From time to time, our public communications often include the effect of changes to accounting standards, rules and interpretations on these oral or written forward-looking statements. Statements of this type are included in thi
Slide 3: Opening Remarks
Strong operating results Opening Robust loan growth Remarks Multiple growth initiatives across all four business lines Brian Porter Deploying capital in line with strategic President & CEO priorities Dividend increase of $0.03 per share 3
Slide 4: Q2/22 Financial Results
Q2/22 Financial Results Raj Viswanathan Group Head & CFO 4
Slide 5: Q2 2022 Financial Performance
Q2 2022 Financial Performance $MM, except EPS Q2/22 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported Net Income $2,747 12% - • EPS up a strong 15% Pre-Tax, Pre-Provision Profit1 $3,783 2% (1%) • Pre-tax, pre-provision profit up 2% Diluted EPS $2.16 15% 1% Revenue $7,942 3% (1%) • Revenue up 3% Expenses $4
Slide 6: Strong Capital Position
Strong Capital Position CET1 ratio of 11.6%1 Q/Q CHANGE IN CET1 RATIO (%) • Internal capital generation supported strong organic growth in all of the business lines. 31 bps 12.0% • Capital deployment of ~39 bps during the (33 bps) quarter: (28 bps) 7 bps 11.6% o 28 bps - Repurchased 13.9 million (11
Slide 7: Canadian Banking
Canadian Banking $MM Q2/22 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Net income1 up 27% Net Income1 $1,179 27% (2%) Pre-Tax, Pre-Provision Profit2 $1,579 13% (1%) o Pre-tax, pre-provision profit up 13% Revenue $2,903 11% 1% o PCLs trending positively; low net write-offs Expenses $1,324 8% 3% • Re
Slide 8: Global Wealth Management
Global Wealth Management $MM, except AUM/AUA Q2/22 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Net income up 9% Net Income1 $407 9% (1%) Pre-Tax, Pre-Provision Profit2 $555 9% (1%) o Canadian wealth management earnings up 10% Y/Y Revenue $1,358 4% (5%) • Revenue up 4% Expenses $803 - (7%) o Higher
Slide 9: Global Banking and Markets
Global Banking and Markets $MM Q2/22 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Net income down 6% Net Income1 $488 (6%) (13%) Pre-Tax, Pre-Provision Profit2 $609 (2%) (17%) o Strong revenue growth in Corporate and Investment Banking Revenue $1,262 - (10%) Expenses $653 3% (3%) o Capital Markets l
Slide 10: International Banking
International Banking Constant dollar basis1,5 YEAR-OVER-YEAR HIGHLIGHTS1 $MM Q2/22 Q2/21 Y/Y1 Q1/22 Q/Q1 • Net income2 up 50% (up 10% Q/Q ) Reported • Pre-tax, pre-provision profit up 9% Net Income2 $605 $403 50% $547 10% • Revenue up 4% Pre-Tax, Pre-Provision $1,139 $1,046 9% 1,128 1% o Net intere
Slide 11: Q2 2022 Business Line Performance
Q2 2022 Business Line Performance Reported Pre-Tax Pre-Provision Operating $MM Revenues Profit (PTPP)1 Leverage2 Q2/22 Y/Y Q2/22 Y/Y Y/Y Canadian Banking $2,903 11% $1,579 13% 2.9% International Banking $2,407 1%3 $1,139 5%3 3.2% (Reported FX) Global Wealth Management $1,358 4% $555 9% 3.6% Global B
Slide 12: Other
Other 1, 2 REPORTED NET INCOME ($MM) YEAR-OVER-YEAR HIGHLIGHTS • Significantly lower investment gains and higher non- interest expenses, partially offset by a higher contribution from asset/liability management activities 130 (7) (67) (10) (164) QUARTER-OVER-QUARTER HIGHLIGHTS Q2/21 Q3/21 Q4/21 Q1/2
Slide 13: Risk Review
Risk Review Phil Thomas Chief Risk Officer 13
Slide 14: Credit Quality
Credit Quality GILs ($MM) AND GIL RATIO1 HIGHLIGHTS 81 bps 81 bps 84 bps 81 bps 73 bps • GIL ratio continues to improve due to: 67 bps 64 bps 60 bps 5,148 26 5,053 26 5,279 39 5,116 33 o Lower formations across all portfolios 209 302 224 286 4,735 28 1,067 235 4,456 26 4,435 32 4,264 32 1,209 1,049
Slide 15: Credit Performance
Credit Performance TOTAL ACLs1 ($MM) AND ACL RATIO2 HIGHLIGHTS 116 bps 125 bps 125 bps 109 bps 96 bps 86 bps 80 bps 75 bps • Strong balance sheet with total ACLs of $5.4 billion 7,820 21 7,810 7,403 19 409 24 • Performing loan ACLs decreased 5% Q/Q 377 395 6,893 23 325 6,232 22 2,648 2,655 288 5,731
Slide 16: PCLs - Impaired and Performing
PCLs - Impaired and Performing HIGHLIGHTS PCLs ($MM) Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 All-Bank YEAR-OVER-YEAR Impaired 1,192 841 511 405 406 • Total PCLs declined 56% driven mainly by lower Performing (696) (461) (343) (183) (187) impaired PCLs in International Banking Total 496 380 168 222 219 o Net r
Slide 17: Closing Remarks
Closing Strong FY22 year-to-date results Remarks On track to exceed medium-term Brian Porter objectives President & CEO Proven diversified business model 17
Slide 18: Appendix
1 2 Appendix 3 4 5 18
Slide 19: Net Income and Adjusted Diluted EPS
Net Income and Adjusted Diluted EPS Net Income ($MM) and Q2/21 Q1/22 Q2/22 EPS ($ per share) Quarterly diluted common shares 1 outstanding may be impacted by dilutive Net Income attributable to common shareholders $2,289 $2,608 $2,595 effect of put options sold by the bank in the Dilutive impact of
Slide 20: Adjusting Items
Adjusting Items1 Adjusting Items (Pre-Tax) ($MM) Q2/21 Q1/22 Q2/22 Acquisition-Related Costs 2 Amortization of Intangibles Canadian Banking 5 6 5 International Banking 11 10 10 Global Wealth Management 10 9 9 Total (Pre-Tax) 26 25 24 Q2/22 After-Tax Adjusting Items (After-Tax and NCI) ($MM) Q2/21 Q1
Slide 21: Other Items Impacting Financial Results
Other Items Impacting Financial Results1,2 1 (Pre-Tax) ($MM) Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 International Banking One month reporting lag elimination - - - - - Impact of closed divestitures 2 1 2 - - Total 2 1 2 - - Global Wealth Management One month reporting lag elimination - - - - - Performance fe
Slide 22: Net Interest Income and NIMs
Net Interest Income and NIMs ALL-BANK NET INTEREST INCOME ($MM) All-BANK NET INTEREST MARGIN AND NIM1 (%) 2.26% 2.23% 2.23% 2.17% 2.16% 4,473 8 bps 4,344 (1 bp) 10 4,217 4,217 4,176 33 35 4,504 42 223 bps 4,334 216 bps 4,134 4,184 4,182 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 (31) Q1/22 Spreads Business Mix Q
Slide 23: Interest Rate Sensitivity
Interest Rate Sensitivity NET INTEREST INCOME SENSITIVITY POLICY RATE CHANGE AND OUTLOOK • An immediate and sustained +100 bps parallel Change During shift would have a negative impact on annual BNS Fiscal Quarters Current Expected Increase net interest income of $126 million for Year 1 QTD Policy F
Slide 24: All Bank NIM Calculation
All Bank NIM1 Calculation All-Bank ($ millions) Q2/21 Q1/22 Q2/22 Average total assets2 1,151,196 1,238,616 1,264,193 Average non-earning assets2 93,758 94,165 102,901 Average total earning assets2 1,057,438 1,144,451 1,161,292 Less: Trading Assets 144,415 162,885 144,501 Securities purchased under
Slide 25: Digital Progress: All-Bank
Digital Progress: All-Bank • Canada: Increase in Digital Sales, supported by greater Digital Adoption, Active Digital Users and Active Mobile Users • Pacific Alliance: Strong momentum in Digital Sales, driven by Peru, and Active Mobile Users, driven by Colombia Digital Adoption (%)1 +9% 7,524 8,073
Slide 26: Digital Progress: Canada
Digital Progress: Canada Digital Adoption (%)1 +7% 3,847 4,071 3,960 4,222 Active Digital 3,329 3,599 +200 bps Users (#’000) +27% 55% 59% 58% 60% 46% 50% 2018 2019 2020 2021 Q2/21 Q2/22 +1,400 bps +8% 2018 2019 2020 2021 Q2/21 Q2/22 3,393 3,242 3,488 Active Mobile 2,666 3,073 2,396 Users (#’000) +46
Slide 27: Digital Progress: Pacific Alliance
Digital Progress: Pacific Alliance Digital Adoption (%) +11% 3,677 4,002 3,716 4,133 +600 bps Active Digital 2,717 Users (#’000) 1,947 53% 55% +112% 46% 49% 35% 2018 2019 2020 2021 Q2/21 Q2/22 +2,900 bps 26% +20% 2018 2019 2020 2021 Q2/21 Q2/22 3,334 3,569 Active Mobile 2,830 2,978 Users (#’000)1 1,
Slide 28: Economic Outlook in Core Markets
Economic Outlook in Core Markets Real GDP Growth Forecast (2022–23) Real GDP (Annual % Change) Forecast1, 2 2010–19 Country 2020 2021 2022 2023 Average Q1E Q2F Q3F Q4F Year Year Canada 2.3 (5.2) 4.6 4.0 4.4 4.0 2.6 4.2 3.0 U.S. 2.3 (3.4) 5.7 (1.4) 4.7 2.7 3.5 3.8 2.9 Mexico 2.7 (8.2) 4.8 1.6 1.5 1.6
Slide 29: Revenue Growth
Revenue Growth Canadian Banking1,2 International Banking1 (Constant Dollar Basis)3 +11% +4% 2,874 2,903 2,624 +22% 679 727 44 2,441 44 2,407 37 -16% 596 2,310 491 490 503 +2% 2,028 2,195 2,176 +7% 1,775 1,907 1,866 +5% Q2/21 Q1/22 Q2/22 Q2/21 Q1/22 Q2/22 Retail Banking Business Banking Latin America
Slide 30: Loan Growth by Business Line
Loan Growth by Business Line Canadian Banking1 International Banking Global Banking and Markets (Constant Dollar Basis)2 +14% +9% 408 420 +13% 370 73 +19% 151 68 146 7 6 +6% 138 61 6 69 69 +1% 68 80 83 75 +10% 99 102 7 7 -1% 91 7 265 272 +16% 18 18 0% 235 18 37 41 42 +14% Q2/21 Q1/22 Q2/22 Q2/21 Q1/
Slide 31: Deposit Growth
Deposit Growth Canadian Banking1 International Banking1,2 (Constant Dollar Basis)3 +3% +6% 293 299 302 104 111 112 +8% 101 103 106 65 67 70 +7% 189 187 190 +1% 36 36 36 +2% Q2/21 Q1/22 Q2/22 Q2/21 Q1/22 Q2/22 Global Banking and Markets1,2 Global Wealth Management1 +2% +7% 39 39 37 -3% 160 165 164 18
Slide 32: Canadian Retail: Loans and Provisions
Canadian Retail: Loans and Provisions 1 MORTGAGES AUTO LOANS 224 106 91 99 39 37 41 105 4 2 4 2 1 1 1 1 1 0 0 0 0 0 81 89 78 0 (5) 35 0 0 (6) (4) Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 LINES OF CREDIT3 CREDIT CARDS 169 1,002 79 62 70 48 33 41
Slide 33: Residential Mortgages
Residential Mortgages • Four Distinct Distribution Channels: Broker, Branch, Mobile Salesforce and eHOME. Broker and Mobile Salesforce account for more than 80% of the distribution FICO® Distribution – Canadian Uninsured Portfolio1 New Canadian Mortgage Originations 64% Q2-21 Q1-22 Q2-22 Average FIC
Slide 34: International Retail: Loans and Provisions
International Retail: Loans and Provisions MEXICO CHILE CARIBBEAN AND CENTRAL AMERICA 591 321 556 Markets with 428 329 326 300 Greater 280 248 181 221 261 212 237 238 81 Weighting to 267 253 243 173 138 111 70 62 64 51 67 139 Secured 205 179 120 122 102 87 221 195 204 216 170 195 133 54 67 58 45 39
Slide 35: Retail 90+ Days Past Due Loans
Retail 90+ Days Past Due Loans1,2 CANADA3 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Mortgages 0.19% 0.15% 0.17% 0.16% 0.13% 0.12% 0.12% 0.10% Personal Loans 0.63% 0.51% 0.54% 0.51% 0.41% 0.39% 0.44% 0.40% Credit Cards 0.81% 0.70% 0.98% 0.75% 0.57% 0.63% 0.69% 0.69% Secured and 0.23% 0.19% 0.22
Slide 36: International Banking: Pacific Alliance
International Banking: Pacific Alliance FINANCIAL PERFORMANCE AND METRICS ($MM) Reported Q2/22 Q1/22 Q2/21 Q/Q1 Y/Y1 (Constant FX)1,2 Revenue ($MM) $1,737 $1,748 $1,641 (1%) 6% Expenses ($MM) $782 $814 $785 (4%) - PTPP3 ($MM) $955 $934 $856 2% 12% Net Income4 ($MM) $533 $473 $337 13% 58% Net Interes
Slide 37: Trading Results
Trading Results TRADING REVENUE1 THREE TRADING LOSS DAYS (Q2/22) AND ONE-DAY TOTAL VAR (Q2/22) 40 Average 1-Day Total VaR Millions Q2/22: $ 11.9 MM 25 Q1/22: $ 12.3 MM 30 Q2/21: $ 16.7 MM 20 20 (# of days in quarter) 15 10 10 0 5 -10 0 -20 <0 3 5 6 7 9 10 15 20 25 >25 Q2/22 Daily Trading Revenues ($
Slide 38: Impact of Foreign Currency Translation
Impact of Foreign Currency Translation Average Exchange Rate Q2/22 Q/Q Y/Y US Dollar/Canadian Dollar 0.790 - (0.6%) Mexican Peso/Canadian Dollar 16.072 (1.9%) (0.8%) Peruvian Sol/Canadian Dollar 2.964 (5.7%) 1.2% Colombian Peso/Canadian Dollar 3,033.704 (3.0%) 5.8% Chilean Peso/Canadian Dollar 637.9
Slide 39: Investor Relations Contact
Investor John McCartney, Senior Vice-President Relations 416-863-7579 john.mccartney@scotiabank.com Contact Sophia Saeed, Vice-President Information 416-933-8869 sophia.saeed@scotiabank.com Mark Michalski, Director 416-866-6905 mark.michalski@scotiabank.com Rene Lo, Director 416-866-6124 rene.lo@sco