Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — The Bank of Nova Scotia — Q1 2024 Earnings Presentation
52 slides from Bank Of Nova Scotia's earnings presentation, Feb 27, 2024
Slide 1: Investor Presentation
Investor Presentation February 27, 2024
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements Forward-looking Statements From time to time, our public communications include oral or dispositions, including obtaining regulatory approvals; critical accounting estimates and the written forward-looking statements. Statements of this type are included
Slide 3: Reference Notes
Reference Notes Adoption of IFRS 17 On November 1, 2023, the Bank adopted IFRS 17 Insurance Contracts, which provides a comprehensive principle-based framework for the recognition, measurement, presentation, and disclosure of insurance contracts and replaces IFRS 4, the previous accounting standard
Slide 4: Opening Remarks
Opening Clear Strategic Priorities Remarks Disciplined Capital Allocation Scott Thomson Continued Balance Sheet Strength President & CEO 4
Slide 5: Q1/24 Overview
Q1/24 Overview Raj Viswanathan Group Head & CFO 5
Slide 6: Q1 2024 Financial Performance
Q1 2024 Financial Performance $MM, except EPS Q1/24 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income $2,199 25% 62% • Adjusted diluted EPS down 8% Diluted EPS $1.68 24% 70% o Higher PCLs and expenses partly offset by higher revenues Revenue $8,433 6% 2% • Revenues up 6% Expenses $4,739 6% (14%) o Net inte
Slide 7: Strong Capital Position
Strong Capital Position Q/Q CHANGE IN CET1 RATIO (%)1 • CET1 ratio of 12.9%, benefited from earnings, share issuances through DRIP and gains from FVOCI securities. • RWA growth of 48 basis points, was driven by the adoption of FRTB/CVA requirements and the 2.5% increase in capital floor, that was pa
Slide 8: Canadian Banking
Canadian Banking $MM Q1/24 Y/Y Q/Q Y/Y HIGHLIGHTS Reported • Net Income1 up 1% Net Income1 $1,095 1% 38% o Higher revenues mostly offset by higher PCL and expenses Revenue $3,387 7% 2% • Revenue up 7% (up 2% Q/Q) Expenses $1,498 3% (1%) o Net interest income up 11%; strong deposit growth, along with
Slide 9: Global Wealth Management
Global Wealth Management $MM Q1/24 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income1 $368 (4%) 13% • Net Income1 down 4% Revenue $1,365 3% 2% o International Wealth up 18% • Revenue up 3% Expenses $862 8% (3%) o Higher brokerage revenues Pre-Tax, Pre-Provision Profit6 $503 (4%) 13% • Expenses up 8% PCLs $
Slide 10: Global Banking and Markets
Global Banking and Markets $MM Q1/24 Y/Y Q/Q Y/Y HIGHLIGHTS Reported Net Income1 $439 (15%) 6% • Net Income1 down 15% (up 6% Q/Q) o Strong US net income of $237MM (up 13% Y/Y) Revenue $1,379 (8%) 2% • Revenue down 8% (up 2% Q/Q) Expenses $801 4% 3% o Non-interest income down 2%, net interest income
Slide 11: International Banking
International Banking Constant dollar basis2 Y/Y HIGHLIGHTS (CONSTANT FX) $MM Q1/24 Y/Y Q/Q Y/Y Q/Q Reported • Net Income1 up 5% Net Income1 $746 16% 36% 5% 36% o GBM Latam up 24% (reported FX) • Revenue up 9% Revenue $3,103 16% 12% 9% 11% o Net interest income up 13%; driven by margin expansion Exp
Slide 12: Other
Other R E P O R T E D N E T L O S S 1,2 ( $ M M ) HIGHLIGHTS • Adjusted net loss decreased $13 million Q/Q from lower expenses, and increased $140 million Y/Y from higher funding costs (299) • Lower TEB increased revenue both Q/Q and Y/Y, (323) with a corresponding increase in taxes (474) • Reported
Slide 13: Risk Review
Risk Review Phil Thomas Group Head & Chief Risk Officer 13
Slide 14: Allowance for Credit Losses
Allowance for Credit Losses TOTAL ACLS1 ($MM) AND ACL RATIO2 HIGHLIGHTS 85 bps 86 bps • Total ACL ratio up 1 bp Q/Q to 86 bps 75 bps 78 bps 72 bps o The impact of FX was negative $87MM 6,629 6,597 this quarter. Adjusting for the impact of 5,931 6,094 5,668 foreign currency translation, the 1,910 1,9
Slide 15: Provision for Credit Losses
Provision for Credit Losses $MM Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q/Q HIGHLIGHTS Provision for Credit Losses All-Bank • Total PCL ratio of 50bps, down 15 bps Q/Q Impaired 562 621 738 802 942 Performing 76 88 81 454 20 o Performing PCLs were higher last quarter due to Total 638 709 819 1,256 962 ACL buil
Slide 16: Gross Impaired Loans and Net Write-offs
Gross Impaired Loans and Net Write-offs GILS ($MM) AND GIL RATIO1 HIGHLIGHTS • Increased $393 million Q/Q driven by new formations in 70 bps 74 bps 80 bps Canadian Commercial and International Banking 65 bps 67 bps o Canadian Banking: Higher Q/Q mainly related to 5,726 6,119 one commercial account;
Slide 17: Appendix
1 2 Appendix 3 4 5 17
Slide 18: Net Income and Adjusted Diluted EPS
Net Income and Adjusted Diluted EPS Net Income ($MM) and EPS ($ per share) Reported View Q1/23 Q4/23 Q1/24 Net Income Attributable to Common Shareholders Net Income attributable to common shareholders 1,620 1,214 2,066 Dilutive impact of share-based payment options and others2 (4) (11) (15) Net Inco
Slide 19: Strong Balance Sheet Metrics
Strong Balance Sheet Metrics $Bn (unless indicated otherwise) Q1/23 Q4/23 Q1/24 Y/Y Capital Metrics CET1 Ratio1 11.5% 13.0% 12.9% 140 bps 1 Tier 1 Capital Ratio 13.2% 14.8% 14.8% 160 bps 1 Total Capital Ratio 15.2% 17.2% 16.7% 150 bps 2 TLAC Ratio 27.9% 30.6% 28.9% 100 bps 3 Leverage Ratio 4.2% 4.2%
Slide 20: Risk Adjusted Margin and NIM
Risk Adjusted Margin and NIM RISK ADJUSTED MARGIN1 ALL-BANK NIM2 4 bps 0 bps 3.16% 3.22% 3.16% 3.23% 3.08% 2.20% 219 bps 2.05% 2.08% 2.06% 215 bps 1.79% 1.83% 1.80% 1.74% 1.77% 1.60% Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q4/23 Spreads Business Mix Q1/24 All-Bank Canadian Banking International Banking CANADI
Slide 21: Interest Rate Sensitivity
Interest Rate Sensitivity NET INTEREST INCOME SENSITIVITY1 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 Current Forecast Policy Rate2 rate on F
Slide 22: Economic Outlook in Core Markets
Economic Outlook in Core Markets REAL GDP (ANNUAL % CHANGE) Forecast1 2010-20 2024 2025 Country 2021 2022 2023E Average Full Full Q1F Q2F Q3F Q4F Q1F Q2F Q3F Q4F Year Year Canada 1.6 5.3 3.8 1.1 0.7 0.6 1.2 1.3 0.9 1.5 1.9 2.3 2.5 2.0 U.S. 2 2.0 5.8 1.9 2.5 3.1 2.7 1.8 1.4 2.3 1.2 1.4 1.6 1.6 1.5 Me
Slide 23: Digital Progress: Canada
Digital Progress: Canada DIGITAL SALES (%) ACTIVE DIGITAL USERS (MM) +100 bps +7% 29.5 29.4 4.7 4.8 28.4 4.6 27.4 27.5 4.5 4.5 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 DIGITAL ADOPTION (%) ACTIVE MOBILE USERS (MM) +210 bps +11% 63.3 4.2 62.4 4.0 4.1 61.8 61.8 3.8 3.9 61.2 Q1/23 Q2
Slide 24: Digital Progress: International
Digital Progress: International1 DIGITAL SALES (%) ACTIVE DIGITAL USERS (MM) +470 bps +1% 51.7 50.6 50.7 4.4 4.5 46.0 47.3 4.4 4.4 4.4 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 DIGITAL ADOPTION (%) ACTIVE MOBILE USERS (MM) +10 bps +5% 59.3 59.3 4.1 57.7 57.8 3.9 4.0 57.6 3.9 3.9 Q1
Slide 25: Revenue Growth
Revenue Growth CANADIAN BANKING1 INTERNATIONAL BANKING1 in $MM in $MM Constant Dollar Basis2: +9% Y/Y 7% Reported +16% 3,163 3,312 3,387 3,103 2,684 2,780 27 (15%) 31 27 620 +7% 821 805 (8%) 877 582 603 2,581 2,456 +19% 2,286 2,491 +13% 2,072 2,151 Q1/23 Q4/23 Q1/24 Q1/23 Q4/23 Q1/24 Retail Banking
Slide 26: Non-Interest Expense
Non-Interest Expense HIGHLIGHTS NON-INTEREST EXPENSE Y/Y $MM • Reported expenses up 6% Q1/24 Q/Q Y/Y • Adjusted expenses1 up 6%, including ~2% due to negative impact of Salaries and Benefits 1,775 (4%) 2% FX Performance & Share-Based o Higher shared-based compensation, technology-related costs, 671
Slide 27: Average Loans by Business Line
Average Loans by Business Line GLOBAL BANKING AND CANADIAN BANKING1 INTERNATIONAL BANKING1 MARKETS1 in $Bn In $Bn Constant Dollar Basis2: -2% Y/Y in $Bn (1%) Reported +2% 446 444 442 171 175 174 84 (7%) 90 91 7 8 9 72 74 74 95 94 92 9 9 132 8 123 122 283 271 268 20 20 20 48 52 53 Q1/23 Q4/23 Q1/24 Q
Slide 28: Average Business Banking Loans
Average Business Banking Loans1 CANADIAN BANKING INTERNATIONAL BANKING GLOBAL BANKING AND COMMERCIAL COMMERCIAL & CORPORATE MARKETS in $Bn In $Bn Constant Dollar Basis2: -6% Y/Y in $Bn 9% Reported (3%) (7%) 90 91 97 132 132 88 95 96 94 84 86 92 126 123 122 19 20 20 21 21 +10% 55 55 +7% 57 57 52 53 5
Slide 29: Strong Deposit Growth
Strong Deposit Growth AVERAGE DEPOSITS BY SEGMENT Q1/24 AVERAGE DEPOSIT MIX in $Bn CB IB GBM GWM 3 Notice - 2 Term - 682 699 697 Business 666 Business 624 7% 21% 1 591 Demand- 538 Personal 2% 340 328 353 358 308 294 261 2 $697Bn Notice - Demand -1 Personal 126 119 132 131 Business 104 107 21% 111 30
Slide 30: Macroeconomic Scenarios
Macroeconomic Scenarios1 SELECT MACROECONOMIC VARIABLES USED TO ESTIMATE EXPECTED CREDIT LOSSES Alternative Scenario - Alternative Scenario – Alternative Scenario – Next 12 Months Base Case Scenario Optimistic Pessimistic Very Pessimistic Q1/24 Q4/23 Q1/24 Q4/23 Q1/24 Q4/23 Q1/24 Q4/23 Canada Real G
Slide 31: Macroeconomic Scenarios
Macroeconomic Scenarios1 The following charts provide a quarterly breakdown of key macroeconomic variables used for our base case scenarios to calculate the modelled estimate for the allowance for credit losses CANADA REAL GDP U.S REAL GDP in $Tn in $Tn and USD 3.0 Range of Estimated Scenarios 27.0
Slide 32: Commercial Real Estate
Commercial Real Estate Portfolio comprised of Commercial Real Estate, and Contractor loans which include Engineering & Project Management and Trade Contractors SPOT LOANS OUTSTANDING1 HIGHLIGHTS Q1/23 Q4/23 Q1/24 Total Portfolio: $66.6Bn • Exposure reduced marginally Q/Q with continued Y/Y: +5% heav
Slide 33: Canadian Retail: Loans and Provisions
Canadian Retail: Loans and Provisions 1 MORTGAGES AUTO LOANS 10 152 78 89 83 106 41 39 50 2 76 89 104 1 1 1 1 3 65 0 0 1 0 3 45 63 0 0 1 1 (5) 31 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 LINES OF CREDIT CREDIT CARDS2 559 380 458 167 357 312 338
Slide 34: 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) 26% 33% in $Bn (Spot) Mortgage Portfolio Variable Mortgages Insured Variable Total Outstanding Balance $288 $95 Uninsured Outstanding Balance $
Slide 35: Canadian Residential Mortgages
Canadian Residential Mortgages MORTGAGE PORTFOLIO1 in $Bn (Spot) Freehold Condos 84% ($242Bn) Freehold 160.5 22.2 56.9 Total 138.3 30.3 Portfolio1 16.0 19.4 11.2 9.5 40.9 26.8 3.5 2.8 0.3 0.6 $288Bn 16.6 Ontario BC & Territories Alberta Quebec 10.9 Atlantic 8.9 Manitoba & Provinces Saskatchewan 16%
Slide 36: International Retail: Loans and Provisions
International Retail: Loans and Provisions CARIBBEAN AND MEXICO CHILE CENTRAL AMERICA MARKETS 155 201 188 148 WITH 132 158 139 154 133 121 136 136 129 104 137 119 109 GREATER 111 103 102 133 106 124 WEIGHTING 102 98 124 67 65 148 168 108 115 95 105 101 TO SECURED 91 107 124 128 72 78 93 62 71 73 96
Slide 37: Retail 90+ Days Past Due Loans
Retail 90+ Days Past Due Loans1 Canada Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Mortgages 0.10% 0.09% 0.09% 0.11% 0.12% 0.14% 0.16% 0.20% Personal Loans 0.40% 0.42% 0.49% 0.56% 0.58% 0.63% 0.69% 0.55% Credit Cards 0.69% 0.65% 0.72% 0.70% 0.71% 0.61% 0.70% 0.79% Secured and 0.18% 0.16% 0.17% 0
Slide 38: Trading Results
Trading Results Trading NO TRADING LOSS DAY (Q1/24) TRADING REVENUE ($MM) AND VAR1 (Q1/24) Results Average VaR Q1/24: $17.0 MM Q4/23: $16.9 MM Q1/23: $15.1 MM 50 20 18 40 16 30 # Of Days In Quarter 14 20 $MM 12 10 10 0 8 -10 6 -20 4 -30 2 0 <0 5 6 7 8 9 10 15 20 25 >25 Daily Trading Revenues ($MM) V
Slide 39: International Banking: Mexico and Chile
International Banking: Mexico and Chile1 MEXICO CHILE $MM , Reported Constant Dollar2 $MM , Reported Constant Dollar2 Q1/24 Y/Y Q/Q Y/Y Q/Q Q1/24 Y/Y Q/Q Y/Y Q/Q Revenue 814 23% 14% 9% 13% Revenue 651 13% 12% 17% 13% Expenses 387 20% 8% 7% 7% Expenses 246 4% 1% 7% 2% Provision for credit losses 82 4
Slide 40: International Banking: Peru and Colombia
International Banking: Peru and Colombia1 PERU COLOMBIA $MM , Reported Constant Dollar2 $MM , Reported Constant Dollar2 Q1/24 Y/Y Q/Q Y/Y Q/Q Q1/24 Y/Y Q/Q Y/Y Q/Q Revenue 463 9% 20% 6% 21% Revenue 280 25% 12% 4% 9% Expenses 160 (2%) (5%) (4%) (5%) Expenses 181 19% 4% (2%) 1% Provision for credit lo
Slide 41: International Banking: Caribbean and Central America
International Banking: Caribbean and Central America1 FINANCIAL PERFORMANCE AND METRICS GEOGRAPHIC DISTRIBUTION $MM , Reported Constant Dollar2 REVENUE Q1/24 Y/Y Q/Q Y/Y Q/Q Revenue 620 7% 3% 6% 4% Expenses 356 4% 4% 3% 4% 18% Provision for credit losses 37 5% 4% 2% 5% 66% NIAEH 162 21% 4% 22% 5% $6
Slide 42: Impact of Foreign Currency Translation
Impact of Foreign Currency Translation Average Exchange Rate Q1/24 Q/Q Y/Y US Dollar/Canadian Dollar 0.740 0.5% (0.3%) Mexican Peso/Canadian Dollar 12.734 (0.9%) (11.2%) Peruvian Sol/Canadian Dollar 2.772 0.2% (2.8%) Colombian Peso/Canadian Dollar 2,932.809 (2.8%) (17.8%) Chilean Peso/Canadian Dolla
Slide 43: Non-GAAP Reconciliations
1 2 Non-GAAP Reconciliations 3 4 5 43
Slide 44: Non-GAAP Reconciliations - Net Interest Margin and Risk Adjusted Margin
Non-GAAP Reconciliations - Net Interest Margin and Risk Adjusted Margin $MM (unless specified otherwise) All-Bank $MM (unless specified otherwise) International Banking Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 1 1 Average total assets 1,380,216 1,390,729 1,401,783 1,410,124 1,423,
Slide 45: Non-GAAP Reconciliations - International Banking and Other Segment
Non-GAAP Reconciliations - International Banking and Other Segment $MM Reported Basis Reported Basis (Constant FX) International Banking Loans Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Investment Grade 39 40 39 39 38 40 40 39 39 38 Non-Investment Grade 56 57 57 56 54 58 57 57 55 54
Slide 46: Non-GAAP Reconciliations - Mexico
Non-GAAP Reconciliations - Mexico $MM (unless otherwise specified) Reported Basis Reported Basis (Constant FX) Q1/23 Q4/23 Q1/24 Q1/23 Q4/23 Q1/24 Revenue 662 716 814 749 720 814 Expenses 323 357 387 363 360 387 Provision for Credit Losses 56 90 82 63 90 82 NIAEH 220 201 256 258 202 256 $MM (unless
Slide 47: Non-GAAP Reconciliations - Chile
Non-GAAP Reconciliations - Chile $MM (unless otherwise specified) Reported Basis Reported Basis (Constant FX) Q1/23 Q4/23 Q1/24 Q1/23 Q4/23 Q1/24 Revenue 578 579 651 558 575 651 Expenses 236 244 246 231 242 246 Provision for Credit Losses 121 136 174 119 135 174 NIAEH 177 148 177 167 147 177 $MM (un
Slide 48: Non-GAAP Reconciliations - Peru
Non-GAAP Reconciliations - Peru $MM (unless otherwise specified) Reported Basis Reported Basis (Constant FX) Q1/23 Q4/23 Q1/24 Q1/23 Q4/23 Q1/24 Revenue 425 386 463 435 384 463 Expenses 163 169 160 167 168 160 Provision for Credit Losses 98 127 128 101 126 128 NIAEH 125 68 136 128 68 136 $MM (unless
Slide 49: Non-GAAP Reconciliations - Colombia
Non-GAAP Reconciliations - Colombia $MM (unless otherwise specified) Reported Basis Reported Basis (Constant FX) Q1/23 Q4/23 Q1/24 Q1/23 Q4/23 Q1/24 Revenue 224 250 280 270 257 280 Expenses 152 175 181 185 180 181 Provision for Credit Losses 75 102 138 90 106 138 NIAEH - (10) (12) 1 (11) (12) $MM (u
Slide 50: Non-GAAP Reconciliations - Caribbean and Central America
Non-GAAP Reconciliations - Caribbean and Central America $MM (unless otherwise specified) Reported Basis Reported Basis (Constant FX) Q1/23 Q4/23 Q1/24 Q1/23 Q4/23 Q1/24 Revenue 582 603 620 583 599 620 Expenses 342 343 356 345 341 356 Provision for Credit Losses 35 36 37 36 35 37 NIAEH 133 156 162 1
Slide 51: Non-GAAP Reconciliations – Return on Equity
Non-GAAP Reconciliations – Return on Equity $MM (unless otherwise specified) Reported Return on Equity F21 F22 F23 Q1/24 Mexico Net Income Attributable to Common Shareholders 586 745 857 256 Total average common equity 3,093 3,393 3,760 4,309 Return on Equity 18.9% 22.0% 22.8% 23.6% Peru Net Income
Slide 52: 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 52
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