Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — Q2 2012 Earnings Presentation
24 slides from Bank Of Nova Scotia's earnings presentation, May 29, 2012
Slide 1: Investor Presentation Second Quarter, 2012
Investor Presentation Second Quarter, 2012 May 29, 2012 Investor Presentation First Quarter, 2012 March 6, 2012 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
Slide 2: Q2 2012 Overview
Overview Overview Rick Waugh President & Chief Executive Officer Rick Waugh President & Chief Executive Officer Q2 2012 Overview • Strong quarter – Net income: $1,460 million – EPS: $1.15 • Up 8% from prior year, excluding acquisition-related gains and IFRS-related FX gains last year – ROE: 18.6% •
Slide 3: YTD Year-over-Year Comparisons
YTD Year-over-Year Comparisons Business Line Net Income Revenue Canadian Banking 13.5% 3.5% International Banking 15.4% 20.0% Global Wealth Management 23.9% 18.1% Global Banking and Markets (1.8%) 3.1% All Bank 12.1% 9.5% Note: Excludes $286 million in acquisition-related gains in Q2/11 5 Financial
Slide 4: Strong Earnings Momentum Continues; Record Revenue
Strong Earnings Momentum Continues 1 Q2/12 Q1/12 Q/Q Q2/11 Y/Y $1,460 $1,436 2% Net Income ($MM) $1,258 16% 2 $1.15 $1.12 3% EPS $1.06 8% 18.6% 19.8% (120) bps ROE 19.8% (120) bps 53.7% 53.5% 20 bps Productivity Ratio 55.5% (180) bps (1) Excluding $286 million or $0.26 per share gain from acquisitio
Slide 5: Good Progress on Expense Management; Strong Capital Ratios
Good Progress on Expense Management Non-Interest Expenses Year-over-Year ($ millions) • Excluding acquisition-related gains and 2,507 2,565 one-time IFRS foreign currency-related gains, 2,395 operating leverage was +3.5% 692 755 685 • Expenses up 7% – Acquisitions accounted for over 80% of increase
Slide 6: Canadian Banking: Expense Discipline; International Banking: Solid Quarter
Canadian Banking: Expense Discipline Net Income Year-over-Year ($ millions) • Revenues up 5% 475 + Strong asset and deposit growth 461 – Modestly lower margin 374 • PCLs down $26MM to $120MM • Expenses virtually flat + Staffing decline due to operational efficiency initiatives – Normal annual increa
Slide 7: Global Wealth Management: Continuing Steady Growth; Global Banking & Markets: Very Strong Quarter
Global Wealth Management: Continuing Steady Growth Net Income Year-over-Year ($ millions) 494 • Revenues up 6%, ex-gain + Strong growth in global insurance and solid results in asset management – Lower online brokerage revenues 260 • Expenses down 3% 288 298 + DundeeWealth one-time costs incurred in
Slide 8: Other Segment; Risk Review
Other Segment1 Net Income ($ millions) Q2/12 – $34MM impairment loss on investment securities – $25MM costs related to share issuance Q2/11 Q1/12 Q2/12 (17) (29) Q1/12 + $94MM gain on sale of real estate asset – $19MM impairment loss on investment securities (94) Q2/11 + $77MM foreign currency relat
Slide 9: Q2 2012 Risk Overview; Credit Provisions Continue Steady Improvement
Q2 2012 Risk Overview • Risk in credit portfolios continues to be stable – Total provisions remain low • Increase in net impaired loan formations principally due to two accounts • Exposures to “GIIPS” countries in Europe not material • Market risk remains low and well controlled – Average 1-day all-
Slide 10: Canadian Banking: Residential Mortgage Portfolio; High-Rise Condo Exposure
Canadian Banking: Residential Mortgage Portfolio ($ billions, as at April 30, 2012) Total Portfolio: $149 $76 $6 Average LTV of Insured Uninsured uninsured mortgages is 56% 44% 56%1 $70 $23 $22 $3 $2 $16 $12 $1 $20 $20 $1 $11 $15 Ontario B.C. Alberta Quebec Other Freehold - $136B Condos - $13B (1) L
Slide 11: Risk Outlook; Canadian Banking 2012 Outlook
Risk Outlook • Asset quality remains strong – Retail and Commercial portfolios are stable – Corporate portfolios performing exceptionally well • Combination of growth in portfolios and product mix will result in rising provisions – Canadian Retail provisions stable – International Retail provisions
Slide 12: Canadian Banking 2012 Outlook; International Banking 2012 Outlook
Canadian Banking: 2012 Outlook • Retail & Small Business Banking: – Stable asset growth in second half of the year – Focus on deposits, payments and wealth management • Auto business: – Remains robust with healthy asset growth • Commercial Banking: – Continuing opportunities for asset and deposit gr
Slide 13: International Banking 2012 Outlook; Global Wealth Management 2012 Outlook
International Banking: 2012 Outlook • Continued momentum in loan & deposit growth • Diversification is a strength & will generate balanced regional results • Commercial & Retail growth initiatives are producing intended results • Expense focus remains a priority • Second half of the year will be dri
Slide 14: Global Wealth Management 2012 Outlook; Global Banking & Markets Outlook
Global Wealth Management: 2012 Outlook • Strong results year to date • Global Insurance outlook remains strong • Outlook for Wealth supported by strong AUA/AUM levels but impacted by markets • Consolidated online brokerage platform well positioned to grow • Continue to capture DundeeWealth synergies
Slide 15: Global Banking & Markets 2012 Outlook; Appendix
Global Banking & Markets: 2012 Outlook • Ongoing strong results from diversified business platform • Acquisition of Howard Weil expands product footprint in energy sector and grows U.S. equities capabilities • Market challenges from global uncertainty and continuing low levels of M&A activity are ex
Slide 16: Core Banking Margin (TEB); Canadian Banking: Strong Results
1 Core Banking Margin (TEB) 2.30% 2.31% 2.26% 2.37% Quarter-over-Quarter 2.25% • Impact of Colpatria +8 bps • Lower volumes of DWBs +3 bps Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 (1) Represents net interest income (TEB) as a % of average earning assets excluding bankers acceptances and total average assets re
Slide 17: Canadian Banking: Volume Growth; International Banking: Loan & Deposit Growth
Canadian Banking: Volume Growth Q2/12 Q1/12 Q/Q Average Balances ($ billions) Q2/11 Y/Y 146.4 144.6 1.2% Residential Mortgages 136.6 7.2% 38.7 38.4 0.8% Personal Loans 36.8 5.2% 1 8.7 8.9 (2.2%) Credit Cards 8.7 – Business Loans & 27.3 26.3 3.8% 25.2 8.3% Acceptances 103.4 102.7 0.7% Personal Deposi
Slide 18: Global Wealth Management: Solid Performance; Key Metrics
Global Wealth Management: Solid Performance Revenues (TEB) ($ millions) 1,111 Year-over-Year 260 • Wealth Management 905 859 + Higher Canadian mutual fund revenues 141 – Lower online brokerage revenues 119 145 • Insurance + Strong global insurance revenues 732 714 764 Quarter-over-Quarter • Wealth M
Slide 19: Global Banking & Markets: Strength of Diversification; Economic Outlook
Global Banking & Markets: Strength of Diversification Revenues (TEB) Year-over-Year ($ millions) • Global Capital Markets 910 + Higher revenues in precious metals, 845 845 equities and energy – Fixed income revenues decline 507 • Global Corp. & Investment Banking 441 470 + Volume growth – Lower advi
Slide 20: Unrealized Securities Gains; Stable PCL Ratios
Unrealized Securities Gains ($ millions) Q2/12 Q1/12 Emerging Market Debt 249 260 Other Debt 267 321 Equities 443 406 959 987 Net Fair Value of Derivative Instruments (131) (255) and Other Hedge Amounts Total 828 732 39 Stable PCL Ratios (Total PCL as % of average loans & BAs) Q2/11 Q3/11 Q4/11 Q1/1
Slide 21: Net Impaired Loan Formations; Gross Impaired Loans
Net Impaired Loan Formations ($ millions) 500 419 405 400 372 300 276 254 228 200 100 0 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 41 Modest Increase in Gross Impaired Loans ($ billions) 3.7 1.20% 3.6 1.15% 3.5 1.10% 3.4 1.05% 3.3 1.00% 3.2 0.95% 3.1 3.0 0.90% Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 GILs GILs
Slide 22: Canadian Banking Retail Loans and Provisions; International Retail Loans
Canadian Banking: Retail Loans and Provisions $149 (Spot balances at Q2/12, $ billions) Total = $197B; 93% secured $24 $15 $9 1 Mortgages Lines of Credit Personal Loans Credit Cards % secured 100% 66% 98% 36% PCL Q2/12 Q1/12 Q2/12 Q1/12 Q2/12 Q1/12 Q2/12 Q1/12 $ millions 4 5 29 31 33 33 39 43 % of a
Slide 23: International Commercial Lending Portfolio; Trading Results and VaR
International Commercial Lending Portfolio Q2/12 = $45 billion Asia/Pacific 27% Latin America 50% Caribbean & Central America 23% • Well secured • Portfolios in Asia/Pacific, Mexico, Chile, Peru and Central America performing well • Closely managing Caribbean hospitality portfolio 45 Q2 2012 Trading
Slide 24: Q2 2012 Trading Revenue Distribution
Q2 2012 Trading Revenue Distribution (# days) 10 9 8 7 6 5 4 3 2 1 0 (1) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 ($ millions) • 98% of days had positive results in Q2/12 47