Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — The Bank of Nova Scotia — Q3 2023 Earnings Presentation
53 slides from Bank Of Nova Scotia's earnings presentation, Aug 29, 2023
Slide 1: Investor Presentation Third Quarter 2023
Investor Presentation Third Quarter 2023 August 29, 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 obtaining regulatory approvals; critical accounting estimates and the effect of changes to statements. Statements of this type are included in this document, and may be i
Slide 3: Opening Remarks
Opening Focused Client Initiatives Remarks Disciplined Capital Allocation Scott Thomson Strong Capital & Liquidity Metrics President & CEO 3
Slide 4: Q3/23 Overview
Q3/23 Overview Raj Viswanathan Group Head & CFO 4
Slide 5: Q3 2023 Financial Performance
Q3 2023 Financial Performance $MM, except EPS Q3/23 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported Net Income $2,212 (15%) 2% • Diluted EPS down 18% (up 2% Q/Q) Pre-Tax, Pre-Provision Profit1 $3,528 (2%) 5% Diluted EPS $1.72 (18%) 2% • Adjusted PTPP down 2% (up 5% Q/Q) Revenue $8,090 4% 2% • Revenues up
Slide 6: Strong Capital Position
Strong Capital Position Q/Q CHANGE IN CET1 RATIO (%)1 11 bps • CET1 ratio of 12.7%, expected to continue 19 bps 12.7% 18 bps to grow through fiscal 2023 12.3% (10 bps) • Contributions from internal capital generation and share issuances through DRIP Q2 2023 Earnings less RWA growth Share issuances O
Slide 7: Canadian Banking
Canadian Banking $MM Q3/23 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported Net Income1 $1,062 (12%) - • Net income1 down 12% Pre-Tax, Pre-Provision Profit2 $1,768 2% 5% o Pre-tax, pre-provision profit up 2% Revenue $3,216 3% 3% o Higher PCLs as a result of higher commercial and Expenses $1,448 5% (1%) re
Slide 8: Global Wealth Management
Global Wealth Management $MM, except AUM/AUA Q3/23 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported Net Income1 $366 (3%) 4% • Net income down 3% (up 4% Q/Q) Pre-Tax, Pre-Provision Profit2 $493 (4%) 3% o International Wealth Management up 26% Revenue $1,336 2% 3% • Revenue up 2% Expenses $843 6% 3% o High
Slide 9: Global Banking and Markets
Global Banking and Markets $MM Q3/23 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported Net Income1 $434 15% 8% • Net income up 15% Pre-Tax, Pre-Provision Profit2 $585 18% (3%) o Higher revenue and lower PCLs Revenue $1,343 17% (1%) • Revenue up 17% Expenses $758 16% 1% o Non-interest income up 35% PCLs ($6
Slide 10: International Banking
International Banking Constant dollar basis1,5 YEAR-OVER-YEAR HIGHLIGHTS $MM Q3/23 Q3/22 Y/Y1 Q2/23 Q/Q1 Reported • Net income2 down 8% (down 6% Q/Q) Net Income2 $628 $685 (8%) $667 (6%) • Pre-tax, pre-provision profit up 11% Pre-Tax, Pre-Provision Profit3 $1,355 $1,223 11% $1,314 3% Revenue $2,846
Slide 11: Other
Other R E P O R T E D N E T I N C O M E 1, 2 ( $ M M ) HIGHLIGHTS • Decreased $247 million from the prior year, improved $24 million from the prior quarter (52) • Q/Q and Y/Y: Lower revenues due primarily to higher funding costs net of asset repricing, and (323) (299) lower income from hedges (603)
Slide 12: Risk Review
Risk Review Phil Thomas Chief Risk Officer 12
Slide 13: Gross Impaired Loans and Net Write-offs
Gross Impaired Loans and Net Write-offs GILS ($MM) AND GIL RATIO1 HIGHLIGHTS 67 bps 64 bps 65 bps 67 bps 70 bps • GILs increased $182 million Q/Q but remain below pre- 60 bps 58 bps 62 bps pandemic levels driven by new formations in retail and 5,305 5,487 Canadian Commercial partially offset by decr
Slide 14: Provisions
Provisions PCLs ($MM) Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 HIGHLIGHTS (QUARTER-OVER-QUARTER) All-Bank • Total PCLs (42bps, up 5 bps Q/Q): Impaired 389 494 562 621 738 o Increased $110 million Q/Q driven by retail Performing 23 35 76 88 81 formations primarily in International and Total 412 529 638 709 819
Slide 15: Provisions and Allowances
Provisions and Allowances TOTAL ACLS1 ($MM) AND ACL RATIO2 HIGHLIGHTS 86 bps 80 bps 75 bps 72 bps 71 bps 72 bps 75 bps 78 bps • Total ACL ratio up 3 bps Q/Q to 78 bps o Performing Allowances are $4.3 billion 5,931 6,094 5,731 5,583 5,375 5,499 5,668 (+$95MM Q/Q) reflective of ACL build for 5,295 33
Slide 16: Appendix
1 2 Appendix 3 4 5 16
Slide 17: Net Income and Adjusted Diluted EPS
Net Income and Adjusted Diluted EPS Net Income ($MM) and EPS ($ per share) Q3/22 Q2/23 Q3/23 Reported View Net Income Attributable to Common Shareholders Net Income attributable to common shareholders 2,504 2,029 2,086 Dilutive impact of share-based payment options and others 6 (11) 2 Net Income att
Slide 18: Risk Adjusted Margin and NIM
Risk Adjusted Margin and NIM RISK ADJUSTED MARGIN1 ALL-BANK NIM2 3.22% 3.31% 3.24% 3.18% 3.10% (4bps) 1 bp 2.20% 2.10% 2.05% 2.08% 2.06% 213 bps 210 bps 2.02% 1.94% 1.83% 1.80% 1.74% Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q2/23 Spreads Business Mix Q3/23 All-Bank Canadian Banking International Banking CANADI
Slide 19: Interest Rate Sensitivity
Interest Rate Sensitivity NET INTEREST INCOME SENSITIVITY POLICY RATE CHANGE AND OUTLOOK POLICY RATE CHANGE AND OUTLOOK Policy • Impact of an immediate and sustained 100 bps parallel rate Rate Change by BNS shift on net interest income (NII) over a 12-month on Fiscal Quarters (bps) Current Forecast
Slide 20: 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 Q2E Q3F Q4F Q1F Q2F Q3F Q4F Year Year Canada 1.6 5.0 3.4 2.2 1.7 1.4 1.5 1.7 0.6 0.6 0.9 1.6 0.9 U.S.2 1.8 5.9 2.1 1.8 2.6 1.4 0.7 1.6 0.4 0.1 0.5 1.0 0.5 Mexico2 1.7 4.7 3.
Slide 21: 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 (%) +6% ACTIVE 8,073 8,733 8,551 9,045 7,524 DIGI
Slide 22: Digital Progress: Canada
Digital Progress: Canada DIGITAL ADOPTION (%) +8% ACTIVE 3,847 4,071 4,368 4,272 4,598 +170 bps 3,599 DIGITAL USERS (#’000) +28% 59% 61% 60% 62% 55% 50% 2019 2020 2021 2022 Q3/22 Q3/23 +1,180 bps +12% 2019 2020 2021 2022 Q3/22 Q3/23 ACTIVE 3,393 3,704 3,583 3,994 2,666 3,073 MOBILE USERS DIGITAL SAL
Slide 23: Digital Progress: Pacific Alliance
Digital Progress: Pacific Alliance +4% DIGITAL ADOPTION (%) 4,002 4,365 4,280 4,447 3,677 ACTIVE 2,717 +260 bps DIGITAL USERS (#’000) +64% 58% 57% 59% 53% 2019 2020 2021 2022 Q3/22 Q3/23 46% 35% +2,430 bps +7% 3,793 3,701 3,944 2019 2020 2021 2022 Q3/22 Q3/23 3,334 ACTIVE 2,830 MOBILE USERS 1,847 +1
Slide 24: Revenue Growth
Revenue Growth CANADIAN BANKING1 INTERNATIONAL BANKING1 on Constant Dollar Basis2 +3% +8% 2,846 2,640 2,818 31 32 -9% 35 3,119 3,134 3,216 613 601 +8% 829 +1% 556 818 821 +4% 2,050 2,173 2,213 +8% 2,301 2,313 2,387 Q3/22 Q2/23 Q3/23 Q3/22 Q2/23 Q3/23 Retail Banking Business Banking Latin America CCA
Slide 25: Adjusted Non-Interest Expense
Adjusted Non-Interest Expense1 HIGHLIGHTS ADJUSTED NON-INTEREST EXPENSE Year-Over-Year in MMs Q3/23 Q2/23 Q3/22 Q/Q Y/Y • Expenses up 9%, including ~4% due to the negative impact of Salaries and Benefits 1,801 1,794 1,665 - 8% FX Performance & Share-Based • Higher personnel costs, performance-based
Slide 26: Loan Growth by Business Line
Loan Growth by Business Line GLOBAL BANKING AND CANADIAN BANKING1 INTERNATIONAL BANKING1 MARKETS1 in $Bn in $Bn and on Constant Dollar Basis2 in $Bn +3% +5% +13% 447 447 434 178 178 170 78 86 88 7 8 8 71 73 74 97 96 94 132 126 111 9 9 8 278 281 277 21 20 20 48 52 53 Q3/22 Q2/23 Q3/23 Q3/22 Q2/23 Q3/
Slide 27: High Quality Loan Growth
High Quality Loan Growth CANADIAN BANKING INTERNATIONAL BANKING GLOBAL BANKING AND COMMERCIAL1 C O M M E R C I A L & C O R P O R A T E 1,2 MARKETS1 in $Bn in $Bn and Constant Dollar Basis2 in $Bn +13% +3% +13% 88 98 97 96 132 132 84 86 94 95 126 81 123 78 18 20 111 17 20 +29% 16 53 +8% 56 58 57 57 +
Slide 28: Strong Deposit Growth
Strong Deposit Growth REPORTED AVERAGE DEPOSITS BY SEGMENT Q3/23 REPORTED AVERAGE DEPOSIT MIX in $Bn CB IB GBM GWM 3 2 Term - 679 685 Notice - 666 Business 624 Business 591 22% Demand-1 7% 538 Personal 337 344 2% 328 308 294 261 2 1 $685 Bn Notice - Demand - 107 119 126 129 Personal 104 Business 111
Slide 29: Strong Balance Sheet Metrics
Strong Balance Sheet Metrics $Bn Q3/22 Q2/23 Q3/23 Capital Metrics CET1 Ratio1,2 11.4% 12.3% 12.7% Tier 1 Capital Ratio1,2 13.0% 14.1% 14.6% Total Capital Ratio1,2 15.0% 16.2% 16.9% TLAC Ratio1,2,3 28.4% 28.3% 30.5% Leverage Ratio1,2 4.2% 4.2% 4.1% TLAC Leverage Ratio1,2,3 9.3% 8.4% 8.7% CET1 Capita
Slide 30: 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 July 31, April
Slide 31: 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 in $Tn 2022Q1 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 32: Commercial Real Estate
Commercial Real Estate Portfolio comprised of Commercial Real Estate, and Construction loans which include project management and trade contractors LOANS OUTSTANDING1 HIGHLIGHTS Q3/22 Q2/23 Q3/23 Total Portfolio: $66.2Bn • Portfolio exposure remained relatively flat Q/Q as the Bank has been selectiv
Slide 33: Canadian Retail: Loans and Provisions
Canadian Retail: Loans and Provisions 1 MORTGAGES AUTO LOANS 89 83 78 37 41 39 50 76 4 63 65 45 0 0 0 1 1 1 11 2 31 0 0 0 0 0 0 (5) (6) (4) 1 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 LINES OF CREDIT2 CREDIT CARDS3 380 357 312 338 234 267 268 244
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 Balances) 26% 34% Insured Variable Mortgage Variable Portfolio Mortgages Total Total Total Outstanding Balance $294 $101 Portfolio: Portfolio: U
Slide 35: 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% ($248Bn) Freehold 163.4 22.4 58.3 Total 141.0 Portfolio1,2: 16.3 31.4 19.7 11.4 9.9 42.0 3.6 2.8 0.3 0.7 $294Bn 27.8 16.9 11.1 9.2 Ontario BC & Territories Alberta Quebec Atlantic Manitoba
Slide 36: International Retail: Loans and Provisions
International Retail: Loans and Provisions CARIBBEAN AND MEXICO CHILE CENTRAL AMERICA MARKETS 173 237 132 212 WITH 138 129 201 111 103 102 104 GREATER 158 139 154 133 121 122 133 195 119 109 WEIGHTING 120 102 98 106 91 64 133 124 108 TO SECURED 72 78 67 65 148 115 73 51 124 95 71 93 3 62 45 96 31 39
Slide 37: Retail 90+ Days Past Due Loans
Retail 90+ Days Past Due Loans1,2 CANADA3 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Mortgages 0.12% 0.12% 0.10% 0.09% 0.09% 0.11% 0.12% 0.14% Personal Loans 0.39% 0.44% 0.40% 0.42% 0.49% 0.56% 0.58% 0.63% Credit Cards 0.63% 0.69% 0.69% 0.65% 0.72% 0.70% 0.71% 0.61% Secured and 0.16% 0.17% 0.18
Slide 38: Trading Results
Trading Results TRADING REVENUE NO TRADING LOSS DAYS (Q3/23) AND ONE-DAY TOTAL VAR (Q3/23) Average 1-Day Total VaR Q3/23: $ 15.5 MM 30 40 Q2/23: $ 17.4 MM Q3/22: $ 15.5 MM 30 25 20 (# OF DAYS IN QUARTER) 20 10 15 $MM 0 10 -10 5 -20 0 -30 <0 5 6 7 8 9 10 15 20 25 >25 Q3/23 DAILY TRADING REVENUES ($MM
Slide 39: International Banking: Pacific Alliance
International Banking: Pacific Alliance1 GEOGRAPHIC FINANCIAL PERFORMANCE AND METRICS ($MM) DISTRIBUTION7 Reported (Constant Dollar Basis)2,3 Q3/23 Q2/23 Q3/22 Q/Q2 Y/Y2 as at Q3/23 Colombia Mexico Revenue $2,017 $1,965 $1,877 3% 7% 13% 37% Expenses $936 $944 $890 (1%) 5% REVENUE Pre-Tax, Pre-Provis
Slide 40: International Banking: CCA
International Banking: CCA1 GEOGRAPHIC FINANCIAL PERFORMANCE AND METRICS ($MM) DISTRIBUTION7 Reported (Constant Dollar Basis)2,3 Q3/23 Q2/23 Q3/22 Q/Q2 Y/Y2 as at Q3/23 Central English Revenue $601 $613 $556 (2%) 8% Caribbean America Expenses $339 $340 $337 0% 1% 19% 65% REVENUE Pre-Tax, Pre-Provisi
Slide 41: Non-GAAP Reconciliations
1 2 Non-GAAP Reconciliations 3 4 5 41
Slide 42: Impact of Foreign Currency Translation
Reconciliation for non-GAAP Financial Measures Impact of Foreign Currency Translation Average Exchange Rate Q3/23 Q/Q Y/Y US Dollar/Canadian Dollar 0.750 1.5% (3.6%) Mexican Peso/Canadian Dollar 12.959 (4.3%) (17.3%) Peruvian Sol/Canadian Dollar 2.733 (2.4%) (7.6%) Colombian Peso/Canadian Dollar 3,1
Slide 43: All Bank: Net Interest Margin and Risk Adjusted Margin
Reconciliation for non-GAAP Financial Measures All Bank: Net Interest Margin and Risk Adjusted Margin All-Bank ($MM) Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Average total assets1 1,295,165 1,332,897 1,380,008 1,390,459 1,401,515 Less: Non-earning assets 111,324 126,213 118,465 111,261 109,143 1 Average total
Slide 44: Canadian Banking: Risk Adjusted Margin
Reconciliation for non-GAAP Financial Measures Canadian Banking: Risk Adjusted Margin Canadian Banking ($MM) Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Average total assets1 437,269 445,670 450,040 450,634 450,192 Less: Non-earning assets 4,089 4,112 4,035 3,957 4,066 1 Average total earning assets 433,180 441,5
Slide 45: International Banking: Risk Adjusted Margin
Reconciliation for non-GAAP Financial Measures International Banking: Risk Adjusted Margin International Banking ($MM) Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Average total assets1 209,076 217,061 228,374 238,705 241,396 Less: Non-earning assets 18,448 19,358 19,103 20,050 19,611 1 Average total earning asset
Slide 46: Pacific Alliance: NIM and Risk Adjusted Margin
Reconciliation for non-GAAP Financial Measures Pacific Alliance: NIM and Risk Adjusted Margin Pacific Alliance ($MM) Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Average total assets1 157,441 161,526 170,840 183,531 186,890 Less: Non-earning assets 18,427 18,640 18,071 21,552 21,692 1 Average total earning assets
Slide 47: Caribbean and Central America: NIM and Risk Adjusted Margin
Reconciliation for non-GAAP Financial Measures Caribbean and Central America: NIM and Risk Adjusted Margin Caribbean and Central America ($MM) Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Average total assets1 33,219 34,522 35,124 35,372 34,829 Less: Non-earning assets 2,656 2,611 2,662 2,547 2,550 1 Average total
Slide 48: Pre-Tax, Pre-Provision Profit
Reconciliation for non-GAAP Financial Measures Pre-Tax, Pre-Provision Profit ($MM) Reported Basis Adjusted Basis1 Business Line Pre-tax, pre-provision profit Q3/22 Q2/23 Q3/23 Q3/22 Q2/23 Q3/23 Revenue 7,799 7,929 8,090 7,799 7,929 8,090 All-Bank Expenses 4,191 4,576 4,562 4,167 4,555 4,542 Pre-tax,
Slide 49: Pre-Tax, Pre-Provision Profit (Constant Dollar Basis)
Reconciliation for non-GAAP Financial Measures Pre-Tax, Pre-Provision Profit (Constant Dollar Basis) ($MM) Reported Basis Adjusted Basis1 Business Line Pre-tax, pre-provision profit Q3/22 Q2/23 Q3/23 Q3/22 Q2/23 Q3/23 International Banking Revenue 2,640 2,818 2,846 2,640 2,818 2,846 (Constant FX) Ex
Slide 50: International Banking: Return on Equity
Reconciliation for non-GAAP Financial Measures International Banking: Return on Equity ($MM) Reported Basis ($MM) Reported Basis Return on Equity FY21 FY22 Q3/23 Return on Equity FY21 FY22 Q3/23 Mexico Chile Net Income Attributable to Common Net Income Attributable to Common 586 745 234 605 841 150
Slide 51: Pacific Alliance and CCA: Return on Equity, PCLs
Reconciliation for non-GAAP Financial Measures Pacific Alliance and CCA: Return on Equity, PCLs ($MM) Reported Basis Constant Dollar Basis1 PCLs Q3/22 Q2/23 Q3/23 Q3/22 Q2/23 Q3/23 Pacific Alliance 261 398 465 287 409 465 Caribbean and Central America 51 25 27 55 24 27 ($MM) Reported Basis Return on
Slide 52: International Banking: Revenue, Loans, Deposits
Reconciliation for non-GAAP Financial Measures International Banking: Revenue, Loans, Deposits Reported Basis Constant Dollar Basis1 Revenue ($Bn) Q3/22 Q2/23 Q3/23 Q3/22 Q1/23 Q2/23 Latin America 1,856 2,097 2,213 2,050 2,173 2,213 C&CA 528 623 601 556 613 601 Asia 35 32 32 35 31 32 Average Interna
Slide 53: 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 53
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