Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — Scotiabank — Q3 2020 Earnings Presentation
46 slides from Bank Of Nova Scotia's earnings presentation, Aug 25, 2020
Slide 1: Investor Presentation Third Quarter 2020
Investor Presentation Third Quarter 2020 August 25, 2020
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements From time to time, our public communications often include oral or written forward- changes to accounting standards, rules and interpretations on these estimates; global looking statements. Statements of this type are included in this document, and may be
Slide 3: Q3/20 Financial Results
Q3/20 Financial Results Raj Viswanathan Group Head & CFO 3
Slide 4: Q3 2020 Financial Performance
Q3 2020 Financial Performance $MM, except EPS Q3/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Adjusted EPS down 45%2 Net Income $1,304 (34%) (2%) • Pre-tax, pre-provision profit (PTPP) down 3%2, up 2% Pre-Tax, Pre Provision Profit $3,716 +8% +3% excluding divestitures Diluted EPS $1.04 (31%) +4%
Slide 5: Strong Capital & Liquidity
Strong Capital & Liquidity +17 bps -7 bps 11.3% +31 bps -26 bps +28 bps 10.9% (1) Q2/20 Earnings Dividends Lower RWA ECL Transitional Pension Q3/20 Reported Capital Relief Reported Internal capital generation • CET1 ratio 230 bps above OSFI minimum capital standard (versus 190 bps in Q2 2020) • +10
Slide 6: Canadian Banking
Canadian Banking $MM Q3/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Adjusted Net Income down 53%3 Net Income1 $429 (53%) (10%) o PCLs up 212%; mainly from performing loan PCLs Pre-Tax, Pre Provision Profit $1,328 (10%) +2% o Adjusted expenses down 2%3 Revenue $2,500 (6%) (1%) o Strong volume gro
Slide 7: International Banking
International Banking $MM1 Q3/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS1 Reported • Adjusted Net Income ex. divestitures down 91%2,5. Net Income2 $26 (96%) (85%) Excluding divested operations: Pre-Tax, Pre Provision Profit $1,180 (21%) (4%) o PCLs up 187%; mainly from performing loan PCLs Revenue $2,570
Slide 8: Global Banking and Markets
Global Banking and Markets $MM Q3/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Net Income up 60% Net Income1 $600 +60% +15% o Continued strong trading and investment banking Pre-Tax, Pre Provision Profit $925 +88% +10% revenues Revenue $1,545 +43% +6% • Revenue up 43% Expenses $620 +5% 1% o Non-i
Slide 9: Global Wealth Management
Global Wealth Management $MM, except AUM/AUA Q3/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS Reported • Adjusted Net Income up 6%2 Net Income1 $321 +6% +6% • Revenue up 2% excluding divestitures Pre-Tax, Pre Provision Profit $435 +5% +6% o Higher brokerage fees from strong iTRADE Revenue $1,135 - +1% volume
Slide 10: Other
Other 1, 2, 3 ADJUSTED NET INCOME ($MM) YEAR-OVER-YEAR HIGHLIGHTS • Higher expenses partly offset by higher -31 -48 -35 contributions from asset/liability -64 management activities -166 QUARTER-OVER-QUARTER HIGHLIGHTS Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 • Included higher operating expenses relating to pro
Slide 11: Risk Review
Risk Review Daniel Moore Group Head & CRO 11
Slide 12: Well Provisioned
Well Provisioned Total ACLs ($MM) 7,403 6,079 1,958 +45% • $7.4 billion in total ACLs 5,273 5,145 5,095 1,717 • 56% increase ($2 billion) in performing 1,749 1,663 1,607 ACLs over the past 2 quarters. 5,445 • Adequate coverage for future net write- 3,524 3,482 3,488 4,362 offs Q3/19 Q4/19 Q1/20 Q2/2
Slide 13: PCLs by Business Line
PCLs by Business Line TOTAL PCLs ($MM)1, 2, 3 AND PCL RATIO2 136 bps YEAR-OVER-YEAR HIGHLIGHTS 119 bps 2,181 2400 2 • Total PCL ratio2 of 136 bps, up 17 bps Q/Q, and 1,846 149 48 bps 50 bps 51 bps up 88 bps Y/Y 1900 2 155 752 • Higher PCL rates primarily due to higher 1400 670 performing loan PCL re
Slide 14: PCLs - Impaired and Performing
PCLs - Impaired and Performing PCLs ($MM) Q3/19 Q4/19 Q1/202 Q2/20 Q3/20 All-Bank YEAR-OVER-YEAR HIGHLIGHTS Impaired 776 744 802 870 928 Performing (63)1 91 (31) 1 9761 1,2531 • Higher PCLs driven mainly by higher 7531 performing PCL. Total PCLs1 of $2,181 million Total 7131 7711 1,8461 2,1811 were
Slide 15: International Retail: Loans and Provisions
International Retail: Loans and Provisions PERU COLOMBIA 2.5x 3.0x 447 1127 416 1242 Markets with 1290 1552 Greater Weighting to 970 939 Unsecured 545 473 549 531 372 471 471 439 402 491 424 470 455 579 542 395 361 420 406 377 1 1 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/
Slide 16: Customer Assistance Programs
Customer Assistance Programs Active Deferral Active Expiring Deferral % Deferral Exposure % Current following Product Types Requests 1 Total Exposure1 Exposure in Q4/201 Expired 1 Deferral Expiry1,2 #(’000s) % ($B) % ($B) % Canada Mortgages 137 58.1% $39.0 94.0% 10.8% $35.3 90.6% 99.4% Credit Cards
Slide 17: GILs and GIL Formations by Business Line
GILs and GIL Formations by Business Line GILs2 ($MM) AND GILs RATIO1, 2 86 bps 84 bps 81 bps YEAR-OVER-YEAR HIGHLIGHTS 77 bps 78 bps 5,229 5,135 • GILs increased 1% Q/Q but declined 2% Y/Y 4,770 5,120 5,148 202 14 237 10 31 26 27 285 209 1,069 218 o GILs ratio up 3 bps Q/Q and down 5 bps 1,087 1,222
Slide 18: Net Write-Offs by Business Line
Net Write-Offs by Business Line NET WRITE-OFFS ($MM)1, 2 AND NET WRITE-OFFS RATIO1, 2, 3 50 bps 49 bps 54 bps 47 bps 47 bps YEAR-OVER-YEAR HIGHLIGHTS 827 • Net write-offs1 were up 2% Q/Q and up 1% Y/Y 745 749 27 732 750 1 4 8 13 33 256 o Higher write-offs in Global Banking and 257 260 265 266 Market
Slide 19: Key Messages
High quality portfolio Key Well provisioned for potential credit Messages losses Brian Porter President & CEO Resilient capital ratios Strong expense management 19
Slide 20: COVID-19 in Core Markets
COVID-19 in Core Markets 80,000 New Cases(1) 60,000 40,000 20,000 0 March April May June July New Cases/100K Population(1)(2) 20 15 10 5 0 March April May June July 1 Source: World Health Organization, John Hopkins University & Medicine (up to July 31, 2020) 2 Source: World Bank 2017-2019 20
Slide 21: COVID-19: Pacific Alliance
COVID-19: Pacific Alliance Mexico Peru Economic Outlook GDP Growth – Current Forecast (Previous Forecast) Economic Outlook GDP Growth – Current Forecast (Previous Forecast) • 2020: -9.1% (-8.4%). 2021: +3.1% (+1.1%) • 2020: -11.5% (-9.0%). 2021: +8.7% (+7.0%) COVID-19 New Case Trend: COVID-19 New Ca
Slide 22: Scotiabank Customer Activity
Scotiabank Customer Activity Canada: Daily Debit and Credit Card Canada: New Mortgage Transaction Volumes ($MM) and Auto Originations ($MM) Start of 500 COVID-19 8,000 Lockdown 400 6,000 300 4,000 200 2,000 100 - - Nov Dec Jan Feb Mar Apr May Jun Jul Nov Dec Jan Feb Mar Apr May Jun Jul 2020 2019 202
Slide 23: Appendix
1 2 Appendix 3 4 5 23
Slide 24: Economic Outlook in Core Markets
Economic Outlook in Core Markets Real GDP Growth Forecast (2019 – 2021) Real GDP (Annual % Change) Forecast 2010–18 Country 2019 2020F 2021F Average 1 2 1 Previous Current Previous Current2 Canada 2.2 1.7 -9.1 -6.6 6.5 5.4 U.S. 2.3 2.3 -6.3 -4.7 7.0 5.4 Mexico 3.0 -0.3 -8.4 -9.1 1.1 3.1 Peru 4.8 2.2
Slide 25: Macroeconomic Scenarios
Macroeconomic Scenarios Select Macroeconomic Variables that Impact Expected Credit Loss Calculations Alternative Scenario - Severe Base Case Scenario Alternative Scenario - Optimistic Alternative Scenario - Pessimistic Pessimistic As at As at As at As at As at As at As at As at As at As at As at As
Slide 26: NIAT Excluding Divestitures
NIAT Excluding Divestitures YTD-OVER-YTD1 All-Bank -23.8% YTD/YTD +7.6% Y/Y -4932 -602 7,009 6,516 5,023 4,963 Q3/19 YTD Divestitures Q3/19 YTD Adj. Q3/20 YTD Divestitures Q3/20 YTD Adj. Adj. NIAT Related NIAT NIAT ex. Adj. NIAT Related NIAT NIAT ex. Divestitures Divestitures 1 Refer to Non-GAAP Mea
Slide 27: Net Income and Adjusted Diluted EPS
Net Income and Adjusted Diluted EPS Net Income ($MM) and EPS ($ per Q3/19 Q2/20 Q3/20 share) Net Income attributable to common $1,839 $1,243 $1,332 shareholders 1 Quarterly diluted common shares Dilutive impact of share-based $40 ($22) ($43) outstanding may be impacted by dilutive payment options an
Slide 28: Adjusting Items - Pre-Tax
Adjusting Items - Pre-Tax Q3/19 Q2/20 Q3/20 Adjusting Items (Pre-Tax) ($MM) Acquisition-Related Costs Day 1 PCL on acquired performing financial instruments - - - – International Banking Integration Costs 43 41 40 Canadian Banking - - - International Banking 39 33 34 Global Wealth Management 4 8 6 1
Slide 29: Adjusting Items – After-Tax and NCI
Adjusting Items – After-Tax and NCI Q3/19 Q2/20 Q3/20 Adjusting Items (After-Tax and NCI) ($MM) Tax NCI After-Tax and NCI Acquisition-Related Costs Day 1 PCL on acquired performing financial instruments - - - - - – International Banking Integration Costs 26 20 11 5 24 Canadian Banking - - - - - Inte
Slide 30: Other Items Impacting Financial Results
Other Items Impacting Financial Results 1 Q3/20 vs YTD20 vs (Pre-Tax) ($MM) Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 YTD19 Canadian Banking Branch real estate gains 8 7 - - - - - - (15) Total 8 7 - - - - - - (15) International Banking One month reporting lag elimination 58 - - - 51 - - - (7)
Slide 31: Revenue Growth: P&C Banking
Revenue Growth: P&C Banking Canadian Banking1 International Banking1, 2 +5% -16% -6% Y/Y Y/Y3 Y/Y 3,237 2,664 163 2,526 2,500 +12% Flat 2,707 628 Y/Y Y/Y 822 46 2,570 40 -76% 613 627 Y/Y 608 548 -34% Y/Y -8% Y/Y 2,036 1,913 2,253 1,873 2,052 1,982 -4% Y/Y Q3/19 Q2/20 Q3/20 Q3/19 Q2/20 Q3/20 Retail C
Slide 32: Revenue Growth: GWM and GBM
Revenue Growth: GWM and GBM Global Wealth Management Global Banking and Markets2,3 Flat +43% Y/Y1 Y/Y 1,545 1,460 1,136 1,127 1,135 -25% 156 143 Y/Y1 +119% 190 654 Y/Y 1,084 708 298 +25% 234 Y/Y +5% 187 43 946 971 992 Y/Y +10% 709 Y/Y +25% 599 657 Y/Y3 Q3/19 Q2/20 Q3/20 Q3/19 Q2/20 Q3/20 Canada Inte
Slide 33: Loan Growth by Business Line
Loan Growth by Business Line Canadian Banking International Banking1 Global Banking and Markets +7% +5% +18% +1% Y/Y2 Y/Y Y/Y Y/Y 355 356 +10% 339 Y/Y 154 152 157 59 59 54 7 7 -13% +17% 8 Y/Y Y/Y 71 69 70 78 83 89 -1% -4% Y/Y Y/Y 111 109 10 +6% 10 9 -7% 93 218 221 24 Y/Y 207 Y/Y 22 21 42 -2% 37 38 Y
Slide 34: Deposit Growth by Business Line
Deposit Growth by Business Line Canadian Banking1 International Banking1,2,3 Global Banking and Markets +10% +2% +46% Y/Y Y/Y4 Y/Y 267 116 113 250 111 243 86 +11% 79 +7% 77 Y/Y Y/Y5 75 74 77 148 125 101 171 182 166 +9% -7% Y/Y 41 36 36 Y/Y5 Q3/19 Q2/20 Q3/20 Q3/19 Q2/20 Q3/20 Q3/19 Q2/20 Q3/20 Perso
Slide 35: Global Wealth AUM/AUA Growth
Global Wealth AUM/AUA Growth Assets Under Management Assets Under Administration -1% +2% Y/Y1 Y/Y2 492 503 297 477 293 278 108 37 -35% 110 -2% 57 105 38 Y/Y1 Y/Y2 240 240 256 +7% 382 395 +4% 372 Y/Y Y/Y Q3/19 Q2/20 Q3/20 Q3/19 Q2/20 Q3/20 Canada International AUM down due to divestitures and the imp
Slide 36: Sectors Most Impacted by COVID-19
Sectors Most Impacted by COVID-191 Real Estate: Canada Office and Retail C&CA Total Loans ($B) 11% $B %IG Mexico 3% 55% Office REIT $1.0 69% $8.5B Office Real Estate $3.3 44% U.S. 11% (1.3%) Retail REIT $1.3 97% 7% Other Retail Real Estate $2.9 56% 1% 12% Europe Total2 $8.5 59% Latin America Energy
Slide 37: Energy - E&P and OFS Exposure
Energy - E&P and OFS Exposure1 % of Total Loans and Loans and Acceptances % of Total E&P % Investment Acceptances Outstanding ($B) and OFS Grade Outstanding Total Exploration & Production (E&P) 8.3 85% 1.3% 47% Canadian E&P* 3.6 37% 0.6% 63% U.S. E&P 1.2 12% 0.2% 15% Oilfield Services (OFS) 1.5 15%
Slide 38: Historical PCL Ratios on Impaired Loans
Historical PCL Ratios on Impaired Loans 1,2 1.75% ALL BANK 1.50% 1.27% 1.25% 1.00% 0.92% 0.75% 0.57% 0.59% 0.50% 0.45% 0.43% 0.49% 0.56% 0.47% 0.50% 0.25% 0.34% 0.36% 0.32% 0.40% 0.42% 0.24% 0.25% 0.14% 0.11% 0.12% 0.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 39: Canadian Retail: Loans and Provisions
Canadian Retail: Loans and Provisions 1 MORTGAGES AUTO LOANS 216 224 85 85 96 4 11 1 1 0 0 1 4 2 105 78 84 94 99 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20 LINES OF CREDIT2 CREDIT CARDS 164 169 1002 896 96 80 72 402 381 385 70 73 87 74 73 339 379 377 445 401 Q3/19 Q4/19 Q1/20 Q2/20
Slide 40: International Banking: Pacific Alliance
International Banking: Pacific Alliance 1, 2, 3 FINANCIAL PERFORMANCE AND METRICS ($MM) Q3/20 Q2/20 Q3/19 Q/Q Y/Y Revenue ($MM) 1,833 1,899 2,096 (2%) (5%) Expenses ($MM) 846 880 966 (3%) (3%) PTPP ($MM) 987 1,019 1,130 (2%) (6%) Net Income1 ($MM) 63 170 473 (60%) (86%) NIM 4.04% 4.32% 4.61% (28 bps
Slide 41: GBM: Revenue and Average Assets
GBM: Revenue and Average Assets REVENUE BY GEOGRAPHY1,2 ASSETS BY GEOGRAPHY1,2 4% 54% 7% 45% Asia Canada Asia Canada 6% Europe REVENUE (TEB) 14% AVG ASSETS Europe $1.5B $416B 36% US 34% US 1 For the 3 months ended July 31, 2020 2 GBM LatAm revenue contribution and assets are not included above as th
Slide 42: Digital Progress
Digital Progress Winner of The Banker “Innovation in Digital Banking North America1“ award #1 ranking in Canada Online Banking Satisfaction Study (J.D. Power 2020) Leading mobile banking app in Canada4 Digital account opening and sales capabilities that reduces processing time by up to 75% i
Slide 43: Trading Results
Trading Results TRADING REVENUE ZERO TRADING LOSS DAYS (Q3/20) & ONE-DAY TOTAL VAR (Q3/20) Average 1-Day Total VaR 25 Q3/20: $ 30.5 MM 50 Q2/20: $ 34.2 MM Q3/19: $ 11.9 MM Millions 40 20 30 (# of days in quarter) 20 15 10 0 -10 10 -20 -30 5 -40 -50 -60 0 3 4 5 6 7 8 9 10 15 20 25 30 >30 1-day total
Slide 44: Retail 90+ Days Past Due Loans
Retail 90+ Days Past Due Loans CANADA1 Q3/19 Q4/19 Q1/20 Q2/204 Q3/204 Mortgages 0.21% 0.20% 0.21% 0.21% 0.19% Personal Loans 0.54% 0.58% 0.63% 0.72% 0.63% Credit Cards 0.83% 0.98% 1.02% 1.12% 0.81% Secured and Unsecured Lines of Credit 0.26% 0.26% 0.25% 0.26% 0.23% Total 0.27% 0.28% 0.29% 0.30% 0.2
Slide 45: Non-GAAP Measures
Non-GAAP Measures The Bank uses a number of financial measures to assess its performance. Some of these measures are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS), are not defined by GAAP and d
Slide 46: Investor Relations Contact
Investor Philip Smith, Senior Vice-President 416-863-2866 Relations philip.smith@scotiabank.com Contact Judy Lai, Director Information 416-775-0485 judy.lai@scotiabank.com 46