Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — Investor Day (February 2018)
120 slides from Bank Of Nova Scotia's investor day presentation, Feb 1, 2018
Slide 1: Opening and Welcome Remarks
OPENING AND WELCOME REMARKS ADAM BORGATTI V ICE PR ESIDENT INV ESTOR R ELATIONS
Slide 2: Forward-Looking Statements
Forward-Looking Statements From time to time, we make written or oral forward-looking statements within the meaning of certain that we use as described in our annual financial statements and updated by quarterly reports; global securities laws, including the “safe harbour” provisions of the U.S. Pri
Slide 3: Strategic Overview
S T R AT E G I C O V E R V I E W BRIAN P ORT E R P RESIDENT AND CHIEF EX ECUTIV E OF FI C ER
Slide 4: Strong track record of allocating capital; significant untapped potential
The Bank has a strong track record of allocating capital; we have significant untapped potential and increased confidence going forward S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 5: All-Bank strategy balances short-term performance and long-term investment
All-Bank strategy balances short-term performance and long-term investment S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 2
Slide 6: Our heavy lifting has positioned the Bank for enhanced growth
Our heavy lifting has positioned the Bank for enhanced growth Alignment Leadership & Digital Cost Balance sheet culture transformation S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 3
Slide 7: Key areas of focus going forward
Key areas CUSTOMER GROWTH LEVERS DIGITAL of focus going forward STRENGTHEN THE CORE S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 4
Slide 8: Key takeaways
Key takeaways Significant untapped potential and multiple levers to drive growth A thoughtful strategy with increased confidence to execute Raising our medium-term EPS growth objective to 7%+ S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 5
Slide 9: Financials
FINANCIALS SEAN McGUCKIN G R OUP HEAD AND CHIEF FINANCIAL OFFI C ER
Slide 10: A stronger foundation will enhance earnings growth
A stronger foundation will enhance earnings growth S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 11: Consistent financial performance
Consistent financial performance1 EARNINGS PER SHARE RETURN ON EQUITY DIVIDENDS PER SHARE $ % $ +6% +6% CAGR CAGR 6.49 3.05 6.00 14.6 14.3 14.6 2.88 5.43 5.67 2.56 2.72 F2014 F2015 F2016 F2017 F2015 F2016 F2017 F2014 F2015 F2016 F2017 1 Non-GAAP measure adjusted for items of note. For further inform
Slide 12: Delivering on our medium-term financial objectives
Delivering on our medium-term financial objectives Objectives F2017 results1 3-year performance1 EPS GROWTH 5-10% 8% 6% RETURN ON EQUITY 14%+ 14.6% 14.5% OPERATING LEVERAGE POSITIVE -0.2% IN-LINE CAPITAL LEVELS STRONG 11.5% + 70 bps 1 Non-GAAP measure adjusted for items of note. For further informat
Slide 13: Driving results and improving customer service
Driving results and improving customer service Focusing on Stronger financial Technology Structural cost core markets & position modernization transformation opportunities & operational improvements S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 FI N A N C I A L P E R FO R MANCE 4
Slide 14: Focusing on our core markets and opportunities
Focusing on our core markets and opportunities • Five key markets • Canada >50% of all-Bank revenues • Increased contribution from the Pacific Alliance • Exited non-core markets and businesses S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 FI N A N C I A L P E R FO R MANCE 5
Slide 15: Stronger capital position
Stronger capital position DEPLOYMENT OF INTERNALLY GENERATED CAPITAL 3-YEAR AVERAGE % Excess capital 11 • Industry leading CET1 Acquisitions 6 capital ratio Internal investment Return to • Primarily organic initiatives 11 shareholders and shareholder returns 52 Organic growth 20 S C O T I A B A N K
Slide 16: Stronger funding position
Stronger funding position CORE DEPOSITS / WHOLESALE FUNDING/ TOTAL DEPOSITS TOTAL ASSETS % % 36 • Focus on growing 31 core deposits 28 • Reduced wholesale funding 24 F2014 F2017 F2014 F2017 For further information, see Appendix. S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 FI N A N C I A L P E
Slide 17: Technology and operational improvements
Technology and operational improvements¹ F2017 TECHNOLOGY COSTS FROM TECHNOLOGY GROWTH WAS $ 2.0 BN ~ 60 % RUN THE BANK 14 YEAR-OVER-YEAR % IN F2014 16% CAGR TO ~ 40 % TECHNOLOGY COST WAS 11 % $ 3.1 BN CHANGE THE BANK OF REVENUES IN F2017 1 Non-GAAP measure adjusted for items of note. For further in
Slide 18: Structural cost transformation is tracking ahead of schedule
Structural cost transformation is tracking ahead of schedule RUN-RATE SAVINGS $MM • Making great progress 500 and exceeded F2017 cost saving target 750 550 • Portion of savings being 55 350 reinvested in the business F2016 F2017 F2018 F2019 n Actual n Target S C O T I A B A N K I N V E S T O R D AY
Slide 19: Accounting versus economic performance
Accounting versus economic performance PROVISION FOR CREDIT LOSSES VS NET CHARGE-OFFS 3-YEAR EXPERIENCE Range in bps • Stable underlying experience Average in both provisions and net 46 charge-offs PCLs 43 50 • Expect underlying trend in net charge-offs to be stable Average • Investments in analytic
Slide 20: Earnings growth drivers
Earnings growth drivers Business mix Excess capital Technology Productivity outlook investments improvements S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO R WAR D 11
Slide 21: Business mix outlook
Business mix outlook REVENUE BY F2017 REVENUE BY GEOGRAPHY1 BUSINESS LINE1 GBM Canadian Other 17% Banking • Pacific Alliance revenue to 20 % 46% grow toward 30% in the medium-term Canada 52% • Revenue contribution by Pacific Alliance business line to remain in-line 23% with current levels U.S. Inter
Slide 22: Excess capital provides optionality
Excess capital provides optionality CET1 CAPITAL RATIO % 11.5 ~$7-8 billion of excess capital1 10.5 F2017 F2020 1 Assumes historical internal capital generation of ~50 bps per year (3-year average), excluding potential future acquisitions and other capital deployment opportunities S C O T I A B A N
Slide 23: Technology remains a key enabler
Technology remains a key enabler MODERATING TO MEDIUM-TERM HIGH SINGLE OUTLOOK DIGIT GROWTH ~ 12% OF REVENUES S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO R WAR D 14
Slide 24: Improving productivity ratio
Improving productivity ratio 53.9% F2017 <52% 50% < F2019 F2021 1 Non-GAAP measure adjusted for items of note. For further information, see Appendix. S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO R WAR D 15
Slide 25: Key takeaways
Key takeaways Medium-term objectives Stronger business platforms to drive growth EPS GROWTH 7%+ Excess capital provides ongoing optionality RETURN ON EQUITY 14%+ Ongoing cost reduction efforts represent OPERATING LEVERAGE POSITIVE significant untapped potential CAPITAL LEVELS STRONG S C O T I A B A
Slide 26: Global Risk Management
GLOBAL RISK MANAGEMENT DANIE L MOORE CHIEF R ISK OFFICER
Slide 27: Strong risk foundation enhanced by digitization and partnerships
Strong risk foundation enhanced by accelerating digitization, deeper partnerships and data-driven insights S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 28: Global Risk Management overview
OPERATIONAL CREDIT, REPUTATIONAL LIQUIDITY, & INTEREST RATE RISK-WEIGHTED PROVISION FOR AVG ONE-DAY ASSETS CREDIT LOSSES VALUE AT RISK DATA Global Risk PRIVACY $ 376 BILLION $2.2 BILLION $ 11 MILLION Management 360° VIEW ENVIRONMENTAL CONDUCT CANADIAN OVERSIGHT, LOCAL EXECUTION AML & IT & CYBER COMP
Slide 29: Diversification remains a key competitive advantage
Diversification remains a key competitive advantage LOANS BY GEOGRAPHY LOANS BY INDUSTRY % % Power & Colombia utilities 6 4 Mining 2 Transportation 5 Peru 11 Commercial Technology & media 5 Other 23 International 33 Other & Corporate 35 35 Agriculture 6 Chile 13 Automotive 7 Canada 67 Personal 65 Re
Slide 30: Solid PCL performance
Solid PCL performance RISK-ADJUSTED MARGINS AND PROVISION FOR CREDIT LOSSES F2017 VS F2016 % 2.05 2.03 2.09 1.98 • Risk-adjusted margin improved driven largely by business mix expansion 0.40 0.43 0.50 0.45 • Fast recovery from energy downturn F2014 F2015 F2016 F2017 n PCLs as a % of average net n Ri
Slide 31: Improved risk-adjusted margins
Improved risk-adjusted margins CANADIAN BANKING INTERNATIONAL BANKING GLOBAL BANKING % % AND MARKETS % 3.80 3.78 3.76 3.87 1.91 1.99 2.09 2.10 1.67 1.69 1.54 1.34 1.27 1.24 1.26 1.21 0.30 0.23 0.23 0.28 0.29 0.10 0.03 0.05 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 1 Net
Slide 32: Our PCL outlook remains positive
Our PCL outlook remains positive FAVOURABLE GDP OUTLOOK PERFORMANCE CREDIT LOSSES ACROSS MOST IN KEY MARKETS WILL CONTINUE INDUSTRIES & IS EXPECTED AT LOW LEVELS GEOGRAPHIES TO BE SOLID S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 FI N A N C I A L P E R FO R MANCE 6
Slide 33: Evolving role of risk management
S T R AT E G Y U P D AT E Evolving role of risk management Maximize risk-adjusted Strengthen our Deliver margins competitive advantage efficiently S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U TLO O K 7
Slide 34: Top priorities for Global Risk Management
S T R AT E G Y U P D AT E Top priorities for Global Risk Management Talent & leadership Partnerships Digital transformation S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 8
Slide 35: Future risk managers need different skills
TA L E N T & L E A D E R S H I P Future risk managers need different skills DIVERSIFYING OUR DEVELOPING RISK TALENT POOL MANAGERS OF THE FUTURE S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 9
Slide 36: Drive collaboration inside and outside the Bank
PARTNERSHIPS Drive collaboration inside and outside the Bank FINTECHS PARTNERS ACROSS EXTERNAL AND THE BANK NON-TRADITIONAL PLAYERS REGTECHS ACADEMIA S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 10
Slide 37: Drive digital innovation and accelerate pace of change
D I G I TA L T R A N S F O R M AT I O N Drive digital innovation and accelerate pace of change CUSTOMER DATA ANALYTICS S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 11
Slide 38: Key takeaways
Key takeaways Focused on increasing risk-adjusted margins Competitive advantage and global insights for our businesses Technology and operating model to control costs Customer at the centre of everything we do S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y TA K E AWAYS 12
Slide 39: Global Operations
G L O B A L O P E R AT I O N S DAN REES EX ECUTIV E V ICE PR ESIDENT OPER ATIONS
Slide 40: Lean processes and Bank-wide technology will lower costs
Lean processes, leveraging scale and deploying Bank-wide technology will lower costs and improve customer experience S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 41: Global Operations has an enterprise-wide mandate
FRAUD COLLECTIONS MANAGEMENT Global Operations STRUCTURAL COST RETAIL & COMMERCIAL has an enterprise- TRANSFORMATION Global Operations wide mandate GLOBAL PROCUREMENT GLOBAL BUSINESS SERVICES SERVICES CONTACT CENTRES S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O V E R VI EW 2
Slide 42: Global Operations is all about performance
PROCUREMENT SPEND PEOPLE ANNUALLY Global > 17,000 >$ 4 BILLION Operations is all about CUSTOMER INTERACTIONS F2019 STRUCTURAL COST performance ANNUALLY TRANSFORMATION TARGET > 100 MILLION >$ 750 MILLION S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O V ER VI EW 3
Slide 43: Top priorities
S T R AT E G Y U P D AT E Top priorities INVESTING TO DRIVING GREATER IMPROVE CUSTOMER EFFECTIVENESS EXPERIENCE & & EFFICIENCY DIGITAL ADOPTION S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 4
Slide 44: SCT program is tracking a year ahead of schedule
S T R U C T U R A L C O S T T R A N S F O R M AT I O N SCT program is tracking a year ahead of schedule RUN-RATE SAVINGS $MM • F2017: Delivered $500 million in net cost savings versus $350 million target • F2018 priority: End-to-end process simplification 500 – continue significant investments in >1
Slide 45: Procurement: considerable untapped potential
PROCUREMENT Considerable untapped potential RUN-RATE SAVINGS $MM >200 • F2017: Savings of 2x the internal target • F2018 priority: Ramping up savings from 125 $4 billion third-party spend • Outlook: Drive for ongoing continuous savings F2017 F2018 F2019 Cumulative penetration of third-party spend 20
Slide 46: Collections: key lever to drive improved financial outcomes
COLLECTIONS Key lever to drive improved financial outcomes • F2017: Globally, collected ~20% COLLECTIONS EFFECTIVENESS more dollars than in F2016 RISK SEGMENTATION FROM GRM • F2018 priority: Automation and analytics to drive agent COLLECTIONS PERFORMANCE productivity and recoveries • Outlook: Managi
Slide 47: Contact centres: investing to drive efficiency and customer experience
C O N TA C T C E N T R E S Investing to drive efficiency and customer experience OPERATING MINDSET • F2017: Built out multi-region, at-scale campus in our footprint CUSTOMER • F2018 priority: Improve customer experience EXPERIENCE by 20% by eliminating pain points, simplifying processes and investin
Slide 48: Key takeaways
Key takeaways SCT one year ahead of schedule with considerable potential Leveraging scale and technology to drive efficiency Contact Centres and Collections are key areas of focus S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y TA K E AWAYS 9
Slide 49: Digital Banking
D I G I TA L B A N K I N G N ACHO DESCHAMP S SHAWN RO SE G R O U P H E AD CHIEF D I G I TAL O FFI CER I N T E R N AT I O N A L BANK ING A N D D I G I TA L T R A N S FOR MATION JAMES O’SULLIVAN MICHAEL ZERBS G R O U P H E AD CHIEF TEC H N O LO G Y O FFI CER C A N A D I A N B A N K ING
Slide 50: Our digital transformation is in motion and accelerating
Our digital transformation is in motion, it is working and it is accelerating S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 51: We have built the foundation for success
We have built the foundation for success TAKE IT TO THE NEXT LEVEL ACCELERATE TRANSFORMATION 2019 & DELIVERY BUILT FOUNDATION & EARLY WINS 2018 2017 S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 2
Slide 52: Progress in our digital strategy since last year
We have made a lot of progress in our digital Organizational Technology modernization & strategy since last year alignment advanced analytics Culture & talent Customer experience Operational efficiency S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 3
Slide 53: Our Digital Advisory Council
Our Digital Advisory Council provides strategic guidance to shape our transformation NEIL HUNT ODILE ROUJOL NIGEL MORRIS DJ PATIL Ex-Chief Product Officer, Ex-Chief Strategy and Data Officer, Co-Founder, Ex-Chief Data Scientist, Netflix Orange France Capital One U.S. Government Ex-President and CEO,
Slide 54: Attracted top digital talent over the past year
Attracted > 700 top digital talent over the past year >60 % new to the Bank, most from external industries S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 5
Slide 55: Our global operating model leverages our scale
Our global operating model leverages our scale and connects expertise across countries Global Digital Banking Organization In-country teams Enterprise team DIGITAL BANKING UNITS COMMUNITIES OF PRACTICE • Design • Engineering • Agile delivery • Digital marketing • Product • Analytics management S C O
Slide 56: Our communities of practice are already having an impact
Our communities of practice are already having an impact CANVAS: A COMMON DESIGN SYSTEM Colombia Peru Mexico Chile Canada S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 7
Slide 57: The Pulse, our customer experience system
SURVEYS SENT RESPONSE RATE 9.6 > 21 % The Pulse, MILLION our customer CALLBACKS experience system RESPONSES TO CUSTOMERS 2 MILLION 250 THOUSAND S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 8
Slide 58: Executing Scotiabank's technology strategy
BANK CHANNELS Mobile Contact Branch Mobile Online ABMs Sales Executing Centre Force Scotiabank’s MICRO-SERVICES LAYER technology Login Account List Account Balance Account Transactions Fund Transfer Bill Payment strategy CORE BANK SYSTEMS Chequing Credit Investment Retail Mortgages Others & Deposits
Slide 59: PLATO Platform
HIGH VELOCITY DEVELOPMENT PLATFORM VELOCITY PLATO Platform • 30 applications • 1.2MM customers • 5 regions SERVICE REPEATABILITY • 30 minute release cycle ENABLEMENT MICRO-SERVICES SECURE CLOUD PLATFORM Technology foundation S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T
Slide 60: Killer basics: Building what our customers really want
Killer basics: Building $ what our customers really want S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 11
Slide 61: Using new technologies to drive business results
Using new technologies to drive business results ARTIFICIAL INTELLIGENCE Scotiabank built Strategic partner BITSY Derive actionable Unique AI Internal use cases to business insights partnership drive value this year from speech data with Scotiabank 1 Excluding Wealth S C O T I A B A N K I N V E S T
Slide 62: We have built an innovation ecosystem
FINTECHS We have built an innovation ecosystem VENTURE ACADEMIA AND CAPITALISTS ACCELERATORS S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O U R P R O G R E S S T O DATE 13
Slide 63: Our VC partnerships connect us to the innovation ecosystem
Our VC partnerships generate unique value and connect us to the innovation ecosystem Online microfinance Brazilian online credit card Online lending platform Online comparison platform lending platform and savings FinTech offering home equity of financial products for leveraging tax data and auto lo
Slide 64: We committed to ambitious medium-term targets
DIGITAL DIGITAL ADOPTION We committed SALES BY OUR CUSTOMERS to ambitious > 50 % > 70 % medium-term IN-BRANCH FINANCIAL CUSTOMER EXPERIENCE TRANSACTIONS targets LEADER < 10 % IN OUR FIVE KEY MARKETS Improve all-bank productivity ratio to <50% S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y
Slide 65: Good progress on our key metrics
We are making good progress on our key metrics DIGITAL RETAIL SALES % DIGITAL ADOPTION % F2016 11 F2016 26 GOAL GOAL 900 900 15 50% 29 70% + + F2017 bps > F2017 bps > F2018 20 F2018 35 IN-BRANCH FINANCIAL TRANSACTIONS % CUSTOMER EXPERIENCE F2016 26 GOAL The Pulse full GOAL Focus on key 22 600 - F201
Slide 66: Key takeaways
Key takeaways Continue building the global Take customer experience to digital team the next level Execute PLATO at scale Keep the focus on digital sales Leverage data and analytics S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y TA K E AWAYS 17
Slide 67: Canadian Banking
CANADIAN BANKING J AME S O’SULLIVAN GR OUP HEAD CANADIAN B ANK ING
Slide 68: Committing to increased earnings growth of 7%+
Committing to increased earnings growth of 7%+ driven by revenue growth, thoughtful investment and cost discipline, and deepening customer engagement Announcing medium-term goal of +1 million new primary customers S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 69: Strong Canadian Banking results over the past year
Strong Canadian Banking results over the past year F2017 Change EARNINGS $ 4.1 BN 9% PRODUCTIVITY RATIO 50.5% 140 bps - AVERAGE ASSETS 323 BN $ 4% AVERAGE DEPOSITS 233 BN $ 4% RETURN ON EQUITY 22.8% 80 bps + S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 2
Slide 70: Consistent earnings from Retail, Commercial and Wealth businesses
Consistent earnings from high quality and stable Retail, Commercial and Wealth businesses RETAIL & COMMERCIAL WEALTH CUSTOMERS EMPLOYEES BRANCHES CUSTOMERS1 NET INCOME > 10 > 21 >960 >1.9 $ 0.8 BILLION MILLION THOUSAND MILLION NET AVERAGE AVERAGE INCOME ASSETS DEPOSITS AUM AUA $ 3.3 BILLION >$ 305 B
Slide 71: Delivering on our Retail & Commercial targets
Continuing to deliver on our Retail & Commercial targets F2014 commitments F2017 results1 3-year performance1 EARNINGS GROWTH 5-8% 7% 8% PRODUCTIVITY RATIO 48-50% 47% - 260 bps MARGIN + 10 bps + 2 bps + 24 bps 1 Excludes gains on sale of real estate and non-core lease financing business Note: Refer
Slide 72: Achieving our medium-term objectives in Retail and Commercial
Achieving our medium-term objectives in Retail and Commercial EARNINGS GROWTH EARNINGS GROWTH – REPORTED – EXCLUDING GAINS ON SALE1 $BN $BN 10% 8% CAGR 3.3 CAGR 3.0 3.1 2.7 2.7 2.9 2.5 2.5 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 1 Excludes gains on sale of real estate and non-core lease fina
Slide 73: Strong Retail and Commercial balance sheet growth
Strong Retail and Commercial balance sheet growth AVERAGE ASSETS1 AVERAGE DEPOSITS $BN $BN 4% 5% CAGR CAGR 305 Y/Y GROWTH 204 214 277 290 187 194 262 4 % 4 % 6% 7 % 298 301 308 314 Q1 Q2 Q3 Q4 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 1 Excluding Tangerine mortgage run-off; CAGR was +3% as rep
Slide 74: Growing earnings while improving productivity in Canadian Wealth
Growing earnings while improving productivity in Canadian Wealth EARNINGS GROWTH PRODUCTIVITY RATIO – EXCLUDING GAINS ON SALE1 – EXCLUDING GAINS ON SALE1 $MM % 9% 744 – 710 CAGR bps 73.4 66.3 575 F2014 F2017 F2014 F2017 1 Excludes gains and earnings of CI Financial (in F2014) and HollisWealth (in F2
Slide 75: Our strategic pillars are aligned to the all-Bank strategy
S T R AT E G Y U P D AT E Our strategic pillars are fully aligned to the all-Bank strategy S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 8
Slide 76: Re-imagining priority customer journeys
CUSTOMER FOCUS Re-imagining priority customer journeys Onboarding Advice Problem resolution S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 9
Slide 77: Growth in Credit Cards and Commercial Banking
BUSINESS MIX ALIGNMENT Successful growth in Credit Cards and ongoing growth in Commercial Banking CREDIT CARD BALANCES COMMERCIAL ASSETS1 COMMERCIAL DEPOSITS $BN $BN $BN Doubled 10% 11% CAGR CAGR 36 6.8 6.8 30 31 29 25 27 26 5.0 22 4.0 3.3 F2013 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 F2014
Slide 78: Closing the gap versus our peers
BUSINESS MIX ALIGNMENT Closing the gap versus our peers NET INTEREST MARGIN % 2.70 2.67 PEER 2.64 2.62 AVERAGE1 33 bps 29 bps 50 bps 61 bps 2.31 2.33 2.17 2.09 F2014 F2015 F2016 F2017 1 Retail and Commercial peer average includes: BMO, CIBC, RBC & TD S C O T I A B A N K I N V E S T O R D AY | 2 0 1
Slide 79: Transforming our cost base to create investment capacity
S T R U C T U R A L C O S T T R A N S F O R M AT I O N Transforming our cost base to create investment capacity and drive shareholder value PRODUCTIVITY RATIO RUN-RATE SAVINGS – EXCLUDING GAINS ON SALE1 $MM % -290 bps 54.5 53.5 52.7 51.6 ~320 ~520 ~380 ~240 F2014 F2015 F2016 F2017 F2017 F2018 F2019
Slide 80: Imperatives to execute our strategy
LEADERSHIP Imperatives to execute our strategy PARTNERSHIP SIMPLICITY VELOCITY S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 13
Slide 81: We are targeting +1 million new primary customers
We are targeting +1 million new primary customers From monoline Scotiabank + Partnerships Complete to multi Tangerine including SCENE & customer (auto/broker) Maple Leaf Sports solutions and Entertainment S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 S T R AT E G Y UPDATE 14
Slide 82: We are excited about Canadian Banking's future
We are excited about Canadian Banking’s future F2017 results 3-5 year targets EARNINGS GROWTH1 6.5% 7%+ CANADIAN RETAIL & WEALTH PRODUCTIVITY BANKING COMMERCIAL RATIO1 52% < 49% < 45% < 65% NEW PRIMARY CUSTOMERS 130K + 1 MILLION + 1 Excludes gains on sale of real estate and businesses (non-core leas
Slide 83: Key takeaways
Key takeaways Reducing structural costs while Committed to the bank-wide strategy and delivering revenue growth focused on execution Deepening customer relationships Driving value from internal and external partnerships S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y TA K E AWAYS 16
Slide 84: Global Banking and Markets
GLOBAL BANKING AND MARKETS DIETER J ENTSCH GR OUP HEAD GLOB AL B ANK ING AND MAR K ETS
Slide 85: Growth potential driven by lending, investment banking and Latin America
Growth potential driven by strategic approach to lending, strengthening investment banking and deeper penetration of Latin America S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 86: Delivering lending, investment banking and capital markets services
Delivering lending, CLIENTS EMPLOYEES COUNTRIES investment banking > 10 2,400 > 20+ and capital markets THOUSAND services to our clients NET INCOME RETURN ON PRODUCTIVITY 1.8 EQUITY RATIO $ BILLION 16.0 % 46.7 % F2017 figures S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O V E R VI EW 2
Slide 87: Performance overview
Performance overview Financial results Geographic Market positioning Optimizing footprint operational effectiveness S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 P E R FO R MA N C E O V ER VI EW 3
Slide 88: Strong financial performance
FINANCIAL RESULTS Strong financial performance EARNINGS GROWTH RETURN ON EQUITY $MM % 1,818 15.2 16.0 1,670 1,571 1,553 13.0 12.6 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 P E R FO R MA N C E O V ER VI EW 4
Slide 89: Strong growth in business banking assets and deposits
FINANCIAL RESULTS Strong growth in business banking assets and deposits LENDING AND ADVISORY ASSETS DEPOSITS $BN $BN 8% 23% CAGR CAGR 77 91 91 69 79 72 51 41 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 P E R FO R MA N C E O V ER VI EW 5
Slide 90: Tailored strategies across our footprint
GEOGRAPHIC FOOTPRINT Tailored strategies across our footprint PACIFIC UNITED EUROPE CANADA ALLIANCE STATES & ASIA Full-service capabilities Select industries Niche strategy & products S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 P E R FO R MA N C E O V ER VI EW 6
Slide 91: Gaining traction in key areas
MARKET POSITIONING Gaining traction in key areas LOANS EQUITY INVESTMENT DEBT CAPITAL SYNDICATION RESEARCH BANKING MARKETS S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 P E R FO R MA N C E O V ER VI EW 7
Slide 92: Modernizing operations and developing digital solutions
OPTIMIZING OPERATIONAL EFFECTIVENESS Modernizing operations and developing digital solutions PRODUCTIVITY RATIO COST DRIVERS % PEER 58 58 56 AVERAGE1 55 Digital 46 46 47 solutions 44 SCT initiatives Modernizing technology F2014 F2015 F2016 F2017 platforms 1 Peer average includes: BMO, CIBC, RBC & TD
Slide 93: Drive growth across our key businesses and geographies
GROWTH DRIVERS Drive growth across our key businesses and geographies 1 Strategic approach to lending 2 Strengthening investment banking 3 Deeper penetration of Latin America S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 G R O WT H D R I VER S 9
Slide 94: Key takeaways
Key takeaways Clear and executable strategy that is fully aligned with the Bank Considerable growth potential across our three key levers Achieve top 5 rank in the Pacific Alliance S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y TA K E AWAYS 10
Slide 95: International Banking
I N T E R N AT I O N A L B A N K I N G NACHO DE SCHAMPS GR OUP HEAD INTER NATIONAL B ANK ING AND DIGITAL TR ANSFOR MATION
Slide 96: International Banking continues to be an attractive growth opportunity
International Banking continues to be an attractive growth opportunity. We have deep knowledge of our markets and a clear strategy that we are executing with discipline S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 1
Slide 97: Strong International Banking results over the past year
Strong International Banking results over the past year F2017 Change EARNINGS $ 2.4 BN 15% PRODUCTIVITY RATIO 54.4% -170 bps AVERAGE ASSETS $ 148 BN 4% AVERAGE DEPOSITS $ 95 BN 9% RETURN ON EQUITY 14.7% + 190 bps S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 2
Slide 98: Strong and diverse international franchise
We have a strong and diverse CUSTOMERS BRANCHES international franchise >15 MILLION 1,800 ~ EMPLOYEES COUNTRIES 50 THOUSAND 36 F2017 figures S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 O V E R VI EW 3
Slide 99: Delivering on our International Banking targets
We are delivering on our International Banking targets F2016 commitments F2017 results 3-year performance EARNINGS GROWTH1 8-10% 16% 12% PRODUCTIVITY RATIO 54-55% 54.4% -350 bps OPERATING LEVERAGE POSITIVE 3.3 + % POSITIVE 1 Constant FX 1 Excluding Wealth S C O T I A B A N K I N V E S T O R D AY | 2
Slide 100: International Banking has generated solid earnings growth
International Banking has generated solid earnings growth EARNINGS GROWTH1 RETURN ON EQUITY $MM % 12% 300 + CAGR 16 % bps Y/Y 2,363 14.7 2,045 11.7 13.0 12.8 1,821 1,675 ROE F2014 F2015 F2016 F2017 excluding goodwill & intangibles 16 18 17 20 F2014 F2015 F2016 F2017 1 Constant FX S C O T I A B A N K
Slide 101: Improvements in productivity and positive operating leverage
Significant improvements in productivity and achieved positive operating leverage PRODUCTIVITY OPERATING LEVERAGE % % 57.9 57.6 2.9 3.3 56.1 54.4 0.6 -2.9 F2014 F2015 F2016 F2017 F2014 F2015 F2016 F2017 S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 FI N A N C I A L P E R FO R MANCE 6
Slide 102: Strong balance sheet growth
Strong balance sheet growth AVERAGE LOANS1 AVERAGE DEPOSITS1 $BN $BN 106 8% 92 CAGR 84 12% CAGR 68 66 13% 53 47 CAGR 15% 35 CAGR 1% 7% 37 31 CAGR 32 30 CAGR 6 6 1 2 F2014 F2017 F2014 F2017 n Pacific Alliance n Caribbean, Central America and Uruguay n Other 1 Constant FX S C O T I A B A N K I N V E S
Slide 103: Caribbean and Central America franchise strong and profitable
Our Caribbean and Central America franchise continues to be strong and profitable EARNINGS GROWTH1 OTHER PERFORMANCE METRICS $MM F2014 – F2017 12% PRODUCTIVITY RATIO 60.4%2 (- 400 bps) CAGR 735 OPERATING LEVERAGE POSITIVE3 613 620 516 HIGHLIGHTS OF OUR ACHIEVEMENTS • Consolidating operations to lowe
Slide 104: We have achieved our Pacific Alliance targets
We have achieved our Pacific Alliance targets F2016 commitments F2017 results 3-year performance EARNINGS GROWTH1 9-11% 17% 10% PRODUCTIVITY RATIO < 52% 50.3% -330 bps OPERATING LEVERAGE POSITIVE 3.6 + % POSITIVE 1 Constant FX S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 FI N A N C I A L P E R
Slide 105: The Pacific Alliance is an attractive and growing market
The Pacific Alliance is an attractive and growing market FAVOURABLE DEMOGRAPHICS PEOPLE AGED 15+ WITH AN ACCOUNT AT A BANK OR FINANCIAL INSTITUTION % 42 38 Median age of 29 99 94 Median percentage of 39 34 63 30 28 28 39 38 29 Can U.S. Chile Col Mex Peru Can U.S. Chile Mex Col Peru Population (MM) 3
Slide 106: Mexico's performance has been very strong
Mexico’s performance has been very strong MEXICO MARKET SHARE MEXICO PERFORMANCE METRICS TREND IN TOTAL LOANS1 F2014 – F2017 % 6.5 EARNINGS GROWTH2 14% CAGR 100 + PRODUCTIVITY RATIO 58.6% (- 600 bps) 3 bps 5.5 OPERATING LEVERAGE POSITIVE4 F2014 F2015 F2016 F2017 2 Constant FX 1 Local GAAP Financials
Slide 107: Peru continues to deliver in a challenging environment
Peru continues to deliver in a challenging environment PERU MARKET SHARE PERU PERFORMANCE METRICS TREND IN TOTAL LOANS1 F2014 – F2017 % 18.1 EARNINGS GROWTH2 10% CAGR 170 + PRODUCTIVITY RATIO 39.6% (- 400 bps) 3 bps 16.4 OPERATING LEVERAGE POSITIVE4 F2014 F2015 F2016 F2017 2 Constant FX 1 Local GAAP
Slide 108: Colombia is at an inflection point
Colombia is at an inflection point COLOMBIA MARKET SHARE COLOMBIA PERFORMANCE METRICS TREND IN TOTAL LOANS1 F2014 – F2017 % EARNINGS GROWTH2 - 16% CAGR 5.3 –15 PRODUCTIVITY RATIO 53.2% (+ 400 bps) 3 5.1 bps OPERATING LEVERAGE NEGATIVE4 F2014 F2015 F2016 F2017 2 Constant FX ¹ Local GAAP Financials an
Slide 109: Chile is growing organically and through acquisition
Chile is growing both organically and through acquisition CHILE MARKET SHARE CHILE PERFORMANCE METRICS TREND IN TOTAL LOANS1 F2014 – F2017 % 6.9 EARNINGS GROWTH2 14% CAGR +180 PRODUCTIVITY RATIO 51.4% (- 200 bps) 3 bps OPERATING LEVERAGE POSITIVE4 5.1 F2014 F2015 F2016 F2017 2 Constant FX ¹ Local GA
Slide 110: BBVA Chile acquisition reinforces Pacific Alliance commitment
BBVA Chile acquisition reinforces our commitment to the Pacific Alliance Aligns with Leverages combined Stable market Scotiabank’s focus on strengths to create with favourable the Pacific Alliance a premier Chilean bank fundamentals S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO
Slide 111: Enhanced market presence and a stronger bank
Enhanced market presence and a stronger bank MARKET SHARE BY LOANS % 19 x2 18 15 14 13 11 7 7 S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO R WAR D 16
Slide 112: Both banks combined will generate high value to Scotiabank
Both banks combined will generate high value to Scotiabank Scotiabank Chile F2017 3-year target1 TOTAL AVERAGE LOANS $ 20 BN $ 50 BN PRODUCTIVITY RATIO2 52.7% 47.0% EARNINGS $ 321 MM ~$ 600 MM 3 1 3-year target following the completion of the Chile BBVA merger 2 Local GAAP Financials and Canadian fi
Slide 113: Investing in attractive business opportunities
GROWTH DRIVERS Investing in attractive business opportunities Corporate banking Unsecured lending Insurance Capital markets TARGETING +1 MILLION NEW PRIMARY CUSTOMERS IN 5 YEARS S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO R WAR D 18
Slide 114: We are excited about International Banking's future
We are excited about International Banking’s future 2016 commitment New commitment 3-5 year targets 3-5 year targets EARNINGS GROWTH1 8-10% 9%+ PRODUCTIVITY RATIO 54-55% < 51% OPERATING LEVERAGE POSITIVE POSITIVE ¹ Constant FX S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 LO O K I N G FO R WAR
Slide 115: Key takeaways
Key takeaways Delivering strong results and updating our International Banking targets Continued focus in the Pacific Alliance and well positioned for future growth Committed to our strategy and continue to be focused on execution S C O T I A B A N K I N V E S T O R D AY | 2 0 1 8 K E Y TA K E AWAYS
Slide 116: Appendix
APPENDIX
Slide 117: Appendix | Non-GAAP measures
IN VESTO R D AY 2018 | Appendix | 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 (IF
Slide 118: Appendix | Financials
IN VESTO R D AY 2018 | Appendix | Financials All-Bank Slide 2 Consistent Financial Performance Slide 12 Business Mix Outlook • For F2016 adjusted EPS and ROE ratios, see page 14 of the 2017 • For Revenue by Geography, see page 105 of the 2017 Annual Report. Annual Report. • For F2014 adjusted EPS, s
Slide 119: Appendix | Canadian Banking
IN VESTO R D AY 2018 | Appendix | Canadian Banking Canadian Banking – Reported Figures Slide 4 Retail & Commercial Slide 12 Canadian Banking • Amounts in presentation exclude after-tax gains on sale of • Amounts in presentation exclude after-tax gains on sale of real real estate and non-core lease f
Slide 120: Appendix | International Banking
IN VESTO R D AY 2018 | Appendix | International Banking International Banking – Constant F/X Slide 7 Reconciliation: Reported to Constant F/X Results for current and prior periods are translated at Q4/17 F/X rates. $Bn F2014 F2017 3-YR CAGR Growth rates are calculated on figures translated at Q4/17
Bank of Nova Scotia (Scotiabank) — Investor Day (February 2018) on 6ix