Bank Of Nova Scotia · TSX:BNS
Bank Of Nova Scotia — Scotiabank — Investor Day (December 2015)
130 slides from Bank Of Nova Scotia's investor day presentation, December 2015
Slide 1: International Banking Investor Day
International Banking Investor Day
Slide 2: Introduction
Introduction Jake Lawrence, SVP, Investor Relations
Slide 3: Agenda
Agenda Session Speaker Breakfast Regency Room E (2nd floor, Hyatt Regency) International Banking Investor Day Regency Room D (2nd floor, Hyatt Regency) Opening Remarks Jake Lawrence, SVP INVESTOR RELATIONS All-Bank Overview Brian Porter, PRESIDENT & CHIEF EXECUTIVE OFFICER International Banking Over
Slide 4: Caution Regarding Forward Looking Statements
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 may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commiss
Slide 5: All-Bank Overview
All-Bank Overview Brian Porter, President & Chief Executive Officer
Slide 6: International Banking Overview
International Banking Overview Dieter Jentsch, Group Head International Banking
Slide 7: Agenda
Agenda Who We Are Today Why We Bank the Pacific Alliance How We Have Performed What Our Strategy Is What Is Driving Our Growth 2
Slide 8: International Banking Has a Diversified Franchise
International Banking Has a Diversified Franchise Three Operating Regions: ● Latin American ● Caribbean & Central America ● Asia Customers 14 million Branches >1,800 Contact centres 8 Key strategic alliances 12 Employees >51,000 Total net income $1.85 billion Average loans $93 billion Average deposi
Slide 9: International Banking at a Glance
International Banking at a Glance Earnings by International Banking Business Line Earnings Growth ($ billions) Global Banking & Markets 23% 11% CAGR 1.85 1.73 1.69 International 1.61 27% Banking 1.49 50% 1.08 Canadian Banking 2010 2011 2012 2013* 2014** 2015 Fiscal year end 2015 excluding Other Segm
Slide 10: Breakdown of Revenues by Region for International Banking
Breakdown of Revenues by Region for International Banking Latin America C & CA Asia ($ billions) ($ billions) ($ billions) 15% 5.8 CAGR 6% CAGR 2.6 2.9 1.9 16% CAGR 0.4 0.2 2010 2015 2010 2015 2010 2015 Fiscal year end 5
Slide 11: Agenda
Agenda Who We Are Today Why We Bank the Pacific Alliance How We Have Performed What Our Strategy Is What Is Driving Our Growth 6
Slide 12: Key Takeaways for the Pacific Alliance
Key Takeaways for the Pacific Alliance THE POSITIONING 3-5 Year Targets Investing in the right Latin American markets 9-11% Earnings THE STRATEGY CAGR growth Driving a clear growth strategy <52% Productivity ratio THE EXECUTION Positive Operating leverage Capitalizing effectively on the opportunitie
Slide 13: Investment Thesis Centered on the Pacific Alliance
Investment Thesis Centered on the Pacific Alliance Investment Thesis 1. Solid macro-economic fundamentals 2. Sound and stable banking environment 3. Fast growing middle class, low banking penetration and low consumer indebtedness 8
Slide 14: Strong Growth Prospects in the Pacific Alliance
Investment Thesis Element #1: Strong Growth Prospects in the Pacific Alliance 2016 GDP Forecast with a Weighted Average of 2.8% 3.5% 2.9% 2.8% 2.5% 1.9% 1.6% Peru Colombia Mexico Chile US Canada Source: Scotiabank Economics, IMF WEO October 2015 9
Slide 15: Low Economic Volatility & Exposure to Commodities
Investment Thesis Element #1 (continued): Low Economic Volatility & Exposure to Commodities Pacific Alliance GDP by Sector Canada GDP by Sector Agriculture Agriculture & & Forestry Forestry 4.2% 1.6% Manufacturing Manufacturing 10.6% 15.7% Other Activities Mining & 34.2% Utilities 10.1% Other Mining
Slide 16: Sound & Stable Banking Environment
Investment Thesis Element #2: Sound & Stable Banking Environment Credible central bankers Well-capitalized banking system Strong regulatory environment 11
Slide 17: Prudent Fiscal Management
Investment Thesis Element #2 (continued): Prudent Fiscal Management General Gross Government Debt, Total (% GDP) 106 90 52 49 25 20 US Canada Mexico Colombia Peru Chile Growth oriented governments High levels of trade liberalization Source: Scotiabank Economics, IMF WEO October 2015 12
Slide 18: Supported by Stable Credit Ratings
Investment Thesis Element #2 (continued): Supported by Stable Credit Ratings Investment Grade Sovereign Credit Rating Mexico Peru Colombia Chile Canada US A3 A3 Baa2 Aa3 Aaa Aaa BBB+ BBB+ BBB AA- AAA AA+ BBB+ BBB+ BBB A+ AAA AAA Source: Scotiabank Economics 13
Slide 19: Favourable Demographics
Investment Thesis Element #3: Favourable Demographics Median Age of 29 42 38 34 29 28 27 Canada US Chile Colombia Mexico Peru Population 35 million 321 million 17 million 47 million 122 million 30 million Source: The World Fact Book 2015 Total Population of the Pacific Alliance is 216 million 14
Slide 20: Opportunity to Provide More Banking Products & Services
Investment Thesis Element #3 (continued): Opportunity to Provide More Banking Products & Services Financial Institution Account (% age 15+) 99 94 63 39 38 29 Canada US Chile Mexico Colombia Peru Source: World Bank 2015 15
Slide 21: Agenda
Agenda Who We Are Today Why We Bank the Pacific Alliance How We Have Performed What Our Strategy Is What Is Driving Our Growth 16
Slide 22: Strong Diversified Earnings Growth in the Pacific Alliance
Strong Diversified Earnings Growth in the Pacific Alliance Business Mix NIAT by Focus Markets ($ billions) 14% Wealth $1.13 0.22 Chile 16% CAGR 0.09 Colombia* 51% Retail $0.54 0.47 35% Peru 0.16 Commercial 0.18 0.35 0.2 Mexico 2010 2015 Fiscal year end *Colpatria acquired in 2012 Business mix based
Slide 23: Strong Balanced Loan Growth & Well Diversified Portfolio
Strong Balanced Loan Growth & Well Diversified Portfolio in the Pacific Alliance Average Loans Portfolio Breakdown ($ billions, CAGR 18%) $56.1 Residential Mortgages 24% 17% $27.0 CAGR Lines of $25.0 Credit 9% Commercial $12.1 18% 52% Credit Cards CAGR $29.1 6% $12.9 Other Retail 9% 2010 2015 Commer
Slide 24: Diverse Portfolio by Industry for the Pacific Alliance
Diverse Portfolio by Industry for the Pacific Alliance Corporate & Commercial Industry Distribution Utilities Mining and 5% Primary Metals Wholesale, 10% Retail & Food 26% Energy 5% Sovereign 7% Financial Services 9% Other Industries Real Estate 29% and Construction 9% Fiscal year end 2015 19
Slide 25: Strong Deposit Growth and Funding Mix in the Pacific Alliance
Strong Deposit Growth and Funding Mix in the Pacific Alliance Average Deposits Portfolio Breakdown ($ billions, CAGR 16%) $38.7 $14.1 Demand 11% Deposits CAGR 42% $18.7 Term Deposits $8.4 19% 48% CAGR $24.6 $10.3 Notice Deposits 2010 2015 10% Commercial Retail Fiscal year end 20
Slide 26: Higher Spreads and Well Compensated for Risk
Higher Spreads and Well Compensated for Risk Pacific Alliance – Margin / Risk Adjusted Margin1 5.02% 5.01% 4.93% 4.80% 4.83% 4.75% 4.28% 4.06% 4.03% 3.83% 3.75% 4.06% 3.99% 3.63% 3.75% 3.69% 3.58% 3.60% 2010 2011 2012 2013 2014 2015 Net Interest Margin % Risk Adjusted Margin % Risk Adjusted Margin e
Slide 27: Clear Focus on Productivity Improvement
Clear Focus on Productivity Improvement 58.5% 57.6% 57.3% 57.1%* International 56.5% 56.3% Banking 56.4% 56.1% 55.4% Pacific Alliance 54.0% 54.0% 53.6%* 2010 2011 2012 2013 2014 2015 • Adjusted for Q4/14 restructuring charges Fiscal year end Expecting positive operating leverage 22
Slide 28: Pacific Alliance Has Good Levels of Total Local Capital
Pacific Alliance Has Good Levels of Total Local Capital Regulator September Peers Requirement 2015 (average) Mexico 11% 12.5% 15% Peru 10% 13.8% 14% Colombia 9% 11.4% 15% Chile 8% 11.3% 12% Source: Local Total Capital Ratio 23
Slide 29: Agenda
Agenda Who We Are Today Why We Bank the Pacific Alliance How We Have Performed What Our Strategy Is What Is Driving Our Growth 24
Slide 30: Clear Strategy to Build Greater Relevance & Presence in the Pacific Alliance
Clear Strategy to Build Greater Relevance & Presence in the Pacific Alliance Simplify & Digitize Customer Experience Develop More Primary Customer Relationships Leverage Optimize Strong Structure to Leadership Fund Growth Team & Culture 25
Slide 31: Varying Strategic Choices by Market
Varying Strategic Choices by Market MEXICO Upgrade platform to drive growth COLOMBIA Increase relevance & presence while PERU broadening bank offering in key Deepen customer relationships segments and target higher profitability customer segments CHILE Grow customer base and deepen customer relation
Slide 32: Established Business Operating Model in Place
Established Business Operating Model in Place Governance Execution • Head office to define • Country leadership strategy, set goals & to lead distribution provide oversight • Divisional Optimization • Leveraging best practices across the division Leveraging strengths globally for our customers Stewa
Slide 33: Governance and Operating Approach Resulting in Strong Retail Risk Fundamentals
Governance and Operating Approach Resulting in Strong Retail Risk Fundamentals Defined Risk Appetite & Portfolio Limits Operating & Risk Management Standards Governance & Portfolio Oversight with Global Policies and Standards Advanced Analytics, Predictive Modeling, Proactive Decisioning & M
Slide 34: Clear Differentiators
Clear Differentiators Strong Canadian brand Ability to leverage global leadership team & culture Proven risk management framework Scalable model Strategic alliances & partnerships 29
Slide 35: Agenda
Agenda Who We Are Today Why We Bank the Pacific Alliance How We Have Performed What Our Strategy Is What Is Driving Our Growth 30
Slide 36: Three Key Strategic Initiatives Driving Growth for the Pacific Alliance
Three Key Strategic Initiatives Driving Growth for the Pacific Alliance 1 2 3 Develop more Optimize Structure Simplify & Digitize our Primary Customer to Customer Experience Relationships Fund Growth 31
Slide 37: Simplify & Digitize Our Customer Experience
Strategic Initiative #1: Simplify & Digitize Our Customer Experience Launching an enhanced sales platform & customer analytics 3-5 year incremental + earnings1 Providing stronger digital self-service channels + $40-60 million Redesigning our branches 1 Run rate within 3-5 years 32
Slide 38: Develop More Primary Customers
Strategic Initiative #2: Develop More Primary Customers Developing multi-product customer base focused on key customer segments + 3-5 year incremental Accelerating payments earnings1 + Building strong partnerships & alliances $35-50 million + Enabling omni-channel loyalty program 1 Run rate
Slide 39: Optimize Our Structure to Fund our Growth
Strategic Initiative #3: Optimize Our Structure to Fund our Growth Consolidating processing & service centres + 3-5 year net cost reduction Automating & consolidating technology platforms impact on earnings1 + Simplifying our end-to-end customer process $30-40 million + Streamlining our orga
Slide 40: Key Strategic Initiatives Driving Growth for the Pacific Alliance
Key Strategic Initiatives Driving Growth for the Pacific Alliance Simplify & Digitize Our Customer Experience $40-60 million Next 3-5 Years: Develop More Primary Continued Customers Relationships $35-50 million Earnings Growth 9-11% CAGR1 Optimize Our Structure to Fund Our Growth $30-40 million Grow
Slide 41: Positioned to Deliver Good Asset & Deposit Growth Over the Medium Term
In Summary Positioned to Deliver Good Asset & Deposit Growth Over the Medium Term in the Pacific Alliance THE POSITIONING 3-5 Year Targets Investing in the right Latin American markets 9-11% Earnings THE STRATEGY CAGR growth Driving a clear growth strategy <52% Productivity ratio THE EXECUTION Posit
Slide 42: International Banking Q&A
International Banking Q&A § Scotiabank"
Slide 43: Mexico Overview
Mexico Overview Enrique Zorrilla, SVP & Country Head, Mexico
Slide 44: Agenda
Agenda Who We Are Today Why We Bank Mexico How We Have Performed What Is Driving Our Growth 2
Slide 45: Our Business Today
Our Business Today Customers 2.7 million Branches >850 ATMs 3,300 Employees >13,000 Net income $353 million Average loans $17 billion Average deposits $14 billion ROEE / ROA1 19.5% / 1.4% Capital ratio (local) 12.5% Governance Independent Board • Retail • Corporate & Commercial Fiscal year end 2015.
Slide 46: Our History
Our History 97% 2004 5.0% 2000 1992 55% 4
Slide 47: Building Presence in our Key Customer Segments
Building Presence in our Key Customer Segments Retail Banking Business Banking ● Focusing on digitization & ● Deploying global expertise in segmentation energy & mining ● Building unsecured portfolio ● Key player in Agribusiness ● Leveraging Partnerships & ● Expanded coverage model Alliances Scotiab
Slide 48: Solid Presence in All Customer Segments
Solid Presence in All Customer Segments Corporate Affluent Premium Banking Commercial Preferente Small Business Mass Market Emerging Retail Micro Finance (Consumer Finance) 6
Slide 49: Mexico has an Opportunity to Grow Market Share
Mexico has an Opportunity to Grow Market Share September 2015 Market Share % – Loans 24.2% 14.3% 14.2% 13.7% 6.4% 6.3% 5.6% 2.9% Bancomer Santander Banamex Banorte Inbursa HSBC BanBajio 7
Slide 50: Mexico has Strong Market Share in Mortgages & Auto Loans
Mexico has Strong Market Share in Mortgages & Auto Loans Market Share as of September 2015 Total Loans #7 5.6% Auto Loans #3 16.1% Mortgages #5 12.6% Credit Cards #7 1.8% Personal Loans #7 2.2% Commerical Loans #7 5.2% Mutual Funds #6 4.6% Term Deposits #6 7.2% DDA + Savings #6 4.4% 8
Slide 51: Agenda
Agenda Who We Are Today Why We Bank Mexico How We Have Performed What Is Driving Our Growth 9
Slide 52: Why We Believe Mexico is the Right Market
Why We Believe Mexico is the Right Market Solid macro fundamentals ● GDP 2016 forecast 2.8% ● Population of 122 million with a median age Favourable demographics of 27 ● 39% of the population over the age of 15 has Low banking penetration an account with a financial institution Sound & stable bankin
Slide 53: Agenda
Agenda Who We Are Today Why We Bank Mexico How We Have Performed What Is Driving Our Growth 11
Slide 54: Mexico's Growth Story
Mexico’s Growth Story… Strong Net Income Growth Strong Revenue Growth (in millions of Canadian dollars at constant FX) (in millions of Canadian dollars at constant FX) $353 $1,807 8% 12% CAGR CAGR $1,243 $197 2010 2015 2010 2015 Fiscal year end Net income after minority interest 12
Slide 55: Strong Balanced Loan Growth & Well Diversified Portfolio
Strong Balanced Loan Growth & Well Diversified Portfolio Average Loans Portfolio Breakdown (in billions of Canadian dollars at constant FX) (2015 average loans) CAGR: 10% $17.3 Residential Mortgages $8.8 Retail 32% $10.6 10% Business CAGR Banking 49% $5.6 Credit Cards 11% $8.5 Business 3% CAGR Banki
Slide 56: Strong Deposit Growth
Strong Deposit Growth Average Deposits Portfolio Breakdown (in billions of Canadian dollars at constant FX) (2015 average deposits) CAGR: 9% $14.0 $9.3 8% $9.8 Retail Demand Term CAGR Deposits Deposits $6.7 55% 45% 10% CAGR $4.2 Business $2.6 Banking 2010 2015 Fiscal year end 2010 and 2015 Retail de
Slide 57: Attractive Risk Adjusted Margins and Focused on Improving Productivity
Attractive Risk Adjusted Margins and Focused on Improving Productivity Risk Adjusted Margin1 Productivity (Canadian GAAP at constant FX)2 66.6% 64.1% 64.1% 63.8% 63.8% 64.1% 4.87% 5.04% 4.82% 4.47% 4.28%3 4.08% 2010 2011 2012 2013 2014 2015 4.07% 3.79% 3.70% 3.75% 3.62% 3.27% Productivity vs System
Slide 58: Agenda
Agenda Who We Are Today Why We Bank Mexico How We Have Performed What Is Driving Our Growth 16
Slide 59: Universal Bank Focused On Driving Growth
Universal Bank Focused On Driving Growth 1 Renewed focus on customer experience New leadership & organizational structure 2 3 Right-sizing branch network Revamping technology platforms 4 5 Expanding on key growth segments 17
Slide 60: Three Strategies Driving Growth
Three Strategies Driving Growth 1 Retail Transformation 2 Drive Business Banking Streamline Operational 3 Infrastructure 18
Slide 61: Mexico Retail Banking
Mexico Retail Banking Carlos Lomelí, SVP, Retail Banking, Mexico
Slide 62: Agenda
Agenda Who We are Today How We Have Performed What the Business Landscape Looks Like What Will Drive Our Growth 2
Slide 63: Retail & Small Business Today
Retail & Small Business Today #3 in auto loans $1.0 billion #5 in mortgages $5.9 billion Customers 2.5 million Average loans $8.8 billion Average deposits $9.8 billion Revenue $1 billion Branches >850 ATMs >3,300 Fiscal year end 2015 1 Includes Retail and CMF branches and Wealth offices Deposits inc
Slide 64: Broad Distribution Channels
Broad Distribution Channels Our Channels Face-to-Face Interactions Digital & Direct Indirect • Retail, micro finance • Online • Alliances & premium branches • Mobile (e.g. OXXO) • Small business & • ATMs • Auto dealerships mobile advisors (e.g. Mazda) • Contact Centre • External sales forces • Partn
Slide 65: Delivering Increased Customer Loyalty – A Key to our Success
Delivering Increased Customer Loyalty – A Key to our Success Internal Measure: Industry Leading External Measure Record High Performance vs. Peers Customer Loyalty 2010 2015 FY15 Customer retention Branch 2nd 1st Scotiabank 40% Customer share of wallet Mobile n/a 4th Competition 33% Online 2nd 3
Slide 66: Agenda
Agenda Who We are Today How We Have Performed What the Business Landscape Looks Like What Will Drive Our Growth 6
Slide 67: Retail is a Key Driver for Mexico's Growth
Retail is a Key Driver for Mexico’s Growth Revenue (in millions of Canadian dollars at constant FX) $1,018 10% CAGR $638 Retail 56% 2010 2015 Fiscal year end 7
Slide 68: Maintaining Momentum
Maintaining Momentum Average Loans Average Deposits (in billions of Canadian dollars at constant FX) (in billions of Canadian dollars at constant FX) 10% 8% CAGR CAGR $9.8 $8.8 CAGR CAGR 10% $6.7 $5.6 12% 10% 4% 2010 2015 2010 2015 Secured Lending Unsecured Lending Term Deposits Core Deposits Fiscal
Slide 69: Agenda
Agenda Who We Are Today How We Have Performed What the Business Landscape Looks Like What Will Drive Our Growth 9
Slide 70: Market Trends Impacting Our Business
Market Trends Impacting Our Business Advice Savings culture is developing A superior omni-channel Payments Alternate payment methods are growing experience is key to our success Adding to choices – mobile, Channels online & social platforms 10
Slide 71: Our Competitive Advantages
Our Competitive Advantages Strong Market Share in Secured Lending Full-service Contact Centre Profitable Customer Growth Optimized Distribution Channels & Footprint Strategic Alliances & Partnerships 11
Slide 72: Agenda
Agenda Who We Are Today How We Have Performed What the Business Landscape Looks Like What Will Drive Our Growth 12
Slide 73: Strategies to Transform Mexico's Retail Business
Strategies to Transform Mexico’s Retail Business 1 2 3 4 Acquire Simplify & Redesign Increase profitable digitize our customer primary customer branches analytics customers experience Building a Strong Platform 13
Slide 74: Acquire Profitable Primary Customers
Strategic Initiative #1: Acquire Profitable Primary Customers Number of Customers ● Prioritizing growing affluent & small business segments 19% 700,000 ● Leveraging Business Banking CAGR relationships to acquire payroll business 415,000 ● Strengthening payments 13% 3.3 CAGR million ● Enhancing loyal
Slide 75: Ensure Continued Growth of Chequing Accounts
Strategic Initiative #1: Ensure Continued Growth of Chequing Accounts Debit Transactions Chequing Balances (Point of Sale) (in billions of Canadian dollars at constant FX) 80 $8.0 17% 12% CAGR CAGR $5.7 50 $3.2 23 2010 2015 3-5 Year 2010 2015 3-5 Year Target Target 15
Slide 76: Leverage Retail Alliances to Drive Growth
Strategic Initiative #1: Leverage Retail Alliances to Drive Growth Largest online retailer in Latin America Co-branded credit card with online card applications Leverage retailer customer data for analytics Goal: Deliver a 100% digital experience 16
Slide 77: Simplify & Digitize Customer Experience
Strategic Initiative #2: Simplify & Digitize Customer Experience Transaction Volume & Mix 510 ● Enhancing mobile channel 20% ● Enhancing online banking platform 320 ● Enhancing ATM capability with 273 alliances 35% 80% ● Ensuring optionality in emerging 51% payments 65% ● Migrating low value transac
Slide 78: Redesign our Branches
Strategic Initiative #3: Redesign our Branches ● Engaging IDEO consulting ● Re-considering customer experience in branches ● Right-sizing our footprint ● Driving greater sales per square foot 18
Slide 79: Increase Customer Analytics
Strategic Initiative #4: Increase Customer Analytics Customer Analytics (Number of Transactions) 17% 1,300,000 CAGR ● Leveraging speech analytics 11% ● Advancing risk analytics CAGR 810,000 ● Building business intelligence 480,000 analytics ● Developing strong analytics to deliver tailored customer
Slide 80: Positioned to Deliver Strong Growth
In Summary Positioned to Deliver Strong Growth Proven Track Strong performance and superior growth supported by Record strong risk fundamentals Strong Leveraging unique strengths including secured lending, Competitive Position low cost deposits and solid retail alliances Accelerating Focused on acce
Slide 81: Mexico Business Banking
Mexico Business Banking Jose Luis Zepeda, SVP, Corporate & Commercial Banking, Mexico
Slide 82: Agenda
Agenda Who We are Today How We Have Performed What the Business Landscape Looks Like What Is Driving Our Growth 2
Slide 83: Our Business Today
Our Business Today International Mexico Business Banking Business Banking Banking (Constant FX) $49 billion Assets $8.5 billion $48 billion Deposits $4.2 billion 390 Relationship Managers 140 >12,000 Lending Customers >2,000 Fiscal year end 2015 Mexico Business deposits do not include $2.5 billion o
Slide 84: Segmented Approach to Maximize Customer Experience
Segmented Approach to Maximize Customer Experience Market Commercial Corporate Capital Segment Banking Banking Markets Customer Revenue < US $100MM > US $100MM All Sizes Broad, Custom solutions innovative Tailored (FX, DCM / ECM, Focus comprehensive Derivatives and financing solutions Investment sol
Slide 85: Well-Balanced & Diversified Segments
Well-Balanced & Diversified Segments Revenue Mix Net Interest Income & by Segment Non-Interest Revenue Non-Interest Revenue 32% Net Interest Commercial 42% 58% Corporate 68% Income Fiscal year end 2015 5
Slide 86: Agenda
Agenda Who We are Today How We Have Performed What the Business Landscape Looks Like What Is Driving Our Growth 6
Slide 87: Solid Earnings Growth Supported by Strength in Risk Management
Solid Earnings Growth Supported by Strength in Risk Management Revenue (in millions of Canadian dollars at constant FX) 8% $398 CAGR Corporate & $270 Commercial 22% 2010 2015 PCLs 0.20% of Commercial loan portfolio Fiscal year end 7
Slide 88: Gaining Market Share in Commercial & Corporate Banking in Mexico
Gaining Market Share in Commercial & Corporate Banking in Mexico Corporate & Commercial – Loans Market Share - Loans (in billions of Canadian dollars at constant FX) (September 2015) 11% $8.5 CAGR 5.2% 4.1% $5.0 2010 2015 2010 2015 Fiscal year end 8
Slide 89: Strong Diversification of Corporate & Commercial Loans
Strong Diversification of Corporate & Commercial Loans September 2015 Diversified – Industrial, Conglomerate & Wholesale 29% Auto 15% Media 1% Telecom 1% Agribusiness 7% Mining 2% Infrastructure 4% Government 3% Retail & Food & Energy 9% Beverage 14% Financial 7% Real Estate 8% Fiscal year end 2015
Slide 90: Solid Deposit Growth & Well Diversified Funding Mix
Solid Deposit Growth & Well Diversified Funding Mix Corporate & Commercial – Deposits (in billions of Canadian dollars at constant FX) 10% CAGR $4.2 Term 33% $2.6 Demand 67% 2010 2015 Fiscal year end 2010 and 2015 Corporate & Commercial deposits do not include Small Business deposits of $1.4 billion
Slide 91: Refocused Our Coverage Model & Product Suite
Refocused Our Coverage Model & Product Suite Leverage our global industry expertise & specialized teams 11
Slide 92: 2010 – 2015 Expanded Coverage Model
2010 – 2015 Expanded Coverage Model New offices opened in strategic locations +9 Increase in GDP coverage 22% 12
Slide 93: Committed to Improving Customer Loyalty
Committed to Improving Customer Loyalty Customer Loyalty Context 70% Faster turnaround times 60% 53.5% Improved customer 50% resolution 40% 44.5% Enhanced customer service 30% 2015 3-5 Year Target 13
Slide 94: Agenda
Agenda Who we are Today How we Have Performed What the Business Landscape Looks Like What Is Driving Our Growth 14
Slide 95: Positive Business Landscape in Mexico
Positive Business Landscape in Mexico Solid GDP growth rates Free trade agreements: NAFTA, LatAm, TransPacific Reforms: Opportunities Business to Grow expansion & investments 15
Slide 96: Agenda
Agenda Who we are Today How we Have Performed What the Business Landscape Looks Like What Is Driving Our Growth 16
Slide 97: Three Key Strategies Driving Growth
Three Key Strategies Driving Growth 1 2 3 Increase Focus Increase Leverage Sector on Profitable Primary Expertise Higher Growth Customers Markets 17
Slide 98: Leverage Sector Expertise
Strategy #1 Leverage Sector Expertise Income Property • Niche player with above market growth Lending Agribusiness • Industry and lending program specific guidelines Power, • Sophisticated platform that integrates Infrastructure & Scotia Waterous expertise Energy • Active participant in financing fo
Slide 99: Increase Focus on Higher Growth Markets
Strategy #2 Increase Focus on Higher Growth Markets ● Reposition to better serve our customers ● Simplification of customer processes ● Increased segment / sector focus – e.g. Mid-Market, Capital Markets ● Deliver an integrated lending, Above national growth average capital markets and investment ba
Slide 100: Increase Profitable Primary Customers
Strategy #3 Increase Profitable Primary Customers Growth in Total Customers 5-7% CAGR ● Increase new customer acquisition ● Deepen customer relationships & increase cross-sell ● Increase internal referrals through Today 3-5 Year Target collaboration ● Increase referrals by customers Increase Product
Slide 101: Positioned for Significant Gains
Positioned for Significant Gains Solid business platform Business growth & investment Key Takeaways opportunities Renewed strategic focus & commitment to deliver 21
Slide 102: Mexico Closing Remarks
Mexico Closing Remarks Enrique Zorrilla, SVP & Country Head, Mexico
Slide 103: Three Strategies Driving Growth
Three Strategies Driving Growth 1 Retail Transformation 2 Drive Business Banking Streamline Operational 3 Infrastructure 2
Slide 104: Mexico's Transformational Journey
Mexico’s Transformational Journey 1 1 Stabilization Stabilization Transforming our operating model, organizational structure, 2 2 Transformation Transformation core banking platform, and customer facing platforms to become a 3 3 Centralization Centralization market leader 3
Slide 105: Leadership & Organizational Right-Sizing
Leadership & Organizational Right-Sizing 1. Leadership to align to culture shifts: • Evolve to a well-diversified universal bank • From product focused to customer centric • Greater shift to digitization 2. Streamlining ‘spans & layers’ for greater efficiency 3. Building a talent pool to be a compet
Slide 106: Re-deploying to Invest for Growth
Re-deploying to Invest for Growth Productivity (Canadian GAAP at constant FX)2 ● Optimizing our operating model ● Reducing structural costs 66.6% ● Revamping our technology platforms ● Redesigning policies & processes 64.1% 64.1% 63.8% 63.8% 64.1% ● Making it easier for customers to do business with
Slide 107: Key Strategic Initiatives Driving Growth in Mexico
Key Strategic Initiatives Driving Growth in Mexico 3-5 Year Targets Retail Transformation 7-9% CAGR earnings growth (12-14% pre-tax) Drive Business Banking <58% productivity ratio Streamline our Operational Infrastructure Positive operating leverage Growth in core business Canadian GAAP, constant FX
Slide 108: Positioned to Maintain Profitable Growth
In Summary Positioned to Maintain Profitable Growth THE Tremendous growth opportunity OPPORTUNITY THE Repositioning to accelerate growth REPOSITIONING THE Expanding into high growth & STRATEGY high profitability segments 7
Slide 109: Mexico Q&A
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Slide 110: Digital Strategy
Digital Strategy Stacey Madge, SVP, International Retail Banking
Slide 111: Agenda
Agenda The Latin American Consumer International Banking Digital Strategy 2
Slide 112: Ripe for Digital Adoption
Ripe for Digital Adoption Digitally nascent, but e-commerce growing Mobile phone growth (almost 100% penetration) Mobile banking growth to bypass online banking Opportunity to grow electronic payments Socially active 3
Slide 113: Digital Sales Growing Rapidly with Large Potential
Digital Sales Growing Rapidly with Large Potential E-commerce Growth 2015 E-commerce Sales (Market Year-Over-Year Growth Rate) (July 2015 % of Total Retail Sales Worldwide) 26% Asia - Pacific 10.1% 24% Western Europe 7.3% 17% North America 7.0% Central & Eastern Europe 2.8% LatAm 2.3% Middle East &
Slide 114: Smartphone Penetration Growing Rapidly
Smartphone Penetration Growing Rapidly Smartphone User Penetration (% of mobile phone users) 74 71 56 51 47 34 Peru Mexico Colombia Chile Canada US 14% 15% 11% 9% 7% Source: eMarketer 6% CAGR 2015-2018 5
Slide 115: Digital Banking Growth Opportunity
Digital Banking Growth Opportunity Active Online Customers Active Mobile Customers (2014 % of Total) (2014 % of Total) 20% 63% 19% 42% 18% 20% 5% 12% 3% 3% Mexico Colombia Peru Chile Canada Mexico Colombia Peru Chile Canada Source: Finalta 2014 6
Slide 116: Governments and Regulators are Supporting Digital Growth
Governments and Regulators are Supporting Digital Growth Use of biometrics as a means to formalize economy Emerging acceptance of digital signatures $ Allowance of non-banks to manage mobile money accounts to promote financial inclusion Contactless payments 7
Slide 117: Agenda
Agenda The Latin American Consumer International Banking Digital Strategy 8
Slide 118: Strategic Objectives
Strategic Objectives Enhance Process Build Customer Simplification New Business Digital & Models & Experience Digitization Partnerships Omni-Channel Technology Foundation 9
Slide 119: Enabling Omni-Channel Technology
Enabling Omni-Channel Technology Omni-Channel System of Engagement: Consistent User Experience Websites Tablets Smart Existing Branches Other Phones Partners Channels Services/Applications Programming Interfaces (APIs) Industry Standard Service Bus Standardize Core Banking Services 10
Slide 120: New Online & Mobile Banking Platform
Strategic Initiative #1: Enhance Customer Digital Experience New Online & Mobile Banking Platform ● ‘Device adaptive’ platform ● Customer experience redesign ● Strengthening our analytics ● Creating the foundation to drive digital sales 11
Slide 121: International Banking's Digital Adoption
Strategic Initiative #1: Enhance Customer Digital Experience International Banking’s Digital Adoption Active Online Customers Active Mobile Customers (in millions) (in thousands) 1.25 297 11% 48% CAGR CAGR 1.01 136 2013 2015 2013 2015 4x digital customer profitability vs. non-digital customers 12
Slide 122: Redesigning our Branches
Strategic Initiative #1: Enhance Customer Digital Experience Redesigning our Branches ● Engaged IDEO - leading global design firm ● Re-imagining the customer experience ● Featuring new technology to facilitate transaction migration ● Launching new ‘My Financial Plan’ tool 13
Slide 123: Increasing Productivity by Getting Closer to the Customer
Strategic Initiative #2: Process Simplification & Digitization Increasing Productivity by Getting Closer to the Customer ● Leveraging digital applications and signatures ● Increasing productivity and cycle times ● Launching the electronic capture of customer information directly from their ID 14
Slide 124: Redesigning our Technology Processes
Strategic Initiative #2: Process Simplification & Digitization Redesigning our Technology Processes ● Integrated CRM & Multi-product Multi-product origination platform CRM Sales ● Reduce time to make a sale ● Make customer opportunities more readily available for sales officers ● Enable greater auto
Slide 125: Leveraging Digital to Drive Customer Growth
Strategic Initiative #3: Build New Business Models & Partnerships Leveraging Digital to Drive Customer Growth ● Latin America’s largest online retailer with similar footprint to Scotiabank ● Co-branded credit card in Colombia & Mexico ● Launching digital applications ● Opportunity to leverage digita
Slide 126: Fintech Partnerships to Drive Growth & Customer Experience
Strategic Initiative #3: Build New Business Models & Partnerships Fintech Partnerships to Drive Growth & Customer Experience ● Online lending and data analytics platform for small businesses ● Risk scoring based on non-traditional data ● Automated funding to small businesses in minutes 17
Slide 127: What Else Is Coming
What Else Is Coming Enhanced • Customer offers and analytics engine Customer Digital • Onmi-channel loyalty platform & analytics Experience • Digital Sales Digital Process • Biometrics Automation • Intelligent Deposits Machines (IDMs) New Business • Mobile Payments Models & • Analytics Partnerships
Slide 128: Three Year Growth Targets
Three Year Growth Targets Today 3-5 Year Target Online penetration 15% 20%-25% Mobile penetration 5% 10%-15% % of branch transactions 50% 35%-45% % reduction in sales processes through – >20% digitization (account opening time) % of digital sales <5% 5%-10% 19
Slide 129: Digitizing & Simplifying Banking
In Summary Digitizing & Simplifying Banking Make it easier for our customers Simplify to do business with us Digitize to grow and reduce our Migrate cost-to-serve Grow our digitally active customer base and leverage Grow analytics to make customer- relevant offers 20
Slide 130: Digital Strategy Q&A
Digital Strategy Q&A § Scotiabank"