BNS — The Bank of Nova Scotia

Summary of Scotiabank's Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 Earnings: Net income of $2.6 billion, or $1.93 per share, up 23% year-over-year.
• Full-Year EPS: Adjusted diluted EPS of $7.09, a 10% increase compared to the previous year.
• Return on Equity (ROE): Q4 ROE at 12.5%, up 190 basis points year-over-year; full-year ROE at 11.8%, up 50 basis points.
• Efficiency Ratio: Improved to 54.3%, a 180 basis point improvement.
• Net Interest Income: Grew by 13% year-over-year, driven by higher net interest margin and loan growth.
• Provision for Credit Losses (PCL): Approximately $1.1 billion in Q4, with a PCL ratio of 58 basis points.

2. Strategic Updates and Business Highlights

• Client Primacy Focus: Closed referrals between Canadian retail, commercial, and wealth management increased by 18% to $15 billion.
• Deposit Growth: Continued emphasis on deposit gathering, with a 6% increase in day-to-day and savings deposits year-over-year.
• Canadian Banking: Earnings of $942 million in Q4, with a focus on improving client relationships and efficiency.
• Global Wealth Management: Record earnings driven by strong asset growth and net sales of $11.5 billion for the year.
• International Banking: Earnings up 1% year-over-year, with successful regionalization efforts and a new retail brand launched in key markets.
• Global Banking and Markets: Earnings increased by 30%, benefiting from strong trading revenues and a robust underwriting environment.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipated double-digit EPS growth driven by net interest income and noninterest revenue growth, despite a higher tax rate expected around 25%.
• Canadian Banking: Expected to deliver double-digit earnings growth, supported by improved revenue and moderating loan losses.
• International Banking: Modest earnings growth anticipated, adjusting for divestitures.
• Global Wealth Management: Expected to continue strong earnings growth.
• Capital Position: CET1 ratio expected to remain above 13%, with ongoing share repurchases.

4. Bad News, Challenges, or Points of Concern

• Loan Loss Provisions: Increased PCLs, particularly in retail portfolios, indicating some stress among clients, especially in Ontario.
• Economic Uncertainty: Ongoing trade-related challenges and macroeconomic uncertainties affecting performance, particularly in international markets.
• Declining Loan Balances: Some segments, particularly in Global Banking and Markets, saw a decline in loan balances, although earnings improved.
• Market Conditions: Potential headwinds from rising unemployment and geopolitical uncertainties in key international markets.

5. Notable Q&A Insights

• EPS Growth Drivers: Management indicated that mid-single-digit PTPP growth in Canadian Banking would be driven by loan growth and margin expansion, alongside disciplined expense management.
• ROE Aspirations: Management expressed confidence in achieving an ROE of 14% or higher, with a focus on organic growth and capital deployment.
• Private Credit Exposure: Management clarified that Scotiabank's private credit exposure is primarily high-quality, with rigorous stress testing indicating manageable risk levels.
• Deposit Strategy: The bank is focusing on improving the deposit mix, with significant growth in day-to-day savings and mutual funds, while managing a decline in term deposits.

This summary encapsulates the key elements from Scotiabank's Q4 2025 earnings call, highlighting financial performance, strategic initiatives, future outlook, and areas of concern.