BNS — The Bank of Nova Scotia

Summary of Scotiabank Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Earnings: $2.7 billion, or $2.05 per share, up 16% year-over-year.
• Return on Equity (ROE): 13%, an increase of 120 basis points year-over-year, with Canadian Banking showing the largest improvement at 18.1%.
• Net Interest Income: Grew 13% year-over-year, driven by margin expansion of 27 basis points.
• Revenue Growth: Overall revenue increased by 11% year-over-year.
• Provision for Credit Losses (PCLs): Totaled $1.2 billion, with an impaired PCL ratio of 58 basis points.
• CET1 Ratio: Remained strong at 13.3%, despite share repurchases of 4.9 million shares.

2. Strategic Updates and Business Highlights

• Canadian Banking: Strong performance with double-digit earnings growth expected for the year; demand deposits grew 5% year-over-year.
• Global Wealth Management: Continued positive momentum with net sales of $1.8 billion and ROE at 17.9%, up 180 basis points year-over-year.
• International Banking: Earnings increased by 10% year-over-year with a stable ROE of 16%.
• Global Banking and Markets (GBM): Delivered strong earnings of $545 million, benefiting from constructive market conditions and margin expansion.
• Technology Investments: Focus on AI and efficiency improvements, including the deployment of tools like Ask AI to enhance operational efficiency.

3. Forward Guidance and Outlook

• ROE Target: Confidence in achieving a medium-term target of over 14% a year ahead of plan, with expectations of continued ROE expansion across business units.
• PCL Guidance: Elevated PCLs expected in the first half of the year, with gradual improvement anticipated in the latter half.
• Loan Growth: Anticipated to improve as economic conditions stabilize, particularly in Canadian Banking.

4. Bad News, Challenges, or Points of Concern

• Impaired PCLs: Remain elevated, particularly in Canadian Banking and GBM, driven by macroeconomic uncertainties and specific accounts.
• Credit Quality: Concerns regarding the performance of COVID-era mortgage vintages, particularly in Ontario, with rising delinquencies noted.
• Economic Environment: Ongoing uncertainty in key markets, especially in emerging markets like Mexico and Chile, which may impact performance.
• Expense Growth: Expenses increased by 7% year-over-year, primarily due to higher personnel costs and technology investments.

5. Notable Q&A Insights

• Credit Quality Outlook: Management indicated that while impaired PCLs are expected to remain elevated, early signs of improvement in unsecured lending portfolios were noted.
• Loan Deferrals: Limited material impact from customer support initiatives such as loan deferrals, with strict guidelines governing their application.
• International Banking Performance: Management expressed optimism about the growth potential in International Banking, despite macroeconomic challenges.
• Market Conditions: The GBM segment's performance is closely tied to market volatility, with management cautious about future revenue sustainability as market conditions evolve.

This summary encapsulates the key takeaways from Scotiabank's Q1 2026 earnings call, highlighting both the positive performance metrics and the challenges faced by the bank.