Summary of Scotiabank Q1 2026 Earnings Call

1Key Financial Results and Metrics

Adjusted Earnings: $2.7 billion, or $2.05 per share, up 16% year-over-year.

Return on Equity (ROE): 13%, up 120 basis points year-over-year; Canadian Banking segment ROE at 18.1%.

Capital Ratios: CET1 ratio at 13.3%, following share repurchases of 4.9 million shares.

Revenue Growth: 11% year-over-year, with net interest income up 13% and noninterest income up 10%.

Expenses: Grew 7% year-over-year, primarily due to higher personnel costs.

Provision for Credit Losses (PCLs): $1.1 billion, with an impaired PCL ratio of 58 basis points.

2Strategic Updates and Business Highlights

Canadian Banking: Strong start to the year with double-digit earnings growth expected. Notable growth in demand deposits (5% year-over-year) and retail mutual fund sales (doubled year-over-year).

Global Wealth Management: Continued strong performance with net sales of $1.8 billion and ROE at 17.9%, up 180 basis points year-over-year.

International Banking: Earnings up 10% year-over-year, with a focus on building deeper client relationships.

Global Banking and Markets: Strong quarter driven by capital markets and disciplined pricing, with ROE above 14% for the second consecutive quarter.

Technology Investments: Significant focus on AI to enhance efficiency and client service, including the rollout of tools like Ask AI.

3Forward Guidance and Outlook

ROE Target: Confidence in achieving 14%+ medium-term target, potentially one year ahead of schedule.

Impaired PCLs: Expected to remain elevated in the first half of the year, with gradual improvement anticipated in the latter half.

Loan Growth: Anticipated growth in Canadian Banking, particularly in commercial and mid-market segments, as the economy improves.

4Bad News, Challenges, or Points of Concern

Credit Quality: Elevated impaired PCLs, particularly in Canadian Banking and Global Banking and Markets, driven by specific accounts and macroeconomic uncertainties.

Economic Environment: Ongoing macroeconomic challenges, particularly in emerging markets like Mexico and Chile, could impact performance.

Mortgage Delinquencies: Increased 90-plus day delinquencies in the mortgage portfolio, primarily related to COVID-era loans in Ontario.

Regulatory Changes: New regulations in Chile affecting collections in consumer finance may pose challenges.

5Notable Q&A Insights

Credit Outlook: Management reiterated that while impaired PCLs are elevated, they expect gradual improvement as macroeconomic conditions stabilize.

Growth Strategy: Emphasis on shifting from volume to value, focusing on profitable client relationships rather than solely on loan growth.

International Banking Performance: Strong performance noted, but management remains cautious about macroeconomic conditions affecting growth, particularly in Mexico.

Investment in Technology: Management highlighted the importance of balancing cost control with necessary investments in technology and AI to drive future growth. Overall, Scotiabank reported strong financial results in Q1 2026, with positive growth across several segments, but faces challenges related to credit quality and macroeconomic conditions that could impact future performance.