Scotiabank Quarterly Earnings Buoyed by Global Wealth Management, Markets Operations

By Robb M. Stewart

Bank of Nova Scotia's earnings jumped in the final quarter of its fiscal year despite lingering economic uncertainty thanks strong income growth in the Canadian lender's global banking and markets operations and in global wealth management.

The bank recorded net income of 2.21 billion Canadian dollars ($1.58 billion), or C$1.65 a share, against C$1.69 billion, or C$1.22, a year earlier. On an adjusted basis that strips out certain items, the Canadian bank reported earnings of C$1.93 a share, beating the C$1.85 mean forecast of analysts polled by FactSet.

Overall revenue increased 15% to C$9.8 billion for the for the three months to Oct. 31 from C$8.53 billion last year, and versus the C$9.45 billion analysts expected.

Net interest income was up 13% to C$5.59 billion, while noninterest revenue rose 17% to C$4.22 billion.

The bank, one of the largest in North America by assets, logged improving financial results through the fiscal year and a strengthened balance sheet. The latest quarter saw year-over-year growth in each of its business lines, led by global wealth management and global banking and markets as well as improvement in Canadian banking.

Scotiabank's results kick off earnings season for the Big Six, the largest banks in Canada, and offer a glimpse at how the sector is coping with the heightened economic uncertainty and trade worries that have emerged with the Trump administration's abrupt shift in trade policy and embrace of tariffs.

The bank recorded provisions in the fourth quarter for credit losses, money set aside to cover soured loans, totaling C$1.11 billion. That was up from C$1.04 billion the quarter before and C$1.03 billion a year earlier, and was higher than the C$1.08 billion analysts anticipated.

Scotiabank's provision for credit losses on impaired loans was slightly lower on last year but up C$67 million on the prior quarter mainly due to its retail portfolio. The provision for losses on performing loans nudged up by C$5 million, which the bank said reflected business growth, mainly in international retail banking, as well as credit migration affecting Canadian banking and corporate loans.

The global economic landscape continues to be shaped by developments in U.S. trade policy, the bank's management said comments to shareholders. While there is a better sense of the tariff backdrop, undertainty remains over how America's changed trade policies will affect economies and financial markets, it said.

The bank said it was increasingly clear these policies and associated uncertainty are weighing more heavily on the U.S. than on many of its trading partners, Canada has been significantly impacted. It forecast Canada's economy will grow just 1.2% this year and by 1.4% in 2026, while inflationary pressures are likely to mean the Bank of Canada leaves interest rates steady through the middle of next year before raising them by the end of 2026.

Scotiabank's common equity Tier 1 capital ratio stood at 13.2%, down slightly from 13.3% at the end of the prior quarter but up from 13.1% a year earlier. The country's big banks are sitting on sizable capital buffers, and the country's banking regulator requires the lenders to hold a CET1 ratio of at least 11.5% of risk-weighted assets.

Scotiabank at the end of last year finalized a $2.8 billion investment in KeyCorp, grabbing an almost 15% stake in the U.S. regional lender as part of an effort to expand its reach and gain exposure to retail banking in the country.

On Monday, the bank closed a deal to tighten its focus on its core North American operations with the sale its businesses in Colombia, Costa Rica and Panama to Banco Davivienda in exchange for a 20% stake in the enlarged Colombian lender. Scotiabank has estimated it will record a loss of about $300 million with the move, largely related to cumulative foreign currency translation losses but its CET1 ratio should see an about 0.1 percentage point boost.

Write to Robb M. Stewart at [e-mail]

Corrections & Amplifications

This article was corrected at 11:19 a.m. ET because it misstated the year-earlier income as C$1.52 billion. Bank of Nova Scotia's net income was C$1.69 billion in the fourth quarter of fiscal 2024.

(END) Dow Jones Newswires

12-02-25 0743ET