All amounts are in
Canadian dollars and are based on our unaudited Interim Condensed
Consolidated Financial Statements for the quarter ended April 30,
2021 and related notes prepared in accordance with International
Financial Reporting Standards (IFRS), unless otherwise noted. Our
complete Second Quarter 2021 Report to Shareholders, including our
unaudited interim financial statements for the period ended April
30, 2021, can also be found on the SEDAR website at
www.sedar.com and on the EDGAR section of the SEC's website at
www.sec.gov. Supplementary Financial Information is also available,
together with the Second Quarter 2021 Report to Shareholders on the
Investor Relations page of www.scotiabank.com
|
Second Quarter
Highlights on a Reported basis (versus Q2 2020)
|
Second Quarter
Highlights on an Adjusted
basis(1) (versus Q2
2020)
|
•
|
Net income of $2,456
million, compared to $1,324 million
|
•
|
Net income of $2,475
million, compared to $1,371 million
|
•
|
Earnings per share
(diluted) of $1.88, compared to $1.00
|
•
|
Earnings per share
(diluted) of $1.90, compared to $1.04
|
•
|
Return on equity of
14.8%, compared to 7.9%
|
•
|
Return on equity of
14.9%, compared to 8.2%
|
TORONTO, June 1, 2021 /CNW/ - Scotiabank reported
second quarter net income of $2,456
million compared to $1,324
million in the same period last year. Diluted earnings per
share (EPS) was $1.88, up 88% from
$1.00 in the previous year. Return on
equity was 14.8%, up from 7.9% in the previous year.
Adjusted net income(1) increased 81% to
$2,475 million and EPS of
$1.90, increased 83% compared to the
prior year. Return on equity was 14.9% compared to 8.2% a year
ago.
"We delivered another quarter of strong results reflecting the
strength of our diversified business platform, and the solid
economic recovery underway in our core markets," said Brian Porter, President and CEO,
Scotiabank. "Our commitment to superior customer service was
recognized in the J.D. Power 2021 Canada Retail Banking
Satisfaction Study where the Bank rose to #2 among large banks and
Tangerine was recognized as number one for the tenth consecutive
year among mid-sized retail banks. Our commitment to strong ESG
practices was also recognized with a rating of "AAA" in the MSCI
ESG Ratings(2) assessment, a rating held by only 2% of
banks globally. We are very proud of these accomplishments."
Canadian Banking generated earnings of $931 million with a strong rebound in fee income,
lower provision for credit losses, as well as solid asset and
deposit growth.
Global Wealth Management's earnings of $378 million were supported by strong revenue
growth, positive operating leverage for the sixth consecutive
quarter, and strong net sales. AUM and AUA increased 19% and 20%
from the prior year, respectively.
Global Banking and Markets reported earnings of $517 million, driven by continued solid
performance in the capital markets business, particularly equities,
good deposit growth and lower provision for credit losses.
The advisory pipeline remains strong for the balance of the
year.
International Banking generated earnings of $429 million, trending positively from the prior
quarter, aided by strong economic recovery across the Pacific
Alliance.
The Bank reported a Common Equity Tier 1 capital ratio of 12.3%
and remains very well capitalized to support its strategic growth
plans.
_____________________________________________
|
(1) Refer
to Non-GAAP Measures section on page 2.
|
(2) The use by Scotiabank of any MSCI
ESG Research LLC or its affiliates ("MSCI") data, and the use of
MSCI logos, trademarks, service marks or index names herein, do not
constitute a sponsorship, endorsement, recommendation, or promotion
of Scotiabank by MSCI. MSCI services and data are the property of
MSCI or its information providers and are provided 'as-is' and
without warranty. MSCI names and logos are trademarks or service
marks of MSCI.
|
Financial Highlights
Reported
Results
|
|
For the three months ended
|
|
For the six months ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
(Unaudited)($
millions)
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net interest
income
|
$
|
4,176
|
$
|
4,351
|
$
|
4,417
|
$
|
8,527
|
$
|
8,809
|
Non-interest
income
|
|
3,560
|
|
3,721
|
|
3,539
|
|
7,281
|
|
7,288
|
Total
revenue
|
|
7,736
|
|
8,072
|
|
7,956
|
|
15,808
|
|
16,097
|
Provision for credit
losses
|
|
496
|
|
764
|
|
1,846
|
|
1,260
|
|
2,772
|
Non-interest
expenses
|
|
4,042
|
|
4,208
|
|
4,363
|
|
8,250
|
|
8,781
|
Income tax
expense
|
|
742
|
|
702
|
|
423
|
|
1,444
|
|
894
|
Net
income
|
$
|
2,456
|
$
|
2,398
|
$
|
1,324
|
$
|
4,854
|
$
|
3,650
|
Net income
attributable to non-controlling interests in
|
|
|
|
|
|
|
|
|
|
|
subsidiaries
|
|
90
|
|
90
|
|
15
|
|
180
|
|
54
|
Net income
attributable to equity holders of the Bank
|
$
|
2,366
|
$
|
2,308
|
$
|
1,309
|
$
|
4,674
|
$
|
3,596
|
Preferred shareholders
and other equity instrument holders
|
|
77
|
|
43
|
|
66
|
|
120
|
|
91
|
Common
shareholders
|
$
|
2,289
|
$
|
2,265
|
$
|
1,243
|
$
|
4,554
|
$
|
3,505
|
Earnings per
common share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.89
|
$
|
1.87
|
$
|
1.03
|
$
|
3.76
|
$
|
2.89
|
Diluted
|
$
|
1.88
|
$
|
1.86
|
$
|
1.00
|
$
|
3.74
|
$
|
2.84
|
Non-GAAP Measures
The Bank uses a number of financial measures to assess its
performance. Some of these measures are not calculated in
accordance with Generally Accepted Accounting Principles (GAAP),
which are based on International Financial Reporting Standards
(IFRS), are not defined by GAAP and do not have standardized
meanings that would ensure consistency and comparability among
companies using these or similar measures. The Bank believes that
certain non-GAAP measures are useful in assessing ongoing business
performance and provide readers with a better understanding of how
management assesses performance. These non-GAAP measures are used
throughout this press release and are defined in the "Non-GAAP
Measures" section in the Second Quarter 2021 Report to
Shareholders.
Adjusted results and diluted earnings per share
The following table presents reconciliations of GAAP reported
financial results to non-GAAP adjusted financial results. The
adjustments summarized below are consistent with those described in
the Bank's 2020 Annual Report. For a complete description of the
adjustments, refer to the Non-GAAP measures section in the Bank's
2020 Annual Report.
Adjustment impacting current and prior periods:
- Amortization of acquisition-related intangible assets,
excluding software.
Adjustments impacting prior periods only:
- Acquisition and divestiture-related costs – Include costs
related to integrating acquired operations and net (gain)/loss on
divestitures.
- Valuation-related adjustments, recorded in Q1 2020 –
Relate to the inclusion of an additional scenario in the
measurement of allowance for credit losses, fair value methodology
change relating to uncollateralized OTC derivatives, and a
software-related impairment loss.
Reconciliation of reported and adjusted results
|
|
For the three months
ended
|
|
For the six months
ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
(Unaudited)($
millions)
|
|
2021
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,176
|
$
|
4,351
|
$
|
4,417
|
$
|
8,527
|
$
|
8,809
|
Non-interest
income
|
|
3,560
|
|
3,721
|
|
3,539
|
|
7,281
|
|
7,288
|
Total
revenue
|
|
7,736
|
|
8,072
|
|
7,956
|
|
15,808
|
|
16,097
|
Provision for credit
losses
|
|
496
|
|
764
|
|
1,846
|
|
1,260
|
|
2,772
|
Non-interest
expenses
|
|
4,042
|
|
4,208
|
|
4,363
|
|
8,250
|
|
8,781
|
Income before
taxes
|
|
3,198
|
|
3,100
|
|
1,747
|
|
6,298
|
|
4,544
|
Income tax
expense
|
|
742
|
|
702
|
|
423
|
|
1,444
|
|
894
|
Net
income
|
$
|
2,456
|
$
|
2,398
|
$
|
1,324
|
$
|
4,854
|
$
|
3,650
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
90
|
|
90
|
|
15
|
|
180
|
|
54
|
Net income
attributable to equity holders
|
|
2,366
|
|
2,308
|
|
1,309
|
|
4,674
|
|
3,596
|
Net income
attributable to common shareholders
|
$
|
2,289
|
$
|
2,265
|
$
|
1,243
|
$
|
4,554
|
$
|
3,505
|
Diluted earnings
per share (in dollars)
|
$
|
1.88
|
$
|
1.86
|
$
|
1.00
|
$
|
3.74
|
$
|
2.84
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs
|
|
|
|
|
|
|
|
|
|
|
Integration
costs(1)
|
$
|
-
|
$
|
-
|
$
|
41
|
$
|
-
|
$
|
117
|
Amortization of
Acquisition-related intangible assets, excluding
software(1)
|
|
26
|
|
28
|
|
27
|
|
54
|
|
54
|
|
|
26
|
|
28
|
|
68
|
|
54
|
|
171
|
Allowance for credit
losses - Additional scenario(2)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
155
|
Derivatives valuation
adjustment(3)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
116
|
Net (gain)/loss on
divestitures(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(262)
|
Impairment charge on
software asset(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
44
|
Adjustments
(Pre-tax)
|
$
|
26
|
$
|
28
|
$
|
68
|
$
|
54
|
$
|
224
|
Income tax
expense/(benefit)
|
|
(7)
|
|
(8)
|
|
(21)
|
|
(15)
|
|
(159)
|
Adjustments (After
tax)
|
$
|
19
|
$
|
20
|
$
|
47
|
$
|
39
|
$
|
65
|
Adjustment
attributable to NCI
|
|
-
|
|
-
|
|
(7)
|
|
-
|
|
(55)
|
Adjustments (After
tax and NCI)
|
$
|
19
|
$
|
20
|
$
|
40
|
$
|
39
|
$
|
10
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,176
|
$
|
4,351
|
$
|
4,417
|
$
|
8,527
|
$
|
8,809
|
Non-interest
income
|
|
3,560
|
|
3,721
|
|
3,539
|
|
7,281
|
|
7,136
|
Total
revenue
|
|
7,736
|
|
8,072
|
|
7,956
|
|
15,808
|
|
15,945
|
Provision for credit
losses
|
|
496
|
|
764
|
|
1,846
|
|
1,260
|
|
2,617
|
Non-interest
expenses
|
|
4,016
|
|
4,180
|
|
4,295
|
|
8,196
|
|
8,560
|
Income before
taxes
|
|
3,224
|
|
3,128
|
|
1,815
|
|
6,352
|
|
4,768
|
Income tax
expense
|
|
749
|
|
710
|
|
444
|
|
1,459
|
|
1,053
|
Net
income
|
$
|
2,475
|
$
|
2,418
|
$
|
1,371
|
$
|
4,893
|
$
|
3,715
|
Net income
attributable to NCI
|
|
90
|
|
90
|
|
22
|
|
180
|
|
109
|
Net income
attributable to equity holders
|
|
2,385
|
|
2,328
|
|
1,349
|
|
4,713
|
|
3,606
|
Net income
attributable to common shareholders
|
$
|
2,308
|
$
|
2,285
|
$
|
1,283
|
$
|
4,593
|
$
|
3,515
|
Adjusted diluted
earnings per share (in dollars)
|
$
|
1.90
|
$
|
1.88
|
$
|
1.04
|
$
|
3.78
|
$
|
2.87
|
(1)
|
Recorded in
non-interest expenses.
|
(2)
|
Recorded in
provision for credit losses.
|
(3)
|
Recorded in
non-interest income.
|
(4)
|
Recorded in
non-interest income; costs related to divestitures are recorded in
non-interest expenses.
|
Reconciliation of reported and adjusted results by business
line(1)
(Unaudited)($
millions)
|
Canadian
Banking
|
International
Banking
|
Global Wealth
Management
|
Global Banking
and Markets
|
Other
|
Total
|
|
For the three
months ended April 30, 2021
|
Reported net
income
|
$
|
927
|
$
|
507
|
$
|
374
|
$
|
517
|
$
|
131
|
$
|
2,456
|
Total adjustments
(after tax)
|
|
4
|
|
9
|
|
6
|
|
-
|
|
-
|
|
19
|
Adjusted net
income
|
$
|
931
|
$
|
516
|
$
|
380
|
$
|
517
|
$
|
131
|
$
|
2,475
|
Adjusted net
income attributable to equity holders
|
$
|
931
|
$
|
429
|
$
|
378
|
$
|
517
|
$
|
130
|
$
|
2,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended January 31, 2021
|
Reported net
income
|
$
|
911
|
$
|
477
|
$
|
421
|
$
|
543
|
$
|
46
|
$
|
2,398
|
Total adjustments
(after tax)
|
|
4
|
|
9
|
|
7
|
|
-
|
|
-
|
|
20
|
Adjusted net
income
|
$
|
915
|
$
|
486
|
$
|
428
|
$
|
543
|
$
|
46
|
$
|
2,418
|
Adjusted net income
attributable to equity holders
|
$
|
915
|
$
|
398
|
$
|
425
|
$
|
543
|
$
|
47
|
$
|
2,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended April 30, 2020
|
Reported net
income
|
$
|
477
|
$
|
185
|
$
|
304
|
$
|
523
|
$
|
(165)
|
$
|
1,324
|
Total adjustments
(after tax)
|
|
4
|
|
31
|
|
12
|
|
-
|
|
-
|
|
47
|
Adjusted net
income
|
$
|
481
|
$
|
216
|
$
|
316
|
$
|
523
|
$
|
(165)
|
$
|
1,371
|
Adjusted net income
attributable to equity holders
|
$
|
481
|
$
|
197
|
$
|
314
|
$
|
523
|
$
|
(166)
|
$
|
1,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended April 30, 2021
|
Reported net
income
|
$
|
1,838
|
$
|
984
|
$
|
795
|
$
|
1,060
|
$
|
177
|
$
|
4,854
|
Total adjustments
(after tax)
|
|
8
|
|
18
|
|
13
|
|
-
|
|
-
|
|
39
|
Adjusted net
income
|
$
|
1,846
|
$
|
1,002
|
$
|
808
|
$
|
1,060
|
$
|
177
|
$
|
4,893
|
Adjusted net
income attributable to equity holders
|
$
|
1,846
|
$
|
827
|
$
|
803
|
$
|
1,060
|
$
|
177
|
$
|
4,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months
ended April 30, 2020
|
Reported net
income
|
$
|
1,329
|
$
|
767
|
$
|
613
|
$
|
895
|
$
|
46
|
$
|
3,650
|
Total adjustments
(after tax)
|
|
60
|
|
148
|
|
24
|
|
79
|
|
(246)
|
|
65
|
Adjusted net
income
|
$
|
1,389
|
$
|
915
|
$
|
637
|
$
|
974
|
$
|
(200)
|
$
|
3,715
|
Adjusted net income
attributable to equity holders
|
$
|
1,389
|
$
|
812
|
$
|
632
|
$
|
974
|
$
|
(201)
|
$
|
3,606
|
(1)
|
Refer to Business
Segment Overview in the Second Quarter 2021 Report to
Shareholders.
|
Business Segment Review
Canadian Banking
Q2 2021 vs Q2 2020
Net income attributable to equity holders was $927 million, compared to $477 million. Adjusted net income was
$931 million, an increase of
$450 million or 94%. The increase was
due primarily to lower provision for credit losses and higher
non-interest income, partly offset by lower net interest income and
higher non-interest expenses.
Q2 2021 vs Q1 2021
Net income attributable to equity holders increased $16 million or 2%. The increase was due primarily
to lower provision for credit losses and higher non-interest
income, partly offset by lower net interest income and higher
non-interest expenses.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
Net income attributable to equity holders was $1,838 million, an increase of $509 million or 38%. Adjusted net income
was $1,846 million, an increase of
$457 million or 33%. The increase was
due primarily to lower provision for credit losses, higher
non-interest income and lower non-interest expenses, partly offset
by lower net interest income.
International Banking
Q2 2021 vs Q2 2020
Net income attributable to equity holders was $420 million, an increase of $247 million or 143%. Adjusted net income
attributable to equity holders was $429
million, an increase of $232
million or 118%. This increase was driven by lower provision
for credit losses and lower non-interest expenses, partially offset
by lower revenues and higher income taxes.
Q2 2021 vs Q1 2021
Net income attributable to equity holders increased by
$31 million or 8%. This was due
largely to lower provision for credit losses and non-interest
expenses, partially offset by lower revenues and higher income
taxes.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
Net income attributable to equity holders was $809 million, an increase of $118 million or 17%. Adjusted net income
attributable to equity holders was $827
million, an increase of $15
million or 2%. The increase was due largely to lower
provision for credit losses and non-interest expenses, partially
offset by lower revenues, higher income taxes, the impact of
divested operations, and the benefit of one additional month of
earnings from the Alignment of the reporting period of Mexico with the Bank ("Alignment of reporting
period") last year.
Financial Performance on an Adjusted and Constant Dollar
Basis
The discussion below on the results of operations is on an
adjusted and constant dollar basis. Constant dollar basis excludes
the impact of foreign currency translation, which is a non-GAAP
financial measure (refer to "Non-GAAP" measures section in the
Second Quarter 2021 Report to Shareholders). The Bank believes that
reporting in constant dollar is useful for readers in assessing
ongoing business performance.
Q2 2021 vs Q2 2020
Net income attributable to equity holders was $420 million, an increase of $281 million or 203%. Adjusted net income
attributable to equity holders increased to $429 million, up 165%. This increase was driven
by lower provision for credit losses and lower non-interest
expenses, partially offset by lower revenues and higher income
taxes.
Q2 2021 vs Q1 2021
Net income attributable to equity holders increased $43 million or 12%. Adjusted net income
attributable to equity holders increased by $43 million or 11%. This was due largely to lower
provision for credit losses and non-interest expenses, partially
offset by lower revenues and higher income taxes.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
Net income attributable to equity holders was $809 million, an increase of $190 million or 31%. Adjusted net income
attributable to equity holders was $827
million, an increase of $92
million, up 12%. The increase was due largely to lower
provision for credit losses and non-interest expenses, partially
offset by lower revenues, higher income taxes, the impact of
divested operations, and the Alignment of reporting period last
year.
Global Wealth Management
Q2 2021 vs Q2 2020
Net income attributable to equity holders was $372 million, an increase of $70 million or 23%. Adjusted net income increased
to $378 million, up 21%. This growth
is due primarily to higher mutual fund fees and brokerage revenues,
partially offset by higher volume-related expenses.
Q2 2021 vs Q1 2021
Net income attributable to equity holders decreased $46 million or 11%. Net income was up
$16 million or 5% excluding the
seasonally elevated performance fees in the prior quarter, driven
by higher fee income from strong net sales and market appreciation
partly offset by volume driven expense growth.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
Net income attributable to equity holders was $790 million, an increase of $182 million or 30%. Adjusted net income
increased to $803 million, up 27%.
This increase is due primarily to higher mutual fund fees,
brokerage revenues, and elevated performance fees, partially offset
by higher volume related expenses.
Global Banking and Markets
Q2 2021 vs Q2 2020
Net income attributable to equity holders was $517 million, a decrease of $6 million or 1%. This was due to lower net
interest income and non-interest income, higher non-interest
expenses and the impact of foreign currency translation, partly
offset by lower provision for credit losses.
Q2 2021 vs Q1 2021
Net income attributable to equity holders decreased by
$26 million or 5%. This was due
mainly to lower net interest income and non-interest income, higher
non-interest expenses and the impact of foreign currency
translation, partly offset by lower provision for credit
losses.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
Net income attributable to equity holders was $1,060 million, an increase of $165 million or 18%. Adjusted net income
attributable to equity holders increased by $86 million or 9%. This was due to lower
non-interest expenses and provision for credit losses, partly
offset by lower net interest income and non-interest income.
Other
Q2 2021 vs Q2 2020
Net income attributable to equity holders was $130 million, compared to a net loss of
$166 million. The increase of
$296 million was due mainly to lower
non-interest expenses, which included metals business charges of
$212 million and higher COVID-19
related costs in the prior year, as well as higher contribution
from asset/liability management activities in the current year.
Q2 2021 vs Q1 2021
Net income attributable to equity holders was $130 million, an increase of $83 million. The increase was due mainly to lower
non-interest expenses as a result of the investment in the SCENE
loyalty program in the prior quarter, and higher investment
gains.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
Net income attributable to equity holders was $177 million compared to $73 million. Adjusted net income attributable to
equity holders was $177 million
compared to a net loss of $201
million. The increase of $378
million was due mainly to lower non-interest expenses, which
included metals business charges of $232
million and higher COVID-19 related costs in the prior year,
as well as higher investment gains in the current year.
Credit risk
Provision for credit losses
Q2 2021 vs Q2 2020
The provision for credit losses was $496
million, compared to $1,846
million, a decrease of $1,350
million or 73%. The provision for credit losses ratio
decreased 86 basis points to 33 basis points.
Provision on performing loans was a net reversal of $696 million, compared to $976 million, a decrease of $1,672 million. Of this decrease, $1,276 million is related to retail driven by the
more favourable credit and macroeconomic outlook across the
footprint and credit migration to impaired, mainly in International
Banking. Commercial and corporate banking provisions decreased
$396 million due primarily to this
quarter's partial reversal of Energy portfolio related provisions
set up last year, as a result of improved market conditions and the
more favourable macroeconomic outlook.
Provision on impaired loans was $1,192
million, compared to $870
million, an increase of $322
million or 37% due to elevated write-offs in the retail
portfolio in International Banking driven by credit migration from
expired payment deferrals, partially offset by lower commercial and
corporate provisions. The provision for credit losses ratio on
impaired loans increased 24 basis points to 80 basis points.
Q2 2021 vs Q1 2021
The provision for credit losses was $496
million, compared to $764
million, a decrease of $268
million. The provision for credit losses ratio decreased 16
basis points to 33 basis points.
Provision on performing loans was a net reversal of $696 million, compared to $2 million, a decrease of $698 million. Approximately $200 million of this decrease was due to release
of allowances built in prior periods reflecting the more favourable
credit quality and macroeconomic outlook. The remaining decrease
was due to credit migration, the majority of which was to impaired
loans in the retail portfolio, mainly in International Banking.
Provision on impaired loans was $1,192
million, an increase of $430
million or 56% due primarily to higher retail provisions in
International Banking driven by credit migration of performing
loans from expired payment deferrals. The provision for credit
losses ratio on impaired loans was 80 basis points, an increase of
31 basis points.
Year-to-date Q2 2021 vs Year-to-date Q2 2020
The provision for credit losses was $1,260 million, compared to $2,772 million, a decrease of $1,512 million. Adjusted provision for credit
losses decreased $1,357 million or
52%. The provision for credit losses ratio decreased 49 basis point
to 41 basis points and adjusted provision for credit losses ratio
decreased by 44 basis points.
Provision on performing loans was a net reversal of $694 million, compared to $1,067 million, a decrease of $1,761 million. Adjusted provision for performing
loans decreased $1,639 million of
which $1,267 million related to
retail driven by credit migration and the more favourable credit
and macroeconomic outlook. Commercial and corporate banking
provisions decreased $372 million
driven by the favourable macroeconomic outlook, stable credit
quality and reversals of Energy portfolio provisions due to
improved market conditions.
The provision for credit losses on impaired loans was
$1,954 million, an increase of
$249 million. Adjusted provision for
credit losses on impaired loans increased $282 million or 17% due to higher retail
provisions in International Banking driven by credit migration from
expired payment deferrals partially offset by lower provisions in
Canadian retail, commercial and corporate portfolios. The provision
for credit losses ratio on impaired loans increased nine basis
points to 64 basis points and by 10 basis points on an adjusted
basis.
Allowance for credit losses
The total allowance for credit losses as at April 30, 2021 was $6,893
million. The allowance for credit losses on loans was
$6,716 million, down $874 million from the prior quarter. The decrease
was due primarily to lower performing loan provisions driven by
credit migration and write-offs related to the International
Banking retail portfolio, more favourable macroeconomic outlook and
the impact of foreign currency translation.
The allowance against performing loans was lower at $4,778 million compared to $5,596 million as at January 31, 2021. The decrease was due primarily
to credit migration related to the International Banking retail
portfolio, mainly in Peru and
Colombia, more favourable
macroeconomic outlook and the impact of foreign currency
translation.
The allowance on impaired loans decreased to $1,938 million from $1,994
million last quarter. The decrease is due primarily to the
impact of foreign currency translation as higher provisions related
to the International Banking retail portfolio were offset by
write-offs mainly in Peru and
Colombia due to expiry of payment
deferrals.
Impaired loans
Gross impaired loans decreased to $5,116
million as at April 30, 2021,
from $5,279 million last quarter. The
decrease was due primarily to the impact of foreign currency
translation and higher write-offs related to the International
Banking retail portfolio driven by credit migration due to expired
payment deferrals in Peru and
Colombia. Commercial and corporate
impaired loans were higher due primarily to a new formation in one
account in the real estate and construction sector. The gross
impaired loan ratio was 81 basis points as at April 30, 2021, a decrease of three basis
points.
Net impaired loans in Canadian Banking were $538 million as at April
30, 2021, a decrease of $47
million from January 31, 2021.
International Banking's net impaired loans were $2,375 million as at April
30, 2021, a decrease of $124
million from January 31, 2021,
driven by impact of foreign currency translation and write-offs
mainly in Peru and Colombia. In Global Banking and Markets, net
impaired loans were $243 million as
at April 30, 2021, an increase of
$70 million from January 31, 2021 due primarily to a new formation
in one account in the real estate and construction sector. In
Global Wealth Management, net impaired loans were $22 million as at April
30, 2021, a decrease of $6
million from January 31, 2021.
Net impaired loans as a percentage of loans and acceptances were
0.50% as at April 30, 2021, a
decrease of two basis points from 0.52% from last quarter.
Capital Ratios
The Bank's Common Equity Tier 1 (CET1) capital ratio was 12.3%
at April 30, 2021, an increase of
approximately 10 basis points from the prior quarter, due primarily
to strong internal capital generation and the reduction of the
employee pension and post-retirement benefits liability, partly
offset by strong growth in risk-weighted assets, a lower CET1
inclusion from declines in Stage 1 and Stage 2 expected credit
losses (ECL) and the impacts of foreign currency translation from a
stronger Canadian dollar. As at April 30,
2021, the Bank's CET1 ratio included a benefit of 14 basis
points (January 31, 2021 – 22 basis
points; October 31, 2020 – 30 basis
points) from OSFI's transitional adjustment for the partial
inclusion of increases in Stage 1 and Stage 2 ECL relative to their
pre-crisis baseline levels.
The Bank's Tier 1 and Total capital ratios were unchanged from
the prior quarter at 13.6% and 15.7%, respectively, due primarily
to the above noted impacts to the CET1 ratio, substantially offset
by the redemption of $350 million of
Basel III compliant NVCC preferred shares.
As at April 30, 2021, the CET1, Tier 1, Total capital and
Leverage ratios were well above OSFI's minimum capital ratios.
Forward-looking statements
From time to time, 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 Commission, or in other communications. In addition,
representatives of the Bank may include forward-looking statements
orally to analysts, investors, the media and others. All such
statements are made pursuant to the "safe harbor" provisions of the
U.S. Private Securities Litigation Reform Act of 1995 and any
applicable Canadian securities legislation. Forward-looking
statements may include, but are not limited to, statements made in
this document, the Management's Discussion and Analysis in the
Bank's 2020 Annual Report under the headings "Outlook" and in other
statements regarding the Bank's objectives, strategies to achieve
those objectives, the regulatory environment in which the Bank
operates, anticipated financial results, and the outlook for the
Bank's businesses and for the Canadian, U.S. and global economies.
Such statements are typically identified by words or phrases such
as "believe," "expect," "foresee," "forecast," "anticipate,"
"intend," "estimate," "plan," "goal," "project," and similar
expressions of future or conditional verbs, such as "will," "may,"
"should," "would" and "could."
By their very nature, forward-looking statements require us to
make assumptions and are subject to inherent risks and
uncertainties, which give rise to the possibility that our
predictions, forecasts, projections, expectations or conclusions
will not prove to be accurate, that our assumptions may not be
correct and that our financial performance objectives, vision and
strategic goals will not be achieved.
We caution readers not to place undue reliance on these
statements as a number of risk factors, many of which are beyond
our control and effects of which can be difficult to predict, could
cause our actual results to differ materially from the
expectations, targets, estimates or intentions expressed in such
forward-looking statements.
The future outcomes that relate to forward-looking statements
may be influenced by many factors, including but not limited to:
general economic and market conditions in the countries in which we
operate; changes in currency and interest rates; increased funding
costs and market volatility due to market illiquidity and
competition for funding; the failure of third parties to comply
with their obligations to the Bank and its affiliates; changes in
monetary, fiscal, or economic policy and tax legislation and
interpretation; changes in laws and regulations or in supervisory
expectations or requirements, including capital, interest rate and
liquidity requirements and guidance, and the effect of such changes
on funding costs; changes to our credit ratings; operational and
infrastructure risks; reputational risks; the accuracy and
completeness of information the Bank receives on customers and
counterparties; the timely development and introduction of new
products and services; our ability to execute our strategic plans,
including the successful completion of acquisitions and
dispositions, including obtaining regulatory approvals; critical
accounting estimates and the effect of changes to accounting
standards, rules and interpretations on these estimates; global
capital markets activity; the Bank's ability to attract, develop
and retain key executives; the evolution of various types of fraud
or other criminal behaviour to which the Bank is exposed;
disruptions in or attacks (including cyber-attacks) on the Bank's
information technology, internet, network access, or other voice or
data communications systems or services; increased competition in
the geographic and in business areas in which we operate, including
through internet and mobile banking and non-traditional
competitors; exposure related to significant litigation and
regulatory matters; the occurrence of natural and unnatural
catastrophic events and claims resulting from such events; the
emergence of widespread health emergencies or pandemics, including
the magnitude and duration of the COVID-19 pandemic and its impact
on the global economy and financial market conditions and the
Bank's business, results of operations, financial condition and
prospects; and the Bank's anticipation of and success in managing
the risks implied by the foregoing. A substantial amount of the
Bank's business involves making loans or otherwise committing
resources to specific companies, industries or countries.
Unforeseen events affecting such borrowers, industries or countries
could have a material adverse effect on the Bank's financial
results, businesses, financial condition or liquidity. These and
other factors may cause the Bank's actual performance to differ
materially from that contemplated by forward-looking statements.
The Bank cautions that the preceding list is not exhaustive of all
possible risk factors and other factors could also adversely affect
the Bank's results, for more information, please see the "Risk
Management" section of the Bank's 2020 Annual Report, as may be
updated by quarterly reports.
Material economic assumptions underlying the forward-looking
statements contained in this document are set out in the 2020
Annual Report under the headings "Outlook", as updated by quarterly
reports. The "Outlook" sections are based on the Bank's views and
the actual outcome is uncertain. Readers should consider the
above-noted factors when reviewing these sections. When relying on
forward-looking statements to make decisions with respect to the
Bank and its securities, investors and others should carefully
consider the preceding factors, other uncertainties and potential
events. Any forward-looking statements contained in this document
represent the views of management only as of the date hereof and
are presented for the purpose of assisting the Bank's shareholders
and analysts in understanding the Bank's financial position,
objectives and priorities, and anticipated financial performance as
at and for the periods ended on the dates presented, and may not be
appropriate for other purposes. Except as required by law, the Bank
does not undertake to update any forward-looking statements,
whether written or oral, that may be made from time to time by or
on its behalf.
Additional information relating to the Bank, including the
Bank's Annual Information Form, can be located on the SEDAR website
at www.sedar.com and on the EDGAR section of the SEC's website
at www.sec.gov.
Shareholders Information
Dividend and Share Purchase Plan
Scotiabank's dividend reinvestment and share purchase plan
allows common and preferred shareholders to purchase additional
common shares by reinvesting their cash dividend without incurring
brokerage or administrative fees. As well, eligible shareholders
may invest up to $20,000 each fiscal
year to purchase additional common shares of the Bank. All
administrative costs of the plan are paid by the Bank. For more
information on participation in the plan, please contact the
transfer agent.
Website
For information relating to Scotiabank and its services, visit
us at our website: www.scotiabank.com.
Conference call and Web broadcast
The quarterly results conference call will take place on
June 1, 2021, at 8:00 am EDT and is expected to last approximately
one hour. Interested parties are invited to access the call live,
in listen-only mode, by telephone at 416-641-6104 or toll-free, at
1-800-952-5114 using ID 4045996# (please call shortly before
8:00 am EDT). In addition, an audio
webcast, with accompanying slide presentation, may be accessed via
the Investor Relations page of www.scotiabank.com.
Following discussion of the results by Scotiabank executives,
there will be a question and answer session. A telephone replay of
the conference call will be available from June 1, 2021, to July 1,
2021, by calling 905-694-9451 or 1-800-408-3053
(North America toll-free) and
entering the access code 5111905#. The archived audio webcast will
be available on the Bank's website for three months.
Additional Information
Investors:
Financial Analysts, Portfolio Managers and
other Institutional Investors requiring financial information,
please contact Investor Relations, Finance Department:
Scotiabank
Scotia Plaza, 44 King Street West
Toronto, Ontario, Canada M5H
1H1
Telephone: (416) 775-0798
E-mail: investor.relations@scotiabank.com
Global Communications:
Scotiabank
44 King Street West, Toronto, Ontario
Canada M5H 1H1
E-mail: corporate.communications@scotiabank.com
Shareholders:
For enquiries related to changes in
share registration or address, dividend information, lost share
certificates, estate transfers, or to advise of duplicate mailings,
please contact the Bank's transfer agent:
Computershare Trust Company of Canada
100 University Avenue, 8th Floor
Toronto, Ontario, Canada M5J
2Y1
Telephone: 1-877-982-8767
Fax: 1-888-453-0330
E-mail: service@computershare.com
Co-Transfer Agent (U.S.A.)
Computershare Trust Company, N.A.
Att: Stock Transfer Department
Overnight Mail Delivery: 462 South 4th Street, Louisville, KY 40202
Regular Mail Delivery: P.O. Box 505005, Louisville, KY 40233-5005
Telephone: (303) 262-0600 or 1-800-962-4284
For other shareholder enquiries, please contact the Corporate
Secretary's Department:
Scotiabank
Scotia Plaza, 44 King Street West
Toronto, Ontario, Canada M5H
1H1
Telephone: (416) 866-3672
E-mail: corporate.secretary@scotiabank.com
Rapport trimestriel disponible en français
Le Rapport annuel et les états financiers de la Banque sont
publiés en français et en anglais et distribués aux actionnaires
dans la version de leur choix. Si vous préférez que la
documentation vous concernant vous soit adressée en français,
veuillez en informer Relations publiques, Affaires de la société et
Affaires gouvernementales, La Banque de Nouvelle-Écosse, Scotia
Plaza, 44, rue King Ouest, Toronto (Ontario), Canada M5H 1H1, en joignant, si possible,
l'étiquette d'adresse, afin que nous puissions prendre note du
changement.
SOURCE Scotiabank