The Bank of Nova Scotia(BNS) - 2024 Q2 - Quarterly Report

Forward-Looking Statements and Risks - Forward-looking statements are made pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation[12] - Forward-looking statements include objectives, strategies, regulatory environment, anticipated financial results, and economic outlook for Canada, U.S., and global markets[12] - Key risks to forward-looking statements include economic conditions, currency and interest rate changes, geopolitical risks, technological changes, and operational risks[12] - The Bank's business involves significant exposure to loans and commitments to specific companies, industries, or countries, which could be adversely affected by unforeseen events[12] - Material economic assumptions underlying forward-looking statements are detailed in the 2023 Annual Report under the "Outlook" section[12] - The "Outlook" and "2024 Priorities" sections are based on the Bank's views, but actual outcomes remain uncertain[12] - The Bank does not undertake to update forward-looking statements except as required by law[12] - Additional information about the Bank can be found on the SEDAR+ and SEC EDGAR websites[12] Financial Performance and Key Metrics - Net income for the quarter ended April 30, 2024, was $2,092 million, compared to $2,146 million in the same period last year[13] - Total revenue for the quarter increased to $8,347 million from $7,913 million in the prior year period[13] - Provision for credit losses rose to $1,007 million, up from $709 million in the previous year[13] - Common Equity Tier 1 (CET1) capital ratio improved to 13.2%, up from 12.3% a year ago[13] - The effective tax rate for the quarter was 20.4%, slightly higher than the 20.2% average over the period[14] - Dividends paid per share increased to $1.06, up from $1.03 in the prior year[13] - Market capitalization stood at $77,660 million as of April 30, 2024[13] - Q4 2023 net gain of $367 million ($319 million after-tax) from the sale of 20% equity interest in Canadian Tire's Financial Services business[38] - Q4 2023 restructuring charge and severance provisions of $354 million ($258 million after-tax) due to workforce reductions and digitization efforts[38] - Q4 2023 real estate consolidation and contract termination costs of $87 million ($63 million after-tax)[38] - Q4 2023 impairment charges of $185 million ($159 million after-tax) related to investment in Bank of Xi'an Co. Ltd. in China[38] - Q4 2023 impairment of intangible assets, including software, of $161 million ($114 million after-tax)[38] - Q1 2023 additional income tax expense of $579 million for the Canada Recovery Dividend (CRD)[39] - Q4 2022 net loss of $361 million ($340 million after-tax) from divestitures and wind-down of operations in Asia Pacific[39] - Q4 2022 costs of $133 million ($98 million after-tax) to support the expansion of the Scene+ loyalty program[39] - Q2 2024 reported net income of $2,092 million, with adjusted net income of $2,105 million[40] - Q1 2024 reported net income of $2,199 million, with adjusted net income of $2,212 million[40] - Canadian Banking reported net income of $1,055 million for the three months ended April 30, 2023, and $2,103 million for the six months ended April 30, 2024[42][43] - International Banking reported net income of $657 million for the three months ended April 30, 2023, and $1,463 million for the six months ended April 30, 2024[42][43] - Global Wealth Management reported net income of $356 million for the three months ended April 30, 2023, and $753 million for the six months ended April 30, 2024[42][43] - Global Banking Markets reported net income of $401 million for the three months ended April 30, 2023, and $867 million for the six months ended April 30, 2024[42][43] - Adjusted net income attributable to common shareholders was $2,018 million for the three months ended April 30, 2023, and $4,009 million for the six months ended April 30, 2024[42][43] - Total non-interest expenses adjustments (Pre-tax) were $21 million for the three months ended April 30, 2023, and $36 million for the six months ended April 30, 2024[42][43] - Impact of adjusting items on net income before taxes was $21 million for the three months ended April 30, 2023, and $36 million for the six months ended April 30, 2024[42][43] - Total impact of adjusting items on net income was $15 million for the three months ended April 30, 2023, and $26 million for the six months ended April 30, 2024[42][43] - Adjusted net income attributable to equity holders was $2,137 million for the three months ended April 30, 2023, and $4,266 million for the six months ended April 30, 2024[42][43] - The Bank adopted IFRS 17 effective November 1, 2023, and prior period amounts have been restated accordingly[43] - Net interest income for the three months ended April 30, 2024, was $2,246 million, an increase from $1,999 million in the same period in 2023[45] - Non-interest income for the three months ended April 30, 2024, was $857 million, compared to $743 million in the same period in 2023[45] - Total revenue for the three months ended April 30, 2024, was $3,103 million, up from $2,742 million in the same period in 2023[45] - Provision for credit losses increased to $574 million for the three months ended April 30, 2024, from $436 million in the same period in 2023[45] - Net income for the three months ended April 30, 2024, was $768 million, compared to $657 million in the same period in 2023[45] - Average assets for the three months ended April 30, 2024, were $236 billion, slightly down from $239 billion in the same period in 2023[45] - Canadian Banking net interest income increased due to deposit growth, margin expansion, and loan growth[50] - International Banking net interest income trended upward due to growth in residential mortgages, business loans, and central bank rate increases[50] - Provision for credit losses increased due to an unfavorable macroeconomic outlook, retail portfolio growth, and higher interest rates[54] - Non-interest expenses reflect investments in personnel and technology, partly offset by expense management and efficiency initiatives[54] - Net income attributable to common shareholders for the six months ended April 30, 2024, was $4,009 million, compared to $3,638 million in the same period in 2023[66] - Adjusted net income attributable to common shareholders for the six months ended April 30, 2024, was $4,035 million, compared to $4,247 million in the same period in 2023[66] - Return on tangible common equity (adjusted) for the six months ended April 30, 2024, was 14.2%, compared to 16.0% in the same period in 2023[66] - Core net interest income for the six months ended April 30, 2024, was $9,804 million, compared to $9,432 million in the same period in 2023[60] - Net interest margin for the six months ended April 30, 2024, was 2.18%, compared to 2.12% in the same period in 2023[60] - Average core earning assets for the six months ended April 30, 2024, were $903,456 million, compared to $898,261 million in the same period in 2023[60] - Net interest income (reported) for the six months ended April 30, 2024, was $9,467 million, compared to $9,023 million in the same period in 2023[60] - Average tangible common equity for the six months ended April 30, 2024, was $57,026 million, compared to $53,603 million in the same period in 2023[66] - The Bank adopted IFRS 17 effective November 1, 2023, resulting in restated prior period amounts[66][60] - The Bank increased the capital attributed to its business lines to approximate 11.5% of the Basel III common equity capital requirements, up from 10.5% previously[63] - Reported Net income attributable to common shareholders for the three months ended January 31, 2024 was $2,066 million, compared to $2,018 million for the same period in 2023[64] - Total average common equity for the three months ended January 31, 2024 was $69,372 million, up from $67,574 million in the same period last year[64] - Return on equity for the three months ended January 31, 2024 was 11.8%, compared to 12.2% in the same period last year[64] - Adjusted Net income attributable to common shareholders for the three months ended January 31, 2024 was $2,079 million, up from $2,033 million in the same period last year[64] - Reported Net income attributable to common shareholders for the six months ended April 30, 2024 was $4,009 million, compared to $3,638 million for the same period in 2023[65] - Total average common equity for the six months ended April 30, 2024 was $69,774 million, up from $66,766 million in the same period last year[65] - Return on equity for the six months ended April 30, 2024 was 11.6%, compared to 11.0% in the same period last year[65] - Adjusted Net income attributable to common shareholders for the six months ended April 30, 2024 was $4,035 million, up from $4,247 million in the same period last year[65] - The Bank adopted IFRS 17 effective November 1, 2023, requiring restatement of prior period amounts[64][65] - Effective Q1 2024, the Bank increased the capital attributed to business lines to approximate 11.5% of Basel III common equity capital requirements, up from 10.5% previously[69][71] - The Bank's reported net income for Q2 2024 was $2,092 million, a decrease of 3% compared to $2,146 million in Q2 2023 and a decrease of 5% compared to $2,199 million in Q1 2024[73][80] - Adjusted net income for Q2 2024 was $2,105 million, a decrease of 3% compared to $2,161 million in Q2 2023 and a decrease of 5% compared to $2,212 million in Q1 2024[73][80] - Revenues for Q2 2024 were $8,347 million, an increase of 5% compared to $7,913 million in Q2 2023, driven by a 5% increase in net interest income to $4,694 million and a 6% increase in non-interest income to $3,653 million[82] - The provision for credit losses for Q2 2024 was $1,007 million, an increase of $298 million (42%) compared to $709 million in Q2 2023, with the provision for credit losses ratio increasing 17 basis points to 54 basis points[85] - Non-interest expenses for Q2 2024 were $4,711 million, an increase of $137 million (3%) compared to $4,574 million in Q2 2023, driven by higher technology-related costs, personnel costs, and advertising expenses[89] - The net interest margin for Q2 2024 was 2.17%, an increase of 5 basis points compared to Q2 2023, driven by higher margins in International Banking and Canadian Banking[82] - The productivity ratio for Q2 2024 improved to 56.4% compared to 57.8% in Q2 2023, with the adjusted productivity ratio improving to 56.2% compared to 57.5%[89] - Year-to-date net income for Q2 2024 was $4,291 million, an increase of 10% compared to $3,904 million in the same period last year, driven by higher revenues and lower provision for income taxes[81] - Year-to-date revenues for Q2 2024 were $16,780 million, an increase of 6% compared to $15,875 million in the same period last year, with net interest income increasing 5% to $9,467 million and non-interest income increasing 7% to $7,313 million[84] - The provision for credit losses on impaired loans for Q2 2024 was $975 million, an increase of $354 million (57%) compared to $621 million in Q2 2023, with the provision for credit losses ratio on impaired loans increasing 19 basis points to 52 basis points[85] - Non-interest expenses decreased by $28 million or 1% in Q2 2024 compared to Q1 2024, driven by seasonally lower share-based compensation and fewer days in the quarter[90] - Adjusted non-interest expenses increased by $421 million or 5% in Q2 2024 compared to Q2 2023, primarily due to higher personnel costs, technology-related costs, and foreign currency translation impacts[91] - The productivity ratio improved to 56.3% in Q2 2024 from 56.9% in Q2 2023, with the adjusted productivity ratio also improving to 56.1% from 56.6%[91] - Net interest income for Canadian Banking increased to $2,634 million in Q2 2024 from $2,342 million in Q2 2023, reflecting growth in this segment[98] - The effective tax rate rose to 20.4% in Q2 2024 from 18.4% in Q2 2023, primarily due to lower tax-exempt income and proposed tax measures[95] - Total revenue for Canadian Banking grew to $3,336 million in Q2 2024 from $3,128 million in Q2 2023, driven by higher net interest and non-interest income[98] - Provision for credit losses increased to $428 million in Q2 2024 from $218 million in Q2 2023, reflecting higher credit risk provisions[98] - Return on equity for Canadian Banking was 20.0% in Q2 2024, down from 22.7% in Q2 2023, indicating a slight decline in profitability[98] - Net interest margin for Canadian Banking remained stable at 2.56% in Q2 2024, compared to 2.30% in Q2 2023, showing consistent performance[98] - Average assets for Canadian Banking were $445 billion in Q2 2024, slightly down from $451 billion in Q2 2023, reflecting minor adjustments in asset management[98] - Net income attributable to equity holders decreased by $47 million or 4% in Q2 2024 compared to Q2 2023, primarily due to higher provision for credit losses and non-interest expenses[100] - Average assets decreased by $6 billion or 1% in Q2 2024 compared to Q2 2023, driven by a $13 billion or 5% decline in residential mortgages, partly offset by growth in business loans and credit cards[100] - Net interest income increased by $292 million or 12% in Q2 2024 compared to Q2 2023, driven by deposit growth and margin expansion, with the net interest margin rising 26 basis points to 2.56%[101] - Provision for credit losses increased by $210 million in Q2 2024 compared to Q2 2023, with the provision ratio rising 20 basis points to 40 basis points, driven by retail migration and an unfavourable macroeconomic outlook[104] - Non-interest expenses increased by $62 million or 4% in Q2 2024 compared to Q2 2023, primarily due to higher technology, personnel, and advertising costs to support business growth[107] - Year-to-date revenues increased by $432 million or 7% in Q2 2024 compared to Q2 2023, with net interest income rising $558 million or 12% and non-interest income declining $126 million or 8%[103] - Year-to-date provision for credit losses increased by $370 million in Q2 2024 compared to Q2 2023, with the provision ratio rising 17 basis points to 37 basis points, driven by higher retail and commercial formations[106] - Year-to-date non-interest expenses increased by $111 million or 4% in Q2 2024 compared to Q2 2023, primarily due to higher technology, personnel, and advertising costs[110] - The effective tax rate remained stable at 27.5% in Q2 2024, consistent with the prior year and prior quarter[111] - Average liabilities increased by $22 billion or 6% in Q2 2024 compared to Q2 2023, driven by growth in personal and non-personal deposits[100] - Net income attributable to equity holders increased by $35 million to $671 million in Q2 2024 compared to Q2 2023, driven by higher net interest income and foreign currency translation[114] - Adjusted net income attributable to equity holders decreased by $75 million or 10% in Q2 2024 compared to Q1 2024, primarily due to lower non-interest income and higher provision for income taxes[115] - Year-to-date Q2 2024 net income attributable to equity holders was $1,417 million, a 2% increase from $1,384 million in the same period last year, driven by higher net interest income[118] - Average assets remained stable at $235 billion in Q2 2024, with total loans decreasing by 2% primarily in Brazil and Peru, offset by a 6% increase in residential mortgages[119] - Net interest income increased to $2,261 million in Q2 2024, up from $1,999 million in Q2 2023, contributing to higher total revenue of $2,992 million[113] - Provision for credit losses rose to $566