Bank of Nova Scotia Q2 Earnings Fall on Higher Provisions & Expenses

Core Viewpoint - The Bank of Nova Scotia (BNS) reported a decline in adjusted net income for Q2 fiscal 2025, primarily due to increased expenses and provisions for credit losses, despite higher revenues and solid capital ratios [1][2]. Financial Performance - Adjusted net income for Q2 was C$2.07 billion ($1.5 billion), down 1.6% year over year [1]. - Total revenues increased to C$9.08 billion ($6.59 billion), reflecting an 8.8% year-over-year growth [2]. - Net interest income rose by 12.3% to C$5.27 billion ($3.83 billion), while non-interest income grew 4.3% to C$3.81 billion ($2.77 billion) [2]. - Non-interest expenses increased by 8.5% to C$5.11 billion ($3.71 billion) [2]. - Provisions for credit losses surged by 38.8% to C$1.4 billion ($1.02 billion), indicating a deteriorating economic outlook [2]. Balance Sheet Analysis - As of April 30, 2025, total assets were C$1.42 trillion ($1.03 trillion), down 1.6% sequentially [3]. - Deposits decreased by 2.1% to C$945.8 billion ($686.9 billion) [3]. - Net loans fell by 1.3% to C$756.4 billion ($549.4 billion) [3]. Capital and Profitability Ratios - The Common Equity Tier 1 ratio remained stable at 13.2, consistent with the prior-year quarter [4]. - The total capital ratio was also stable at 17.1 [4]. - Adjusted return on equity decreased to 10.4%, down from 11.3% in the previous year [4]. Market Outlook - A diversified product mix and strong capital position are expected to support BNS, although macroeconomic concerns and rising expenses pose challenges [5].