The Bank of Nova Scotia(BNS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The bank ended the year with adjusted diluted earnings per share of $6.47, a return on equity of 11.3%, and return on tangible common equity of 13.7% [67] - Revenue was up 6% year-over-year, while expenses grew 4%, resulting in positive operating leverage of 2.3% for the year [68] - The provision for credit losses was$ 4.1 billion in 2024, $629 million higher, driven by higher impaired provisions [68] Business Line Data and Key Metrics Changes - Canadian Banking earnings were$ 4.3 billion, up $290 million or 7%, with revenue growth driven by deposit growth and margin expansion [68] - International Banking earnings were$ 2.7 billion, up 10% year-over-year, with revenues up 9% [69] - Global Wealth Management earnings of $1.6 billion were up 10% year-over-year, benefiting from strong assets under management growth of 18% [70] Market Data and Key Metrics Changes - The bank reported quarterly adjusted earnings of$ 2.1 billion and a diluted EPS of $1.57 [75] - Net interest income was$ 4.9 billion, up 6% year-over-year, primarily driven by loan growth [76] - Deposits were up 2% year-over-year, mostly in term, while loans were down 2% year-over-year, mainly in corporate [78] Company Strategy and Development Direction - The bank is focused on increasing the number of primary clients and has set a target of 2 million incremental primary clients by 2028 [6] - Capital allocation is being directed towards priority businesses, with a commitment to remix the portfolio to accelerate growth in fee income [7] - The bank aims to maintain a strong balance sheet with a Tier-1 capital ratio of 13.1% and has grown its allowance for credit losses by approximately 22% since the end of fiscal 2022 [8] Management's Comments on Operating Environment and Future Outlook - The management anticipates a rebound in economic activity next year due to the Bank of Canada's policy rate actions [19] - There is a focus on monitoring policy actions from the new administrations in Mexico and the US, with expectations for a cooperative environment that encourages capital investment [20] - Earnings growth is expected to be between 5% and 7% in 2025, prior to incorporating any benefits from the minority investment in KeyCorp [59] Other Important Information - The bank's productivity ratio improved to 56.1% this quarter, an improvement of 360 basis points year-over-year [80] - The Other segment reported an adjusted net loss of $453 million, compared to a loss of$ 465 million in the prior quarter [99] - ScotiaBond, a new culture framework, was rolled out to drive the bank's strategy forward [61] Q&A Session Summary Question: What are the expectations for earnings growth in 2025? - The bank continues to expect earnings growth between 5% and 7% in 2025, prior to incorporating any benefits from the KeyCorp investment [72] Question: How is the bank managing its capital allocation? - The bank is focused on disciplined capital allocation and execution, with a commitment to maintaining strong capital and liquidity positions [74] Question: What is the outlook for the International Banking segment? - International Banking earnings are expected to be lower, impacted by weaker Latin American currencies and slow growth economies [74]