All amounts are in
Canadian dollars and are based on our unaudited Interim Condensed
Consolidated Financial Statements for the quarter ended July 31,
2019 and related notes prepared in accordance with International
Financial Reporting Standards (IFRS), unless otherwise noted. Our
complete Third Quarter 2019 Report to Shareholders, including our
unaudited interim financial statements for the period ended July
31, 2019, 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. In
addition, Supplementary Financial Information is also available,
together with the Third Quarter 2019 Report on the Investor
Relations page of www.scotiabank.com.
|
Third Quarter
Highlights on a Reported basis (versus Q3, 2018)
|
Third Quarter
Highlights on an Adjusted basis(1) (versus Q3,
2018)
|
|
|
•
|
Net income of $1,984
million, compared to $1,939 million
|
•
|
Net income of $2,455
million, compared to $2,259 million
|
•
|
Earnings per share
(diluted) of $1.50, compared to $1.55
|
•
|
Earnings per share
(diluted) of $1.88, compared to $1.76
|
•
|
Return on equity of
11.5%, compared to 13.1%
|
•
|
Return on equity of
14.3%, compared to 14.5%
|
TORONTO, Aug. 27, 2019 /CNW/ - Scotiabank reported third
quarter net income of $1,984 million
compared to $1,939 million in the
same period last year. Diluted earnings per share were $1.50, compared to $1.55 in the same period a year ago. Return on
equity was 11.5% compared to 13.1% a year ago.
Adjusting for Acquisition and divestiture-related
amounts(1), net income increased 9% to $2,455 million and diluted earnings per share
were $1.88 compared to $1.76 last year. Return on equity was 14.3%
compared to 14.5% a year ago.
"Meaningful progress was made this quarter to reposition the
Bank and simplify the operations. As a result, we are better
positioned for growth in our key markets. We formalized agreements
to reduce our investment in Thailand and announced the divestiture of our
operations in Puerto Rico and US
Virgin Islands. The repositioning of our international footprint is
now substantially complete" said Brian
Porter, President and CEO of Scotiabank.
"Canadian Banking reported good results this quarter, producing
positive operating leverage, margin expansion, and double-digit
deposit growth. Canadian Wealth Management earnings grew 20%, with
good organic growth and strong contributions from MD Financial and
Jarislowsky Fraser.
"International Banking delivered another quarter of double-digit
earnings growth. The business remains focused on successfully
integrating our recent acquisitions while continuing to drive
organic growth. We continue to see strong growth in the Pacific
Alliance countries, led by Chile
and Peru.
"The Bank continued to maintain strong capital ratios and
reported a Common Equity Tier 1 capital ratio of 11.2%, or 11.7% on
a pro-forma basis, including the estimated impact from announced
divestitures. This quarter we announced a 3 cent increase in the quarterly dividend to
90 cents per common share, 6% higher
than a year ago.
"We are pleased that a number of key milestones were achieved
this quarter in delivering digital innovations for our customers,
including being recognized as the industry leader in mobile banking
by J.D. Power and launching our new mobile banking app in
Canada. In addition, Tangerine
benefitted from our long-term partnership with Maple Leaf Sports
and Entertainment as the Official Bank of the 2019 NBA
Championships. We remain focused on achieving strong consistent
long-term results for our shareholders."
(1)Refer to Non-GAAP Measures on page 2.
Financial Results
Reported
Results
|
For the three months
ended
|
For the nine months
ended
|
|
|
July
31
|
|
April 30
|
|
July 31
|
|
July
31
|
|
July 31
|
(Unaudited) ($
millions)
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net interest
income
|
$
|
4,374
|
$
|
4,193
|
$
|
4,085
|
$
|
12,841
|
$
|
11,971
|
Non-interest
income
|
|
3,285
|
|
3,610
|
|
3,096
|
|
10,225
|
|
9,356
|
Total
revenue
|
|
7,659
|
|
7,803
|
|
7,181
|
|
23,066
|
|
21,327
|
Provision for credit
losses
|
|
713
|
|
873
|
|
943
|
|
2,274
|
|
2,021
|
Non-interest
expenses
|
|
4,209
|
|
4,046
|
|
3,770
|
|
12,426
|
|
10,994
|
Income tax
expense
|
|
753
|
|
625
|
|
529
|
|
1,876
|
|
1,859
|
Net
income
|
$
|
1,984
|
$
|
2,259
|
$
|
1,939
|
$
|
6,490
|
$
|
6,453
|
Net income
attributable to non-controlling interests in
subsidiaries
|
|
120
|
|
70
|
|
(44)
|
|
301
|
|
84
|
Net income
attributable to equity holders of the Bank
|
$
|
1,864
|
$
|
2,189
|
$
|
1,983
|
$
|
6,189
|
$
|
6,369
|
Preferred
shareholders and other equity instrument holders
|
|
25
|
|
64
|
|
27
|
|
118
|
|
122
|
Common
shareholders
|
$
|
1,839
|
$
|
2,125
|
$
|
1,956
|
$
|
6,071
|
$
|
6,247
|
Earnings per
common share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.51
|
$
|
1.74
|
$
|
1.60
|
$
|
4.96
|
$
|
5.18
|
Diluted
|
$
|
1.50
|
$
|
1.73
|
$
|
1.55
|
$
|
4.94
|
$
|
5.10
|
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 of our Third Quarter 2019 Report to
Shareholders.
Adjusted results and diluted earnings per share
The following tables present reconciliations of GAAP Reported
financial results to non-GAAP Adjusted financial results. The
financial results have been adjusted for the following:
Acquisition and divestiture-related amounts – Acquisition
and divestiture-related amounts are defined as:
A) Acquisition-related costs
1. Integration costs – Includes costs that are
incurred and relate to integrating the acquired operations and are
recorded in the Canadian and International Banking operating
segments. These costs will cease once integration is complete. The
costs relate to the following acquisitions:
- Jarislowsky, Fraser Limited, Canada (closed Q3, 2018)
- BBVA, Chile (closed Q3,
2018)
- Citibank consumer and small and medium enterprise operations,
Colombia (closed Q3,
2018)
- MD Financial Management, Canada (closed Q4, 2018)
- Banco Dominicano del Progreso, Dominican Republic (closed Q2,
2019)
- Banco Cencosud, Peru
(closed Q2, 2019)
2. Day 1 provision for credit losses on acquired
performing financial instruments, as required by IFRS 9 and are
recorded in the Canadian and International Banking operating
segments. The standard does not differentiate between originated
and purchased performing loans and as such, requires the same
accounting treatment for both. These credit losses are considered
Acquisition-related costs in periods where applicable. The costs
for Q2, 2019 relate to Banco Cencosud, Peru and Banco Dominicano del Progreso,
Dominican Republic. The costs for
Q3, 2018 relate to BBVA, Chile and
Citibank, Colombia.
3. Amortization of Acquisition-related intangible
assets, excluding software. These costs relate to the six
acquisitions above, as well as prior acquisitions and are recorded
in the Canadian and International Banking operating segments.
B) Net gain/loss on
divestitures – relates to the loss on sale of operations in
Puerto Rico announced in Q3, 2019,
gain on divestiture of Scotia Crecer AFP and Scotia Seguros in the
Dominican Republic that closed in
Q2, 2019, and the loss on the sale of the insurance and banking
operations in El Salvador
announced in Q2, 2019. These amounts are recorded in the Other
segment.
Reconciliation of reported and adjusted results and diluted
earnings per share
|
For the three months
ended
|
For the
nine months ended
|
($
millions)
|
July
31
2019
|
April 30
2019
|
July 31
2018
|
July
31
2019
|
July 31
2018
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,374
|
$
|
4,193
|
$
|
4,085
|
$
|
12,841
|
$
|
11,971
|
Non-interest
income
|
|
3,285
|
|
3,610
|
|
3,096
|
|
10,225
|
|
9,356
|
Total
revenue
|
|
7,659
|
|
7,803
|
|
7,181
|
|
23,066
|
|
21,327
|
Provision for credit
losses
|
|
713
|
|
873
|
|
943
|
|
2,274
|
|
2,021
|
Non-interest
expenses
|
|
4,209
|
|
4,046
|
|
3,770
|
|
12,426
|
|
10,994
|
Income before
taxes
|
|
2,737
|
|
2,884
|
|
2,468
|
|
8,366
|
|
8,312
|
Income tax
expense
|
|
753
|
|
625
|
|
529
|
|
1,876
|
|
1,859
|
Net
income
|
$
|
1,984
|
$
|
2,259
|
$
|
1,939
|
$
|
6,490
|
$
|
6,453
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
120
|
|
70
|
|
(44)
|
|
301
|
|
84
|
Net income
attributable to equity holders
|
|
1,864
|
|
2,189
|
|
1,983
|
|
6,189
|
|
6,369
|
Net income
attributable to common shareholders
|
|
1,839
|
|
2,125
|
|
1,956
|
|
6,071
|
|
6,247
|
Diluted earnings
per share (in dollars)
|
$
|
1.50
|
$
|
1.73
|
$
|
1.55
|
$
|
4.94
|
$
|
5.10
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and
divestiture-related amounts
|
|
|
|
|
|
|
|
|
|
|
Day 1 provision for
credit losses on acquired performing financial
instruments(1)
|
$
|
-
|
$
|
151
|
$
|
404
|
$
|
151
|
$
|
404
|
Integration
costs(2)
|
|
43
|
|
25
|
|
26
|
|
99
|
|
26
|
Amortization of
Acquisition-related intangible assets, excluding
software(2)
|
|
30
|
|
28
|
|
23
|
|
88
|
|
59
|
Acquisition-related
costs
|
|
73
|
|
204
|
|
453
|
|
338
|
|
489
|
Net loss/(gain) on
divestitures(3)
|
|
320
|
|
(173)
|
|
-
|
|
147
|
|
-
|
Acquisition and
divestiture-related amounts (Pre-tax)
|
|
393
|
|
31
|
|
453
|
|
485
|
|
489
|
Income tax
expense/(benefit)
|
|
78
|
|
(27)
|
|
(133)
|
|
34
|
|
(143)
|
Acquisition and
divestiture-related amounts (After tax)
|
|
471
|
|
4
|
|
320
|
|
519
|
|
346
|
Adjustment
attributable to NCI
|
|
(5)
|
|
(45)
|
|
(113)
|
|
(55)
|
|
(113)
|
Acquisition and
divestiture-related amounts (After tax and
NCI)
|
$
|
466
|
$
|
(41)
|
$
|
207
|
$
|
464
|
$
|
233
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,374
|
$
|
4,193
|
$
|
4,085
|
$
|
12,841
|
$
|
11,971
|
Non-interest
income
|
|
3,591
|
|
3,437
|
|
3,096
|
|
10,358
|
|
9,356
|
Total
revenue
|
|
7,965
|
|
7,630
|
|
7,181
|
|
23,199
|
|
21,327
|
Provision for credit
losses
|
|
713
|
|
722
|
|
539
|
|
2,123
|
|
1,617
|
Non-interest
expenses
|
|
4,122
|
|
3,993
|
|
3,721
|
|
12,225
|
|
10,909
|
Income before
taxes
|
|
3,130
|
|
2,915
|
|
2,921
|
|
8,851
|
|
8,801
|
Income tax
expense
|
|
675
|
|
652
|
|
662
|
|
1,842
|
|
2,002
|
Net
income
|
$
|
2,455
|
$
|
2,263
|
$
|
2,259
|
$
|
7,009
|
$
|
6,799
|
Net income
attributable to NCI
|
|
125
|
|
115
|
|
69
|
|
356
|
|
197
|
Net income
attributable to equity holders
|
|
2,330
|
|
2,148
|
|
2,190
|
|
6,653
|
|
6,602
|
Net income
attributable to common shareholders
|
$
|
2,305
|
$
|
2,084
|
$
|
2,163
|
$
|
6,535
|
$
|
6,480
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to common shareholders
|
$
|
2,305
|
$
|
2,084
|
$
|
2,163
|
$
|
6,535
|
$
|
6,480
|
Dilutive impact of
share-based payment options and others
|
|
44
|
|
39
|
|
31
|
|
131
|
|
51
|
Adjusted net income
attributable to common shareholders (diluted)
|
$
|
2,349
|
$
|
2,123
|
$
|
2,194
|
$
|
6,666
|
$
|
6,531
|
Weighted average
number of basic common shares outstanding
(millions)
|
|
1,221
|
|
1,224
|
|
1,223
|
|
1,224
|
|
1,207
|
Dilutive impact of
share-based payment options and others (millions)
|
|
30
|
|
28
|
|
26
|
|
29
|
|
16
|
Adjusted weighted
average number of diluted common shares outstanding
(millions)
|
|
1,251
|
|
1,252
|
|
1,249
|
|
1,253
|
|
1,223
|
Adjusted diluted
earnings per share (in dollars)
|
$
|
1.88
|
$
|
1.70
|
$
|
1.76
|
$
|
5.32
|
$
|
5.34
|
Impact of
adjustments on diluted earnings per share (in
dollars)
|
$
|
0.38
|
$
|
(0.03)
|
$
|
0.21
|
$
|
0.38
|
$
|
0.24
|
(1)
|
Recorded in
provision for credit losses.
|
(2)
|
Recorded in
non-interest expenses.
|
(3)
|
Loss/(gain) on
divestitures are recorded in non-interest income; costs related to
divestitures are recorded in non-interest expenses.
|
Reconciliation of reported and adjusted results and diluted
earnings per share by business line
Canadian Banking(1)
|
For the three months
ended
|
For the
nine months ended
|
($
millions)
|
July
31
2019
|
April 30
2019
|
July 31
2018
|
July
31
2019
|
July 31
2018
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,120
|
$
|
1,990
|
$
|
2,024
|
$
|
6,146
|
$
|
5,869
|
Non-interest
income
|
|
1,412
|
|
1,390
|
|
1,349
|
|
4,181
|
|
4,038
|
Total
revenue
|
|
3,532
|
|
3,380
|
|
3,373
|
|
10,327
|
|
9,907
|
Provision for credit
losses
|
|
240
|
|
252
|
|
181
|
|
725
|
|
596
|
Non-interest
expenses
|
|
1,723
|
|
1,711
|
|
1,661
|
|
5,164
|
|
4,907
|
Income before
taxes
|
|
1,569
|
|
1,417
|
|
1,531
|
|
4,438
|
|
4,404
|
Income tax
expense
|
|
409
|
|
369
|
|
401
|
|
1,157
|
|
1,155
|
Net
income
|
$
|
1,160
|
$
|
1,048
|
$
|
1,130
|
$
|
3,281
|
$
|
3,249
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Net income
attributable to equity holders
|
$
|
1,160
|
$
|
1,048
|
$
|
1,130
|
$
|
3,281
|
$
|
3,249
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
Acquisition-related costs
|
|
|
|
|
|
|
|
|
|
|
Day 1 provision for
credit losses on acquired performing financial
instruments(2)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Integration
costs(3)
|
|
4
|
|
6
|
|
3
|
|
17
|
|
3
|
Amortization of
Acquisition-related intangible assets, excluding
software(3)
|
|
14
|
|
14
|
|
12
|
|
42
|
|
26
|
Acquisition-related costs (Pre-tax)
|
|
18
|
|
20
|
|
15
|
|
59
|
|
29
|
Income tax
expense/(benefit)
|
|
(4)
|
|
(6)
|
|
(4)
|
|
(15)
|
|
(8)
|
Acquisition-related costs (After
tax)
|
|
14
|
|
14
|
|
11
|
|
44
|
|
21
|
Adjustment
attributable to NCI
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Acquisition-related costs (After tax and
NCI)
|
$
|
14
|
$
|
14
|
$
|
11
|
$
|
44
|
$
|
21
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,120
|
$
|
1,990
|
$
|
2,024
|
$
|
6,146
|
$
|
5,869
|
Non-interest
income
|
|
1,412
|
|
1,390
|
|
1,349
|
|
4,181
|
|
4,038
|
Total
revenue
|
|
3,532
|
|
3,380
|
|
3,373
|
|
10,327
|
|
9,907
|
Provision for credit
losses
|
|
240
|
|
252
|
|
181
|
|
725
|
|
596
|
Non-interest
expenses
|
|
1,705
|
|
1,691
|
|
1,646
|
|
5,105
|
|
4,878
|
Income before
taxes
|
|
1,587
|
|
1,437
|
|
1,546
|
|
4,497
|
|
4,433
|
Income tax
expense
|
|
413
|
|
375
|
|
405
|
|
1,172
|
|
1,163
|
Net
income
|
$
|
1,174
|
$
|
1,062
|
$
|
1,141
|
$
|
3,325
|
$
|
3,270
|
Net income
attributable to NCI
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Net income
attributable to equity holders
|
$
|
1,174
|
$
|
1,062
|
$
|
1,141
|
$
|
3,325
|
$
|
3,270
|
(1)
|
Refer to Business
Segment Review on page 7.
|
(2)
|
Recorded in
provision for credit losses.
|
(3)
|
Recorded in
non-interest expenses.
|
International Banking(1)
|
For the three months
ended
|
For the
nine months ended
|
($
millions)
|
July
31
2019
|
April 30
2019
|
July 31
2018
|
July
31
2019
|
July 31
2018
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,157
|
$
|
2,121
|
$
|
1,827
|
$
|
6,358
|
$
|
5,292
|
Non-interest
income
|
|
1,270
|
|
1,235
|
|
1,026
|
|
3,756
|
|
3,007
|
Total
revenue
|
|
3,427
|
|
3,356
|
|
2,853
|
|
10,114
|
|
8,299
|
Provision for credit
losses
|
|
476
|
|
628
|
|
771
|
|
1,574
|
|
1,455
|
Non-interest
expenses
|
|
1,780
|
|
1,710
|
|
1,510
|
|
5,232
|
|
4,390
|
Income before
taxes
|
|
1,171
|
|
1,018
|
|
572
|
|
3,308
|
|
2,454
|
Income tax
expense
|
|
269
|
|
249
|
|
97
|
|
744
|
|
509
|
Net
income
|
$
|
902
|
$
|
769
|
$
|
475
|
$
|
2,564
|
$
|
1,945
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
121
|
|
69
|
|
(44)
|
|
301
|
|
84
|
Net income
attributable to equity holders
|
$
|
781
|
$
|
700
|
$
|
519
|
$
|
2,263
|
$
|
1,861
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
Acquisition-related costs
|
|
|
|
|
|
|
|
|
|
|
Day 1 provision for
credit losses on acquired performing financial
instruments(2)
|
$
|
-
|
$
|
151
|
$
|
404
|
$
|
151
|
$
|
404
|
Integration
costs(3)
|
|
39
|
|
19
|
|
23
|
|
82
|
|
23
|
Amortization of
Acquisition-related intangible assets, excluding
software(3)
|
|
16
|
|
14
|
|
11
|
|
46
|
|
33
|
Acquisition-related costs (Pre-tax)
|
|
55
|
|
184
|
|
438
|
|
279
|
|
460
|
Income tax
expense/(benefit)
|
|
(16)
|
|
(53)
|
|
(129)
|
|
(81)
|
|
(135)
|
Acquisition-related costs (After
tax)
|
|
39
|
|
131
|
|
309
|
|
198
|
|
325
|
Adjustment
attributable to NCI
|
|
(5)
|
|
(44)
|
|
(113)
|
|
(54)
|
|
(113)
|
Acquisition-related costs (After tax and
NCI)
|
$
|
34
|
$
|
87
|
$
|
196
|
$
|
144
|
$
|
212
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,157
|
$
|
2,121
|
$
|
1,827
|
$
|
6,358
|
$
|
5,292
|
Non-interest
income
|
|
1,270
|
|
1,235
|
|
1,026
|
|
3,756
|
|
3,007
|
Total
revenue
|
|
3,427
|
|
3,356
|
|
2,853
|
|
10,114
|
|
8,299
|
Provision for credit
losses
|
|
476
|
|
477
|
|
367
|
|
1,423
|
|
1,051
|
Non-interest
expenses
|
|
1,725
|
|
1,677
|
|
1,476
|
|
5,104
|
|
4,334
|
Income before
taxes
|
|
1,226
|
|
1,202
|
|
1,010
|
|
3,587
|
|
2,914
|
Income tax
expense
|
|
285
|
|
302
|
|
226
|
|
825
|
|
644
|
Net
income
|
$
|
941
|
$
|
900
|
$
|
784
|
$
|
2,762
|
$
|
2,270
|
Net income
attributable to NCI
|
|
126
|
|
113
|
|
69
|
|
355
|
|
197
|
Net income
attributable to equity holders
|
$
|
815
|
$
|
787
|
$
|
715
|
$
|
2,407
|
$
|
2,073
|
(1)
|
Refer to Business
Segment Review on page 7.
|
(2)
|
Recorded in
provision for credit losses.
|
(3)
|
Recorded in
non-interest expenses.
|
Other(1)
|
For the three months
ended
|
For the
nine months ended
|
($
millions)
|
July
31
2019
|
April 30
2019
|
July 31
2018
|
July
31
2019
|
July 31
2018
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
(240)
|
$
|
(268)
|
$
|
(131)
|
$
|
(722)
|
$
|
(307)
|
Non-interest
income
|
|
(144)
|
|
184
|
|
(24)
|
|
37
|
|
(27)
|
Total
revenue
|
|
(384)
|
|
(84)
|
|
(155)
|
|
(685)
|
|
(334)
|
Provision for credit
losses
|
|
1
|
|
(1)
|
|
1
|
|
1
|
|
-
|
Non-interest
expenses
|
|
113
|
|
31
|
|
56
|
|
198
|
|
17
|
Income before
taxes
|
|
(498)
|
|
(114)
|
|
(212)
|
|
(884)
|
|
(351)
|
Income tax
expense/(benefit)
|
|
(46)
|
|
(136)
|
|
(105)
|
|
(400)
|
|
(268)
|
Net income
(loss)
|
$
|
(452)
|
$
|
22
|
$
|
(107)
|
$
|
(484)
|
$
|
(83)
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
(1)
|
|
1
|
|
-
|
|
-
|
|
-
|
Net income (loss)
attributable to equity holders
|
$
|
(451)
|
$
|
21
|
$
|
(107)
|
$
|
(484)
|
$
|
(83)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
Net loss/(gain) on divestitures(2)
|
$
|
320
|
$
|
(173)
|
$
|
-
|
$
|
147
|
$
|
-
|
Income tax
expense
|
|
98
|
|
32
|
|
-
|
|
130
|
|
-
|
Net loss/(gain) on
divestitures (After tax)
|
|
418
|
|
(141)
|
|
-
|
|
277
|
|
-
|
Adjustment
attributable to NCI
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
-
|
Net loss/(gain) on
divestitures (After tax and NCI)
|
$
|
418
|
$
|
(142)
|
$
|
-
|
$
|
276
|
$
|
-
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
(240)
|
$
|
(268)
|
$
|
(131)
|
$
|
(722)
|
$
|
(307)
|
Non-interest
income
|
|
162
|
|
11
|
|
(24)
|
|
170
|
|
(27)
|
Total
revenue
|
|
(78)
|
|
(257)
|
|
(155)
|
|
(552)
|
|
(334)
|
Provision for credit
losses
|
|
1
|
|
(1)
|
|
1
|
|
1
|
|
-
|
Non-interest
expenses
|
|
99
|
|
31
|
|
56
|
|
184
|
|
17
|
Income before
taxes
|
|
(178)
|
|
(287)
|
|
(212)
|
|
(737)
|
|
(351)
|
Income tax
expense/(benefit)
|
|
(144)
|
|
(168)
|
|
(105)
|
|
(530)
|
|
(268)
|
Net income
(loss)
|
$
|
(34)
|
$
|
(119)
|
$
|
(107)
|
$
|
(207)
|
$
|
(83)
|
Net income
attributable to NCI
|
|
(1)
|
|
2
|
|
-
|
|
1
|
|
-
|
Net income (loss)
attributable to equity holders
|
$
|
(33)
|
$
|
(121)
|
$
|
(107)
|
$
|
(208)
|
$
|
(83)
|
(1)
|
Refer to Business
Segment Review on page 8.
|
(2)
|
Loss/(gain) on
divestitures are recorded in non-interest income; costs related to
divestitures are recorded in non-interest expenses.
|
Reconciliation of International Banking's reported results
and constant dollar results
International Banking business segment results are analyzed on a
constant dollar basis. Under the constant dollar basis, prior
period amounts are recalculated using current period average
foreign currency rates. The following table presents the
reconciliation between reported and constant dollar results for
International Banking for prior periods.
|
For the three months
ended
|
For the nine months
ended
|
($
millions)
|
April 30,
2019
|
July 31,
2018
|
July 31,
2018
|
(Taxable
equivalent basis)
|
Reported
|
Foreign
exchange
|
Constant
dollar
|
|
Reported
|
Foreign
exchange
|
Constant
dollar
|
|
Reported
|
Foreign
exchange
|
Constant
dollar
|
Net interest
income
|
$
|
2,121
|
$
|
36
|
$
|
2,085
|
|
$
|
1,827
|
$
|
13
|
$
|
1,814
|
|
$
|
5,292
|
$
|
(11)
|
$
|
5,303
|
Non-interest
income
|
|
1,235
|
|
6
|
|
1,229
|
|
|
1,026
|
|
(7)
|
|
1,033
|
|
|
3,007
|
|
9
|
|
2,998
|
Total
revenue
|
|
3,356
|
|
42
|
|
3,314
|
|
|
2,853
|
|
6
|
|
2,847
|
|
|
8,299
|
|
(2)
|
|
8,301
|
Provision for credit
losses
|
|
628
|
|
12
|
|
616
|
|
|
771
|
|
36
|
|
735
|
|
|
1,455
|
|
32
|
|
1,423
|
Non-interest
expenses
|
|
1,710
|
|
27
|
|
1,683
|
|
|
1,510
|
|
18
|
|
1,492
|
|
|
4,390
|
|
19
|
|
4,371
|
Income tax
expense
|
|
249
|
|
-
|
|
249
|
|
|
97
|
|
(10)
|
|
107
|
|
|
509
|
|
(9)
|
|
518
|
Net
income
|
$
|
769
|
$
|
3
|
$
|
766
|
|
$
|
475
|
$
|
(38)
|
$
|
513
|
|
$
|
1,945
|
$
|
(44)
|
$
|
1,989
|
Net income
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in
subsidiaries
|
$
|
69
|
$
|
(3)
|
$
|
72
|
|
$
|
(44)
|
$
|
1
|
$
|
(45)
|
|
$
|
84
|
$
|
2
|
$
|
82
|
Net income
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity holders of the
Bank
|
$
|
700
|
$
|
6
|
$
|
694
|
|
$
|
519
|
$
|
(39)
|
$
|
558
|
|
$
|
1,861
|
$
|
(46)
|
$
|
1,907
|
Other
measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets ($
billions)
|
$
|
203
|
$
|
3
|
$
|
200
|
|
$
|
164
|
$
|
-
|
$
|
164
|
|
$
|
159
|
$
|
-
|
$
|
159
|
Average liabilities
($ billions)
|
$
|
156
|
$
|
3
|
$
|
153
|
|
$
|
129
|
$
|
1
|
$
|
128
|
|
$
|
123
|
$
|
(1)
|
$
|
124
|
Business Segment Review
Canadian Banking
Q3 2019 vs Q3 2018
Net income attributable to equity holders was $1,160 million, an increase of $30 million or 3%. The increase was due
primarily to solid asset and deposit growth and the impact of
acquisitions, partly offset by higher non-interest expenses and
provision for credit losses. Lower gains on sale of real
estate impacted earnings growth by 2%.
Q3 2019 vs Q2 2019
Net income attributable to equity holders increased $112 million or 11%. The increase was due
primarily to higher net interest income driven by three additional
days in the quarter and solid asset and deposit growth, and higher
wealth management fees.
Year-to-date Q3 2019 vs Year-to-date Q3 2018
Net income attributable to equity holders increased $32 million or 1%. Adjusting for
Acquisition-related costs, net income increased by 2% due primarily
to higher revenue driven by solid asset and deposit growth, and the
impact of acquisitions, partly offset by higher non-interest
expenses and provision for credit losses. Lower gains on sale of
real estate, the prior year gain on the reorganization of Interac,
and the prior year benefit from the Alignment of the reporting
period of the insurance operations with the Bank, impacted earnings
growth by 3%.
International Banking
Financial Performance on a Reported Basis
Q3 2019 vs Q3 2018
Net income attributable to equity holders of $781 million was up $262
million. Adjusting for Acquisition-related costs, net income
increased to $815 million, up 14%.
This growth was largely driven by higher net interest income due to
strong loan growth in the Pacific Alliance countries, the impact of
acquisitions, higher non-interest income, and the positive impact
of foreign currency translation. This was partly offset by
increased provision for credit losses, non-interest expenses and
higher income taxes.
Q3 2019 vs Q2 2019
Net income attributable to equity holders increased by
$81 million or 12%. Adjusting for
Acquisition-related costs, net income increased by $28 million or 4%. The impact of revenue
growth and lower income taxes, were partly offset by higher
non-interest expenses.
Year-to-date Q3 2019 vs Year-to-date Q3 2018
Net income attributable to equity holders of $2,263 million was up $402
million or 22%. Adjusting for Acquisition-related costs, net
income increased to $2,407 million,
up 16%. This growth was largely driven by higher net interest
income due to strong loan growth in the Pacific Alliance countries,
the impact of acquisitions, higher non-interest income, and the
positive impact of foreign currency translation, partly offset by
increased provision for credit losses and non-interest
expenses.
Financial Performance on a Constant Dollar
Basis
The discussion below for International Banking is on a
constant dollar basis that excludes the impact of foreign currency
translation, which is a non-GAAP financial measure (refer to
Non-GAAP Measures). The Bank believes that reporting in
constant dollar is useful for readers in assessing ongoing business
performance.
Q3 2019 vs Q3 2018
Net income attributable to equity holders of $781 million was up $223
million. Adjusting for Acquisition-related costs, net income
increased to $815 million, up 11%.
This growth was largely driven by higher net interest income due to
strong loan growth in the Pacific Alliance countries, the impact of
acquisitions, and higher non-interest income. This was partly
offset by increased provision for credit losses, and higher
non-interest expenses and income taxes.
Q3 2019 vs Q2 2019
Net income attributable to equity holders increased by
$87 million or 13%. Adjusting for
Acquisition-related costs, net income increased by $36 million or 5%. Higher revenues and lower
income taxes, were partly offset by higher non-interest
expenses.
Year-to-date Q3 2019 vs Year-to-date Q3 2018
Net income attributable to equity holders of $2,263 million was up $356
million or 19%. Adjusting for Acquisition-related costs, net
income increased to $2,407 million,
up $311 million or 15%. This growth
was largely driven by higher net interest income due to strong loan
growth in the Pacific Alliance countries, the impact of
acquisitions, and higher non-interest income, partly offset by
increased provision for credit losses and non-interest
expenses.
Global Banking and Markets
Q3 2019 vs Q3 2018
Net income attributable to equity holders was $374 million, a decrease of $67 million or 15%. Lower net interest income,
higher non-interest expenses, and lower recovery of provision for
credit losses were partially offset by the favourable impact of
foreign currency translation, and lower income taxes.
Q3 2019 vs Q2 2019
Net income attributable to equity holders decreased by
$46 million or 11%. Lower
non-interest income, net interest income and recovery of provision
for credit losses was partially offset by lower income taxes.
Year-to-date Q3 2019 vs Year-to-date Q3 2018
Net income attributable to equity holders decreased by
$213 million or 16%. Lower net
interest income, non-interest income and higher non-interest
expenses was partly offset by lower income taxes.
Other
Q3 2019 vs Q3 2018
Net loss attributable to equity holders was $451 million. Adjusting for the Net loss on
divestitures of $418 million, net
loss attributable to equity holders was $33
million, compared to $107
million. The lower net loss was due mainly to higher
investment gains and lower taxes, partly offset by lower
contributions from asset/liability management activities and higher
non-interest expenses.
Q3 2019 vs Q2 2019
Net loss attributable to equity holders was $451 million. Adjusting for the Net loss on
divestitures in the current period and the Net gain on divestitures
in the prior period, the net loss attributable to equity holders
was $33 million, compared to
$121 million. The lower net loss was
due primarily to higher investment gains, higher contributions from
asset/liability management activities and lower income taxes,
partly offset by higher non-interest expenses.
Year-to-date Q3 2019 vs Year-to-date Q3 2018
Net loss attributable to equity holders was $484 million. Adjusting for the Net loss on
divestitures, the net loss attributable to equity holders was
$208 million, compared to
$83 million. The prior year had lower
expenses primarily related to the benefits remeasurement of
$150 million ($203 million pre-tax). The current period also
reflects lower contributions from asset/liability management
activities and higher income taxes.
Credit risk
Allowance for credit losses
The total allowance for credit losses as at July 31, 2019 was $5,273
million. The allowance for credit losses on loans was
$5,194 million, down $101 million, due primarily to new provisions
being offset by write-offs and the impact of foreign currency
translation.
The allowance on impaired loans increased $1 million to $1,670
million from last quarter as new provisions were offset by
write-offs. The allowance against performing loans was lower at
$3,524 million compared to
$3,626 million as at April 30, 2019, driven by decreases in retail
allowances primarily due to the impact of foreign currency
translation.
Impaired loans
Total gross impaired loans as at July 31,
2019 were $5,229 million, down
from $5,364 million as at
April 30, 2019, due primarily to the
impact of foreign currency translation.
Net impaired loans in Canadian Banking were $706 million as at July
31, 2019, a decrease of $1
million from April 30, 2019.
International Banking's net impaired loans were $2,688 million as at July
31, 2019, a decrease of $55
million from April 30, 2019.
In Global Banking and Markets, net impaired loans were $165 million as at July
31, 2019, a decrease of $80
million from April 30, 2019
due largely to reversals during the quarter. Net impaired loans as
a percentage of loans and acceptances were 0.58% as at July 31, 2019, a decrease of three basis points
from last quarter.
Capital ratios
The Bank's Common Equity Tier 1 capital ratio was 11.2% at
July 31, 2019, an increase of
approximately 10 basis points from the prior quarter, primarily due
to strong internal capital generation which was partly offset by
organic growth in risk-weighted assets, the impact from employee
pension and post-retirement benefits on accumulated other
comprehensive income, and share buybacks under the Bank's Normal
Course Issuer Bid.
The Bank's Tier 1 capital ratio was 12.3%, a decline of
approximately 20 basis points from the prior quarter, primarily due
to the redemption of $650 million of
Scotiabank Tier 1 Trust Securities, partly offset by the above
impacts to the Common Equity Tier 1 (CET1) ratio. In addition, the
Total Capital ratio increased by approximately 10 basis points
during the quarter to 14.8%, primarily due to the issuance of
$1.5 billion of subordinated
debentures.
The Bank's Leverage ratio was 4.2% at July 31, 2019, a decline of approximately 10
basis points from the prior quarter, primarily due to the
redemption of Scotiabank Tier 1 Trust Securities noted above and
growth from the Bank's consolidated balance sheet assets.
As at July 31, 2019, 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 2018 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; 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 2018 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 2018
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.
Shareholder 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 August 27, 2019, at 8:15
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 647-484-0473 or toll-free, at
1-800-289-0459 using ID 350989# (please call shortly before
8:15 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 August 27, 2019, to September 11, 2019, by calling 647-436-0148 or
1-888-203-1112 (North America
toll-free) and entering the access code 3040720#. The archived
audio webcast will be available on the Bank's website for three
months.
Contact 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
Media:
For media enquiries, please contact the Global Communications
Department at the above address.
Telephone: (416) 775-0828
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.
250 Royall Street
Canton, MA 02021, U.S.A.
Telephone: 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