Bank Of Nova Scotia ((TSE:BNS)) has held its Q1 earnings call. Read on for the main highlights of the call.
The Bank of Nova Scotia’s recent earnings call painted a picture of cautious optimism amidst a backdrop of strong financial performance and strategic progress. The bank showcased significant advancements in its Global Wealth Management and Global Banking and Markets segments. However, the positive sentiment was moderated by challenges such as elevated credit loss provisions, uncertainties related to potential tariffs, and difficulties in Canadian Banking earnings. Despite these hurdles, the overall tone remained hopeful about navigating through uncertainties and focusing on strategic growth.
Strong Start to 2025 with Revenue Growth
The Bank of Nova Scotia reported a robust start to 2025, with adjusted earnings for the quarter reaching $2.2 billion or $1.76 per share. This represents a 15% year-over-year growth in noninterest revenue. The bank’s capital ratio also saw a significant improvement, increasing by approximately 140 basis points since the end of 2022.
Global Wealth Management Momentum
Global Wealth Management was a standout performer, with earnings up 23% year-over-year. This growth was driven by higher mutual fund fees and wealth advisory revenues. Notably, assets under administration reached record levels, surpassing $730 billion.
Global Banking and Markets Performance
The Global Banking and Markets segment delivered impressive results, with earnings up 33% year-over-year. Capital markets revenue surged by 41%, helping the segment achieve a #1 rank in debt capital markets in Canada and #11 in the U.S.
International Banking Solid Results
International Banking reported earnings of $657 million, with a productivity ratio improvement to 51%. This was due to a 4% revenue growth and disciplined 1% expense growth, showcasing the segment’s solid performance.
Strategic Investment in KeyCorp
The bank’s strategic investment in KeyCorp is proving to be immediately accretive to earnings growth and return on equity metrics, further strengthening its financial position.
Elevated Provisions for Credit Losses
Despite the positive financial outcomes, the bank faced elevated provisions for credit losses, which remained high at approximately $1.2 billion. This reflects the impact of higher interest rates, inflation, and geopolitical uncertainty.
Canadian Banking Earnings Decline
The Canadian Banking segment experienced a 6% decline in earnings year-over-year, attributed to higher loan loss provisions and increased expenses.
Impact of Potential Tariffs
The announcement of potential tariffs has introduced additional macroeconomic uncertainty. The bank’s base case scenario includes a modest risk from these tariffs.
Challenges in Primary Client Growth
Primary client growth in Canadian Retail has slowed, largely due to a notable slowdown in immigration, presenting a challenge for the bank.
Forward-Looking Guidance
Looking ahead, Scotiabank’s CEO, Scott Thomson, emphasized the bank’s strong financial outcomes driven by strategic initiatives. The bank expects 2025 earnings growth towards the higher end of its 5% to 7% range, excluding potential tariffs. The bank’s capital ratio has improved significantly, and it has achieved a 4% year-over-year deposit growth, reducing its loan-to-deposit ratio to 105%.
In conclusion, the Bank of Nova Scotia’s earnings call highlighted a cautiously optimistic outlook, with strong performances in key segments and strategic investments. However, challenges such as elevated credit loss provisions and uncertainties due to potential tariffs remain. The bank’s focus on strategic growth and managing through uncertainties will be crucial in navigating the financial landscape moving forward.