All amounts are in
Canadian dollars and are based on our unaudited Interim Condensed
Consolidated Financial Statements for the quarter ended April 30,
2019 and related notes prepared in accordance with International
Financial Reporting Standards (IFRS), unless otherwise noted. Our
complete Second Quarter 2019 Report to Shareholders, including our
unaudited interim financial statements for the period ended April
30, 2019, can also be found on the SEDAR website at
http://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 Second Quarter
2019 Report on the Investor Relations page of
www.scotiabank.com.
|
Second Quarter
Highlights on a Reported basis (versus Q2, 2018)
|
Second Quarter
Highlights on an Adjusted basis(1) (versus Q2,
2018)
|
•
|
Net income of $2,259
million, compared to $2,177 million
|
•
|
Net income of $2,263
million, compared to $2,190 million
|
•
|
Earnings per share
(diluted) of $1.73, compared to $1.70
|
•
|
Earnings per share
(diluted) of $1.70, compared to $1.71
|
•
|
Return on equity of
13.8%, compared to 14.9%
|
•
|
Return on equity of
13.6%, compared to 15.0%
|
TORONTO, May 28, 2019 /CNW/ - Scotiabank reported second
quarter net income of $2,259 million
compared to $2,177 million in the
same period last year. Diluted earnings per share were $1.73, compared to $1.70 in the same period a year ago. Return on
equity was 13.8% compared to 14.9% a year ago.
Adjusting for Acquisition and divestiture-related
amounts(1), net income increased 3% to $2,263 million and diluted earnings per share
were $1.70 compared to $1.71 last year. Return on equity was 13.6%
compared to 15.0% a year ago.
"The Bank continues to make steady progress in the execution of
its strategy, completing previously announced acquisitions in
Peru and the Dominican Republic and announcing the
divestiture of El Salvador. Our
sharper geographic focus, improved business mix and progress in
digital banking position the Bank well for the future," said
Brian Porter, President and CEO of
Scotiabank.
"We had strong operating results across our businesses. Earnings
from the Personal and Commercial banking businesses were up 8%
year-over-year while Global Banking and Markets rebounded
strongly."
"International Banking delivered strong results this quarter,
with double-digit annual earnings growth. These results were driven
by strong loan growth, particularly in the Pacific Alliance
countries and the impact of acquisitions. Our competitive strength
in these high-quality growth markets provides us with significant
opportunities for customer-driven growth. Our merged Chilean
operations are gaining market share while creating considerable
synergies and value for our customers and shareholders."
"Canadian Banking delivered solid results this quarter, driven
by commercial lending and wealth management earnings growth, along
with better expense management. The business continued its efforts
to enhance the customer experience and advance digital adoption
through the launch of two new platforms in the second quarter:
Scotiabank Healthcare+Physician Banking and Scotiabank eHOME."
"We also announced our intention to establish Global Wealth
Management as a standalone business segment effective in fiscal
2020 to demonstrate its importance and our strategic commitment to
expanding our global wealth management businesses."
"The Bank reported a Common Equity Tier 1 capital ratio of 11.1%
through strong internal capital generation, and prudent management
of organic asset growth."
"Overall, we delivered solid results across the Bank in the
second quarter. We have made good progress towards strengthening
our businesses and offering a superior customer experience. Looking
ahead, we remain focused on delivering against our differentiated
strategy and achieving consistent long-term growth."
__________________________________
|
(1) Refer
to Non-GAAP Measures section on page 2.
|
Financial Results
Reported
Results
|
For the three months
ended
|
For the six months
ended
|
|
|
April
30
|
|
January 31
|
|
April 30
|
|
April
30
|
|
April 30
|
(Unaudited) ($
millions)
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,193
|
$
|
4,274
|
$
|
3,950
|
$
|
8,467
|
$
|
7,886
|
Non-interest
income
|
|
3,610
|
|
3,330
|
|
3,108
|
|
6,940
|
|
6,260
|
Total
revenue
|
|
7,803
|
|
7,604
|
|
7,058
|
|
15,407
|
|
14,146
|
Provision for credit
losses
|
|
873
|
|
688
|
|
534
|
|
1,561
|
|
1,078
|
Non-interest
expenses
|
|
4,046
|
|
4,171
|
|
3,726
|
|
8,217
|
|
7,224
|
Income tax
expense
|
|
625
|
|
498
|
|
621
|
|
1,123
|
|
1,330
|
Net
income
|
$
|
2,259
|
$
|
2,247
|
$
|
2,177
|
$
|
4,506
|
$
|
4,514
|
Net income
attributable to non-controlling interests in
subsidiaries
|
|
70
|
|
111
|
|
70
|
|
181
|
|
128
|
Net income
attributable to equity holders of the Bank
|
$
|
2,189
|
$
|
2,136
|
$
|
2,107
|
$
|
4,325
|
$
|
4,386
|
Preferred shareholders
and other equity instrument holders
|
|
64
|
|
29
|
|
65
|
|
93
|
|
95
|
Common
shareholders
|
$
|
2,125
|
$
|
2,107
|
$
|
2,042
|
$
|
4,232
|
$
|
4,291
|
Earnings per
common share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.74
|
$
|
1.72
|
$
|
1.70
|
$
|
3.46
|
$
|
3.58
|
Diluted
|
$
|
1.73
|
$
|
1.71
|
$
|
1.70
|
$
|
3.44
|
$
|
3.56
|
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 Second 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.
These costs relate to Banco Cencosud, Peru and Banco Dominicano del Progreso,
Dominican Republic for Q2,
2019.
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 on
divestitures – relates to the gain on divestitures 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 this period.
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
six months ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
($
millions)
|
2019
|
2019
|
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,193
|
$
|
4,274
|
$
|
3,950
|
$
|
8,467
|
$
|
7,886
|
Non-interest
income
|
|
3,610
|
|
3,330
|
|
3,108
|
|
6,940
|
|
6,260
|
Total
revenue
|
|
7,803
|
|
7,604
|
|
7,058
|
|
15,407
|
|
14,146
|
Provision for credit
losses
|
|
873
|
|
688
|
|
534
|
|
1,561
|
|
1,078
|
Non-interest
expenses
|
|
4,046
|
|
4,171
|
|
3,726
|
|
8,217
|
|
7,224
|
Income before
taxes
|
|
2,884
|
|
2,745
|
|
2,798
|
|
5,629
|
|
5,844
|
Income tax
expense
|
|
625
|
|
498
|
|
621
|
|
1,123
|
|
1,330
|
Net
income
|
$
|
2,259
|
$
|
2,247
|
$
|
2,177
|
$
|
4,506
|
$
|
4,514
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
70
|
|
111
|
|
70
|
|
181
|
|
128
|
Net income
attributable to equity holders
|
|
2,189
|
|
2,136
|
|
2,107
|
|
4,325
|
|
4,386
|
Net income
attributable to common shareholders
|
|
2,125
|
|
2,107
|
|
2,042
|
|
4,232
|
|
4,291
|
Diluted earnings
per share (in dollars)
|
$
|
1.73
|
$
|
1.71
|
$
|
1.70
|
$
|
3.44
|
$
|
3.56
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and
divestiture-related amounts
|
|
|
|
|
|
|
|
|
|
|
|
Day 1 provision for
credit losses on acquired performing financial
instruments(1)
|
$
|
151
|
$
|
-
|
$
|
-
|
$
|
151
|
$
|
-
|
|
Integration
costs(2)
|
|
25
|
|
31
|
|
-
|
|
56
|
|
-
|
|
Amortization of
Acquisition-related intangible assets, excluding
software(2)
|
|
28
|
|
30
|
|
18
|
|
58
|
|
36
|
|
Acquisition-related costs
|
|
204
|
|
61
|
|
18
|
|
265
|
|
36
|
|
Net gain on
divestitures(3)
|
|
(173)
|
|
-
|
|
-
|
|
(173)
|
|
-
|
Acquisition and
divestiture-related
amounts (Pre-tax)
|
|
31
|
|
61
|
|
18
|
|
92
|
|
36
|
Income tax
expense/(benefit)
|
|
(27)
|
|
(17)
|
|
(5)
|
|
(44)
|
|
(10)
|
Acquisition and
divestiture-related amounts (After
tax)
|
|
4
|
|
44
|
|
13
|
|
48
|
|
26
|
Adjustment
attributable to NCI
|
|
(45)
|
|
(5)
|
|
-
|
|
(50)
|
|
-
|
Acquisition and
divestiture-related amounts (After tax and
NCI)
|
$
|
(41)
|
$
|
39
|
$
|
13
|
$
|
(2)
|
$
|
26
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
4,193
|
$
|
4,274
|
$
|
3,950
|
$
|
8,467
|
$
|
7,886
|
Non-interest
income
|
|
3,437
|
|
3,330
|
|
3,108
|
|
6,767
|
|
6,260
|
Total
revenue
|
|
7,630
|
|
7,604
|
|
7,058
|
|
15,234
|
|
14,146
|
Provision for credit
losses
|
|
722
|
|
688
|
|
534
|
|
1,410
|
|
1,078
|
Non-interest
expenses
|
|
3,993
|
|
4,110
|
|
3,708
|
|
8,103
|
|
7,188
|
Income before
taxes
|
|
2,915
|
|
2,806
|
|
2,816
|
|
5,721
|
|
5,880
|
Income tax
expense
|
|
652
|
|
515
|
|
626
|
|
1,167
|
|
1,340
|
Net
income
|
$
|
2,263
|
$
|
2,291
|
$
|
2,190
|
$
|
4,554
|
$
|
4,540
|
Net income
attributable to NCI
|
|
115
|
|
116
|
|
70
|
|
231
|
|
128
|
Net income
attributable to equity holders
|
|
2,148
|
|
2,175
|
|
2,120
|
|
4,323
|
|
4,412
|
Net income
attributable to common shareholders
|
$
|
2,084
|
$
|
2,146
|
$
|
2,055
|
$
|
4,230
|
$
|
4,317
|
Adjusted diluted
earnings per share
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to common shareholders
|
$
|
2,084
|
$
|
2,146
|
$
|
2,055
|
$
|
4,230
|
$
|
4,317
|
Dilutive impact of
share-based payment options and others
|
|
39
|
|
45
|
|
2
|
|
83
|
|
34
|
Adjusted net income
attributable to common shareholders (diluted)
|
$
|
2,123
|
$
|
2,191
|
$
|
2,057
|
$
|
4,313
|
$
|
4,351
|
Weighted average
number of basic common shares outstanding
(millions)
|
|
1,224
|
|
1,226
|
|
1,198
|
|
1,225
|
|
1,199
|
Dilutive impact of
share-based payment options and others (millions)
|
|
28
|
|
29
|
|
5
|
|
28
|
|
16
|
Adjusted weighted
average number of diluted common shares outstanding
(millions)
|
|
1,252
|
|
1,255
|
|
1,203
|
|
1,253
|
|
1,215
|
Adjusted diluted
earnings per share (in dollars)
|
$
|
1.70
|
$
|
1.75
|
$
|
1.71
|
$
|
3.44
|
$
|
3.58
|
Impact of
adjustments on diluted earnings per share (in
dollars)
|
$
|
(0.03)
|
$
|
0.04
|
$
|
0.01
|
$
|
-
|
$
|
0.02
|
(1)
|
Recorded in
provision for credit losses.
|
(2)
|
Recorded in
non-interest expenses.
|
(3)
|
Recorded in
non-interest income.
|
Reconciliation of reported and adjusted results and diluted
earnings per share by business line
Canadian Banking(1)
|
|
For the three months
ended
|
For the
six months ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
($
millions)
|
2019
|
2019
|
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,990
|
$
|
2,036
|
$
|
1,906
|
$
|
4,026
|
$
|
3,845
|
Non-interest
income
|
|
1,390
|
|
1,379
|
|
1,325
|
|
2,769
|
|
2,689
|
Total
revenue
|
|
3,380
|
|
3,415
|
|
3,231
|
|
6,795
|
|
6,534
|
Provision for credit
losses
|
|
252
|
|
233
|
|
205
|
|
485
|
|
415
|
Non-interest
expenses
|
|
1,711
|
|
1,730
|
|
1,641
|
|
3,441
|
|
3,246
|
Income before
taxes
|
|
1,417
|
|
1,452
|
|
1,385
|
|
2,869
|
|
2,873
|
Income tax
expense
|
|
369
|
|
379
|
|
368
|
|
748
|
|
754
|
Net
income
|
$
|
1,048
|
$
|
1,073
|
$
|
1,017
|
$
|
2,121
|
$
|
2,119
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Net income
attributable to equity holders
|
$
|
1,048
|
$
|
1,073
|
$
|
1,017
|
$
|
2,121
|
$
|
2,119
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
Acquisition-related costs
|
|
|
|
|
|
|
|
|
|
|
|
Day 1 provision for
credit losses on acquired performing financial
instruments(2)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Integration
costs(3)
|
|
6
|
|
7
|
|
-
|
|
13
|
|
-
|
|
Amortization of
Acquisition-related intangible assets, excluding
software(3)
|
|
14
|
|
14
|
|
7
|
|
28
|
|
14
|
Acquisition-related costs (Pre-tax)
|
|
20
|
|
21
|
|
7
|
|
41
|
|
14
|
Income tax
expense/(benefit)
|
|
(6)
|
|
(5)
|
|
(2)
|
|
(11)
|
|
(4)
|
Acquisition-related costs (After
tax)
|
|
14
|
|
16
|
|
5
|
|
30
|
|
10
|
Adjustment
attributable to NCI
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Acquisition-related costs (After tax and
NCI)
|
$
|
14
|
$
|
16
|
$
|
5
|
$
|
30
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
1,990
|
$
|
2,036
|
$
|
1,906
|
$
|
4,026
|
$
|
3,845
|
Non-interest
income
|
|
1,390
|
|
1,379
|
|
1,325
|
|
2,769
|
|
2,689
|
Total
revenue
|
|
3,380
|
|
3,415
|
|
3,231
|
|
6,795
|
|
6,534
|
Provision for credit
losses
|
|
252
|
|
233
|
|
205
|
|
485
|
|
415
|
Non-interest
expenses
|
|
1,691
|
|
1,709
|
|
1,634
|
|
3,400
|
|
3,232
|
Income before
taxes
|
|
1,437
|
|
1,473
|
|
1,392
|
|
2,910
|
|
2,887
|
Income tax
expense
|
|
375
|
|
384
|
|
370
|
|
759
|
|
758
|
Net
income
|
$
|
1,062
|
$
|
1,089
|
$
|
1,022
|
$
|
2,151
|
$
|
2,129
|
Net income
attributable to NCI
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Net income
attributable to equity holders
|
$
|
1,062
|
$
|
1,089
|
$
|
1,022
|
$
|
2,151
|
$
|
2,129
|
(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
six months ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
($
millions)
|
2019
|
2019
|
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,121
|
$
|
2,080
|
$
|
1,758
|
$
|
4,201
|
$
|
3,465
|
Non-interest
income
|
|
1,235
|
|
1,251
|
|
984
|
|
2,486
|
|
1,981
|
Total
revenue
|
|
3,356
|
|
3,331
|
|
2,742
|
|
6,687
|
|
5,446
|
Provision for credit
losses
|
|
628
|
|
470
|
|
340
|
|
1,098
|
|
684
|
Non-interest
expenses
|
|
1,710
|
|
1,742
|
|
1,438
|
|
3,452
|
|
2,880
|
Income before
taxes
|
|
1,018
|
|
1,119
|
|
964
|
|
2,137
|
|
1,882
|
Income tax
expense
|
|
249
|
|
226
|
|
219
|
|
475
|
|
412
|
Net
income
|
$
|
769
|
$
|
893
|
$
|
745
|
$
|
1,662
|
$
|
1,470
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
69
|
|
111
|
|
70
|
|
180
|
|
128
|
Net income
attributable to equity holders
|
$
|
700
|
$
|
782
|
$
|
675
|
$
|
1,482
|
$
|
1,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
Acquisition-related costs
|
|
|
|
|
|
|
|
|
|
|
|
Day 1 provision for
credit losses on acquired performing financial
instruments(2)
|
$
|
151
|
$
|
-
|
$
|
-
|
$
|
151
|
$
|
-
|
|
Integration
costs(3)
|
|
19
|
|
24
|
|
-
|
|
43
|
|
-
|
|
Amortization of
Acquisition-related intangible assets, excluding
software(3)
|
|
14
|
|
16
|
|
11
|
|
30
|
|
22
|
Acquisition-related costs (Pre-tax)
|
|
184
|
|
40
|
|
11
|
|
224
|
|
22
|
Income tax
expense/(benefit)
|
|
(53)
|
|
(12)
|
|
(3)
|
|
(65)
|
|
(6)
|
Acquisition-related costs (After
tax)
|
|
131
|
|
28
|
|
8
|
|
159
|
|
16
|
Adjustment
attributable to NCI
|
|
(44)
|
|
(5)
|
|
-
|
|
(49)
|
|
-
|
Acquisition-related costs (After tax and
NCI)
|
$
|
87
|
$
|
23
|
$
|
8
|
$
|
110
|
$
|
16
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
2,121
|
$
|
2,080
|
$
|
1,758
|
$
|
4,201
|
$
|
3,465
|
Non-interest
income
|
|
1,235
|
|
1,251
|
|
984
|
|
2,486
|
|
1,981
|
Total
revenue
|
|
3,356
|
|
3,331
|
|
2,742
|
|
6,687
|
|
5,446
|
Provision for credit
losses
|
|
477
|
|
470
|
|
340
|
|
947
|
|
684
|
Non-interest
expenses
|
|
1,677
|
|
1,702
|
|
1,427
|
|
3,379
|
|
2,858
|
Income before
taxes
|
|
1,202
|
|
1,159
|
|
975
|
|
2,361
|
|
1,904
|
Income tax
expense
|
|
302
|
|
238
|
|
222
|
|
540
|
|
418
|
Net
income
|
$
|
900
|
$
|
921
|
$
|
753
|
$
|
1,821
|
$
|
1,486
|
Net income
attributable to NCI
|
|
113
|
|
116
|
|
70
|
|
229
|
|
128
|
Net income
attributable to equity holders
|
$
|
787
|
$
|
805
|
$
|
683
|
$
|
1,592
|
$
|
1,358
|
(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
six months ended
|
|
|
April
30
|
January 31
|
April 30
|
April
30
|
April 30
|
($
millions)
|
2019
|
2019
|
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Reported
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
(268)
|
$
|
(214)
|
$
|
(76)
|
$
|
(482)
|
$
|
(176)
|
Non-interest
income
|
|
184
|
|
(3)
|
|
6
|
|
181
|
|
(3)
|
Total
revenue
|
|
(84)
|
|
(217)
|
|
(70)
|
|
(301)
|
|
(179)
|
Provision for credit
losses
|
|
(1)
|
|
1
|
|
-
|
|
-
|
|
(1)
|
Non-interest
expenses
|
|
31
|
|
54
|
|
82
|
|
85
|
|
(39)
|
Income before
taxes
|
|
(114)
|
|
(272)
|
|
(152)
|
|
(386)
|
|
(139)
|
Income tax
expense
|
|
(136)
|
|
(218)
|
|
(120)
|
|
(354)
|
|
(163)
|
Net
income
|
$
|
22
|
$
|
(54)
|
$
|
(32)
|
$
|
(32)
|
$
|
24
|
Net income
attributable to non-controlling interests in subsidiaries
(NCI)
|
|
1
|
|
-
|
|
-
|
|
1
|
|
-
|
Net income
attributable to equity holders
|
$
|
21
|
$
|
(54)
|
$
|
(32)
|
$
|
(33)
|
$
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for
Net gain on divestitures(2)
|
$
|
(173)
|
$
|
-
|
$
|
-
|
$
|
(173)
|
$
|
-
|
Income tax
expense
|
|
32
|
|
-
|
|
-
|
|
32
|
|
-
|
Net gain on
divestitures (After tax)
|
|
(141)
|
|
-
|
|
-
|
|
(141)
|
|
-
|
Adjustment
attributable to NCI
|
|
(1)
|
|
-
|
|
-
|
|
(1)
|
|
-
|
Net gain on
divestitures (After tax and NCI)
|
$
|
(142)
|
$
|
-
|
$
|
-
|
$
|
(142)
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
$
|
(268)
|
$
|
(214)
|
$
|
(76)
|
$
|
(482)
|
$
|
(176)
|
Non-interest
income
|
|
11
|
|
(3)
|
|
6
|
|
8
|
|
(3)
|
Total
revenue
|
|
(257)
|
|
(217)
|
|
(70)
|
|
(474)
|
|
(179)
|
Provision for credit
losses
|
|
(1)
|
|
1
|
|
-
|
|
-
|
|
(1)
|
Non-interest
expenses
|
|
31
|
|
54
|
|
82
|
|
85
|
|
(39)
|
Income before
taxes
|
|
(287)
|
|
(272)
|
|
(152)
|
|
(559)
|
|
(139)
|
Income tax
expense
|
|
(168)
|
|
(218)
|
|
(120)
|
|
(386)
|
|
(163)
|
Net
income
|
$
|
(119)
|
$
|
(54)
|
$
|
(32)
|
$
|
(173)
|
$
|
24
|
Net income
attributable to NCI
|
|
2
|
|
-
|
|
-
|
|
2
|
|
-
|
Net income
attributable to equity holders
|
$
|
(121)
|
$
|
(54)
|
$
|
(32)
|
$
|
(175)
|
$
|
24
|
(1)
|
Refer to Business
Segment Review on page 9.
|
(2)
|
Recorded in
non-interest income.
|
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 six months
ended
|
($
millions)
|
January 31,
2019
|
April 30,
2018
|
April 30,
2018
|
(Taxable
equivalent basis)
|
Reported
|
Foreign
exchange
|
Constant
dollar
|
|
Reported
|
Foreign
exchange
|
Constant
dollar
|
|
Reported
|
Foreign
exchange
|
Constant
dollar
|
Net interest
income
|
$
|
2,080
|
$
|
(30)
|
$
|
2,110
|
|
$
|
1,758
|
$
|
(3)
|
$
|
1,761
|
|
$
|
3,465
|
$
|
(24)
|
$
|
3,489
|
Non-interest
income
|
|
1,251
|
|
(28)
|
|
1,279
|
|
|
984
|
|
1
|
|
983
|
|
|
1,981
|
|
2
|
|
1,979
|
Total
revenue
|
|
3,331
|
|
(58)
|
|
3,389
|
|
|
2,742
|
|
(2)
|
|
2,744
|
|
|
5,446
|
|
(22)
|
|
5,468
|
Provision for credit
losses
|
|
470
|
|
(8)
|
|
478
|
|
|
340
|
|
4
|
|
336
|
|
|
684
|
|
4
|
|
680
|
Non-interest
expenses
|
|
1,742
|
|
(21)
|
|
1,763
|
|
|
1,438
|
|
7
|
|
1,431
|
|
|
2,880
|
|
1
|
|
2,879
|
Income tax
expense
|
|
226
|
|
(6)
|
|
232
|
|
|
219
|
|
(3)
|
|
222
|
|
|
412
|
|
(7)
|
|
419
|
Net
income
|
$
|
893
|
$
|
(23)
|
$
|
916
|
|
$
|
745
|
$
|
(10)
|
$
|
755
|
|
$
|
1,470
|
$
|
(20)
|
$
|
1,490
|
Net income
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling
interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in
subsidiaries
|
$
|
111
|
$
|
1
|
$
|
110
|
|
$
|
70
|
$
|
(1)
|
$
|
71
|
|
$
|
128
|
$
|
(1)
|
$
|
129
|
Net income
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity holders of the
Bank
|
$
|
782
|
$
|
(24)
|
$
|
806
|
|
$
|
675
|
$
|
(9)
|
$
|
684
|
|
$
|
1,342
|
$
|
(19)
|
$
|
1,361
|
Other
measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
assets ($ billions)
|
$
|
197
|
$
|
-
|
$
|
197
|
|
$
|
160
|
$
|
(1)
|
$
|
161
|
|
$
|
157
|
$
|
(2)
|
$
|
159
|
Average liabilities
($ billions)
|
$
|
154
|
$
|
(2)
|
$
|
156
|
|
$
|
124
|
$
|
(1)
|
$
|
125
|
|
$
|
120
|
$
|
(2)
|
$
|
122
|
Business Segment Review
Canadian Banking
Q2 2019 vs Q2 2018
Net income attributable to equity holders was $1,048 million, an increase of $31 million or 3%. Adjusting for
Acquisition-related costs, net income was $1,062 million, an increase of 4%, due primarily
to higher revenue driven by solid loan growth, strong deposit
growth and the impact of acquisitions. This was partly offset by
higher non-interest expenses, higher provision for credit losses,
the prior year benefit from an additional month of income from the
Alignment of reporting period, and lower gains on sale of real
estate.
Q2 2019 vs Q1 2019
Net income attributable to equity holders decreased $25 million or 2%. Adjusting for
Acquisition-related costs, net income declined 2% due primarily to
lower net interest income driven by three fewer days in the quarter
and higher provision for credit losses, partially offset by higher
non-interest income and lower non-interest expenses.
Year-to-date Q2 2019 vs Year-to-date Q2 2018
Net income attributable to equity holders was $2,121 million, in line with the prior
year. Adjusting for Acquisition-related costs, net income was
$2,151 million, an increase of 1%,
due primarily to higher revenue driven by solid volume growth and
the impact of acquisitions. This was partly offset by higher
non-interest expenses, higher provision for credit losses, the
prior year gain on the reorganization of Interac and benefit from
the Alignment of reporting period, and lower gains on sale of real
estate.
International Banking
Financial Performance on a Reported Basis
Q2 2019 vs Q2 2018
Net income attributable to equity holders of $700 million was up $25
million, or 4%. Adjusting for Acquisition and
divestiture-related costs, net income increased to $787 million, up 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, including a higher contribution from
associated corporations. This was partly offset by increased
non-interest expenses and provision for credit losses, the benefit
of Alignment of the reporting period of Chile with the Bank ("Alignment of reporting
period") last year, and higher income taxes.
Q2 2019 vs Q1 2019
Net income attributable to equity holders decreased by
$82 million or 11%. Adjusting for
Acquisition and divestiture-related costs, net income decreased by
$18 million or 2% largely driven by
higher income taxes and last quarter's benefit of Alignment of
reporting period of Peru with the
Bank, partly offset by revenue growth and lower non-interest
expenses.
Year-to-date Q2 2019 vs Year-to-date Q2 2018
Net income attributable to equity holders of $1,482 million was up $140
million or 10%. Adjusting for Acquisition-related costs, net
income increased to $1,592 million,
up 17%. 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,
including a higher contribution from associated corporations,
partly offset by increased non-interest expenses and provision for
credit losses.
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.
Q2 2019 vs Q2 2018
Net income attributable to equity holders of $700 million was up $16
million or 2%. Adjusting for Acquisition and
divestiture-related costs, net income increased to $787 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, and
higher non-interest income, including a larger contribution from
associated corporations. This was partly offset by increased
non-interest expenses and provision for credit losses, the benefit
of Alignment of the reporting period of Chile with the Bank last year, and higher
income taxes.
Q2 2019 vs Q1 2019
Net income attributable to equity holders decreased by
$106 million or 13%. Adjusting for
Acquisition and divestiture-related costs, net income decreased by
$42 million or 5% due to last
quarter's benefit of the Alignment of reporting period of
Peru with the Bank. Revenue growth
and lower expenses were offset by lower tax benefits.
Year-to-date Q2 2019 vs Year-to-date Q2 2018
Net income attributable to equity holders of $1,482 million was up $121
million or 9%. Adjusting for Acquisition and
divestiture-related costs, net income increased to $1,592 million, or 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, and
higher non-interest income, including a higher contribution from
associated corporations, partly offset by increased non-interest
expenses and provision for credit losses.
Global Banking and Markets
Q2 2019 vs Q2 2018
Net income attributable to equity holders was $420 million, a decrease of $27 million or 6%. Lower net interest income,
higher non-interest expenses, and lower recovery of provision for
credit losses were partially offset by higher non-interest income,
the favourable impact of foreign currency translation,
and lower income taxes.
Q2 2019 vs Q1 2019
Net income attributable to equity holders increased by
$85 million or 25%. This was due
mainly to higher non-interest income and lower non-interest
expenses, partly offset by lower net interest income, lower
recovery of provision for credit losses, and higher income
taxes.
Year-to-date Q2 2019 vs Year-to-date Q2 2018
Net income attributable to equity holders decreased by
$146 million or 16%. This was due
mainly to lower non-interest income, higher non-interest expenses,
and lower net interest income, partly offset by lower income
taxes.
Other
Q2 2019 vs Q2 2018
Net income attributable to equity holders was $21 million. Adjusting for the Net gain on
divestitures of $142 million
($173 million pre-tax), there was a
net loss of $121 million, compared to
$32 million in the same period last
year. This was due mainly to lower contributions from
asset/liability management activities, partly offset by higher
gains on sale of investment securities, lower non-interest expenses
and lower taxes.
Q2 2019 vs Q1 2019
Net income attributable to equity holders was $21 million. Adjusting for the Net gain on
divestitures, there was a net loss of $121
million, compared to $54
million. This was primarily due to lower contributions from
asset/liability management activities and higher income taxes,
partly offset by higher gains on sale of investment securities and
lower non-interest expenses.
Year-to-date Q2 2019 vs Year-to-date Q2 2018
Net loss attributable to equity holders was $33 million. Adjusting for the Net gain on
divestitures, the net loss was $175
million, compared to net income of $24 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.
Credit risk
Allowance for credit losses
The total allowance for credit losses as at April 30, 2019 was $5,376
million. The allowance for credit losses on loans was
$5,295 million, up $184 million from the prior quarter, due
primarily to the impact of Day 1 provision for credit losses on
acquired performing loans. The allowance on impaired loans
decreased to $1,669 million from
$1,680 million as at January 31, 2019, due primarily to write-offs net
of recoveries during the quarter. The allowance against performing
loans was higher at $3,626 million
compared to $3,431 million as at
January 31, 2019, due primarily to
the impact of Day 1 provision for credit losses on acquired
performing loans.
Impaired loans
Total gross impaired loans as at April
30, 2019 were $5,364 million,
up from $5,287 million as at
January 31, 2019, due largely to new
formations in the retail portfolio in International Banking.
Net impaired loans in Canadian Banking were $707 million as at April
30, 2019, an increase of $16
million from January 31, 2019
mainly due to new formations in the commercial portfolio.
International Banking's net impaired loans were $2,743 million as at April
30, 2019, an increase of $81
million from January 31, 2019
mainly due to new formations in the retail portfolios. In Global
Banking and Markets, net impaired loans were $245 million as at April
30, 2019, a decrease of $8
million from January 31, 2019
due largely to resolutions during the quarter. Net impaired loans
as a percentage of loans and acceptances were 0.61% as at
April 30, 2019, unchanged from last
quarter.
Capital ratios
The Bank's Common Equity Tier 1 capital ratio was 11.1% at
April 30, 2019, in line with the
prior quarter, primarily due to strong internal capital generation
which was offset by organic growth in risk-weighted assets, the net
impact from the Bank's acquisitions and divestitures which closed
during the quarter, share buybacks under the Bank's Normal Course
Issuer Bid and the impact from employee pension and post-retirement
benefits on accumulated other comprehensive income.
In addition, the Bank's Tier 1 capital ratio remained in line at
12.5% and the Total Capital ratio increased by approximately 10
basis points to 14.7%, primarily due to the above impacts to the
Common Equity Tier 1 (CET1) ratio.
The Bank's Leverage ratio declined by approximately 10 bps this
quarter due to growth in the Bank's consolidated assets, which
included the impact from acquisitions.
As at April 30, 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
May 28, 2019, at 8:00 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 647-484-0474 or toll-free, at
1-888-378-4398 using ID 478364# (please call shortly before
8:00 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 May 28, 2019, to June 12,
2019, by calling 647-436-0148 or 1-888-203-1112
(North America toll-free) and
entering the access code 2950667#. 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
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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,
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changement.
SOURCE Scotiabank