Scotiabank (NYSE: BNS) Q2 2026 net income climbs to $2.63B
Rhea-AI Filing Summary
The Bank of Nova Scotia reported stronger Q2 2026 results, with net income of $2,632 million, up from $2,032 million a year earlier. Total revenue reached $9,837 million, driven by net interest income of $5,521 million and non-interest income of $4,316 million.
Diluted earnings per share were $2.00, compared with $1.48 last year, while return on equity improved to 13.1% from 10.1%. Adjusted net income rose to $2,652 million and adjusted diluted EPS to $2.02. The net interest margin increased to 2.49%, and the Common Equity Tier 1 capital ratio remained strong at 13.3%.
Positive
- Profitability improved significantly: Q2 2026 net income rose to $2,632 million from $2,032 million a year earlier, with diluted EPS increasing to $2.00 from $1.48 and return on equity strengthening to 13.1% from 10.1%.
- Capital and liquidity remain strong: The Common Equity Tier 1 ratio was 13.3%, liquidity coverage ratio 124%, and net stable funding ratio 116% as of April 30 2026, supporting balance sheet resilience.
Negative
- None.
Insights
Scotiabank’s Q2 2026 shows solid profit growth, stable margins and strong capital.
Scotiabank delivered Q2 2026 net income of $2,632 million, up from $2,032 million a year earlier, on revenue of $9,837 million. Higher net interest income and non-interest income supported growth, while provision for credit losses fell year-over-year to $1,217 million.
Diluted EPS rose to $2.00 from $1.48, with return on equity improving to 13.1%. The net interest margin increased to 2.49%, indicating better earnings on core assets. Credit metrics remained manageable, with net write-offs at 0.52% of average loans.
Capital and liquidity stayed robust, including a Common Equity Tier 1 ratio of 13.3%, a liquidity coverage ratio of 124% and a net stable funding ratio of 116% as of April 30 2026. These levels provide flexibility as the bank navigates macroeconomic uncertainty and completes portfolio repositioning highlighted in recent divestitures.
Key Figures
Q2 2026 total revenue: $9,837 million
Q2 2026 net income: $2,632 million
Q2 2026 diluted EPS: $2.00 per share
+5 more
8 metrics
Q2 2026 total revenue
$9,837 million
Consolidated revenue for the three months ended April 30, 2026
Q2 2026 net income
$2,632 million
Consolidated net income for the three months ended April 30, 2026
Q2 2026 diluted EPS
$2.00 per share
Diluted earnings per share for the quarter
Net interest margin
2.49%
Q2 2026 consolidated net interest margin
Provision for credit losses
$1,217 million
Q2 2026 provision for credit losses
Common Equity Tier 1 ratio
13.3%
Regulatory capital measure as of April 30, 2026
Total assets
$1,521,521 million
Consolidated assets as of April 30, 2026
Adjusted net income
$2,652 million
Q2 2026 adjusted net income excluding specified items
Key Terms
Common Equity Tier 1 (CET1) capital ratio, net interest margin, provision for credit losses, return on tangible common equity, +1 more
5 terms
Common Equity Tier 1 (CET1) capital ratio financial
"Common Equity Tier 1 (CET1) capital ratio (%) | | | 13.3"
The common equity tier 1 (CET1) capital ratio measures a bank’s core capital—mainly common stock and retained earnings—against its assets after those assets are adjusted for risk. Think of it as the size of the bank’s financial cushion compared with the riskiness of what it owns; a higher CET1 ratio means a bigger cushion to absorb losses and generally signals greater safety for investors, though it can also affect returns.
net interest margin financial
"Net interest margin (%) (2) | | | 2.49"
Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.
provision for credit losses financial
"Provision for credit losses | | | 1,217"
Provision for credit losses is an amount set aside by a financial institution to cover potential future losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution manage risks and stay financially healthy. For investors, it signals how cautious a lender is about potential loan defaults and can impact the company's profitability and financial stability.
return on tangible common equity financial
"Return on tangible common equity (%) (2) | | | 16.0"
Return on tangible common equity measures how much profit a company generates from the real, spendable capital that belongs to common shareholders, shown as a percentage. It strips out intangible items like goodwill to focus on the “hard” equity and tells investors how efficiently the firm uses that tangible capital to create earnings—think of it as the return on the cash you actually have rather than on paper values or goodwill.
non-GAAP measures financial
"Some of these financial measures and ratios are presented on a non-GAAP basis"
Financial results that companies present using formulas or adjustments different from standard accounting rules (GAAP) to highlight what management considers the business’s ongoing performance. Investors care because these figures can make trends or profitability look clearer—like showing a car’s fuel efficiency after removing unusual trips—but they can also hide one‑time costs or aggressive assumptions, so comparing them with GAAP numbers helps judge reliability.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Scotiabank (BNS) perform financially in Q2 2026?
Scotiabank generated net income of $2,632 million in Q2 2026, up from $2,032 million a year earlier. Total revenue was $9,837 million, supported by $5,521 million in net interest income and $4,316 million in non-interest income.
What is Scotiabank’s (BNS) adjusted net income and EPS for Q2 2026?
Adjusted net income for Q2 2026 was $2,652 million, compared with $2,072 million a year earlier. Adjusted diluted earnings per share were $2.02, up from $1.52, after removing specified items like divestiture and acquisition-related adjustments.
How strong are Scotiabank’s (BNS) capital and liquidity ratios as of April 30, 2026?
As of April 30, 2026, Scotiabank reported a Common Equity Tier 1 ratio of 13.3%, total capital ratio of 17.0%, liquidity coverage ratio of 124%, and net stable funding ratio of 116%, indicating solid regulatory capital and funding positions.
What were Scotiabank’s (BNS) credit quality metrics in Q2 2026?
Net impaired loans were $5,200 million, with net impaired loans at 0.68% of loans and acceptances. Provision for credit losses totaled $1,217 million, and net write-offs were 0.52% of average net loans and acceptances, annualized.
How did Scotiabank’s (BNS) net interest margin trend in Q2 2026?
The consolidated net interest margin was 2.49% in Q2 2026, up from 2.31% in Q2 2025. This reflects higher core net interest income of $5,694 million on average core earning assets of $939,261 million.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule
13a-16
or 15d-16
of the Securities Exchange Act of 1934
For the month of: May, 2026
Commission File Number:
002-09048
THE BANK OF NOVA SCOTIA
(Name of registrant)
40 Temperance Street, Toronto, Ontario, M5H 0B4
(416)
866-3672
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F
or Form 40-F:
Form
20-F ☐ Form
40-F ☒ This report on Form
6-K
shall be deemed to be incorporated by reference in The Bank of Nova Scotia’s registration statements on Form S-8
(File No. 333-199099)
and Form F-3
(File No. 333-282565)
and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished. SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE BANK OF NOVA SCOTIA | ||||||||
Date: May 27, 2026 |
By: |
/s/ Gerhardt Samwell | ||||||
Name: |
Gerhardt Samwell | |||||||
Title: |
Senior Vice-President and Chief Accountant | |||||||
EXHIBIT INDEX
| Exhibit |
Description of Exhibit | |
99.1 |
2026 Second Quarter Report to Shareholders | |
101 |
Interactive Data File (formatted as Inline XBRL) | |
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
Exhibit 99.1
 Live audio Web broadcast of the Bank’s analysts’ conference call. See page 92 for details. |
Quarterly Report to Shareholders Scotiabank reports second quarter results TORONTO, May 27, 2026 – Adjusted net income (1) for the second quarter was $2,652 million and adjusted diluted EPS(1) was $2.02, up from $1.52 last year. Adjusted return on equity (ROE)(1) was 13.2% compared to 10.4% a year ago.“The Bank delivered another strong quarter as we continue to execute on our strategy, with strong revenue growth coupled with expanding margins and another quarter of positive operating leverage,” said Scott Thomson, President and CEO of Scotiabank. “The Bank remains on track to achieve its financial objectives for fiscal 2026 and its 14%+ ROE objective in fiscal 2027. Our focus on evolving our business mix drove strong fee income and wealth management revenues, along with sequential Canadian commercial and small business loan growth.” Canadian Banking generated earnings of $935 million, up 53% compared to the prior year, driven by double-digit pre-tax, pre-provision earnings (2) growth and lower performing provision for credit losses. The business grew day-to-day and savings deposits and delivered another quarter of solid positive operating leverage, in line with its strategic objectives.International Banking generated earnings of $736 million, up 3% year-over-year, driven by continued margin expansion and positive operating leverage as the business maintains its focus on expense discipline. ROE remained stable at 16%. Global Wealth Management delivered earnings of $476 million, up 19% year-over year driven by strong revenue growth from higher mutual fund fees, brokerage revenues, and net interest income. The business continued to deliver strong retail mutual fund sales through our branches, while assets under management (3) grew 18% year-over-year to $450 billion.Global Banking and Markets reported earnings of $457 million, up 11% year-over-year. Results were driven by strong performance in our capital markets business, partly offset by higher expenses to support future business growth. The Bank reported a Common Equity Tier 1 (CET1) capital ratio (4) of 13.3% and declared a dividend of $1.14, representing a 4% increase.(1) Refer to Non-GAAP Measures section starting on page 5.(2) Pre-tax, pre-provision (PTPP) earnings are calculated as revenue net of non-interest expenses. This is a non-GAAP measure. PTPP earnings do not have a standardized meaning under GAAP and may not be comparable to similar measures disclosed by other financial institutions. The Bank uses PTPP earnings to assess its ability to generate earnings growth excluding the impact of credit losses and income taxes. The Bank believes that certain non-GAAP measures provide readers with a better understanding of how management assesses performance.(3) Refer to Glossary on page 57 for the description of the measure.(4) The regulatory capital ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements. |
Table of Contents
Enhanced Disclosure Task Force (EDTF) Recommendations
Below is the index of EDTF recommendations to facilitate easy reference in the Bank’s public disclosure documents available on www.scotiabank.com/investorrelations.
Reference Table for EDTF |
||||||||||||||||||||||||||
| Q2 2026 | 2025 Annual Report | |||||||||||||||||||||||||
| Type of risk | Number | Disclosure | Quarterly Report |
Supplementary Regulatory Capital Disclosures |
MD&A | Financial Statements |
||||||||||||||||||||
General |
1 | The index of risks to which the business is exposed. | 16 | |||||||||||||||||||||||
| 2 | The Bank’s risk terminology, measures and key parameters. | 76-83 |
||||||||||||||||||||||||
| 3 | Top and emerging risks, and the changes during the reporting period. | 38 | 85-87, 91-96 |
|||||||||||||||||||||||
| 4 | Discussion on the regulatory developments and plans to meet new regulatory ratios. | 52-54 | 60-63, 120-121 |
|||||||||||||||||||||||
| Risk governance, risk management and business model | 5 | The Bank’s Risk Governance structure. | 78-80 |
|||||||||||||||||||||||
| 6 | Description of risk culture and procedures applied to support the culture. | 80-83 |
||||||||||||||||||||||||
| 7 | Description of key risks from the Bank’s business model. | 84 | ||||||||||||||||||||||||
| 8 | Stress testing use within the Bank’s risk governance and capital management. | 80-82 |
||||||||||||||||||||||||
| Capital Adequacy and risk-weighted assets | 9 | Pillar 1 capital requirements, and the impact for global systemically important banks. | 52-53 | 4-5 |
60-63 |
208 | ||||||||||||||||||||
| 10 | a) Regulatory capital components. | 52-53, 81 | 21-23 |
64 | ||||||||||||||||||||||
| b) Reconciliation of the accounting balance sheet to the regulatory balance sheet. | 18-19 |
|||||||||||||||||||||||||
| 11 | Flow statement of the movements in regulatory capital since the previous reporting period, including changes in common equity tier 1, additional tier 1 and tier 2 capital. | 52-53 | 94 | 65-66 |
||||||||||||||||||||||
| 12 | Discussion of targeted level of capital, and the plans on how to establish this. | 60-63 |
||||||||||||||||||||||||
| 13 | Analysis of risk-weighted assets (RWA) by risk type, business, and market risk RWAs. | |
6, 36-39, 43-60, 77, 91, 97 |
|
68-73, 84, 127 |
178 | ||||||||||||||||||||
| 14 | Analysis of the capital requirements for each Basel asset class. | |
16-17, 36-61, 66-73, 77, 84-87 |
68-73 |
|
178, 224-228 |
| |||||||||||||||||||
| 15 | Tabulate credit risk in the Banking Book. | 38-39 | 16-17, 36-61, 77, 84-87 |
68-73 |
225 | |||||||||||||||||||||
| 16 | Flow statements reconciling the movements in risk-weighted assets for each risk-weighted asset type. | 62, 76, 96 | 68-73 |
|||||||||||||||||||||||
| 17 | Discussion of Basel III back-testing requirement including credit risk model performance and validation. | 101 | 69-71 |
|||||||||||||||||||||||
| Liquidity Funding | 18 | Analysis of the Bank’s liquid assets. | 45-47 |
103-108 |
||||||||||||||||||||||
| 19 | Encumbered and unencumbered assets analyzed by balance sheet category. | 45-47 |
105 | |||||||||||||||||||||||
| 20 | Consolidated total assets, liabilities and off-balance sheet commitments analyzed by remaining contractual maturity at the balance sheet date. |
109-111 |
||||||||||||||||||||||||
| 21 | Analysis of the Bank’s sources of funding and a description of the Bank’s funding strategy. | 50-51 | 108-109 |
|||||||||||||||||||||||
| Market Risk | 22 | Linkage of market risk measures for trading and non-trading portfolios and the balance sheet. |
44-45 | 102 | ||||||||||||||||||||||
| 23 | Discussion of significant trading and non-trading market risk factors. |
43-44 | 97-103 |
|||||||||||||||||||||||
| 24 | Discussion of changes in period on period VaR results as well as VaR assumptions, limitations, backtesting and validation. | 43 | 97-103 |
|||||||||||||||||||||||
| 25 | Other risk management techniques e.g. stress tests, tail risk and market liquidity horizon. | 97-103 |
||||||||||||||||||||||||
| Credit Risk | 26 | Analysis of the aggregate credit risk exposures, including details of both personal and wholesale lending. | 6, 36-39, 43-60, 68-73 |
91-96, 123-127 |
|
188-189, 225-228 |
| |||||||||||||||||||
| 27 | Discussion of the policies for identifying impaired loans, defining impairments and renegotiated loans, and explaining loan forbearance policies. | 158-160 |
||||||||||||||||||||||||
| 28 | Reconciliations of the opening and closing balances of impaired loans and impairment allowances during the year. | 40-41, 70 | 33-34 |
93, 122-125 |
189 | |||||||||||||||||||||
| 29 | Analysis of counterparty credit risk that arises from derivative transactions. | 53-54 | 102 | 88-90 |
176-179 |
|||||||||||||||||||||
| 30 | Discussion of credit risk mitigation, including collateral held for all sources of credit risk. | 89-91, 94 |
||||||||||||||||||||||||
Other risks |
31 | Quantified measures of the management of operational risk. | 72, 112-113 |
|||||||||||||||||||||||
| 32 | Discussion of publicly known risk items. | 85-87 |
205-206 |
|||||||||||||||||||||||
2 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
MANAGEMENT’S DISCUSSION & ANALYSIS
The Management’s Discussion and Analysis (MD&A) is provided to enable readers to assess the Bank’s financial condition and results of operations as at and for the period ended April 30, 2026. The MD&A should be read in conjunction with the Bank’s unaudited Condensed Interim Consolidated Financial Statements included in this Report to Shareholders, and the Bank’s 2025 Annual Report. This MD&A is dated May 27, 2026.
Additional information relating to the Bank, including the Bank’s 2025 Annual Report, is available on the Bank’s website at www.scotiabank.com. As well, the Bank’s 2025 Annual Report and Annual Information Form are available on SEDAR+ at www.sedarplus.ca and on the EDGAR section of the SEC’s website at www.sec.gov.
Contents | ||||
Management’s Discussion and Analysis | ||
4 |
Financial Highlights | |
5 |
Non-GAAP Measures | |
16 |
Overview of Performance | |
18 |
Group Financial Performance | |
22 |
Business Segment Review | |
35 |
Geographic Highlights | |
36 |
Quarterly Financial Highlights | |
37 |
Financial Position | |
38 |
Risk Management | |
52 |
Capital Management | |
53 |
Financial Instruments | |
54 |
Off-Balance Sheet Arrangements | |
54 |
Regulatory Developments | |
55 |
Accounting Policies and Controls | |
56 |
Share Data | |
57 |
Glossary | |
Forward-looking Statements
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 and globally; 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, including relating to the care and control of information, and other risks arising from the Bank’s use of third parties; 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; geopolitical risk (including policies and other changes related to, or affecting, economic or trade matters, including tariffs, countermeasures, tariff mitigation policies and
tax-related
risks); changes to our credit ratings; the possible effects on our business and the global economy of war, conflicts or terrorist actions and unforeseen consequences arising from such actions; technological changes, including open banking and the use of data and artificial intelligence in our business, and technology resiliency; 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, and the extent to which products or services previously sold by the Bank require the Bank to incur liabilities or absorb losses not contemplated at their origination; 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; anti-money laundering; disruptions or attacks (including cyberattacks) on the Bank’s information technology, internet connectivity, network accessibility, or other voice or data communications systems or services, which may result in data breaches, unauthorized access to sensitive information, denial of service and potential incidents of identity theft; increased competition in the geographic and business areas in which we operate, including through internet and mobile banking and non-traditional
competitors; exposure related to significant litigation and regulatory matters; environmental, social and governance risks, including climate-related risk, our ability to implement various sustainability-related initiatives (both internally and with our clients and other stakeholders) under expected time frames, and our ability to scale our sustainable-finance products and services; the occurrence of natural and unnatural catastrophic events and claims resulting from such events, including disruptions to public infrastructure, such as transportation, communications, power or water supply; inflationary pressures; global supply-chain disruptions; Canadian housing and household indebtedness; the emergence or continuation of widespread health emergencies or pandemics, including their impact on the local, national or global economies, financial market conditions and the Bank’s business, results of operations, financial condition and prospects; 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 2025 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 2025 Annual Report under the headings “Outlook”, as updated by quarterly reports. The “Outlook” and “2026 Priorities” 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.sedarplus.ca and on the EDGAR section of the SEC’s website at www.sec.gov.
| Scotiabank Second Quarter Report 2026 | 3 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Financial Highlights
T1 Financial highlights
| As at and for the three months ended | As at and for the six months ended |
|||||||||||||||||||
(Unaudited) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Operating results ($ millions) |
||||||||||||||||||||
Net interest income |
5,521 |
5,582 | 5,270 | 11,103 |
10,443 | |||||||||||||||
Non-interest income |
4,316 |
4,064 | 3,810 | 8,380 |
8,009 | |||||||||||||||
Total revenue |
9,837 |
9,646 | 9,080 | 19,483 |
18,452 | |||||||||||||||
Provision for credit losses |
1,217 |
1,176 | 1,398 | 2,393 |
2,560 | |||||||||||||||
Non-interest expenses |
5,189 |
5,299 | 5,110 | 10,488 |
11,601 | |||||||||||||||
Income tax expense |
799 |
872 | 540 | 1,671 |
1,266 | |||||||||||||||
Net income |
2,632 |
2,299 | 2,032 | 4,931 |
3,025 | |||||||||||||||
Net income attributable to common shareholders |
2,468 |
2,155 | 1,841 | 4,623 |
2,866 | |||||||||||||||
Operating performance |
||||||||||||||||||||
Basic earnings per share ($) |
2.01 |
1.75 | 1.48 | 3.75 |
2.30 | |||||||||||||||
Diluted earnings per share ($) |
2.00 |
1.73 | 1.48 | 3.73 |
2.15 | |||||||||||||||
Return on equity (%) (1) |
13.1 |
11.1 | 10.1 | 12.1 |
7.8 | |||||||||||||||
Return on tangible common equity (%) (2) |
16.0 |
13.5 | 12.5 | 14.7 |
9.6 | |||||||||||||||
Productivity ratio (%) (1) |
52.8 |
54.9 | 56.3 | 53.8 |
62.9 | |||||||||||||||
Net interest margin (%) (2) |
2.49 |
2.45 | 2.31 | 2.47 |
2.27 | |||||||||||||||
Financial position information ($ millions) |
||||||||||||||||||||
Cash and deposits with financial institutions |
79,301 |
73,838 | 63,577 | |||||||||||||||||
Trading assets |
157,689 |
161,043 | 128,987 | |||||||||||||||||
Loans |
757,434 |
755,475 | 756,372 | |||||||||||||||||
Total assets |
1,521,521 |
1,475,979 | 1,415,465 | |||||||||||||||||
Deposits |
981,489 |
971,682 | 945,843 | |||||||||||||||||
Common equity |
77,222 |
77,649 | 74,686 | |||||||||||||||||
Preferred shares and other equity instruments |
9,939 |
9,939 | 10,232 | |||||||||||||||||
Assets under administration (1) |
892,418 |
874,305 | 779,054 | |||||||||||||||||
Assets under management (1) |
450,006 |
435,814 | 379,889 | |||||||||||||||||
Capital and liquidity measures (3) |
||||||||||||||||||||
Common Equity Tier 1 (CET1) capital ratio (%) |
13.3 |
13.3 | 13.2 | |||||||||||||||||
Tier 1 capital ratio (%) |
15.4 |
15.4 | 15.4 | |||||||||||||||||
Total capital ratio (%) |
17.0 |
17.0 | 17.1 | |||||||||||||||||
Total loss absorbing capacity (TLAC) ratio (%) |
28.6 |
28.6 | 30.3 | |||||||||||||||||
Leverage ratio (%) |
4.3 |
4.4 | 4.5 | |||||||||||||||||
TLAC Leverage ratio (%) |
8.0 |
8.3 | 8.9 | |||||||||||||||||
Risk-weighted assets ($ millions) |
474,440 |
474,253 | 458,989 | |||||||||||||||||
Liquidity coverage ratio (LCR) (%) |
124 |
122 | 131 | |||||||||||||||||
Net stable funding ratio (NSFR) (%) |
116 |
115 | 120 | |||||||||||||||||
Credit quality |
||||||||||||||||||||
Net impaired loans ($ millions) |
5,200 |
4,961 | 4,648 | |||||||||||||||||
Allowance for credit losses ($ millions) (4) |
7,344 |
7,185 | 7,276 | |||||||||||||||||
Gross impaired loans as a % of loans and acceptances (1) |
0.99 |
0.95 | 0.90 | |||||||||||||||||
Net impaired loans as a % of loans and acceptances (1) |
0.68 |
0.65 | 0.61 | |||||||||||||||||
Provision for credit losses as a % of average net loans and acceptances (annualized) (1)(5) |
0.66 |
0.61 | 0.75 | 0.63 |
0.68 | |||||||||||||||
Provision for credit losses on impaired loans as a % of average net loans and acceptances (annualized) (1)(5) |
0.61 |
0.58 | 0.57 | 0.59 |
0.56 | |||||||||||||||
Net write-offs as a % of average net loans and acceptances (annualized) (1) |
0.52 |
0.49 | 0.50 | 0.51 |
0.50 | |||||||||||||||
Adjusted results (2) |
||||||||||||||||||||
Adjusted total revenue ($ millions) |
9,845 |
10,077 | 9,098 | 19,922 |
18,470 | |||||||||||||||
Adjusted non-interest expenses ($ millions) |
5,171 |
5,273 | 5,067 | 10,444 |
10,178 | |||||||||||||||
Adjusted net income ($ millions) |
2,652 |
2,695 | 2,072 | 5,347 |
4,434 | |||||||||||||||
Adjusted diluted earnings per share ($) |
2.02 |
2.05 | 1.52 | 4.07 |
3.28 | |||||||||||||||
Adjusted return on equity (%) |
13.2 |
13.0 | 10.4 | 13.1 |
11.1 | |||||||||||||||
Adjusted return on tangible common equity (%) |
16.0 |
15.8 | 12.7 | 15.9 |
13.5 | |||||||||||||||
Adjusted productivity ratio (%) |
52.5 |
52.3 | 55.7 | 52.4 |
55.1 | |||||||||||||||
Common share information |
||||||||||||||||||||
Closing share price ($) |
105.68 |
101.80 | 68.98 | |||||||||||||||||
Shares outstanding (millions) |
||||||||||||||||||||
Average – Basic |
1,230 |
1,235 | 1,246 | 1,233 |
1,245 | |||||||||||||||
Average – Diluted |
1,232 |
1,238 | 1,246 | 1,236 |
1,250 | |||||||||||||||
End of period |
1,227 |
1,233 | 1,246 | |||||||||||||||||
Dividends paid per share ($) |
1.10 |
1.10 | 1.06 | 2.20 |
2.12 | |||||||||||||||
Dividend yield (%) (1) |
4.4 |
4.5 | 6.2 | 4.5 |
5.9 | |||||||||||||||
Market capitalization ($ millions) |
129,647 |
125,498 | 85,918 | |||||||||||||||||
Book value per common share ($) (1) |
62.95 |
62.99 | 59.96 | |||||||||||||||||
Market value to book value multiple (1) |
1.7 |
1.6 | 1.2 | |||||||||||||||||
Price to earnings multiple (trailing 4 quarters) (1) |
14.5 |
15.0 | 13.9 | |||||||||||||||||
Other information |
||||||||||||||||||||
Employees (full-time equivalent) |
80,415 |
79,740 | 86,746 | |||||||||||||||||
Branches and offices |
1,988 |
1,991 | 2,139 | |||||||||||||||||
| (1) | Refer to Glossary on page 57 for the description of the measure. |
| (2) | Refer to Non-GAAP Measures section starting on page 5. |
| (3) | The regulatory ratios and measures are calculated in accordance with the Office of the Superintendent of Financial Institutions (OSFI) Guidelines on Capital Adequacy Requirements, Total Loss Absorbing Capacity, Leverage Requirements and Liquidity Adequacy Requirements (LAR). |
| (4) | Includes allowance for credit losses on all financial assets – loans, acceptances, off-balance sheet exposures, debt securities and deposits with financial institutions. |
| (5) | Includes provision for credit losses on certain financial assets – loans, acceptances and off-balance sheet exposures. |
4 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Non-GAAP
Measures The Bank uses a number of financial measures and ratios to assess its performance, as well as the performance of its operating segments. Some of these financial measures and ratios are presented on a
non-GAAP
basis and are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), are not defined by GAAP, do not have standardized meanings and therefore might not be comparable to similar financial measures and ratios disclosed by other issuers. The Bank believes that non-GAAP
measures and ratios are useful as they provide readers with a better understanding of how management assesses performance. These non-GAAP
measures and ratios are used throughout this report and defined below. Adjusted results and diluted earnings per share
The following tables present a reconciliation of GAAP reported financial results to
non-GAAP
adjusted financial results. Management considers both reported and adjusted results and measures useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non-interest
expenses, income taxes and non-controlling
interests. Presenting results on both a reported basis and adjusted basis allows readers to assess the impact of certain items on results for the periods presented, and to better assess results and trends excluding those items that may not be reflective of ongoing business performance. | Scotiabank Second Quarter Report 2026 | 5 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T2 Reconciliation of reported and adjusted results
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
5,521 |
$ | 5,582 | $ | 5,270 | $ |
11,103 |
$ | 10,443 | ||||||||||
Non-interest income |
4,316 |
4,064 | 3,810 | 8,380 |
8,009 | |||||||||||||||
Total revenue |
9,837 |
9,646 | 9,080 | 19,483 |
18,452 | |||||||||||||||
Provision for credit losses |
1,217 |
1,176 | 1,398 | 2,393 |
2,560 | |||||||||||||||
Non-interest expenses |
5,189 |
5,299 | 5,110 | 10,488 |
11,601 | |||||||||||||||
Income before taxes |
3,431 |
3,171 | 2,572 | 6,602 |
4,291 | |||||||||||||||
Income tax expense |
799 |
872 | 540 | 1,671 |
1,266 | |||||||||||||||
Net income |
$ |
2,632 |
$ | 2,299 | $ | 2,032 | $ |
4,931 |
$ | 3,025 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
37 |
12 | 56 | 49 |
(98 | ) | ||||||||||||||
Net income attributable to equity holders |
2,595 |
2,287 | 1,976 | 4,882 |
3,123 | |||||||||||||||
Net income attributable to preferred shareholders and other equity instrument holders |
127 |
132 | 135 | 259 |
257 | |||||||||||||||
Net income attributable to common shareholders |
$ |
2,468 |
$ | 2,155 | $ | 1,841 | $ |
4,623 |
$ | 2,866 | ||||||||||
Adjustments |
||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||
(a) Divestitures and wind-down of operations |
$ |
– |
$ | 423 | $ | 9 | $ |
423 |
$ | 9 | ||||||||||
(b) Amortization of acquisition-related intangible assets |
8 |
8 | 9 | 16 |
9 | |||||||||||||||
Total non-interest income and total revenue adjusting items (Pre-tax) |
8 |
431 | 18 | 439 |
18 | |||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||
(a) Divestitures and wind-down of operations |
– |
11 | 26 | 11 |
1,388 | |||||||||||||||
(b) Amortization of acquisition-related intangible assets |
18 |
15 | 17 | 33 |
35 | |||||||||||||||
Total non-interest expense adjusting items (Pre-tax) |
18 |
26 | 43 | 44 |
1,423 | |||||||||||||||
Total impact of adjusting items on net income before taxes |
26 |
457 | 61 | 483 |
1,441 | |||||||||||||||
Impact of adjusting items on income tax expense |
||||||||||||||||||||
(a) Divestitures and wind-down of operations |
– |
(57 | ) | (15 | ) | (57 |
) |
(22 | ) | |||||||||||
(b) Amortization of acquisition-related intangible assets |
(6 |
) |
(4 | ) | (6 | ) | (10 |
) |
(10 | ) | ||||||||||
Total impact of adjusting items on income tax expense |
(6 |
) |
(61 | ) | (21 | ) | (67 |
) |
(32 | ) | ||||||||||
Total impact of adjusting items on net income |
$ |
20 |
$ | 396 | $ | 40 | $ |
416 |
$ | 1,409 | ||||||||||
Impact of adjusting items on NCI |
– |
(10 | ) | 16 | (10 |
) |
(175 | ) | ||||||||||||
Total impact of adjusting items on net income attributable to equity holders |
$ |
20 |
$ | 386 | $ | 56 | $ |
406 |
$ | 1,234 | ||||||||||
Adjusted Results |
||||||||||||||||||||
Net interest income |
$ |
5,521 |
$ | 5,582 | $ | 5,270 | $ |
11,103 |
$ | 10,443 | ||||||||||
Non-interest income |
4,324 |
4,495 | 3,828 | 8,819 |
8,027 | |||||||||||||||
Total revenue |
9,845 |
10,077 | 9,098 | 19,922 |
18,470 | |||||||||||||||
Provision for credit losses |
1,217 |
1,176 | 1,398 | 2,393 |
2,560 | |||||||||||||||
Non-interest expenses |
5,171 |
5,273 | 5,067 | 10,444 |
10,178 | |||||||||||||||
Income before taxes |
3,457 |
3,628 | 2,633 | 7,085 |
5,732 | |||||||||||||||
Income tax expense |
805 |
933 | 561 | 1,738 |
1,298 | |||||||||||||||
Net income |
$ |
2,652 |
$ | 2,695 | $ | 2,072 | $ |
5,347 |
$ | 4,434 | ||||||||||
Net income attributable to NCI |
37 |
22 | 40 | 59 |
77 | |||||||||||||||
Net income attributable to equity holders |
2,615 |
2,673 | 2,032 | 5,288 |
4,357 | |||||||||||||||
Net income attributable to preferred shareholders and other equity instrument holders |
127 |
132 | 135 | 259 |
257 | |||||||||||||||
Net income attributable to common shareholders |
$ |
2,488 |
$ | 2,541 | $ | 1,897 | $ |
5,029 |
$ | 4,100 | ||||||||||
6 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
The Bank’s quarterly financial results were adjusted for the following items. These amounts were recorded in the Other operating segment, unless otherwise noted. |
a) Divestitures and wind-down of operations
In Q1 2026, the Bank recognized a loss of $434 million ($377 million
after-tax)
upon the completion of the sale of its banking operations in Colombia, Costa Rica and Panama. The loss primarily represents the release of cumulative foreign currency translation losses, inclusive of hedges. In the prior fiscal year, the Bank recognized a total impairment loss of $1,422 million in non-interest
expense and a credit of $45 million in non-interest
income (collectively $1,342 million after-tax),
of which $1,362 million ($1,355 million after-tax)
was recognized in Q1 2025, as the operations that were a part of this transaction were designated as held for sale. The changes subsequent to Q1 2025 represented changes in the carrying value of net assets being sold and fair value of shares received less costs to sell, as well as changes in foreign currency. For further details, please refer to Note 19 of the condensed interim consolidated financial statements. In Q2 2025, the Bank completed the sale of CrediScotia Financiera S.A. (CrediScotia), a wholly-owned consumer finance subsidiary in Peru, to Banco Santander S.A. (Espana). The Bank recognized an additional loss of $9 million in
non-interest
income – other upon closing. In Q3 2024, the Bank had recognized an impairment loss of $143 million in non-interest
income and a recovery of expenses of $7 million in non-interest
expenses – salaries and employee benefits (collectively $90 million after-tax),
the majority of which relates to goodwill. b) Amortization of acquisition-related intangible assets
These costs relate to the amortization of intangible assets recognized upon the acquisition of businesses, excluding software. The costs are recorded in
non-interest
expenses – depreciation and amortization for the Canadian Banking, International Banking and Global Wealth Management operating segments, and non-interest
income – net income from investments in associated corporations for the Other operating segment. c) Restructuring charge and severance provisions
In Q4 2025, the Bank recorded a restructuring charge and severance provision as well as other related charges of $373 million ($270 million
after-tax)
primarily related to workforce reductions. These amounts reflect actions taken by the Bank to simplify its organizational structure in Canadian Banking, restructure and right-size
Asia operations in Global Banking and Markets and regionalize activities across its international footprint, in line with the Bank’s enterprise strategy. For further details, please refer to Note 22 of the audited consolidated financial statements in the 2025 Annual Report. In Q4 2024, the Bank recorded severance provisions of $53 million ($38 million after-tax)
related to the Bank’s continued efforts to streamline its organizational structure and support execution of the Bank’s strategy. d) Legal provision
In Q4 2025, the Bank recognized a legal provision of $74 million ($54 million
after-tax)
related to several civil and other litigation matters. In Q3 2024, the Bank recognized a $176 million expense for legal actions in Peru relating to certain value-added tax assessed amounts and associated interest. The legal actions arose from certain client transactions that occurred prior to the Bank’s acquisition of its Peruvian subsidiary. For further details, please refer to Note 22 of the audited consolidated financial statements in the 2025 Annual Report.
In addition to the above, the following adjustment also impacted the earnings per share calculation in Q3 2025 |
e) Foreign currency loss on redemption of Subordinated Additional Tier 1 Capital Note
In Q3 2025, the Bank redeemed all outstanding U.S. $1,250 million 4.900% Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (AT1 Note). The redemption resulted in a foreign currency loss of $22 million, which was recognized in retained earnings. The loss was deducted from net income attributable to common shareholders for the purposes of calculating basic and diluted earnings per share (EPS).
| Scotiabank Second Quarter Report 2026 | 7 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T2A Reconciliation of reported and adjusted diluted earnings per common share
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net income attributable to common shareholders |
$ |
2,468 |
$ | 2,155 | $ | 1,841 | $ |
4,623 |
$ | 2,866 | ||||||||||
Dilutive impact of share-based payment options and others |
– |
(9 | ) | – | (9 |
) |
(180 | ) | ||||||||||||
Net income attributable to common shareholders (diluted) |
$ |
2,468 |
$ | 2,146 | $ | 1,841 | $ |
4,614 |
$ | 2,686 | ||||||||||
Weighted average number of diluted common shares outstanding (millions) |
1,232 |
1,238 | 1,246 | 1,236 |
1,250 | |||||||||||||||
Diluted earnings per common share (in dollars) |
$ |
2.00 |
$ | 1.73 | $ | 1.48 | $ |
3.73 |
$ | 2.15 | ||||||||||
Adjusted Results |
||||||||||||||||||||
Net income attributable to common shareholders |
$ |
2,468 |
$ | 2,155 | $ | 1,841 | $ |
4,623 |
$ | 2,866 | ||||||||||
Impact of adjusting items on net income attributable to common shareholders (1) |
20 |
386 | 56 | 406 |
1,234 | |||||||||||||||
Adjusted net income attributable to common shareholders |
$ |
2,488 |
$ | 2,541 | $ | 1,897 | $ |
5,029 |
$ | 4,100 | ||||||||||
Dilutive impact of share-based payment options and others |
– |
1 | 1 | 1 |
(6 | ) | ||||||||||||||
Adjusted net income attributable to common shareholders (diluted) |
$ |
2,488 |
$ | 2,542 | $ | 1,898 | $ |
5,030 |
$ | 4,094 | ||||||||||
Weighted average number of diluted common shares outstanding (millions) |
1,232 |
1,238 | 1,250 | 1,236 |
1,250 | |||||||||||||||
Adjusted diluted earnings per common share (in dollars) |
$ |
2.02 |
$ | 2.05 | $ | 1.52 | $ |
4.07 |
$ | 3.28 | ||||||||||
Impact of adjustments on diluted earnings per share (in dollars) |
$ |
0.02 |
$ | 0.32 | $ | 0.04 | $ |
0.34 |
$ | 1.13 | ||||||||||
| (1) | Refer to Table T2 for details of adjusting items. |
T2B Reconciliation of reported and adjusted results by business line
For the three months ended April 30, 2026 (1) |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other |
Total |
||||||||||||||||||
Reported net income (loss) |
$ |
935 |
$ |
736 |
$ |
476 |
$ |
457 |
$ |
28 |
$ |
2,632 |
||||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
– |
35 |
2 |
– |
– |
37 |
||||||||||||||||||
Reported net income attributable to equity holders |
935 |
701 |
474 |
457 |
28 |
2,595 |
||||||||||||||||||
Reported net income attributable to preferred shareholders and other equity instrument holders |
– |
– |
– |
– |
127 |
127 |
||||||||||||||||||
Reported net income attributable to common shareholders |
$ |
935 |
$ |
701 |
$ |
474 |
$ |
457 |
$ |
(99 |
) |
$ |
2,468 |
|||||||||||
Adjustments: |
||||||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||||||
Amortization of acquisition-related intangible assets |
– |
– |
– |
– |
8 |
8 |
||||||||||||||||||
Total non-interest income adjustments (Pre-tax) |
– |
– |
– |
– |
8 |
8 |
||||||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||||||
Amortization of acquisition-related intangible assets |
– |
9 |
9 |
– |
– |
18 |
||||||||||||||||||
Total non-interest expenses adjustments (Pre-tax) |
– |
9 |
9 |
– |
– |
18 |
||||||||||||||||||
Total impact of adjusting items on net income before taxes |
– |
9 |
9 |
– |
8 |
26 |
||||||||||||||||||
Total impact of adjusting items on income tax expense |
– |
(2 |
) |
(3 |
) |
– |
(1 |
) |
(6 |
) | ||||||||||||||
Total impact of adjusting items on net income |
– |
7 |
6 |
– |
7 |
20 |
||||||||||||||||||
Impact of adjusting items on NCI |
– |
– |
– |
– |
– |
– |
||||||||||||||||||
Total impact of adjusting items on net income attributable to equity holders |
– |
7 |
6 |
– |
7 |
20 |
||||||||||||||||||
Adjusted net income (loss) |
$ |
935 |
$ |
743 |
$ |
482 |
$ |
457 |
$ |
35 |
$ |
2,652 |
||||||||||||
Adjusted net income attributable to equity holders |
$ |
935 |
$ |
708 |
$ |
480 |
$ |
457 |
$ |
35 |
$ |
2,615 |
||||||||||||
Adjusted net income attributable to common shareholders |
$ |
935 |
$ |
708 |
$ |
480 |
$ |
457 |
$ |
(92 |
) |
$ |
2,488 |
|||||||||||
(1) Refer to Business Segment Review on page 22. |
||||||||||||||||||||||||
8 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
| For the three months ended January 31, 2026 (1) |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||
Reported net income (loss) |
$ | 960 | $ | 737 | $ | 484 | $ | 544 | $ | (426 | ) | $ | 2,299 | |||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
– | 20 | 3 | (1 | ) | (10 | ) | 12 | ||||||||||||||||
Reported net income attributable to equity holders |
960 | 717 | 481 | 545 | (416 | ) | 2,287 | |||||||||||||||||
Reported net income attributable to preferred shareholders and other equity instrument holders |
– | – | – | – | 132 | 132 | ||||||||||||||||||
Reported net income attributable to common shareholders |
$ | 960 | $ | 717 | $ | 481 | $ | 545 | $ | (548 | ) | $ | 2,155 | |||||||||||
Adjustments: |
||||||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– | – | – | – | 423 | 423 | ||||||||||||||||||
Amortization of acquisition-related intangible assets |
– | – | – | – | 8 | 8 | ||||||||||||||||||
Total non-interest income adjustments (Pre-tax) |
– | – | – | – | 431 | 431 | ||||||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– | – | – | – | 11 | 11 | ||||||||||||||||||
Amortization of acquisition-related intangible assets |
– | 6 | 9 | – | – | 15 | ||||||||||||||||||
Total non-interest expenses adjustments (Pre-tax) |
– | 6 | 9 | – | 11 | 26 | ||||||||||||||||||
Total impact of adjusting items on net income before taxes |
– | 6 | 9 | – | 442 | 457 | ||||||||||||||||||
Total impact of adjusting items on income tax expense |
– | (2 | ) | (2 | ) | – | (57 | ) | (61 | ) | ||||||||||||||
Total impact of adjusting items on net income |
– | 4 | 7 | – | 385 | 396 | ||||||||||||||||||
Impact of adjusting items on NCI |
– | – | – | – | (10 | ) | (10 | ) | ||||||||||||||||
Total impact of adjusting items on net income attributable to equity holders |
– | 4 | 7 | – | 375 | 386 | ||||||||||||||||||
Adjusted net income (loss) |
$ | 960 | $ | 741 | $ | 491 | $ | 544 | $ | (41 | ) | $ | 2,695 | |||||||||||
Adjusted net income attributable to equity holders |
$ | 960 | $ | 721 | $ | 488 | $ | 545 | $ | (41 | ) | $ | 2,673 | |||||||||||
Adjusted net income attributable to common shareholders |
$ | 960 | $ | 721 | $ | 488 | $ | 545 | $ | (173 | ) | $ | 2,541 | |||||||||||
(1) Refer to Business Segment Review on page 22. |
||||||||||||||||||||||||
| For the three months ended April 30, 2025 (1) |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||
Reported net income (loss) |
$ | 613 | $ | 714 | $ | 401 | $ | 412 | $ | (108 | ) | $ | 2,032 | |||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
– | 38 | 2 | (1 | ) | 17 | 56 | |||||||||||||||||
Reported net income attributable to equity holders |
613 | 676 | 399 | 413 | (125 | ) | 1,976 | |||||||||||||||||
Reported net income attributable to preferred shareholders and other equity instrument holders |
– | – | – | – | 135 | 135 | ||||||||||||||||||
Reported net income attributable to common shareholders |
$ | 613 | $ | 676 | $ | 399 | $ | 413 | $ | (260 | ) | $ | 1,841 | |||||||||||
Adjustments: |
||||||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– | – | – | – | 9 | 9 | ||||||||||||||||||
Amortization of acquisition-related intangible assets |
– | – | – | – | 9 | 9 | ||||||||||||||||||
Total non-interest income adjustments (Pre-tax) |
– | – | – | – | 18 | 18 | ||||||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– | – | – | – | 26 | 26 | ||||||||||||||||||
Amortization of acquisition-related intangible assets |
1 | 7 | 9 | – | – | 17 | ||||||||||||||||||
Total non-interest expenses adjustments (Pre-tax) |
1 | 7 | 9 | – | 26 | 43 | ||||||||||||||||||
Total impact of adjusting items on net income before taxes |
1 | 7 | 9 | – | 44 | 61 | ||||||||||||||||||
Impact of adjusting items on income tax expense |
(1 | ) | (2 | ) | (3 | ) | – | (15 | ) | (21 | ) | |||||||||||||
Total impact of adjusting items on net income |
– | 5 | 6 | – | 29 | 40 | ||||||||||||||||||
Impact of adjusting items on NCI |
– | – | – | – | 16 | 16 | ||||||||||||||||||
Total impact of adjusting items on net income attributable to equity holders |
– | 5 | 6 | – | 45 | 56 | ||||||||||||||||||
Adjusted net income (loss) |
$ | 613 | $ | 719 | $ | 407 | $ | 412 | $ | (79 | ) | $ | 2,072 | |||||||||||
Adjusted net income attributable to equity holders |
$ | 613 | $ | 681 | $ | 405 | $ | 413 | $ | (80 | ) | $ | 2,032 | |||||||||||
Adjusted net income attributable to common shareholders |
$ | 613 | $ | 681 | $ | 405 | $ | 413 | $ | (215 | ) | $ | 1,897 | |||||||||||
| (1) | Refer to Business Segment Review on page 22. |
| Scotiabank Second Quarter Report 2026 | 9 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
For the six months ended April 30, 2026 (1) |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other |
Total |
||||||||||||||||||
Reported net income (loss) |
$ |
1,895 |
$ |
1,473 |
$ |
960 |
$ |
1,001 |
$ |
(398 |
) |
$ |
4,931 |
|||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
– |
55 |
5 |
(1 |
) |
(10 |
) |
49 |
||||||||||||||||
Reported net income attributable to equity holders |
1,895 |
1,418 |
955 |
1,002 |
(388 |
) |
4,882 |
|||||||||||||||||
Reported net income attributable to preferred shareholders and other equity instrument holders |
– |
– |
– |
– |
259 |
259 |
||||||||||||||||||
Reported net income attributable to common shareholders |
$ |
1,895 |
$ |
1,418 |
$ |
955 |
$ |
1,002 |
$ |
(647 |
) |
$ |
4,623 |
|||||||||||
Adjustments: |
||||||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– |
– |
– |
– |
423 |
423 |
||||||||||||||||||
Amortization of acquisition-related intangible assets |
– |
– |
– |
– |
16 |
16 |
||||||||||||||||||
Total non-interest income adjustments (Pre-tax) |
– |
– |
– |
– |
439 |
439 |
||||||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– |
– |
– |
– |
11 |
11 |
||||||||||||||||||
Amortization of acquisition-related intangible assets |
– |
15 |
18 |
– |
– |
33 |
||||||||||||||||||
Total non-interest expenses adjustments (Pre-tax) |
– |
15 |
18 |
– |
11 |
44 |
||||||||||||||||||
Total impact of adjusting items on net income before taxes |
– |
15 |
18 |
– |
450 |
483 |
||||||||||||||||||
Impact of adjusting items on income tax expense |
– |
(4 |
) |
(5 |
) |
– |
(58 |
) |
(67 |
) | ||||||||||||||
Total impact of adjusting items on net income |
– |
11 |
13 |
– |
392 |
416 |
||||||||||||||||||
Impact of adjusting items on NCI |
– |
– |
– |
– |
(10 |
) |
(10 |
) | ||||||||||||||||
Total impact of adjusting items on net income attributable to equity holders |
– |
11 |
13 |
– |
382 |
406 |
||||||||||||||||||
Adjusted net income (loss) |
$ |
1,895 |
$ |
1,484 |
$ |
973 |
$ |
1,001 |
$ |
(6 |
) |
$ |
5,347 |
|||||||||||
Adjusted net income attributable to equity holders |
$ |
1,895 |
$ |
1,429 |
$ |
968 |
$ |
1,002 |
$ |
(6 |
) |
$ |
5,288 |
|||||||||||
Adjusted net income attributable to common shareholders |
$ |
1,895 |
$ |
1,429 |
$ |
968 |
$ |
1,002 |
$ |
(265 |
) |
$ |
5,029 |
|||||||||||
| (1) | Refer to Business Segment Review on page 22. |
| For the six months ended April 30, 2025 (1) |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||
Reported net income (loss) |
$ | 1,526 | $ | 1,400 | $ | 810 | $ | 929 | $ | (1,640 | ) | $ | 3,025 | |||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
– | 73 | 4 | (1 | ) | (174 | ) | (98 | ) | |||||||||||||||
Reported net income attributable to equity holders |
1,526 | 1,327 | 806 | 930 | (1,466 | ) | 3,123 | |||||||||||||||||
Reported net income attributable to preferred shareholders and other equity instrument holders |
– | – | – | – | 257 | 257 | ||||||||||||||||||
Reported net income attributable to common shareholders |
$ | 1,526 | $ | 1,327 | $ | 806 | $ | 930 | $ | (1,723 | ) | $ | 2,866 | |||||||||||
Adjustments: |
||||||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– | – | – | – | 9 | 9 | ||||||||||||||||||
Amortization of acquisition-related intangible assets |
– | – | – | – | 9 | 9 | ||||||||||||||||||
Total non-interest income adjustments (Pre-tax) |
– | – | – | – | 18 | 18 | ||||||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||||||
Divestitures and wind-down of operations |
– | – | – | – | 1,388 | 1,388 | ||||||||||||||||||
Amortization of acquisition-related intangible assets |
2 | 15 | 18 | – | – | 35 | ||||||||||||||||||
Total non-interest expenses adjustments (Pre-tax) |
2 | 15 | 18 | – | 1,388 | 1,423 | ||||||||||||||||||
Total impact of adjusting items on net income before taxes |
2 | 15 | 18 | – | 1,406 | 1,441 | ||||||||||||||||||
Impact of adjusting items on income tax expense |
(1 | ) | (4 | ) | (5 | ) | – | (22 | ) | (32 | ) | |||||||||||||
Total impact of adjusting items on net income |
1 | 11 | 13 | – | 1,384 | 1,409 | ||||||||||||||||||
Impact of adjusting items on NCI |
– | – | – | – | (175 | ) | (175 | ) | ||||||||||||||||
Total impact of adjusting items on net income attributable to equity holders |
1 | 11 | 13 | – | 1,209 | 1,234 | ||||||||||||||||||
Adjusted net income (loss) |
$ | 1,527 | $ | 1,411 | $ | 823 | $ | 929 | $ | (256 | ) | $ | 4,434 | |||||||||||
Adjusted net income attributable to equity holders |
$ | 1,527 | $ | 1,338 | $ | 819 | $ | 930 | $ | (257 | ) | $ | 4,357 | |||||||||||
Adjusted net income attributable to common shareholders |
$ | 1,527 | $ | 1,338 | $ | 819 | $ | 930 | $ | (514 | ) | $ | 4,100 | |||||||||||
| (1) | Refer to Business Segment Review on page 22. |
10 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Constant Dollar
International Banking business segment results are analyzed on a constant dollar basis which is a
non-GAAP
measure. 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. The Bank believes that constant dollar is useful for readers to understand business performance without the impact of foreign currency translation and is used by management to assess the performance of the business segment. The tables below are computed on a basis that is different than the table “Impact of foreign currency translation” in Overview of Performance on page 17. T3 Reconciliation of International Banking’s reported results and constant dollar results
| For the three months ended | For the six months ended | |||||||||||||||||||||||||||||||||||
($ millions) |
January 31, 2026 | April 30, 2025 | April 30, 2025 | |||||||||||||||||||||||||||||||||
| Reported | Foreign exchange |
Constant dollar |
Reported | Foreign exchange |
Constant dollar |
Reported | Foreign exchange |
Constant dollar |
||||||||||||||||||||||||||||
Net interest income |
$ | 2,146 | $ | (7 | ) | $ | 2,153 | $ | 2,179 | $ | (83 | ) | $ | 2,262 | $ | 4,348 | $ | (193 | ) | $ | 4,541 | |||||||||||||||
Non-interest income |
815 | – | 815 | 780 | (27 | ) | 807 | 1,641 | (76 | ) | 1,717 | |||||||||||||||||||||||||
Total revenue |
2,961 | (7 | ) | 2,968 | 2,959 | (110 | ) | 3,069 | 5,989 | (269 | ) | 6,258 | ||||||||||||||||||||||||
Provision for credit losses |
536 | (3 | ) | 539 | 550 | (29 | ) | 579 | 1,152 | (74 | ) | 1,226 | ||||||||||||||||||||||||
Non-interest expenses |
1,460 | (4 | ) | 1,464 | 1,523 | (61 | ) | 1,584 | 3,076 | (140 | ) | 3,216 | ||||||||||||||||||||||||
Income before taxes |
965 | – | 965 | 886 | (20 | ) | 906 | 1,761 | (55 | ) | 1,816 | |||||||||||||||||||||||||
Income tax expense |
228 | 1 | 227 | 172 | (5 | ) | 177 | 361 | (12 | ) | 373 | |||||||||||||||||||||||||
Net income |
$ | 737 | $ | (1 | ) | $ | 738 | $ | 714 | $ | (15 | ) | $ | 729 | $ | 1,400 | $ | (43 | ) | $ | 1,443 | |||||||||||||||
Net income attributable to non-controlling interests in subsidiaries (NCI) |
$ | 20 | $ | – | $ | 20 | $ | 38 | $ | – | $ | 38 | $ | 73 | $ | 3 | $ | 70 | ||||||||||||||||||
Net income attributable to equity holders of the Bank |
$ | 717 | $ | (1 | ) | $ | 718 | $ | 676 | $ | (15 | ) | $ | 691 | $ | 1,327 | $ | (46 | ) | $ | 1,373 | |||||||||||||||
Other measures |
||||||||||||||||||||||||||||||||||||
Average assets ($ billions) |
$ | 219 | $ | – | $ | 219 | $ | 229 | $ | (6 | ) | $ | 235 | $ | 229 | $ | (7 | ) | $ | 236 | ||||||||||||||||
Average liabilities ($ billions) |
$ | 172 | $ | – | $ | 172 | $ | 177 | $ | (7 | ) | $ | 184 | $ | 176 | $ | (7 | ) | $ | 183 | ||||||||||||||||
Earning and
non-earning
assets, core earning assets, core net interest income and net interest margin Net interest margin
Net interest margin is a
non-GAAP
ratio that is used to measure the return generated by the Bank’s core earning assets, net of the cost of funding. Net interest margin is calculated as core net interest income divided by average core earning assets. Management uses net interest margin to measure profitability and how efficiently the Bank earns income from its core earning assets relative to the cost of funding those assets. Components of net interest margin are defined below:
Earning assets
Earning assets are defined as income generating assets which include deposits with financial institutions, trading assets, investment securities, investments in associates, securities borrowed or purchased under resale agreements, loans net of allowances, and customers’ liability under acceptances. This is a
non-GAAP
measure. Non-earning
assets Non-earning
assets are defined as cash, precious metals, derivative financial instruments, property and equipment, goodwill and intangible assets, deferred tax assets and other assets. This is a non-GAAP
measure. Core earning assets
Core earning assets are defined as interest-bearing deposits with financial institutions, investment securities and loans, net of allowances. This is a
non-GAAP
measure. The Bank believes that this measure is useful for readers as it presents the main interest-generating assets and eliminates the impact of trading businesses. Core net interest income
Core net interest income is defined as net interest income earned from core earning assets. This is a
non-GAAP
measure. | Scotiabank Second Quarter Report 2026 | 11 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T4 Calculation of net interest margin
Consolidated Bank
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Average total assets – Reported (1) |
$ |
1,517,380 |
$ | 1,497,957 | $ | 1,468,310 | $ |
1,507,297 |
$ | 1,464,194 | ||||||||||
Less: Non-earning assets |
123,695 |
120,352 | 118,403 | 121,785 |
116,547 | |||||||||||||||
Average total earning assets (1) |
$ |
1,393,685 |
$ | 1,377,605 | $ | 1,349,907 | $ |
1,385,512 |
$ | 1,347,647 | ||||||||||
Less: |
||||||||||||||||||||
Trading assets |
172,563 |
175,004 | 150,997 | 173,804 |
153,814 | |||||||||||||||
Securities purchased under resale agreements and securities borrowed |
243,408 |
225,084 | 206,266 | 234,094 |
203,554 | |||||||||||||||
Other deductions |
38,453 |
37,590 | 35,003 | 38,014 |
34,235 | |||||||||||||||
Average core earning assets (1) |
$ |
939,261 |
$ | 939,927 | $ | 957,641 | $ |
939,600 |
$ | 956,044 | ||||||||||
Net interest income – Reported |
$ |
5,521 |
$ | 5,582 | $ | 5,270 | $ |
11,103 |
$ | 10,443 | ||||||||||
Less: Non-core net interest income |
(173 |
) |
(215 | ) | (135 | ) | (388 |
) |
(335 | ) | ||||||||||
Core net interest income |
$ |
5,694 |
$ | 5,797 | $ | 5,405 | $ |
11,491 |
$ | 10,778 | ||||||||||
Net interest margin |
2.49 |
% |
2.45 | % | 2.31 | % | 2.47 |
% |
2.27 | % | ||||||||||
| (1) | Average balances represent the average of daily balances for the period. |
Canadian Banking
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Average total assets – Reported (1) |
$ |
475,068 |
$ | 471,727 | $ | 461,444 | $ |
473,370 |
$ | 460,657 | ||||||||||
Less: Non-earning assets |
4,256 |
4,392 | 4,607 | 4,326 |
4,682 | |||||||||||||||
Average total earning assets (1) |
$ |
470,812 |
$ | 467,335 | $ | 456,837 | $ |
469,044 |
$ | 455,975 | ||||||||||
Less: |
||||||||||||||||||||
Other deductions |
181 |
183 | 179 | 181 |
182 | |||||||||||||||
Average core earning assets (1) |
$ |
470,631 |
$ | 467,152 | $ | 456,658 | $ |
468,863 |
$ | 455,793 | ||||||||||
Net interest income – Reported |
$ |
2,703 |
$ | 2,734 | $ | 2,524 | $ |
5,437 |
$ | 5,171 | ||||||||||
Less: Non-core net interest income |
– |
– | – | – |
– | |||||||||||||||
Core net interest income |
$ |
2,703 |
$ | 2,734 | $ | 2,524 | $ |
5,437 |
$ | 5,171 | ||||||||||
Net interest margin |
2.36 |
% |
2.32 | % | 2.27 | % | 2.34 |
% |
2.29 | % | ||||||||||
| (1) | Average balances represent the average of daily balances for the period. |
International Banking
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Average total assets – Reported (1) |
$ |
210,553 |
$ | 219,139 | $ | 229,118 | $ |
214,917 |
$ | 228,995 | ||||||||||
Less: Non-earning assets |
13,746 |
13,644 | 13,917 | 13,694 |
14,407 | |||||||||||||||
Average total earning assets (1) |
$ |
196,807 |
$ | 205,495 | $ | 215,201 | $ |
201,223 |
$ | 214,588 | ||||||||||
Less: |
||||||||||||||||||||
Trading assets |
7,200 |
7,490 | 6,438 | 7,347 |
6,423 | |||||||||||||||
Securities purchased under resale agreements and securities borrowed |
2,125 |
2,617 | 4,243 | 2,375 |
4,219 | |||||||||||||||
Other deductions |
7,750 |
7,378 | 7,413 | 7,561 |
7,006 | |||||||||||||||
Average core earning assets (1) |
$ |
179,732 |
$ | 188,010 | $ | 197,107 | $ |
183,940 |
$ | 196,940 | ||||||||||
Net interest income – Reported |
$ |
2,094 |
$ | 2,146 | $ | 2,179 | $ |
4,240 |
$ | 4,348 | ||||||||||
Less: Non-core net interest income |
7 |
(7 | ) | 17 | – |
5 | ||||||||||||||
Core net interest income |
$ |
2,087 |
$ | 2,153 | $ | 2,162 | $ |
4,240 |
$ | 4,343 | ||||||||||
Net interest margin |
4.76 |
% |
4.54 | % | 4.50 | % | 4.65 |
% |
4.45 | % | ||||||||||
| (1) | Average balances represent the average of daily balances for the period. |
12 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Global Banking and Markets
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Average total assets – Reported (1) |
$ |
568,285 |
$ | 546,412 | $ | 501,639 | $ |
557,167 |
$ | 506,347 | ||||||||||
Less: Non-earning assets |
52,970 |
49,194 | 47,883 | 51,051 |
47,346 | |||||||||||||||
Average total earning assets (1) |
$ |
515,315 |
$ | 497,218 | $ | 453,756 | $ |
506,116 |
$ | 459,001 | ||||||||||
Less: |
||||||||||||||||||||
Trading assets |
161,255 |
163,555 | 134,690 | 162,424 |
138,224 | |||||||||||||||
Securities purchased under resale agreements and securities borrowed |
241,283 |
222,468 | 202,023 | 231,719 |
199,335 | |||||||||||||||
Other deductions |
25,071 |
24,064 | 22,410 | 24,559 |
22,898 | |||||||||||||||
Average core earning assets (1) |
$ |
87,706 |
$ | 87,131 | $ | 94,633 | $ |
87,414 |
$ | 98,544 | ||||||||||
Net interest income – Reported |
$ |
389 |
$ | 398 | $ | 368 | $ |
787 |
$ | 687 | ||||||||||
Less: Non-core net interest income |
(44 |
) |
(72 | ) | (37 | ) | (116 |
) |
(143 | ) | ||||||||||
Core net interest income |
$ |
433 |
$ | 470 | $ | 405 | $ |
903 |
$ | 830 | ||||||||||
Net interest margin |
2.03 |
% |
2.14 | % | 1.76 | % | 2.08 |
% |
1.70 | % | ||||||||||
| (1) | Average balances represent the average of daily balances for the period. |
Return on equity
Return on equity is a profitability measure that presents the net income attributable to common shareholders (annualized) as a percentage of average common shareholders’ equity.
Adjusted return on equity is a
non-GAAP
ratio which represents adjusted net income attributable to common shareholders (annualized) as a percentage of average common shareholders’ equity. Attributed capital and operating segment return on equity
The amount of common equity allocated to each operating segment is referred to as attributed capital. The attribution of capital within each operating segment is intended to approximate a percentage of the Basel III common equity capital requirements based on credit, market and operational risks and leverage inherent within each operating segment. The Bank attributes capital to its business lines to approximate 11.5% of the Basel III common equity capital requirements.
Return on equity for the operating segments is calculated as a ratio of net income attributable to common shareholders of the operating segment and the capital attributed. Management uses operating segment return on equity to evaluate the performance of its operating segments.
Adjusted return on equity for the operating segments is calculated as a ratio of adjusted net income attributable to common shareholders of the operating segment and the capital attributed. This is a
non-GAAP
ratio. T5 Return on equity by operating segment
For the three months ended April 30, 2026 |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other |
Total |
||||||||||||||||||
Reported |
||||||||||||||||||||||||
Net income attributable to common shareholders |
$ |
935 |
$ |
701 |
$ |
474 |
$ |
457 |
$ |
(99 |
) |
$ |
2,468 |
|||||||||||
Total average common equity (1) |
21,515 |
17,987 |
10,840 |
15,179 |
11,915 |
77,436 |
||||||||||||||||||
Return on equity |
17.8 |
% |
16.0 |
% |
17.9 |
% |
12.4 |
% |
nm |
(2) |
13.1 |
% | ||||||||||||
Adjusted (3) |
||||||||||||||||||||||||
Net income attributable to common shareholders |
$ |
935 |
$ |
708 |
$ |
480 |
$ |
457 |
$ |
(92 |
) |
$ |
2,488 |
|||||||||||
Return on equity |
17.8 |
% |
16.1 |
% |
18.2 |
% |
12.4 |
% |
nm |
(2) |
13.2 |
% | ||||||||||||
| (1) | Average amounts calculated using methods intended to approximate the daily average balances for the period. |
| (2) | Not meaningful. |
| (3) | Refer to Table on page 6. |
| Scotiabank Second Quarter Report 2026 | 13 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
| For the three months ended January 31, 2026 | For the three months ended April 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||||||||||||||||||||
Reported |
||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders |
$ |
960 |
$ |
717 |
$ |
481 |
$ |
545 |
$ |
(548 |
) |
$ |
2,155 |
$ |
613 |
$ |
676 |
$ |
399 |
$ |
413 |
$ |
(260 |
) |
$ |
1,841 |
||||||||||||||||||||||
Total average common equity (1) |
21,090 |
17,836 |
10,810 |
15,121 |
12,431 |
77,288 |
20,893 |
18,087 |
10,332 |
14,970 |
10,343 |
74,625 |
||||||||||||||||||||||||||||||||||||
Return on equity |
18.1 |
% |
16.0 |
% |
17.7 |
% |
14.3 |
% |
nm |
(2) |
11.1 |
% |
12.0 |
% |
15.3 |
% |
15.8 |
% |
11.3 |
% |
nm |
(2) |
10.1 |
% | ||||||||||||||||||||||||
Adjusted (3) |
||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders |
$ |
960 |
$ |
721 |
$ |
488 |
$ |
545 |
$ |
(173 |
) |
$ |
2,541 |
$ |
613 |
$ |
681 |
$ |
405 |
$ |
413 |
$ |
(215 |
) |
$ |
1,897 |
||||||||||||||||||||||
Return on equity |
18.1 |
% |
16.1 |
% |
17.9 |
% |
14.3 |
% |
nm |
(2) |
13.0 |
% |
12.0 |
% |
15.5 |
% |
16.1 |
% |
11.3 |
% |
nm |
(2) |
10.4 |
% | ||||||||||||||||||||||||
| (1) | Average amounts calculated using methods intended to approximate the daily average balances for the period. |
| (2) | Not meaningful. |
| (3) | Refer to Table on page 6. |
For the six months ended April 30, 2026 |
For the six months ended April 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other |
Total |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||||||||||||||||||||
Reported |
||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders |
$ |
1,895 |
$ |
1,418 |
$ |
955 |
$ |
1,002 |
$ |
(647 |
) |
$ |
4,623 |
$ |
1,526 |
$ |
1,327 |
$ |
806 |
$ |
930 |
$ |
(1,723 |
) |
$ |
2,866 |
||||||||||||||||||||||
Total average common equity (1) |
21,299 |
17,910 |
10,824 |
15,150 |
12,083 |
77,266 |
21,271 |
18,140 |
10,257 |
15,169 |
9,443 |
74,280 |
||||||||||||||||||||||||||||||||||||
Return on equity |
17.9 |
% |
16.0 |
% |
17.8 |
% |
13.3 |
% |
nm |
(2) |
12.1 |
% |
14.5 |
% |
14.8 |
% |
15.8 |
% |
12.4 |
% |
nm |
(2) |
7.8 |
% | ||||||||||||||||||||||||
Adjusted (3) |
||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common shareholders |
$ |
1,895 |
$ |
1,429 |
$ |
968 |
$ |
1,002 |
$ |
(265 |
) |
$ |
5,029 |
$ |
1,527 |
$ |
1,338 |
$ |
819 |
$ |
930 |
$ |
(514 |
) |
$ |
4,100 |
||||||||||||||||||||||
Return on equity |
17.9 |
% |
16.1 |
% |
18.0 |
% |
13.3 |
% |
nm |
(2) |
13.1 |
% |
14.5 |
% |
14.9 |
% |
16.1 |
% |
12.4 |
% |
nm |
(2) |
11.1 |
% | ||||||||||||||||||||||||
| (1) | Average amounts calculated using methods intended to approximate the daily average balances for the period. |
| (2) | Not meaningful. |
| (3) | Refer to Table on page 6. |
Return on tangible common equity
Return on tangible common equity (ROTCE) is a profitability measure that is calculated by dividing the net income attributable to common shareholders (annualized), adjusted for the amortization of intangibles (excluding software), by average tangible common equity. Tangible common equity is defined as common shareholders’ equity adjusted for goodwill and intangible assets (excluding software), net of deferred taxes. This is a
non-GAAP
ratio. Management uses ROTCE to assess the Bank’s performance and ability to use its tangible common equity to generate returns. Adjusted return on tangible common equity represents adjusted net income attributable to common shareholders as a percentage of average tangible common equity. This is a
non-GAAP
ratio. 14 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T6 Return on tangible common equity
| For the three months ended | For the six months ended | |||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported |
||||||||||||||||||||
Average common equity – reported (1) |
$ |
77,436 |
$ | 77,288 | $ | 74,625 | $ |
77,266 |
$ | 74,280 | ||||||||||
Average goodwill (1)(2) |
(9,959 |
) |
(9,984 | ) | (9,962 | ) | (9,968 |
) |
(9,628 | ) | ||||||||||
Average acquisition-related intangibles (net of deferred tax) (1) |
(3,532 |
) |
(3,545 | ) | (3,586 | ) | (3,539 |
) |
(3,592 | ) | ||||||||||
Average tangible common equity (1) |
$ |
63,945 |
$ | 63,759 | $ | 61,077 | $ |
63,759 |
$ | 61,060 | ||||||||||
Net income attributable to common shareholders – reported |
$ |
2,468 |
$ | 2,155 | $ | 1,841 | $ |
4,623 |
$ | 2,866 | ||||||||||
Amortization of acquisition-related intangible assets (after-tax) (3) |
20 |
19 | 20 | 39 |
34 | |||||||||||||||
Net income attributable to common shareholders adjusted for amortization of acquisition-related intangible assets (after-tax) |
$ |
2,488 |
$ | 2,174 | $ | 1,861 | $ |
4,662 |
$ | 2,900 | ||||||||||
Return on tangible common equity – reported |
16.0 |
% |
13.5 | % | 12.5 | % | 14.7 |
% |
9.6 | % | ||||||||||
Adjusted (3) |
||||||||||||||||||||
Adjusted net income attributable to common shareholders |
$ |
2,488 |
$ | 2,541 | $ | 1,897 | $ |
5,029 |
$ | 4,100 | ||||||||||
Return on tangible common equity – adjusted |
16.0 |
% |
15.8 | % | 12.7 | % | 15.9 |
% |
13.5 | % | ||||||||||
| (1) | Average amounts calculated using methods intended to approximate the daily average balances for the period. |
| (2) | Includes imputed goodwill from investments in associates. |
| (3) | Refer to Table on page 6. |
Adjusted productivity ratio
Adjusted productivity ratio represents adjusted
non-interest
expenses as a percentage of adjusted total revenue. This is a non-GAAP
ratio. Management uses the productivity ratio as a measure of the Bank’s efficiency. A lower ratio indicates improved productivity.
Adjusted operating leverage
This financial metric measures the rate of growth in adjusted total revenue less the rate of growth in adjusted
non-interest
expenses. This is a non-GAAP
ratio. Management uses operating leverage as a way to assess the degree to which the Bank can increase operating income by increasing revenue.
Adjusted effective tax rate
The adjusted effective tax rate is calculated by dividing adjusted income tax expense by adjusted income before taxes. This is a
non-GAAP
ratio. | Scotiabank Second Quarter Report 2026 | 15 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Overview of Performance
Financial performance summary
The Bank’s reported net income this quarter was $2,632 million, compared to $2,032 million in the same period last year and $2,299 million in the prior quarter. Diluted earnings per share were $2.00 compared to $1.48 in the same period last year and $1.73 in the prior quarter. Return on equity was 13.1%, compared to 10.1% in the same period last year and 11.1% in the prior quarter.
Adjusted net income was $2,652 million compared to $2,072 million in the same period last year, an increase of $580 million or 28%. The increase was due mainly to higher revenues and lower provision for credit losses, partly offset by higher
non-interest
expenses. Compared to last quarter, adjusted net income decreased 2% from $2,695 million. The decrease was due mainly to lower revenues and higher provision for credit losses, partly offset by lower
non-interest
expenses. The decrease was also due to the impact of three fewer days in the quarter. Adjusted diluted earnings per share were $2.02 compared to $1.52 last year and $2.05 last quarter. Adjusted return on equity was 13.2% compared to 10.4% a year ago and 13% last quarter.
Refer to
Non-GAAP
Measures starting on page 5 for details of adjustments. Significant developments
Sale of banking operations in Colombia, Costa Rica and Panama
In Q1 2026, the Bank completed the sale of its banking operations in Colombia, Costa Rica and Panama to Davivienda Group S.A. in exchange for a 20.3% ownership stake in the combined Davivienda Group S.A.
Upon closing, the Bank recognized an additional loss of $434 million ($377 million
after-tax)
recorded in the Other segment for this transaction. This loss primarily represents the release of cumulative foreign currency translation losses inclusive of hedges. As of October 31, 2025, the Bank recognized an impairment loss of $1,422 million in non-interest
expense and a credit of $45 million in non-interest
income (collectively $1,342 million after-tax).
For further details, please refer to Note 19 of the condensed interim consolidated financial statements. Economic summary and outlook
The global economy remains resilient in the face of trade and geopolitical uncertainty, though activity is expected to grow at a slower and more uneven pace in 2026 before improving modestly in 2027. The outlook is increasingly shaped by differing regional trade and commodity exposures, alongside the challenges facing fiscal and monetary policymakers as economies contend with persistent inflation pressures and growth headwinds. Key to the outlook are developments in the Middle East given their implications for global commodity markets and supply chains. While not the baseline forecast, an extended conflict would imply a weaker global outlook.
In the United States, economic growth is expected to slow modestly in 2026 as household spending cools amid a softening labour market and increased uncertainty. Growth is forecast to ease to 1.9% in 2026, before edging up to 2.1% in 2027, supported by robust business investment, particularly in the technology sector, and resilient equity markets. Recent trade developments are expected to have only a limited net impact on the outlook, as slightly lower effective tariff rates are offset by increased uncertainty. Inflation is expected to remain above target in the near term, reflecting persistent underlying pressures, impact of tariffs, and higher oil prices. This limits the scope for monetary easing, with the Federal Reserve expected to ease policy even more cautiously, to 3.5% by the end of 2026 and 3.25% by the end of 2027.
Canada’s overall negative GDP growth reported in late 2025 masked firm underlying domestic demand, though the weak overall figure leaves a softer starting point for 2026 growth. Weak labour and trade data early in the year suggest some short-term softness, but momentum is expected to build as the year advances, supporting a recovery through 2027. Real GDP growth is expected to ease to 1.3% in 2026 before recovering to 2.0% in 2027. Canada remains relatively less exposed to U.S. tariffs than many economies due to CUSMA exemptions, though sector-specific measures continue to weigh on the automotive, steel, aluminum, forestry, and related industries. Higher oil prices support national income but also raise household costs, raise inflation, and negatively impact household and business sentiment. The Bank of Canada is expected to remove monetary stimulus more decisively to limit upside inflation risks, raising the policy rate to 3.0% by
year-end.
However, the outlook remains highly sensitive to CUSMA negotiations and geopolitical developments. Across Latin America, domestic policy and external shocks continue to drive diverging economic performances, with developments in the Middle East a key factor impacting the outlook in the region. While Mexico’s economy exceeded expectations at the end of 2025, activity softened entering 2026 amid cautious investment trends, fiscal consolidation efforts, and elevated uncertainty, including surrounding CUSMA negotiations and domestic reforms. Labour market indicators and declining remittance transactions point to softer supports for consumption ahead. Despite persistent inflation and upside risks, the recent easing by Banxico underscores growing concerns over slowing growth prospects. Peru remains better positioned, supported by strong mining activity and still-resilient business confidence despite rising inflation expectations. A temporary disruption to domestic energy supply following a key gas pipeline leak, combined with higher global energy prices, added to near-term inflation pressures and posed risks to domestic momentum, though Peru’s export sector is expected to benefit from firmer commodity prices. Chile has seen a loss of momentum amid softer domestic demand, weak labour market conditions, and elevated inflation pressures, which continue to weigh on activity and consumption. More broadly, regional central banks are expected to remain cautious as global financial markets, energy prices, and geopolitical risks continue to complicate the policy environment.
16 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Impact of foreign currency translation
The table below reflects the estimated impact of foreign currency translation on key income statement items and is computed on a basis that is different than the “Constant dollar” table in
Non-GAAP
Measures on page 11. T7 Impact of foreign currency translation
| Average exchange rate | % Change | |||||||||||||||||||
| For the three months ended | April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30, 2026 vs. January 31, 2026 |
April 30, 2026 vs. April 30, 2025 |
|||||||||||||||
U.S. dollar/Canadian dollar |
0.729 |
0.721 | 0.704 | 1.1 | % | 3.6 | % | |||||||||||||
Mexican Peso/Canadian dollar |
12.769 |
13.010 | 14.240 | (1.9 | )% | (10.3 | )% | |||||||||||||
Peruvian Sol/Canadian dollar |
2.494 |
2.427 | 2.594 | 2.8 | % | (3.9 | )% | |||||||||||||
Colombian Peso/Canadian dollar |
2,676.373 |
2,708.926 | 2,944.467 | (1.2 | )% | (9.1 | )% | |||||||||||||
Chilean Peso/Canadian dollar |
650.724 |
656.612 | 669.254 | (0.9 | )% | (2.8 | )% | |||||||||||||
| Average exchange rate | % Change | |||||||||||||||||||
| For the six months ended | April 30 2026 |
April 30 2025 |
April 30, 2026 vs. April 30, 2025 |
|||||||||||||||||
U.S. dollar/Canadian dollar |
0.725 |
0.704 | 3.0 | % | ||||||||||||||||
Mexican Peso/Canadian dollar |
12.891 |
14.293 | (9.8 | )% | ||||||||||||||||
Peruvian Sol/Canadian dollar |
2.460 |
2.618 | (6.0 | )% | ||||||||||||||||
Colombian Peso/Canadian dollar |
2,692.950 |
3,008.152 | (10.5 | )% | ||||||||||||||||
Chilean Peso/Canadian dollar |
653.714 |
681.682 | (4.1 | )% | ||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||
| Impact on net income (1) ($ millions except EPS) |
April 30, 2026 vs. April 30, 2025 |
April 30, 2026 vs. January 31, 2026 |
April 30, 2026 vs. April 30, 2025 |
|||||||||||||||||
Net interest income |
$ | 71 | $ | 4 | $ | 174 | ||||||||||||||
Non-interest income(2) |
50 | 50 | 125 | |||||||||||||||||
Total revenue |
121 | 54 | 299 | |||||||||||||||||
Non-interest expenses |
(36 | ) | 2 | (33 | ) | |||||||||||||||
Other items (net of tax) (2) |
(28 | ) | (15 | ) | (101 | ) | ||||||||||||||
Net income |
$ | 57 | $ | 41 | $ | 165 | ||||||||||||||
Earnings per share (diluted) |
$ | 0.05 | $ | 0.03 | $ | 0.13 | ||||||||||||||
Impact by business line ($ millions) |
||||||||||||||||||||
Canadian Banking |
$ | – | $ | – | $ | (3 | ) | |||||||||||||
International Banking (2) |
76 | 37 | 101 | |||||||||||||||||
Global Wealth Management |
3 | 1 | 7 | |||||||||||||||||
Global Banking and Markets |
(10 | ) | (3 | ) | (15 | ) | ||||||||||||||
Other (2) |
(12 | ) | 6 | 75 | ||||||||||||||||
Net income |
$ | 57 | $ | 41 | $ | 165 | ||||||||||||||
| (1) | Includes the impact of all currencies. |
| (2) | Includes the impact of foreign currency hedges. |
| Scotiabank Second Quarter Report 2026 | 17 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Group Financial Performance
T8 Group Financial Performance
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
5,521 |
$ | 5,582 | $ | 5,270 | $ |
11,103 |
$ | 10,443 | ||||||||||
Non-interest income |
4,316 |
4,064 | 3,810 | 8,380 |
8,009 | |||||||||||||||
Total revenue |
9,837 |
9,646 | 9,080 | 19,483 |
18,452 | |||||||||||||||
Provision for credit losses |
1,217 |
1,176 | 1,398 | 2,393 |
2,560 | |||||||||||||||
Non-interest expenses |
5,189 |
5,299 | 5,110 | 10,488 |
11,601 | |||||||||||||||
Income before taxes |
3,431 |
3,171 | 2,572 | 6,602 |
4,291 | |||||||||||||||
Income tax expense |
799 |
872 | 540 | 1,671 |
1,266 | |||||||||||||||
Net income |
$ |
2,632 |
$ | 2,299 | $ | 2,032 | $ |
4,931 |
$ | 3,025 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
37 |
$ | 12 | $ | 56 | $ |
49 |
$ | (98 | ) | |||||||||
Net income attributable to equity holders of the Bank |
$ |
2,595 |
$ | 2,287 | $ | 1,976 | $ |
4,882 |
$ | 3,123 | ||||||||||
Other financial data and measures |
||||||||||||||||||||
Return on equity (1) |
13.1 |
% |
11.1 | % | 10.1 | % | 12.1 |
% |
7.8 | % | ||||||||||
Net interest margin (2) |
2.49 |
% |
2.45 | % | 2.31 | % | 2.47 |
% |
2.27 | % | ||||||||||
Effective tax rate (1) |
23.3 |
% |
27.5 | % | 21.0 | % | 25.3 |
% |
29.5 | % | ||||||||||
Provision for credit losses – performing (Stage 1 and 2) |
$ |
88 |
$ | 73 | $ | 346 | $ |
161 |
$ | 444 | ||||||||||
Provision for credit losses – impaired (Stage 3) |
$ |
1,129 |
$ | 1,103 | $ | 1,052 | $ |
2,232 |
$ | 2,116 | ||||||||||
Provision for credit losses as a percentage of average net loans and acceptances (annualized) (1) |
0.66 |
% |
0.61 | % | 0.75 | % | 0.63 |
% |
0.68 | % | ||||||||||
Provision for credit losses on impaired loans as a percentage of average net loans and acceptances (annualized) (1) |
0.61 |
% |
0.58 | % | 0.57 | % | 0.59 |
% |
0.56 | % | ||||||||||
Net write-offs as a percentage of average net loans and acceptances (annualized) (1) |
0.52 |
% |
0.49 | % | 0.50 | % | 0.51 |
% |
0.50 | % | ||||||||||
| (1) | Refer to Glossary on page 57 for the description of the measure. |
| (2) | Refer to Non-GAAP Measures starting on page 5. |
T8A Adjusted Group Financial Performance
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Adjusted Results (1) |
||||||||||||||||||||
Net interest income |
$ |
5,521 |
$ | 5,582 | $ | 5,270 | $ |
11,103 |
$ | 10,443 | ||||||||||
Non-interest income |
4,324 |
4,495 | 3,828 | 8,819 |
8,027 | |||||||||||||||
Total revenue |
9,845 |
10,077 | 9,098 | 19,922 |
18,470 | |||||||||||||||
Provision for credit losses |
1,217 |
1,176 | 1,398 | 2,393 |
2,560 | |||||||||||||||
Non-interest expenses |
5,171 |
5,273 | 5,067 | 10,444 |
10,178 | |||||||||||||||
Income before taxes |
3,457 |
3,628 | 2,633 | 7,085 |
5,732 | |||||||||||||||
Income tax expense |
805 |
933 | 561 | 1,738 |
1,298 | |||||||||||||||
Net income |
$ |
2,652 |
$ | 2,695 | $ | 2,072 | $ |
5,347 |
$ | 4,434 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
37 |
$ | 22 | $ | 40 | $ |
59 |
$ | 77 | ||||||||||
Net income attributable to equity holders of the Bank |
$ |
2,615 |
$ | 2,673 | $ | 2,032 | $ |
5,288 |
$ | 4,357 | ||||||||||
| (1) | Refer to Non-GAAP Measures starting on page 5 for adjusted results. |
18 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T8B Impact of Divested Operations
On December 1, 2025, the Bank completed the previously announced sale of its banking operations in Colombia, Costa Rica and Panama to Davivienda Group S.A. In addition, on February 28, 2025, the Bank completed the sale of CrediScotia Financiera S.A. (Peru), which was announced in fiscal 2024. The table below reflects the earnings impact of these operations in the current and prior fiscal periods. For further details on divestitures, refer to Note 19 of the condensed interim consolidated financial statements.
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Net interest income |
$ |
– |
$ | 85 | $ | 259 | $ |
85 |
$ | 550 | ||||||||||
Non-interest income |
– |
45 | 132 | 45 |
276 | |||||||||||||||
Total Revenue |
– |
130 | 391 | 130 |
826 | |||||||||||||||
Provision for credit losses |
– |
39 | 118 | 39 |
261 | |||||||||||||||
Non-interest expenses |
– |
88 | 246 | 88 |
520 | |||||||||||||||
Income before taxes |
– |
3 | 27 | 3 |
45 | |||||||||||||||
Income tax expenses |
– |
2 | 12 | 2 |
15 | |||||||||||||||
Net Income |
$ |
– |
$ | 1 | $ | 15 | $ |
1 |
$ | 30 | ||||||||||
Net income attributable to non-controlling interest in subsidiaries |
$ |
– |
$ | 1 | $ | 1 | $ |
1 |
$ | (4 | ) | |||||||||
Net income attributable to equity holders of the Bank |
$ |
– |
$ | – | $ | 14 | $ |
– |
$ | 34 | ||||||||||
| For the three months ended | For the six months ended |
|||||||||||
| (Unaudited) ($ millions) |
April 30, 2026 vs. January 31, 2026 |
April 30, 2026 vs. April 30, 2025 |
April 30, 2026 vs. April 30, 2025 |
|||||||||
Net interest income |
$ | (85 | ) | $ | (259 | ) | $ | (465 | ) | |||
Non-interest income |
(45 | ) | (132 | ) | (231 | ) | ||||||
Total revenue |
(130 | ) | (391 | ) | (696 | ) | ||||||
Provision for credit losses |
39 | 118 | 222 | |||||||||
Non-interest expenses |
88 | 246 | 432 | |||||||||
Income before taxes |
(3 | ) | (27 | ) | (42 | ) | ||||||
Income tax expenses |
2 | 12 | 13 | |||||||||
Net income |
$ | (1 | ) | $ | (15 | ) | $ | (29 | ) | |||
Net income attributable to non-controlling interest in subsidiaries |
$ | 1 | $ | 1 | $ | (5 | ) | |||||
Net income attributable to equity holders of the Bank |
$ | – | $ | (14 | ) | $ | (34 | ) | ||||
Impact on diluted EPS (in dollars) |
$ | – | $ | (0.01 | ) | $ | (0.03 | ) | ||||
Net income
Q2 2026 vs Q2 2025
Net income was $2,632 million compared to $2,032 million, an increase of $600 million or 30%. The increase was driven primarily by higher revenues and lower provision for credit losses, partly offset by higher
non-interest
expenses and income taxes. Q2 2026 vs Q1 2026
Net income was $2,632 million compared to $2,299 million, an increase of $333 million or 14%. Included in prior quarter non-interest income is a loss of $423 million recognized upon the completion of the sale of the banking operations in Colombia, Costa Rica and Panama. The increase was driven primarily by higher
non-interest
income, and lower non-interest
expenses and income taxes. Adjusted net income was $2,652 million compared to $2,695 million, a decrease of $43 million or 2%. The decrease was driven primarily by lower revenues, partly offset by lower
non-interest
expenses and lower income taxes. The decrease was also due to the impact of three fewer days in the quarter. Year-to-date
Year-to-date
Net income was $4,931 million compared to $3,025 million, an increase of $1,906 million or 63%. Included in current year non-interest income is a loss of $423 million recognized upon the completion of the sale of the banking operations in Colombia, Costa Rica and Panama. Included in prior year non-interest expenses is an impairment loss of $1,388 million related to the announced sale of these operations. The increase was driven primarily by higher revenues, and lower provision for credit losses and lower
non-interest
expenses. This was partly offset by higher income taxes. Adjusted net income was $5,347 million compared to $4,434 million, an increase of $913 million or 21%. The increase was driven primarily by higher revenues and lower provision for credit losses. This was partly offset by higher
non-interest
expenses and income taxes. Total revenue
Q2 2026 vs Q2 2025
Revenues were $9,837 million compared to $9,080 million, an increase of $757 million or 8%.
Net interest income was $5,521 million compared to $5,270 million, an increase of $251 million or 5%. The impact of divested operations was a decrease of $259 million or 5%. The remaining increase of 10% was driven primarily by a higher net interest margin and the positive impact of foreign currency translation.
The net interest margin was 2.49%, an increase of 18 basis points. The impact of divested operations was a decrease of six basis points. The remaining increase of 24 basis points was due primarily to higher margins across all business segments and lower funding costs.
Non-interest
income was $4,316 million compared to $3,810 million, an increase of $506 million or 13%. Adjusted non-interest
income was $4,324 million compared to $3,828 million, an increase of $496 million or 13%. The impact of divested operations was a decrease of $132 million or 3%. The remaining increase of 16% was due primarily to higher wealth management revenues, investment gains, income from associated corporations and non-trading
foreign exchange fees. | Scotiabank Second Quarter Report 2026 | 19 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Q2 2026 vs Q1 2026
Revenues were $9,837 million compared to $9,646 million, an increase of $191 million or 2%.
Net interest income was $5,521 million compared to $5,582 million, a decrease of $61 million or 1%, of which the impact of divested operations was a decrease of $85 million or 2%. The remaining increase of 1% was due to higher net interest margin, higher net interest from capital markets activities, as well as loan growth, partly offset by the impact of three fewer days in the quarter.
The net interest margin was 2.49%, an increase of four basis points. The impact of divested operations was a decrease of two basis points. The remaining increase of six basis points was driven by higher margins in International Banking and Canadian Banking, as well as lower funding costs, partly offset by lower margins in Global Banking and Markets.
Non-interest
income was $4,316 million compared to $4,064 million, an increase of $252 million or 6%. Included in last quarter’s non-interest
income was a loss of $423 million upon the completion of the sale of the banking operations in Colombia, Costa Rica and Panama. Adjusted non-interest
income was $4,324 million compared to $4,495 million, a decrease of $171 million or 4%, of which the impact of divested operations was a decrease of $45 million or 1%. The remaining decrease of 3% was due primarily to lower trading revenues and banking revenues, partly offset by higher investment gains. Year-to-date
Year-to-date
Revenues were $19,483 million compared to $18,452 million, an increase of $1,031 million or 6%.
Net interest income was $11,103 million compared to $10,443 million, an increase of $660 million or 6%. The impact of divested operations was a decrease of $465 million or 4%. The remaining increase of 10% was due primarily to higher net interest margin and the positive impact of foreign currency translation.
The net interest margin was 2.47%, an increase of 20 basis points. The impact of divested operations was a decrease of five basis points. The remaining increase of 25 basis points was due primarily to higher margins across all business segments and lower funding costs.
Non-interest
income was $8,380 million compared to $8,009 million, an increase of $371 million or 5%. Adjusted non-interest
income was $8,819 million compared to $8,027 million, an increase of $792 million or 10%. The impact of divested operations was a decrease of $231 million or 3%. The remaining increase of 13% was due primarily to higher wealth management revenues, investment gains, income from associated corporations and trading revenues. Provision for credit losses
Q2 2026 vs Q2 2025
The provision for credit losses was $1,217 million compared to $1,398 million, a decrease of $181 million. The provision for credit losses ratio decreased by nine basis point to 66 basis points.
The provision for credit losses on performing loans was $88 million compared to $346 million, a decrease of $258 million. The provision this quarter was due primarily to the impact of the unfavourable macroeconomic outlook impacting the Canadian Banking portfolios, as well as credit migration in the International commercial portfolio. Last year, the Bank substantially increased its provision for credit losses on performing loans to reflect the uncertainty related to U.S. tariffs due to the deterioration in macroeconomic indicators, mainly impacting the Canadian retail and commercial portfolios.
The provision for credit losses on impaired loans was $1,129 million compared to $1,052 million, an increase of $77 million. The provision for credit losses ratio on impaired loans was 61 basis points, an increase of four basis points. The increase was due primarily to higher formations in Canadian Banking and in the International corporate portfolios, mainly related to one account.
Q2 2026 vs Q1 2026
The provision for credit losses was $1,217 million compared to $1,176 million, an increase of $41 million. The provision for credit losses ratio increased by five basis points to 66 basis points.
The provision for credit losses on performing loans was $88 million compared to $73 million, an increase of $15 million. The provision this quarter was due primarily to the unfavourable macroeconomic outlook impacting the Canadian Banking portfolios, as well as credit migration in the International commercial portfolio.
The provision for credit losses on impaired loans was $1,129 million compared to $1,103 million, an increase of $26 million. The provision for credit losses ratio on impaired loans was 61 basis points, an increase of three basis points. The increase was due primarily to higher formations in the International corporate portfolio.
Year-to-date
Year-to-date
The provision for credit losses was $2,393 million compared to $2,560 million. The provision for credit losses ratio decreased by five basis points to 63 basis points.
Provision for credit losses on performing loans was $161 million, compared to $444 million. The provision this period was driven by credit migration in the Canadian and International portfolios, as well as retail portfolio growth mainly in Chile and Mexico. This was partly offset by a more favourable macroeconomic outlook impacting the International commercial portfolio. The prior period reflected the impact of the uncertainty related to U.S. tariffs, mainly impacting Canadian Banking.
The provision for credit losses on impaired loans was $2,232 million compared to $2,116 million, an increase of $116 million. The provision for credit losses ratio on impaired loans was 59 basis points, an increase of three basis points. The increase in provision this year was due to higher formations in Canadian Banking and corporate portfolios.
Non-interest expenses
Q2 2026 vs Q2 2025
Non-interest
expenses were $5,189 million compared to $5,110 million, an increase of $79 million or 2%. Adjusted non-interest
expenses were $5,171 million compared to $5,067 million, an increase of $104 million or 2%. The impact of divested operations was a decrease of $246 million or 5%. The remaining increase of 7% was due primarily to higher performance-based compensation and personnel costs, higher technology and advertising and business development costs to support strategic growth initiatives, and the negative impact of foreign currency translation. This was partly offset by lower professional fees. The productivity ratio was 52.8% compared to 56.3%. The adjusted productivity ratio was 52.5% compared to 55.7%.
20 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Q2 2026 vs Q1 2026
Non-interest
expenses were $5,189 million compared to $5,299 million, a decrease of $110 million or 2%. Adjusted non-interest
expenses were $5,171 million compared to $5,273 million, a decrease of $102 million or 2%, of which the impact of divested operations was a decrease of $88 million or 2%. The remaining decrease was due primarily to seasonally lower share-based compensation and the impact of three fewer days in the quarter, partly offset by higher technology expenses to support strategic growth initiatives. The productivity ratio was 52.8% compared to 54.9%. The adjusted productivity ratio was 52.5% compared to 52.3%.
Year-to-date
Year-to-date
Non-interest
expenses were $10,488 million compared to $11,601 million, a decrease of $1,113 million or 10%. Adjusted non-interest
expenses were $10,444 million compared to $10,178 million, an increase of $266 million or 3%. The impact of divested operations was a decrease of $432 million or 4%. The remaining increase of 7% was due primarily to higher performance and stock-based compensation and personnel costs, higher technology and advertising and business development costs to support strategic growth initiatives and the negative impact of foreign currency translation. This was partly offset by lower professional fees. The productivity ratio was 53.8% compared to 62.9%. The adjusted productivity ratio was 52.4% compared to 55.1%. Operative leverage was positive 15.2% on a reported basis and positive 5.2% on an adjusted basis.
Taxes
Q2 2026 vs Q2 2025
The effective tax rate was 23.3% compared to 21.0%, due primarily to a favourable adjustment in the prior year and higher withholding taxes in the current year.
Q2 2026 vs Q1 2026
The effective tax rate was 23.3% compared to 27.5%, due primarily to the loss related to the sale of the banking operations in Colombia, Costa Rica and Panama in the previous quarter, higher inflationary adjustments in Mexico and Chile and higher income in lower tax jurisdictions. On an adjusted basis the effective tax rate was 23.3% compared to 25.7%, due primarily to higher inflationary adjustments in Mexico and Chile and higher income in lower tax jurisdictions.
Year-to-date
Year-to-date
The effective tax rate was 25.3% compared to 29.5%, due primarily to the higher loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama in the prior year, partly offset by a favourable adjustment in the prior year, lower income in lower tax jurisdictions and higher withholding taxes. On an adjusted basis the effective rate was 24.5% compared to 22.7%, due primarily to a favourable adjustment in the prior year, lower income in lower tax jurisdictions, and higher withholding taxes.
| Scotiabank Second Quarter Report 2026 | 21 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Business Segment Review
The Bank’s businesses are grouped into four business lines: Canadian Banking, International Banking, Global Wealth Management and Global Banking and Markets. The Bank’s other smaller operating segments and corporate adjustments are included in the Other segment.
Segment measurement methodologies
Constant Dollar Basis
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 thereby eliminating the impact of foreign currency translation. The Bank believes that reporting in constant dollar is useful for readers in assessing ongoing business performance.
Taxable Equivalent Basis
Effective Q1 2026, the Bank no longer analyzes business segment revenues on a taxable equivalent basis (TEB). Under the TEB methodology,
tax-exempt
income earned on certain securities reported in either net interest income or non-interest
income was grossed up to an equivalent before tax basis. It also grossed up net income from associated corporations to normalize the effective tax rate in the business lines.Corresponding increases were made to the provision for income taxes; hence, there was no impact on the segment’s net income. The elimination of the TEB gross-up
was recorded in the Other segment, resulting in no impact on the consolidated results. The TEB gross-up
recorded in the business segments has significantly decreased in recent quarters as the Bank no longer claims the dividend received deduction on Canadian shares, following the enactment of Bill C-59
in January 2024. The changes have been applied on a prospective basis, prior period results included a TEB gross-up
as follows: T9 TEB gross-up |
||||||||||||||||||||||||||||||||
For the three months ended |
||||||||||||||||||||||||||||||||
($ millions) |
October 31 2025 |
July 31 2025 |
April 30 2025 |
January 31 2025 |
October 31 2024 |
July 31 2024 |
April 30 2024 |
January 31 2024 |
||||||||||||||||||||||||
Net interest income |
$ | – | $ | – | $ | – | $ | – | $ | – | $ | 1 | $ | – | $ | 2 | ||||||||||||||||
Non-interest income |
9 | 8 | 9 | 8 | 10 | 13 | 8 | 48 | ||||||||||||||||||||||||
Total revenue and provision for taxes |
$ | 9 | $ | 8 | $ | 9 | $ | 8 | $ | 10 | $ | 14 | $ | 8 | $ | 50 | ||||||||||||||||
Other segment
The Other segment includes Group Treasury, investments in certain associated corporations, and smaller operating segments and corporate items which are not allocated to a business line. Group Treasury is primarily responsible for balance sheet, liquidity and interest rate risk management, which includes the Bank’s wholesale funding activities.
Funds transfer pricing
Funds transfer pricing (FTP) is the process by which the Bank prices intra-company borrowing or lending between the business segments and the Other segment. Through consideration of interest rate and liquidity risk characteristics of assets, liabilities and
off-balance
sheet exposures, this process aims to manage these risks through Group Treasury and enable risk-adjusted management reporting of business segment results. Periodically, the methodology and assumptions used in the FTP process are adjusted to reflect customer behaviours, market dynamics and other factors, which may impact the financial results of the business segments. 22 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Canadian Banking |
||||||||||||||||||||
T10 Canadian Banking financial performance |
||||||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
2,703 |
$ | 2,734 | $ | 2,524 | $ |
5,437 |
$ | 5,171 | ||||||||||
Non-interest income |
780 |
780 | 711 | 1,560 |
1,476 | |||||||||||||||
Total revenue |
3,483 |
3,514 | 3,235 | 6,997 |
6,647 | |||||||||||||||
Provision for credit losses |
575 |
576 | 805 | 1,151 |
1,343 | |||||||||||||||
Non-interest expenses |
1,620 |
1,615 | 1,581 | 3,235 |
3,192 | |||||||||||||||
Income before taxes |
1,288 |
1,323 | 849 | 2,611 |
2,112 | |||||||||||||||
Income tax expense |
353 |
363 | 236 | 716 |
586 | |||||||||||||||
Net income |
$ |
935 |
$ | 960 | $ | 613 | $ |
1,895 |
$ | 1,526 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
– |
$ | – | $ | – | $ |
– |
$ | – | ||||||||||
Net income attributable to equity holders of the Bank |
$ |
935 |
$ | 960 | $ | 613 | $ |
1,895 |
$ | 1,526 | ||||||||||
Other financial data and measures |
||||||||||||||||||||
Return on equity (1) |
17.8 |
% |
18.1 | % | 12.0 | % | 17.9 |
% |
14.5 | % | ||||||||||
Net interest margin (2) |
2.36 |
% |
2.32 | % | 2.27 | % | 2.34 |
% |
2.29 | % | ||||||||||
Effective tax rate (1) |
27.4 |
% |
27.4 | % | 27.8 | % | 27.4 |
% |
27.8 | % | ||||||||||
Provision for credit losses – performing (Stage 1 and 2) |
$ |
59 |
$ | 23 | $ | 317 | $ |
82 |
$ | 368 | ||||||||||
Provision for credit losses – impaired (Stage 3) |
$ |
516 |
$ | 553 | $ | 488 | $ |
1,069 |
$ | 975 | ||||||||||
Provision for credit losses as a percentage of average net loans and acceptances (annualized) (1) |
0.50 |
% |
0.49 | % | 0.72 | % | 0.50 |
% |
0.60 | % | ||||||||||
Provision for credit losses on impaired loans as a percentage of average net loans and acceptances (annualized) (1) |
0.45 |
% |
0.47 | % | 0.44 | % | 0.46 |
% |
0.43 | % | ||||||||||
Net write-offs as a percentage of average net loans and acceptances (annualized) (1) |
0.44 |
% |
0.40 | % | 0.38 | % | 0.42 |
% |
0.38 | % | ||||||||||
Average assets ($ billions) |
$ |
475 |
$ | 472 | $ | 461 | $ |
473 |
$ | 461 | ||||||||||
Average liabilities ($ billions) |
$ |
374 |
$ | 378 | $ | 384 | $ |
376 |
$ | 385 | ||||||||||
| (1) | Refer to Glossary on page 57 for the description of the measure. |
| (2) | Refer to Non-GAAP Measures starting on page 5. |
Net income
Q2 2026 vs Q2 2025
Net income attributable to equity holders was $935 million compared to $613 million, an increase of 53%. The increase was driven primarily by higher revenues and lower provision for credit losses on performing loans, partly offset by higher
non-interest
expenses. Q2 2026 vs Q1 2026
Net income attributable to equity holders was $935 million compared to $960 million, a decrease of 3%. The decrease was driven primarily by lower net interest income impacted by three fewer days in the quarter.
Year-to-date
Year-to-date
Net income attributable to equity holders was $1,895 million compared to $1,526 million, an increase of 24%. The increase was driven primarily by higher revenues and lower provision for credit losses on performing loans, partly offset by higher
non-interest
expenses. Average assets
Q2 2026 vs Q2 2025
Average assets were $475 billion compared to $461 billion. The growth included $12 billion or 4% in residential mortgages and $2 billion or 1% in commercial and small business loans.
Q2 2026 vs Q1 2026
Average assets were $475 billion compared to $472 billion. The growth included $2 billion or 1% in residential mortgages and $2 billion or 2% in commercial and small business loans.
Year-to-date
Year-to-date
Average assets were $473 billion compared to $461 billion. The growth included $13 billion or 5% in residential mortgages.
Average liabilities
Q2 2026 vs Q2 2025
Average liabilities were $374 billion compared to $384 billion. The decrease included a 10% reduction in personal and and savings accounts.
non-personal
term deposits as clients shifted toward higher yielding savings and mutual funds products, partly offset by an increase of 3% in personal day-to-day
| Scotiabank Second Quarter Report 2026 | 23 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Q2 2026 vs Q1 2026
Average liabilities were $374 billion compared to $378 billion. The decrease was driven primarily by a $3 billion or 2% reduction in
non-personal
deposits, both term and demand accounts. Year-to-date
Year-to-date
Average liabilities were $376 billion compared to $385 billion. The decrease included a 10% reduction in personal and and savings accounts.
non-personal
term deposits, partly offset by an increase of 4% in personal day-to-day
Total revenue
Q2 2026 vs Q2 2025
Revenues were $3,483 million compared to $3,235 million, an increase of 8%.
Net interest income was $2,703 million compared to $2,524 million, an increase of 7% or $179 million. The increase was due primarily to loan growth and higher net interest margin. The net interest margin increased nine basis points to 2.36%, driven by an increase in both loan and deposit margins with favourable changes in deposit mix.
Non-interest
income was $780 million compared to $711 million, an increase of 10% or $69 million. The increase was driven primarily by higher mutual fund distribution fees and credit card revenues. Q2 2026 vs Q1 2026
Revenues were $3,483 million compared to $3,514 million, a decrease of 1%.
Net interest income was $2,703 million compared to $2,734 million, a decrease of 1% or $31 million. The decrease was due primarily to three fewer days in the quarter, partly offset by loan growth and higher net interest margin. The net interest margin increased four basis points to 2.36%, driven by an increase in both loan and deposit margins.
Non-interest
income was $780 million, in line with the prior period. Higher insurance income was offset by lower banking and mutual fund distribution fees. Year-to-date
Year-to-date
Revenues were $6,997 million compared to $6,647 million, an increase of 5%.
Net interest income was $5,437 million compared to $5,171 million, an increase of 5% or $266 million. The increase was due primarily to loan growth and higher net interest margin. The net interest margin increased five basis points to 2.34%, driven by an increase in deposit margin, including favourable changes in deposit mix.
Non-interest
income was $1,560 million compared to $1,476 million, an increase of 6% or $84 million. The increase was driven primarily by higher mutual fund distribution fees and credit card revenues, partly offset by lower private equity gains. Provision for credit losses
Q2 2026 vs Q2 2025
The provision for credit losses was $575 million compared to $805 million, a decrease of $230 million. The provision for credit losses ratio decreased 22 basis points to 50 basis points.
The provision for credit losses on performing loans was $59 million compared to $317 million, a decrease of $258 million. The provision this period was due primarily to the unfavourable macroeconomic outlook impacting the retail and commercial portfolios. The prior period reflected the estimated impact of macroeconomic uncertainty related to U.S. tariffs.
Provision for credit losses on impaired loans was $516 million compared to $488 million, an increase of $28 million. The provision for credit losses ratio on impaired loans was 45 basis points, an increase of one basis point. The increase was due primarily to higher formations in retail and commercial.
Q2 2026 vs Q1 2026
The provision for credit losses was $575 million compared to $576 million, a decrease of $1 million. The provision for credit losses ratio was 50 basis points.
The provision for credit losses on performing loans was $59 million compared to $23 million, an increase of $36 million. The provision this period was due primarily to the unfavourable macroeconomic outlook impacting the retail and commercial portfolios.
Provision for credit losses on impaired loans was $516 million compared to $553 million, a decrease of $37 million. The provision for credit losses ratio on impaired loans was 45 basis points, a decrease of two basis points. The decrease was driven primarily by lower retail provisions benefitting from collections actions, and lower commercial provisions.
Year-to-date
Year-to-date
The provision for credit losses was $1,151 million, compared to $1,343 million, a decrease of $192 million. The provision for credit losses ratio was 50 basis points, a decrease of 10 basis points.
Provision for credit losses on performing loans was $82 million, compared to $368 million, a decrease of $286 million. The provision this period was driven by credit migration in the retail and commercial portfolios, as well as the unfavourable macroeconomic outlook impacting the commercial portfolio. The prior period reflected the estimated impact of macroeconomic uncertainty related to U.S. tariffs.
Provision for credit losses on impaired loans was $1,069 million compared to $975 million, an increase of $94 million, due primarily to higher provisions in the retail and commercial portfolios. The provision for credit losses ratio on impaired loans was 46 basis points, an increase of three basis points.
24 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Non-interest expenses
Q2 2026 vs Q2 2025
Non-interest
expenses were $1,620 million compared to $1,581 million, an increase of $39 million or 3%. Higher technology costs were partly offset by lower professional fees and lower personnel costs from the benefit of efficiency initiatives. The productivity ratio was 46.5% compared to 48.8%. Q2 2026 vs Q1 2026
Non-interest
expenses were $1,620 million compared to $1,615 million, in line with the prior period. Higher technology costs were offset by the benefit of three fewer days in the quarter. The productivity ratio was 46.5% compared to 46.0%. Year-to-date
Year-to-date
Non-interest
expenses were $3,235 million compared to $3,192 million, an increase of $43 million or 1%. Higher marketing and technology costs were partly offset by lower personnel costs from the benefit of efficiency initiatives. The productivity ratio was 46.2% compared to 48.0%. Taxes
The effective tax rate was 27.4%, compared to 27.8% in the prior year and unchanged from the prior quarter. On a basis, the effective tax rate was 27.4%, compared to 27.8%.
year-to-date
International Banking |
||||||||||||||||||||
T11 International Banking financial performance |
||||||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
2,094 |
$ | 2,146 | $ | 2,179 | $ |
4,240 |
$ | 4,348 | ||||||||||
Non-interest income(1) |
765 |
815 | 780 | (2) |
1,580 |
1,641 | (2) | |||||||||||||
Total revenue |
2,859 |
2,961 | 2,959 | 5,820 |
5,989 | |||||||||||||||
Provision for credit losses |
599 |
536 | 550 | 1,135 |
1,152 | |||||||||||||||
Non-interest expenses |
1,370 |
1,460 | 1,523 | (2) |
2,830 |
3,076 | (2) | |||||||||||||
Income before taxes |
890 |
965 | 886 | 1,855 |
1,761 | |||||||||||||||
Income tax expense |
154 |
228 | 172 | 382 |
361 | |||||||||||||||
Net income |
$ |
736 |
$ | 737 | $ | 714 | $ |
1,473 |
$ | 1,400 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
35 |
$ | 20 | $ | 38 | $ |
55 |
$ | 73 | ||||||||||
Net income attributable to equity holders of the Bank |
$ |
701 |
$ | 717 | $ | 676 | $ |
1,418 |
$ | 1,327 | ||||||||||
Other financial data and measures |
||||||||||||||||||||
Return on equity (3) |
16.0 |
% |
16.0 | % | 15.3 | % | 16.0 |
% |
14.8 | % | ||||||||||
Net interest margin (4) |
4.76 |
% |
4.54 | % | 4.50 | % | 4.65 |
% |
4.45 | % | ||||||||||
Effective tax rate (3) |
17.30 |
% |
23.60 | % | 19.40 | % | 20.60 |
% |
20.50 | % | ||||||||||
Provision for credit losses – performing (Stage 1 and 2) |
$ |
21 |
$ | 53 | $ | 27 | $ |
74 |
$ | 54 | ||||||||||
Provision for credit losses – impaired (Stage 3) |
$ |
578 |
$ | 483 | $ | 523 | $ |
1,061 |
$ | 1,098 | ||||||||||
Provision for credit losses as a percentage of average net loans and acceptances (annualized) (3) |
1.66 |
% |
1.37 | % | 1.37 | % | 1.51 |
% |
1.42 | % | ||||||||||
Provision for credit losses on impaired loans as a percentage of average net loans and acceptances (annualized) (3) |
1.61 |
% |
1.23 | % | 1.31 | % | 1.41 |
% |
1.35 | % | ||||||||||
Net write-offs as a percentage of average net loans and acceptances (annualized) (3) |
1.17 |
% |
1.16 | % | 1.19 | % | 1.16 |
% |
1.23 | % | ||||||||||
Average assets ($ billions) |
$ |
211 |
$ | 219 | $ | 229 | $ |
215 |
$ | 229 | ||||||||||
Average liabilities ($ billions) |
$ |
170 |
$ | 172 | $ | 177 | $ |
171 |
$ | 176 | ||||||||||
| (1) | Includes income from associated corporations for the three months ended April 30, 2026 – $65 (January 31, 2026 – $48; April 30, 2025 – $38) and for the six months ended April 30, 2026 – $113 (April 30, 2025 – $73). |
| (2) | Effective Q1 2026, the Bank no longer records the TEB gross-up on tax-exempt income. The prior periods results presented include a TEB gross-up for the three months ended April 30, 2025 – $9 and for the six months ended April 30, 2025 – $17. Refer to page 22 for further details. |
| (3) | Refer to Glossary on page 57 for the description of the measure. |
| (4) | Refer to Non-GAAP Measures starting on page 5. |
| Scotiabank Second Quarter Report 2026 | 25 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T11A Impact of Divested Operations
On December 1, 2025, the Bank completed the previously announced sale of its banking operations in Colombia, Costa Rica and Panama to Davivienda Group S.A. In addition, on February 28, 2025, the Bank completed the sale of CrediScotia Financiera S.A. (Peru), which was announced in fiscal 2024. The table below reflects the earnings impact of these operations in the current and prior fiscal periods. For further details on divestitures, refer to Note 19 of the condensed interim consolidated financial statements.
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Net interest income |
$ |
– |
$ | 84 | $ | 255 | $ |
84 |
$ | 542 | ||||||||||
Non-interest income |
– |
43 | 126 | 43 |
265 | |||||||||||||||
Total revenue |
– |
127 | 381 | 127 |
807 | |||||||||||||||
Provision for credit losses |
– |
39 | 118 | 39 |
261 | |||||||||||||||
Non-interest expenses |
– |
85 | 238 | 85 |
504 | |||||||||||||||
Income before taxes |
– |
3 | 25 | 3 |
42 | |||||||||||||||
Income tax expense |
– |
2 | 11 | 2 |
13 | |||||||||||||||
Net income |
$ |
– |
$ | 1 | $ | 14 | $ |
1 |
$ | 29 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
– |
$ | 1 | $ | 1 | $ |
1 |
$ | (4 | ) | |||||||||
| Net income attributable to equity holders of the Bank |
$ |
– |
$ | – | $ | 13 | $ |
– |
$ | 33 | ||||||||||
Net income
Q2 2026 vs Q2 2025
Net income attributable to equity holders was $701 million compared to $676 million, an increase of $25 million or 4%. The increase was driven primarily by lower
non-interest
expenses, lower income taxes and the positive impact of foreign currency translation. This was partly offset by lower net interest income, lower non-interest
income and higher provision for credit losses. Q2 2026 vs Q1 2026
Net income attributable to equity holders was $701 million compared to $717 million, a decrease of $16 million or 2%. The decrease was driven primarily by higher provision for credit losses, lower net interest income and lower
non-interest
income. This was partly offset by lower non-interest
expenses and lower income taxes. Year-to-date
Q2 2026 vs Year-to-date
Q2 2025 Net income attributable to equity holders was $1,418 million compared to $1,327 million, an increase of $91 million or 7%. The increase was driven primarily by lower
non-interest
expenses, lower provision for credit losses and the positive impact of foreign currency translation. This was partly offset by lower net interest income and lower non-interest
income. Financial Performance on a Constant Dollar Basis
The discussion below on the results of operations is on a constant dollar basis. Under the constant dollar basis, prior period amounts are recalculated using current period average foreign currency rates, which is a
non-GAAP
financial measure (refer to Non-GAAP
Measures starting on page 5). The Bank believes that constant dollar is useful for readers in assessing ongoing business performance without the impact of foreign currency translation and is used by management to assess the performance of the business segment. Ratios are on a reported basis. T12 International Banking financial performance on a constant dollar basis
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Constant dollars (1) |
||||||||||||||||||||
Net interest income |
$ |
2,094 |
$ | 2,153 | $ | 2,262 | $ |
4,240 |
$ | 4,541 | ||||||||||
Non-interest income(2) |
765 |
815 | 807 | 1,580 |
1,717 | |||||||||||||||
Total revenue |
2,859 |
2,968 | 3,069 | 5,820 |
6,258 | |||||||||||||||
Provision for credit losses |
599 |
539 | 579 | 1,135 |
1,226 | |||||||||||||||
Non-interest expenses |
1,370 |
1,464 | 1,584 | 2,830 |
3,216 | |||||||||||||||
Income before taxes |
890 |
965 | 906 | 1,855 |
1,816 | |||||||||||||||
Income tax expense |
154 |
227 | 177 | 382 |
373 | |||||||||||||||
Net income |
$ |
736 |
$ | 738 | $ | 729 | $ |
1,473 |
$ | 1,443 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
35 |
$ | 20 | $ | 38 | $ |
55 |
$ | 70 | ||||||||||
Net income attributable to equity holders of the Bank |
$ |
701 |
$ | 718 | $ | 691 | $ |
1,418 |
$ | 1,373 | ||||||||||
Other financial data and measures |
||||||||||||||||||||
Average assets ($ billions) |
$ |
211 |
$ | 219 | $ | 235 | $ |
215 |
$ | 236 | ||||||||||
Average liabilities ($ billions) |
$ |
170 |
$ | 172 | $ | 184 | $ |
171 |
$ | 183 | ||||||||||
| (1) | Refer to Constant Dollar reconciliation on page 11. |
| (2) | Includes income from associated corporations for the three months ended April 30, 2026 – $65 (January 31, 2026 – $48; April 30, 2025 – $37) and for the six months ended April 30, 2026 – $113 (April 30, 2025 – $72). |
26 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Net income
Q2 2026 vs Q2 2025
Net income attributable to equity holders was $701 million compared to $691 million, an increase of $10 million or 1%. The increase was driven primarily by lower
non-interest
expenses and lower income taxes. This was partly offset by lower net interest income, lower non-interest
income and higher provision for credit losses. Q2 2026 vs Q1 2026
Net income attributable to equity holders was $701 million compared to $718 million, a decrease of $17 million or 2%. The decrease was driven primarily by lower
net-interest
income, lower non-interest
income and higher provision for credit losses. This was partly offset by lower non-interest
expenses and lower income taxes. Year-to-date
Year-to-date
Net income attributable to equity holders was $1,418 million compared to $1,373 million, an increase of $45 million or 3%. The increase was driven primarily by lower
non-interest
expenses and lower provision for credit losses, partly offset by lower net interest income and lower non-interest
income. Average assets
Q2 2026 vs Q2 2025
Average assets were $211 billion compared to $235 billion. Total loans decreased $21 billion or 12%, driven mainly by the impact of divested operations, as well as a decrease in corporate loans, primarily in Brazil and Mexico. This was partly offset by higher retail loans primarily in Mexico and Chile, as well as an increase in investments in associated corporations.
Q2 2026 vs Q1 2026
Average assets were $211 billion compared to $219 billion. Total loans decreased $9 billion or 5%, driven primarily by the impact of divested operations, as well as a decrease in corporate loans in Brazil, Mexico and Chile.
Year-to-date
Year-to-date
Average assets were $215 billion compared to $236 billion. Total loans decreased $18 billion or 10%, due mainly to the impact of divested operations, as well as a decrease in corporate loans in Brazil, Mexico and Chile. This was partly offset by higher retail loans primarily in Mexico and Chile, as well as an increase in investments in associated corporations.
Average liabilities
Q2 2026 vs Q2 2025
Average liabilities were $170 billion compared to $184 billion. Total deposits decreased by $10 billion or 7%, due mainly to the impact of divested operations. Other liabilities decreased by $4 billion. This was partly offset by an increase in personal and
non-personal
deposits in Peru and Caribbean. Q2 2026 vs Q1 2026
Average liabilities were $170 billion compared to $172 billion. Total deposits decreased by $1 billion or 1%, due mainly to the impact of divested operations. This was partly offset by an increase in
non-personal
deposits in Peru, Chile and Caribbean. Year-to-date
Year-to-date
Average liabilities were $171 billion compared to $183 billion. Total deposits decreased by $8 billion or 6%, due mainly to the impact of divested operations. Other liabilities decreased by $4 billion. This was partly offset by an increase in
non-personal
deposits in Peru and Caribbean. Total revenue
Q2 2026 vs Q2 2025
Revenues were $2,859 million compared to $3,069 million, a decrease of $210 million or 7%.
Net interest income was $2,094 million compared to $2,262 million, a decrease of $168 million or 7%, driven mainly by the impact of divested operations. This was partly offset by growth across geographies. Net interest margin increased by 26 basis points to 4.76%, driven mainly by lower funding costs due to declines in central bank rates.
Non-interest
income was $765 million compared to $807 million, a decrease of $42 million or 5%, driven mainly by the impact of divested operations. This was partly offset by higher income from investments in associated corporations and higher insurance income across geographies. Q2 2026 vs Q1 2026
Revenues were $2,859 million compared to $2,968 million, a decrease of $109 million or 4%.
Net interest income was $2,094 million compared to $2,153 million, a decrease of $59 million or 3%, driven by impact of divested operations and three fewer days in the quarter. This was partly offset by growth in Chile. Net interest margin increased by 22 basis points to 4.76%, driven mainly by lower funding costs.
Non-interest
income was $765 million compared to $815 million, a decrease of $50 million or 6%, driven mainly by the impact of divested operations and lower capital markets revenues in Brazil and Peru. This was partly offset by higher income from investments in associated corporations. | Scotiabank Second Quarter Report 2026 | 27 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Year-to-date
Year-to-date
Revenues were $5,820 million compared to $6,258 million, a decrease of $438 million or 7%.
Net interest income was $4,240 million compared to $4,541 million, a decrease of $301 million or 7%, driven mainly by the impact of divested operations. Net interest margin increased by 20 basis points to 4.65%, driven mainly by lower funding costs.
Non-interest
income was $1,580 million compared to $1,717 million, a decrease of $137 million or 8%, driven mainly by the impact of divested operations and lower capital markets revenues in Brazil. This was partly offset by higher income from investments in associated corporations. Provision for credit losses
Q2 2026 vs Q2 2025
The provision for credit losses was $599 million compared to $579 million, an increase of $20 million or 3%. The provision for credit losses ratio increased 29 basis points to 166 basis points.
Provision for credit losses on performing loans was $21 million compared to $26 million, a decrease of $5 million. The provision this period was driven by credit migration in the commercial portfolio, as well as the impact of the unfavourable macroeconomic outlook on the retail portfolio.
Provision for credit losses on impaired loans was $578 million, compared to $553 million, an increase of $25 million. The provision for credit losses ratio on impaired loans was 161 basis points, an increase of 30 basis points. The increase was mainly driven by formations in International corporate, due primarily to one account, partly offset by the impact of divested operations.
Q2 2026 vs Q1 2026
The provision for credit losses was $599 million compared to $539 million, an increase of $60 million or 11%. The provision for credit losses ratio was 166 basis points, an increase of 29 basis points.
Provision for credit losses on performing loans was $21 million compared to $54 million, a decrease of $33 million. The provision this period was driven by credit migration in the commercial portfolio, as well as the impact of the unfavourable macroeconomic outlook on the retail portfolio.
Provision for credit losses on impaired loans was $578 million compared to $485 million, an increase of $93 million. The provision for credit losses ratio on impaired loans increased 38 basis points to 161 basis points. The increase was mainly driven by formations in International corporate, due primarily to one account, while retail remains in line with the prior quarter.
Year-to-date
Year-to-date
The provision for credit losses was $1,135 million compared to $1,226 million, a decrease of $91 million or 7%. The provision for credit losses ratio was 151 basis points, an increase of nine basis points.
Provision for credit losses on performing loans was $74 million compared to $56 million, an increase of $18 million. The provision this period was driven by credit migration in the commercial portfolio, as well as retail portfolio growth in Chile and Mexico. This was partly offset by the impact of more favourable macroeconomic outlook in the commercial portfolio.
Provision for credit losses on impaired loans was $1,061 million compared to $1,170 million, a decrease of $109 million. The decrease was due mainly to divested operations, partly offset by formations, due mainly to one account. The provision for credit losses ratio on impaired loans was 141 basis points, an increase of six basis points.
Non-interest expenses
Q2 2026 vs Q2 2025
Non-interest
expenses were $1,370 million compared to $1,584 million, a decrease of $214 million or 14%. The decrease was driven by the impact of divested operations. This was partly offset by higher personnel costs, mainly in Mexico and Chile. The productivity ratio was 47.9% compared to 51.4%. Q2 2026 vs Q1 2026
Non-interest
expenses were $1,370 million compared to $1,464 million, a decrease of $94 million or 6%. The decrease was driven by the impact of divested operations and lower business taxes, mainly in the Caribbean. This was partly offset by higher technology costs in Mexico and Peru. The productivity ratio was 47.9% compared to 49.3%. Year-to-date
Year-to-date
Non-interest
expenses were $2,830 million compared to $3,216 million, a decrease of $386 million or 12%. The decrease was driven by the impact of divested operations. This was partly offset by higher personnel costs in Mexico and Chile. The productivity ratio was 48.6% compared to 51.4%. Taxes
Q2 2026 vs Q2 2025
The effective tax rate was 17.3% compared to 19.4%. The decrease was due primarily to changes in earnings mix across jurisdictions, including higher income from investments in associated corporations.
Q2 2026 vs Q1 2026
The effective tax rate was 17.3% compared to 23.6%. The decrease was due primarily to higher inflationary adjustments in Mexico and Chile and changes in earnings mix across jurisdictions.
Year-to-date
Year-to-date
The effective tax rate was 20.6% compared to 20.5%.
28 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Global Wealth Management |
||||||||||||||||||||
T13 Global Wealth Management financial performance |
||||||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
306 |
$ | 304 | $ | 246 | $ |
610 |
$ | 478 | ||||||||||
Non-interest income |
1,454 |
1,497 | 1,295 | 2,951 |
2,642 | |||||||||||||||
Total revenue |
1,760 |
1,801 | 1,541 | 3,561 |
3,120 | |||||||||||||||
Provision for credit losses |
4 |
4 | 2 | 8 |
6 | |||||||||||||||
Non-interest expenses |
1,116 |
1,146 | 997 | 2,262 |
2,019 | |||||||||||||||
Income before taxes |
640 |
651 | 542 | 1,291 |
1,095 | |||||||||||||||
Income tax expense |
164 |
167 | 141 | 331 |
285 | |||||||||||||||
Net income |
$ |
476 |
$ | 484 | $ | 401 | $ |
960 |
$ | 810 | ||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
2 |
$ | 3 | $ | 2 | $ |
5 |
$ | 4 | ||||||||||
Net income attributable to equity holders of the Bank |
$ |
474 |
$ | 481 | $ | 399 | $ |
955 |
$ | 806 | ||||||||||
Other financial data and measures |
||||||||||||||||||||
Return on equity (1) |
17.9 |
% |
17.7 | % | 15.8 | % | 17.8 |
% |
15.8 | % | ||||||||||
Effective tax rate (1) |
25.7 |
% |
25.6 | % | 26.0 | % | 25.6 |
% |
26.0 | % | ||||||||||
Assets under administration ($ billions) (1) |
$ |
820 |
$ | 801 | $ | 710 | $ |
820 |
$ | 710 | ||||||||||
Assets under management ($ billions) (1) |
$ |
450 |
$ | 436 | $ | 380 | $ |
450 |
$ | 380 | ||||||||||
Average assets ($ billions) |
$ |
41 |
$ | 40 | $ | 38 | $ |
41 |
$ | 38 | ||||||||||
Average liabilities ($ billions) |
$ |
55 |
$ | 55 | $ | 47 | $ |
55 |
$ | 45 | ||||||||||
| (1) | Refer to Glossary on page 57 for the description of the measure. |
Net income
Q2 2026 vs Q2 2025
Net income attributable to equity holders was $474 million compared to $399 million, an increase of 19%. The increase was driven primarily by higher mutual fund fees, brokerage revenues and net interest income across the Canadian wealth business. This was partly offset by higher volume-related
non-interest
expenses. Q2 2026 vs Q1 2026
Net income attributable to equity holders was $474 million compared to $481 million, a decrease of 2%. The decrease was driven primarily by lower mutual fund fees and brokerage revenues due to the impact of three fewer days in the quarter, partly offset by lower
non-interest
expenses. Year-to-date
Year-to-date
Net income attributable to equity holders was $955 million compared to $806 million, an increase of 18%. The increase was driven primarily by higher mutual fund fees, brokerage revenues, and net interest income reflecting strong volume growth in deposits and loans as well as improved margins, partly offset by higher volume-related
non-interest
expenses. Assets under management (AUM) and assets under administration (AUA)
Q2 2026 vs Q2 2025
Assets under management were $450 billion compared to $380 billion, an increase of 18%, driven primarily by market appreciation and higher net sales with strong contribution from retail distribution.
Assets under administration were $820 billion compared to $710 billion, an increase of 15%, driven primarily by market appreciation and higher net sales.
Q2 2026 vs Q1 2026
Assets under management were $450 billion compared to $436 billion, an increase of 3%, driven primarily by market appreciation and higher net sales.
Assets under administration were $820 billion compared to $801 billion, an increase of 2%, driven primarily by market appreciation and higher net sales.
Total revenue
Q2 2026 vs Q2 2025
Revenues were $1,760 million compared to $1,541 million, an increase of 14%.
Net interest income was $306 million compared to $246 million, an increase of 24% or $60 million, reflecting strong volume growth in deposits and loans as well as improved margins primarily in Private Banking.
| Scotiabank Second Quarter Report 2026 | 29 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Non-interest
income was $1,454 million compared to $1,295 million, an increase of 12% or $159 million. The increase was driven primarily by higher mutual fund fees and brokerage revenues across the Canadian wealth business. Q2 2026 vs Q1 2026
Revenues were $1,760 million compared to $1,801 million, a decrease of 2%.
Net interest income was $306 million compared to $304 million, an increase of 1% or $2 million, reflecting volume growth in loans and deposits.
Non-interest
income was $1,454 million compared to $1,497 million, a decrease of 3% or $43 million. The decrease was driven primarily by lower mutual fund fees and brokerage revenues due to the impact of three fewer days in the quarter. Year-to-date
Year-to-date
Revenues were $3,561 million compared to $3,120 million, an increase of 14%.
Net interest income was $610 million compared to $478 million, an increase of 28% or $132 million, reflecting strong volume growth in deposits and loans, as well as improved margins.
Non-interest
income was $2,951 million compared to $2,642 million, an increase of 12% or $309 million. The increase was driven primarily by higher mutual fund fees and brokerage fee revenues. Provision for credit losses
The provision for credit losses was $4 million, an increase of $2 million from the prior year and unchanged from the prior quarter. On a
year-to-date
basis, the provision for credit losses was $8 million, an increase of $2 million. Non-interest expenses
Q2 2026 vs Q2 2025
Non-interest
expenses were $1,116 million compared to $997 million, an increase of 12%. The increase was driven primarily by higher volume-related expenses, technology costs, and sales force expansion to support business growth. The productivity ratio was 63.4% compared to 64.7%. Q2 2026 vs Q1 2026
Non-interest
expenses were $1,116 million compared to $1,146 million, a decrease of 3%. The decrease was driven primarily by lower volume-related expenses due to the impact of three fewer days in the quarter. The productivity ratio was 63.4% compared to 63.6%. Year-to-date
Year-to-date
Non-interest
expenses were $2,262 million compared to $2,019 million, an increase of 12%. The increase was driven primarily by higher volume-related expenses, technology costs and sales force expansion to support business growth. The productivity ratio was 63.5% compared to 64.7%. Taxes
The effective tax rate was 25.7%, compared to 26.0% in the prior year and 25.6% in the prior quarter. On a basis, the effective tax rate was 25.6%, compared to 26.0%.
year-to-date
30 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Global Banking and Markets
T14 Global Banking and Markets financial performance
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
389 |
$ | 398 | $ | 368 | $ |
787 |
$ | 687 | ||||||||||
Non-interest income |
1,203 |
1,370 | 1,090 | 2,573 |
2,365 | |||||||||||||||
Total revenue |
1,592 |
1,768 | 1,458 | 3,360 |
3,052 | |||||||||||||||
Provision for credit losses |
38 |
60 | 40 | 98 |
58 | |||||||||||||||
Non-interest expenses |
965 |
1,012 | 878 | 1,977 |
1,769 | |||||||||||||||
Income before taxes |
589 |
696 | 540 | 1,285 |
1,225 | |||||||||||||||
Income tax expense |
132 |
152 | 128 | 284 |
296 | |||||||||||||||
Net income |
$ |
457 |
$ | 544 | $ | 412 | $ |
1,001 |
$ | 929 | ||||||||||
Net income attributable to non-controlling interest in subsidiaries |
$ |
– |
$ | (1 | ) | $ | (1 | ) | $ |
(1) |
$ | (1 | ) | |||||||
Net income attributable to equity holders of the Bank |
$ |
457 |
$ | 545 | $ | 413 | $ |
1,002 |
$ | 930 | ||||||||||
Other financial data and measures |
||||||||||||||||||||
Return on equity (1) |
12.4 |
% |
14.3 | % | 11.3 | % | 13.3 |
% |
12.4 | % | ||||||||||
Net interest margin (2) |
2.03 |
% |
2.14 | % | 1.76 | % | 2.08 |
% |
1.70 | % | ||||||||||
Effective tax rate (1) |
22.5 |
% |
21.8 | % | 23.6 | % | 22.1 |
% |
24.1 | % | ||||||||||
Provision for credit losses – performing (Stage 1 and 2) |
$ |
5 |
$ | (4 | ) | $ | (1 | ) | $ |
1 |
$ | 17 | ||||||||
Provision for credit losses – impaired (Stage 3) |
$ |
33 |
$ | 64 | $ | 41 | $ |
97 |
$ | 41 | ||||||||||
Provision for credit losses as a percentage of average net loans (annualized) (1) |
0.14 |
% |
0.22 | % | 0.14 | % | 0.18 |
% |
0.10 | % | ||||||||||
Provision for credit losses on impaired loans as a percentage of average net loans (annualized) (1) |
0.12 |
% |
0.24 | % | 0.15 | % | 0.18 |
% |
0.07 | % | ||||||||||
Net write-offs as a percentage of average net loans (annualized) (1) |
0.13 |
% |
0.10 | % | 0.13 | % | 0.12 |
% |
0.06 | % | ||||||||||
Average assets ($ billions) |
$ |
568 |
$ | 546 | $ | 502 | $ |
557 |
$ | 506 | ||||||||||
Average liabilities ($ billions) |
$ |
556 |
$ | 551 | $ | 516 | $ |
553 |
$ | 513 | ||||||||||
| (1) | Refer to Glossary on page 57 for the description of the measure. |
| (2) | Refer to Non-GAAP Measures starting on page 5. |
Net income
Q2 2026 vs Q2 2025
Net income attributable to equity holders was $457 million compared to $413 million, an increase of $44 million or 11%. The increase was driven primarily by higher
non-interest
income and higher net interest income. This was partly offset by higher non-interest
expenses and the negative impact of foreign currency translation. Q2 2026 vs Q1 2026
Net income attributable to equity holders was $457 million compared to $545 million, a decrease of $88 million or 16%. The decrease was driven primarily by lower non-interest income and lower net interest income, partly offset by lower
non-interest
expenses and lower provision for credit losses. Year-to-date
Year-to-date
Net income attributable to equity holders was $1,002 million compared to $930 million, an increase of $72 million or 8%. The increase was driven primarily by higher non-interest income, higher net interest income and lower income tax expense. This was partly offset by higher
non-interest
expenses, higher provision for credit losses, and the negative impact of foreign currency translation. Average assets
Q2 2026 vs Q2 2025
Average assets were $568 billion compared to $502 billion, an increase of $66 billion or 13%. The increase was driven primarily by higher securities purchased under resale agreements and higher trading securities. This was partly offset by the impact of foreign currency translation and lower loans of $4 billion or 4%.
Q2 2026 vs Q1 2026
Average assets were $568 billion compared to $546 billion, an increase of $22 billion or 4%. The increase was driven primarily by higher securities purchased under resale agreements. Loans increased by $1 billion or 1%.
Year-to-date
Year-to-date
Average assets were $557 billion compared to $506 billion, an increase of $51 billion or 10%. The increase was driven primarily by higher securities purchased under resale agreements and higher trading securities. This was partly offset by the impact of foreign currency translation and lower loans of $8 billion or 8%.
| Scotiabank Second Quarter Report 2026 | 31 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Average liabilities
Q2 2026 vs Q2 2025
Average liabilities were $556 billion compared to $516 billion, an increase of $40 billion or 8%. The increase was driven primarily by higher securities sold under repurchase agreements and higher financial instruments designated at fair value through profit or loss. This was partly offset by the impact of foreign currency translation and lower deposit volumes of $2 billion or 1%.
Q2 2026 vs Q1 2026
Average liabilities were $556 billion compared to $551 billion, an increase of $5 billion or 1%. The increase was driven primarily by higher securities sold under repurchase agreements and higher derivative-related liabilities, partly offset by lower deposit volumes of $6 billion or 3%.
Year-to-date
Year-to-date
Average liabilities were $553 billion compared to $513 billion, an increase of $40 billion or 8%. The increase was driven primarily by higher securities sold under repurchase agreements, higher financial instruments designated at fair value through profit and loss, higher derivative-related liabilities, and higher obligations related to securities sold short. This was partly offset by the impact of foreign currency translation. Deposit volumes were in line with the prior period.
Total revenue
Q2 2026 vs Q2 2025
Revenues were $1,592 million compared to $1,458 million, an increase of $134 million or 9%.
Net interest income was $389 million compared to $368 million, an increase of $21 million or 5%. The increase was driven primarily by higher net interest margin, partly offset by the negative impact of foreign currency translation. The net interest margin increased 27 basis points to 2.03%, driven mainly by higher deposit margins.
Non-interest
income was $1,203 million compared to $1,090 million, an increase of $113 million or 10%. The increase was driven primarily by higher trading-related revenue from equities, commodities and fixed income. This was partly offset by lower trading-related revenue from foreign exchange, lower underwriting and advisory fees, as well as the negative impact of foreign currency translation. Q2 2026 vs Q1 2026
Revenues were $1,592 million compared to $1,768 million, a decrease of $176 million or 10%.
Net interest income was $389 million compared to $398 million, a decrease of $9 million or 2%. The decrease was driven primarily by lower net interest margin and the impact of three fewer days in the quarter, partly offset by higher net interest income from capital markets activities. The net interest margin decreased 11 basis points, driven mainly by lower corporate lending margin and deposit volume and margin.
Non-interest
income was $1,203 million compared to $1,370 million, a decrease of $167 million or 12%. The decrease was driven primarily by lower trading-related revenue from fixed income, equities and commodities, as well as lower underwriting and advisory fees. Year-to-date
Year-to-date
Revenues were $3,360 million compared to $3,052 million, an increase of $308 million or 10%.
Net interest income was $787 million compared to $687 million, an increase of $100 million or 14%. The increase was driven primarily by higher net interest margin and higher net interest income from capital market activities, partly offset by the negative impact of foreign currency translation. The net interest margin increased 38 basis points to 2.08%, driven mainly by higher corporate lending and deposit margins.
Non-interest
income was $2,573 million compared to $2,365 million, an increase of $208 million or 9%. The increase was driven primarily by higher trading-related revenue from commodities, equities and fixed income. This was partly offset by lower trading-related revenue from foreign exchange, lower underwriting and advisory fees, as well as the negative impact of foreign currency translation. Provision for credit losses
Q2 2026 vs Q2 2025
The provision for credit losses was $38 million compared to a provision of $40 million. The provision for credit losses ratio was 14 basis points, unchanged from prior period.
Provision for credit losses on performing loans was $5 million, compared to a net reversal of $1 million. The provision this period was driven by the unfavourable macroeconomic outlook.
Provision for credit losses on impaired loans was $33 million this quarter, compared to a provision of $41 million in the prior period. The provision for credit losses ratio on impaired loans was 12 basis points, a decrease of three basis points. The provision for this quarter was mainly driven by one account.
Q2 2026 vs Q1 2026
The provision for credit losses was $38 million, compared to a provision of $60 million. The provision for credit losses ratio was 14 basis points, a decrease of eight basis points.
Provision for credit losses on performing loans was $5 million, compared to a net reversal of $4 million. The provision this period was driven by the unfavourable macroeconomic outlook.
Provision for credit losses on impaired loans was $33 million this quarter, a decrease of $31 million. The provision for credit losses ratio on impaired loans was 12 basis points, a decrease of 12 basis points. The provision for this quarter was mainly driven by an additional provision on one account.
32 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Year-to-date
Year-to-date
The provision for credit losses was $98 million, an increase of $40 million. The provision for credit losses ratio was 18 basis points, an increase of eight basis points.
Provision for credit losses on performing loans was $1 million, compared to a provision of $17 million. The provision this period was due mainly to the unfavourable macroeconomic outlook, partly offset by migration of accounts to impaired.
Provision for credit losses on impaired loans was $97 million, compared to a provision of $41 million. The increase was due to three accounts in Canada and the U.S. The provision for credit losses ratio on impaired loans was 18 basis points, an increase of 11 basis points.
Non-interest expenses
Q2 2026 vs Q2 2025
Non-interest
expenses were $965 million compared to $878 million, an increase of $87 million or 10%. The increase was driven primarily by higher technology costs and higher personnel costs to support business growth, partly offset by the positive impact of foreign currency translation. Q2 2026 vs Q1 2026
Non-interest
expenses were $965 million compared to $1,012 million, a decrease of $47 million or 5%. The decrease was due mainly to seasonally lower share-based compensation and the impact of three fewer days in the quarter, partly offset by higher technology costs to support business growth. Year-to-date
Year-to-date
Non-interest
expenses were $1,977 million compared to $1,769 million, an increase of $208 million or 12%. The increase was driven primarily by higher personnel costs including performance and share-based compensation and higher technology costs to support business growth, partly offset by the positive impact of foreign currency translation. Taxes
The effective tax rate for the quarter decreased to 22.5% from 23.6% in the prior year, and increased from 21.8% in the prior quarter, driven primarily by changes in earnings mix across jurisdictions. On a basis, the effective tax rate was 22.1% compared to 24.1%, due mainly to the change in earrings mix across jurisdictions.
year-to-date
Other
T15 Other financial performance
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Reported Results |
||||||||||||||||||||
Net interest income |
$ |
29 |
$ | – | $ | (47 | ) | $ |
29 |
$ | (241 | ) | ||||||||
Non-interest income(1)(2) |
114 |
(398 | ) | (66 | ) | (284 |
) |
(115 | ) | |||||||||||
Total revenue |
143 |
(398 | ) | (113 | ) | (255 |
) |
(356 | ) | |||||||||||
Provision for credit losses |
1 |
– | 1 | 1 |
1 | |||||||||||||||
Non-interest expenses(2) |
118 |
66 | 131 | 184 |
1,545 | |||||||||||||||
Income before taxes |
24 |
(464 | ) | (245 | ) | (440 |
) |
(1,902 | ) | |||||||||||
Income tax expense/(benefit) |
(4 |
) |
(38 | ) | (137 | ) | (42 |
) |
(262 | ) | ||||||||||
Net income (loss) |
$ |
28 |
$ | (426 | ) | $ | (108 | ) | $ |
(398 |
) |
$ | (1,640 | ) | ||||||
Net income (loss) attributable to non-controlling interests in subsidiaries |
$ |
– |
$ | (10 | ) | $ | 17 | $ |
(10) |
$ | (174 | ) | ||||||||
Net income (loss) attributable to equity holders |
$ |
28 |
$ | (416 | ) | $ | (125 | ) | $ |
(388 |
) |
$ | (1,466 | ) | ||||||
Other measures |
||||||||||||||||||||
Average assets ($ billions) |
$ |
222 |
$ | 221 | $ | 238 | $ |
221 |
$ | 230 | ||||||||||
Average liabilities ($ billions) |
$ |
274 |
$ | 253 | $ | 258 | $ |
264 |
$ | 260 | ||||||||||
| (1) | Includes income from associated corporations for the three months ended April 30, 2026 – $159 (January 31, 2026 – $150; April 30, 2025 – $123) and for the six months ended April 30, 2026 – $309 (April 30, 2025 – $177). |
| (2) | Includes elimination of fees paid to Canadian Banking by Canadian Wealth Management for administrative support and other services provided by Canadian Banking to the Global Wealth Management businesses. These are reported as revenues in Canadian Banking and operating expenses in Global Wealth Management. |
| Scotiabank Second Quarter Report 2026 | 33 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T15A Adjusted Other financial performance
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Adjusted Results (1) |
||||||||||||||||||||
Net interest income |
$ |
29 |
$ | – | $ | (47 | ) | $ |
29 |
$ | (241 | ) | ||||||||
Non-interest income(2) |
122 |
33 | (48 | ) | 155 |
(97 | ) | |||||||||||||
Total revenue |
151 |
33 | (95 | ) | 184 |
(338 | ) | |||||||||||||
Provision for credit losses |
1 |
– | 1 | 1 |
1 | |||||||||||||||
Non-interest expenses(3) |
118 |
55 | 105 | 173 |
157 | |||||||||||||||
Income before taxes |
32 |
(22 | ) | (201 | ) | 10 |
(496 | ) | ||||||||||||
Income tax expense/(benefit) |
(3 |
) |
19 | (122 | ) | 16 |
(240 | ) | ||||||||||||
Net income (loss) |
$ |
35 |
$ | (41 | ) | $ | (79 | ) | $ |
(6 |
) |
$ | (256 | ) | ||||||
Net income (loss) attributable to non-controlling interests in subsidiaries |
$ |
– |
$ | – | $ | 1 | $ |
– |
$ | 1 | ||||||||||
Net income (loss) attributable to equity holders |
$ |
35 |
$ | (41 | ) | $ | (80 | ) | $ |
(6 |
) |
$ | (257 | ) | ||||||
| (1) | Refer to Non-GAAP Measures starting on page 5 for adjusted results. |
| (2) | Adjusted for divestitures and wind-down of operations for the three months ended April 30, 2026 – nil (January 31, 2026 – $423; April 30, 2025 – $9) and for the six months ended April 30, 2026 – $423 (April 30, 2025 – $9); and amortization of acquisition-related intangible assets for the three months ended April 30, 2026 – $8 (January 31, 2026 – $8; April 30, 2025 – $9) and for the six months ended April 30, 2026 – $16 (April 30, 2025 – $9). |
| (3) | Adjusted for divestitures and wind-down of operations for the three months ended April 30, 2026 – nil (January 31, 2026 – $11; April 30, 2025 – $26) and for the six months ended April 30, 2026 – $11 (April 30, 2025 – $1,388). |
The Other segment includes Group Treasury, investments in certain associated corporations, and smaller operating segments and corporate items which are not allocated to a business line. Group Treasury is primarily responsible for Balance Sheet, Liquidity and Interest Rate Risk management, which includes the Bank’s wholesale funding activities.
Q2 2026 vs Q2 2025
Net income attributable to equity holders was $28 million compared to a loss of $125 million, an increase of $153 million. Included in prior year non-interest expenses is an impairment loss of $26 million related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. Adjusted net income attributable to equity holders was $35 million compared to a loss of $80 million, an increase of $115 million. The increase was due primarily to higher
non-interest
income from investment gains and higher revenue from associated corporations primarily related to the KeyCorp investment, as well as higher net interest income due to lower funding costs. Q2 2026 vs Q1 2026
Net income attributable to equity holders was $28 million compared to a loss of $416 million, an increase of $444 million. Included in prior quarter non-interest income is a loss of $423 million recognized upon the completion of the sale of the banking operations in Colombia, Costa Rica and Panama. Adjusted net income attributable to equity holders was $35 million compared to a loss of $41 million, an increase of $76 million. The increase was due primarily to higher
non-interest
income from investment gains and higher net interest income due to lower funding costs, partly offset by higher non-interest
expenses. Year-to-date
Q2 2026 vs Year-to-date
Q2 2025 Net loss attributable to equity holders was $388 million compared to a loss of $1,466 million. Included in current year non-interest income is a loss of $423 million recognized upon the completion of the sale of the banking operations in Colombia, Costa Rica and Panama. Included in prior year non-interest expenses is an impairment loss of $1,388 million related to the announced sale of these operations. Adjusted net loss attributable to equity holders was $6 million compared to a loss of $257 million last year. The lower loss was driven primarily by higher net interest income due to lower funding costs, higher
non-interest
income from investment gains and higher revenue from associated corporations, primarily related to the KeyCorp investment. This was partly offset by higher non-interest
expenses. 34 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Geographic Highlights
T16 Geographic highlights
For the three months ended April 30, 2026 |
||||||||||||||||||||||||||||||||
(Unaudited) ($ millions) |
Canada |
U.S. |
Mexico |
Peru |
Chile |
Caribbean |
Other (2) |
Total |
||||||||||||||||||||||||
Reported results |
||||||||||||||||||||||||||||||||
Net interest income |
$ |
3,126 |
$ |
255 |
$ |
693 |
$ |
328 |
$ |
533 |
$ |
384 |
$ |
202 |
$ |
5,521 |
||||||||||||||||
Non-interest income |
2,630 |
523 |
296 |
143 |
171 |
307 |
246 |
4,316 |
||||||||||||||||||||||||
Total revenue |
5,756 |
778 |
989 |
471 |
704 |
691 |
448 |
9,837 |
||||||||||||||||||||||||
Provision for credit losses |
578 |
39 |
147 |
68 |
210 |
31 |
144 |
1,217 |
||||||||||||||||||||||||
Non-interest expenses |
3,071 |
449 |
515 |
240 |
307 |
300 |
307 |
5,189 |
||||||||||||||||||||||||
Income tax expense |
594 |
34 |
89 |
22 |
28 |
81 |
(49 |
) |
799 |
|||||||||||||||||||||||
Net income |
$ |
1,513 |
$ |
256 |
$ |
238 |
$ |
141 |
$ |
159 |
$ |
279 |
$ |
46 |
$ |
2,632 |
||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
1 |
– |
6 |
2 |
– |
28 |
– |
37 |
||||||||||||||||||||||||
Net income attributable to equity holders of the Bank |
$ |
1,512 |
$ |
256 |
$ |
232 |
$ |
139 |
$ |
159 |
$ |
251 |
$ |
46 |
$ |
2,595 |
||||||||||||||||
Adjusted results (1) |
||||||||||||||||||||||||||||||||
Adjustments |
6 |
7 |
– |
– |
6 |
1 |
– |
20 |
||||||||||||||||||||||||
Adjusted net income attributable to equity holders of the Bank |
$ |
1,518 |
$ |
263 |
$ |
232 |
$ |
139 |
$ |
165 |
$ |
252 |
$ |
46 |
$ |
2,615 |
||||||||||||||||
Average Assets ($ billions) |
$ |
933 |
$ |
272 |
$ |
63 |
$ |
30 |
$ |
58 |
$ |
26 |
$ |
135 |
$ |
1,517 |
||||||||||||||||
Average Liabilities ($ billions) |
$ |
921 |
$ |
219 |
$ |
59 |
$ |
25 |
$ |
52 |
$ |
27 |
$ |
126 |
$ |
1,429 |
||||||||||||||||
| For the three months ended January 31, 2026 | For the three months ended April 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) ($ millions) |
Canada | U.S. | Mexico | Peru | Chile | Caribbean | Other (2) |
Total | Canada | U.S. | Mexico | Peru | Chile | Caribbean | Other (2) |
Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Reported results |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income |
$ | 3,100 | $ | 229 | $ | 678 | $ | 330 | $ | 501 | $ | 398 | $ | 346 | $ | 5,582 | $ | 2,847 | $ | 122 | $ | 592 | $ | 332 | $ | 515 | $ | 379 | $ | 483 | $ | 5,270 | ||||||||||||||||||||||||||||||||
Non-interest income |
2,215 | 622 | 297 | 179 | 171 | 309 | 271 | 4,064 | 2,127 | 549 | 242 | 139 | 150 | 297 | 306 | 3,810 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue |
5,315 | 851 | 975 | 509 | 672 | 707 | 617 | 9,646 | 4,974 | 671 | 834 | 471 | 665 | 676 | 789 | 9,080 | ||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses |
623 | 16 | 153 | 80 | 226 | 30 | 48 | 1,176 | 813 | 33 | 145 | 81 | 168 | 32 | 126 | 1,398 | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest expenses |
3,061 | 483 | 498 | 227 | 302 | 319 | 409 | 5,299 | 2,908 | 409 | 446 | 215 | 295 | 297 | 540 | 5,110 | ||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense |
562 | 44 | 88 | 54 | 26 | 85 | 13 | 872 | 288 | 25 | 62 | 10 | 25 | 101 | 29 | 540 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
$ | 1,069 | $ | 308 | $ | 236 | $ | 148 | $ | 118 | $ | 273 | $ | 147 | $ | 2,299 | $ | 965 | $ | 204 | $ | 181 | $ | 165 | $ | 177 | $ | 246 | $ | 94 | 2,032 | |||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
(12 | ) | – | 7 | 2 | (13 | ) | 27 | 1 | 12 | 15 | – | 5 | 2 | 3 | 31 | – | 56 | ||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to equity holders of the Bank |
$ | 1,081 | $ | 308 | $ | 229 | $ | 146 | $ | 131 | $ | 246 | $ | 146 | $ | 2,287 | $ | 950 | $ | 204 | $ | 176 | $ | 163 | $ | 174 | $ | 215 | $ | 94 | $ | 1,976 | ||||||||||||||||||||||||||||||||
Adjusted results (1) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments |
373 | 8 | – | 1 | 4 | – | – | 386 | 41 | 9 | – | – | 5 | – | 1 | 56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted net income (loss) attributable to equity holders of the Bank |
$ | 1,454 | $ | 316 | $ | 229 | $ | 147 | $ | 135 | $ | 246 | $ | 146 | $ | 2,673 | $ | 991 | $ | 213 | $ | 176 | $ | 163 | $ | 179 | $ | 215 | $ | 95 | $ | 2,032 | ||||||||||||||||||||||||||||||||
Average Assets ($ billions) |
$ | 912 | $ | 267 | $ | 64 | $ | 30 | $ | 57 | $ | 26 | $ | 142 | $ | 1,498 | $ | 899 | $ | 241 | $ | 59 | $ | 29 | $ | 57 | $ | 26 | $ | 157 | $ | 1,468 | ||||||||||||||||||||||||||||||||
Average Liabilities ($ billions) |
$ | 911 | $ | 193 | $ | 60 | $ | 24 | $ | 50 | $ | 27 | $ | 144 | $ | 1,409 | $ | 889 | $ | 187 | $ | 54 | $ | 22 | $ | 52 | $ | 26 | $ | 152 | $ | 1,382 | ||||||||||||||||||||||||||||||||
For the six months ended April 30, 2026 |
For the six months ended April 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) ($ millions) |
Canada |
U.S. |
Mexico |
Peru |
Chile |
Caribbean |
Other (2) |
Total |
Canada | U.S. | Mexico | Peru | Chile | Caribbean | Other (2) |
Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Reported results |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income |
$ |
6,226 |
$ |
484 |
$ |
1,371 |
$ |
658 |
$ |
1,034 |
$ |
782 |
$ |
548 |
$ |
11,103 |
$ | 5,568 | $ | 275 | $ | 1,149 | $ | 707 | $ | 1,002 | $ | 783 | $ | 959 | $ | 10,443 | ||||||||||||||||||||||||||||||||
Non-interest income |
4,845 |
1,145 |
593 |
322 |
342 |
616 |
517 |
8,380 |
4,438 | 1,187 | 511 | 311 | 283 | 600 | 679 | 8,009 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue |
11,071 |
1,629 |
1,964 |
980 |
1,376 |
1,398 |
1,065 |
19,483 |
10,006 | 1,462 | 1,660 | 1,018 | 1,285 | 1,383 | 1,638 | 18,452 | ||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses |
1,201 |
55 |
300 |
148 |
436 |
61 |
192 |
2,393 |
1,360 | 45 | 273 | 193 | 360 | 66 | 263 | 2,560 | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-interest expenses |
6,132 |
932 |
1,013 |
467 |
609 |
619 |
716 |
10,488 |
7,187 | 791 | 888 | 443 | 586 | 609 | 1,097 | 11,601 | ||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense |
1,156 |
78 |
177 |
76 |
54 |
166 |
(36 |
) |
1,671 |
680 | 106 | 130 | 51 | 45 | 212 | 42 | 1,266 | |||||||||||||||||||||||||||||||||||||||||||||||
Net income |
$ |
2,582 |
$ |
564 |
$ |
474 |
$ |
289 |
$ |
277 |
$ |
552 |
$ |
193 |
$ |
4,931 |
$ | 779 | $ | 520 | $ | 369 | $ | 331 | $ | 294 | $ | 496 | $ | 236 | $ | 3,025 | ||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
(11 |
) |
– |
13 |
4 |
(13 |
) |
55 |
1 |
49 |
(176 | ) | – | 11 | 4 | 9 | 59 | (5 | ) | (98 | ) | |||||||||||||||||||||||||||||||||||||||||||
Net income attributable to equity holders of the Bank |
$ |
2,593 |
$ |
564 |
$ |
461 |
$ |
285 |
$ |
290 |
$ |
497 |
$ |
192 |
$ |
4,882 |
$ | 955 | $ | 520 | $ | 358 | $ | 327 | $ | 285 | $ | 437 | $ | 241 | $ | 3,123 | ||||||||||||||||||||||||||||||||
Adjusted results (1) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments |
379 |
15 |
– |
1 |
10 |
1 |
– |
406 |
1,212 | 9 | – | – | 10 | 1 | 2 | 1,234 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted net income (loss) attributable to equity holders of the Bank |
$ |
2,972 |
$ |
579 |
$ |
461 |
$ |
286 |
$ |
300 |
$ |
498 |
$ |
192 |
$ |
5,288 |
$ | 2,167 | $ | 529 | $ | 358 | $ | 327 | $ | 295 | $ | 438 | $ | 243 | $ | 4,357 | ||||||||||||||||||||||||||||||||
Average Assets ($ billions) |
$ |
922 |
$ |
269 |
$ |
63 |
$ |
30 |
$ |
57 |
$ |
26 |
$ |
140 |
$ |
1,507 |
$ | 898 | $ | 236 | $ | 60 | $ | 29 | $ | 56 | $ | 26 | $ | 159 | $ | 1,464 | ||||||||||||||||||||||||||||||||
Average Liabilities ($ billions) |
$ |
915 |
$ |
203 |
$ |
59 |
$ |
25 |
$ |
51 |
$ |
27 |
$ |
139 |
$ |
1,419 |
$ | 886 | $ | 190 | $ | 55 | $ | 22 | $ | 51 | $ | 25 | $ | 150 | $ | 1,379 | ||||||||||||||||||||||||||||||||
| (1) | Refer to Non-GAAP Measures section starting on page 5. |
| (2) | Colombia and Central America are now included in Other. |
| Scotiabank Second Quarter Report 2026 | 35 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Quarterly Financial Highlights
T17 Quarterly financial highlights
| For the three months ended | ||||||||||||||||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
July 31 2025 |
April 30 2025 |
January 31 2025 |
October 31 2024 |
July 31 2024 |
||||||||||||||||||||||||
Reported results |
||||||||||||||||||||||||||||||||
Net interest income |
$ |
5,521 |
$ | 5,582 | $ | 5,586 | $ | 5,493 | $ | 5,270 | $ | 5,173 | $ | 4,923 | $ | 4,862 | ||||||||||||||||
Non-interest income |
4,316 |
4,064 | 4,217 | 3,993 | 3,810 | 4,199 | 3,603 | 3,502 | ||||||||||||||||||||||||
Total revenue |
$ |
9,837 |
$ | 9,646 | $ | 9,803 | $ | 9,486 | $ | 9,080 | $ | 9,372 | $ | 8,526 | $ | 8,364 | ||||||||||||||||
Canadian Banking |
3,483 |
3,514 | 3,407 | 3,371 | 3,235 | 3,412 | 3,319 | 3,305 | ||||||||||||||||||||||||
International Banking |
2,859 |
2,961 | 3,051 | 3,003 | 2,959 | 3,030 | 2,859 | 2,973 | ||||||||||||||||||||||||
Global Wealth Management |
1,760 |
1,801 | 1,704 | 1,604 | 1,541 | 1,579 | 1,466 | 1,428 | ||||||||||||||||||||||||
Global Banking and Markets |
1,592 |
1,768 | 1,584 | 1,530 | 1,458 | 1,594 | 1,272 | 1,264 | ||||||||||||||||||||||||
Other |
143 |
(398 | ) | 57 | (22 | ) | (113 | ) | (243 | ) | (390 | ) | (606 | ) | ||||||||||||||||||
Provision for credit losses |
$ |
1,217 |
$ | 1,176 | $ | 1,113 | $ | 1,041 | $ | 1,398 | $ | 1,162 | $ | 1,030 | $ | 1,052 | ||||||||||||||||
Non-interest expenses |
5,189 |
5,299 | 5,828 | 5,089 | 5,110 | 6,491 | 5,296 | 4,949 | ||||||||||||||||||||||||
Income tax expense |
799 |
872 | 656 | 829 | 540 | 726 | 511 | 451 | ||||||||||||||||||||||||
Net income |
$ |
2,632 |
$ | 2,299 | $ | 2,206 | $ | 2,527 | $ | 2,032 | $ | 993 | $ | 1,689 | $ | 1,912 | ||||||||||||||||
Basic earnings per share ($) |
2.01 |
1.75 | 1.70 | 1.84 | 1.48 | 0.82 | 1.23 | 1.43 | ||||||||||||||||||||||||
Diluted earnings per share ($) |
2.00 |
1.73 | 1.65 | 1.84 | 1.48 | 0.66 | 1.22 | 1.41 | ||||||||||||||||||||||||
Net interest margin (%) (1) |
2.49 |
2.45 | 2.40 | 2.36 | 2.31 | 2.23 | 2.15 | 2.14 | ||||||||||||||||||||||||
Effective tax rate (%) (2) |
23.3 |
27.5 | 22.9 | 24.7 | 21.0 | 42.2 | 23.2 | 19.1 | ||||||||||||||||||||||||
Adjusted results (1) |
||||||||||||||||||||||||||||||||
Adjusting items impacting non-interest income and total revenue (Pre-tax) |
||||||||||||||||||||||||||||||||
Divestitures and wind-down of operations |
$ |
– |
$ | 423 | $ | (45 | ) | $ | – | $ | 9 | $ | – | $ | – | $ | 143 | |||||||||||||||
Amortization of acquisition-related intangible assets |
8 |
8 | 9 | 8 | 9 | – | – | – | ||||||||||||||||||||||||
Total non-interest income and total revenue adjusting items (Pre-tax) |
8 |
431 | (36 | ) | 8 | 18 | – | – | 143 | |||||||||||||||||||||||
Adjusting items impacting non-interest expenses (Pre-tax) |
||||||||||||||||||||||||||||||||
Divestitures and wind-down of operations |
– |
11 | 57 | (23 | ) | 26 | 1,362 | – | (7 | ) | ||||||||||||||||||||||
Restructuring charge and severance provisions |
– |
– | 373 | – | – | – | 53 | – | ||||||||||||||||||||||||
Impairment of non-financial assets |
– |
– | – | – | – | – | 440 | – | ||||||||||||||||||||||||
Amortization of acquisition-related intangible assets |
18 |
15 | 16 | 17 | 17 | 18 | 19 | 17 | ||||||||||||||||||||||||
Legal provision |
– |
– | 74 | – | – | – | – | 176 | ||||||||||||||||||||||||
Total non-interest expenses adjusting items (Pre-tax) |
18 |
26 | 520 | (6 | ) | 43 | 1,380 | 512 | 186 | |||||||||||||||||||||||
Total impact of adjusting items on net income before taxes |
26 |
457 | 484 | 2 | 61 | 1,380 | 512 | 329 | ||||||||||||||||||||||||
Impact of adjusting items on income tax expense |
(6 |
) |
(61 | ) | (132 | ) | (11 | ) | (21 | ) | (11 | ) | (82 | ) | (50 | ) | ||||||||||||||||
Total impact of adjusting items on net income |
20 |
396 | 352 | (9 | ) | 40 | 1,369 | 430 | 279 | |||||||||||||||||||||||
Adjusted net income |
$ |
2,652 |
$ | 2,695 | $ | 2,558 | $ | 2,518 | $ | 2,072 | $ | 2,362 | $ | 2,119 | $ | 2,191 | ||||||||||||||||
Adjusted diluted earnings per share ($) |
2.02 |
2.05 | 1.93 | 1.88 | 1.52 | 1.76 | 1.57 | 1.63 | ||||||||||||||||||||||||
| (1) | Refer to Non-GAAP Measures section starting on page 5. |
| (2) | Refer to Glossary on page 57 for the description of the measure. |
Trending analysis
Earnings over the
two-year
period were generally driven by higher net interest income and non-interest
income. These earnings were partially offset by higher provisions for credit losses, non-interest expenses and income taxes. Earnings over this period were impacted by adjusting items. Total revenue
Canadian Banking revenue increased over the period, mainly due to loan growth, net interest margin expansion, and improved business mix. International Banking’s revenue growth was driven by improvements in lending mix, fee growth and the positive impact from central bank rate decreases, partially offset by the impact of divested operations during the period. Global Wealth Management
fee-based
revenues increased during the period reflecting strong growth in assets driven by market appreciation and higher net sales. Global Banking and Markets revenues are affected by shifting market conditions that impact client activity in the capital markets and business banking businesses, including underwriting and advisory fees. Revenues in the Other segment were mainly impacted by divestitures and lower term funding costs and income from associated corporations improving over the period. 36 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Provision for credit losses
Provision for credit losses have trended upward during the period driven by higher impaired loans, due primarily to higher formations in Canadian Banking, International corporate and GBM, partly offset by the impact of divested operations. The provision for credit losses for performing loans is stabilizing after the period of deterioration in the macroeconomic outlook, due to the continued uncertainty related to U.S. tariffs, primarily impacting the Canadian Banking portfolio.
Non-interest
expenses Non-interest
expenses over the period reflect the Bank’s continued investment in personnel and technology to support strategy and business growth, as well as the impact of inflation. This was partly offset by expense management and efficiency initiatives. The impact of impairment losses, restructuring charges and foreign currency translation also contributed to fluctuations over the period. Provision for income taxes
The effective tax rate was 23.3% this quarter. The average effective tax rate was 25.5% over the period and was impacted by net income earned in foreign jurisdictions and the implementation of the Global Minimum Tax in fiscal 2025. Divestitures and restructuring charges contributed to variability over the period.
Financial Position
T18 Condensed statement of financial position
| As at | ||||||||||||||||||||
(Unaudited) ($ billions) |
April 30 2026 |
October 31 2025 |
Change | Volume Change |
FX Change |
|||||||||||||||
Assets |
||||||||||||||||||||
Cash, deposits with financial institutions and precious metals |
$ |
89.5 |
$ | 71.1 | 25.8 | % | 28.3 | % | (2.5 | )% | ||||||||||
Trading assets |
157.7 |
152.2 | 3.6 | 5.1 | (1.5 | ) | ||||||||||||||
Securities purchased under resale agreements and securities borrowed |
253.2 |
203.0 | 24.7 | 26.9 | (2.2 | ) | ||||||||||||||
Derivative financial instruments |
46.7 |
46.5 | 0.4 | 3.7 | (3.3 | ) | ||||||||||||||
Investment securities |
149.8 |
150.0 | (0.1 | ) | 1.7 | (1.8 | ) | |||||||||||||
Loans |
757.4 |
771.0 | (1.8 | ) | (1.3 | ) | (0.5 | ) | ||||||||||||
Other |
67.2 |
66.2 | 1.6 | 2.6 | (1.0 | ) | ||||||||||||||
Total assets |
$ |
1,521.5 |
$ | 1,460.0 | 4.2 | % | 5.4 | % | (1.2 | )% | ||||||||||
Liabilities |
||||||||||||||||||||
Deposits |
$ |
981.5 |
$ | 966.3 | 1.6 | % | 2.6 | % | (1.0 | )% | ||||||||||
Derivative financial instruments |
56.8 |
56.0 | 1.5 | 3.7 | (2.2 | ) | ||||||||||||||
Obligations related to securities sold under repurchase agreements and securities lent |
238.6 |
189.1 | 26.2 | 28.5 | (2.3 | ) | ||||||||||||||
Other liabilities |
150.2 |
152.3 | (1.4 | ) | (1.1 | ) | (0.3 | ) | ||||||||||||
Subordinated debentures |
5.8 |
7.7 | (25.0 | ) | (23.8 | ) | (1.2 | ) | ||||||||||||
Total liabilities |
$ |
1,432.9 |
$ | 1,371.4 | 4.5 | % | 5.7 | % | (1.2 | )% | ||||||||||
Equity |
||||||||||||||||||||
Common equity (1) |
$ |
77.2 |
$ | 76.9 | 0.4 | % | 0.9 | % | (0.5 | )% | ||||||||||
Preferred shares and other equity instruments |
10.0 |
10.0 | – | – | – | |||||||||||||||
Non-controlling interests in subsidiaries |
1.4 |
1.7 | (17.4 | ) | (18.6 | ) | 1.2 | |||||||||||||
Total equity |
$ |
88.6 |
$ | 88.6 | – | % | 0.4 | % | (0.4 | )% | ||||||||||
Total liabilities and equity |
$ |
1,521.5 |
$ | 1,460.0 | 4.2 | % | 5.4 | % | (1.2 | )% | ||||||||||
| (1) | Includes net impact of foreign currency translation, primarily change in spot rates on the translation of assets and liabilities from functional currency to Canadian dollar equivalent. |
The Bank’s total assets were $1,522 billion as at April 30, 2026, an increase of $61 billion from October 31, 2025. This increase was driven largely by higher cash, deposits with financial institutions and precious metals, trading assets, securities purchased under resale agreements and securities borrowed, and other assets. This was partly offset by decreases in loans, including derecognition of $24 billion in total assets, mostly loans, due to the impact of the divestitures of the banking operations in Colombia, Costa Rica, and Panama. Cash, deposits with financial institutions and precious metals increased $18 billion due mainly to higher amounts at central banks and increases in gold positions held as a hedge on derivatives. Trading assets increased $5 billion due mainly to higher trading securities held as a hedge. Securities purchased under resale agreements and securities borrowed increased $50 billion due mainly to higher client activity. Loans decreased $14 billion. Residential mortgages were down $2 billion due mainly to the divestitures, partly offset by growth in Canada, Mexico, and Chile. Personal loans and credit cards decreased $4 billion, and business and government loans were lower by $8 billion due mainly to the divestitures. Other assets increased $1 billion due mainly to the Bank’s investment in Davivienda Group S.A.
Total liabilities were $1,433 billion as at April 30, 2026, an increase of $61 billion from October 31, 2025. This increase was driven largely by higher deposits and obligations related to securities sold under repurchase agreements and securities lent. This was partly offset by decreases in other liabilities and subordinated debt, including derecognition of $22 billion in total liabilities, mostly deposits, from the divestitures. Total deposits increased $15 billion. Business and government deposits were higher by $17 billion, with growth in Canada, the U.S., and Europe, partly offset by the divestures, and deposits by financial institutions increased $5 billion with growth in Asia and Europe. This was partly offset by lower personal deposits, which decreased $6 billion due mainly to the divestitures. Obligations related to securities sold under repurchase agreements and securities lent increased $50 billion due mainly to client activity and funding requirements. Other liabilities decreased $2 billion. Subordinated debentures decreased $2 billion due to a maturity.
| Scotiabank Second Quarter Report 2026 | 37 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Total equity was $89 billion consistent with October 31, 2025. Changes within equity reflected current year earnings of $4,931 million, less dividends of $2,969 million, other reserves of $178 million, and common shares issued of $140 million. These increases were offset by other comprehensive loss of $762 million, mainly derivative instruments designated as cash flow hedges and foreign currency translation, share buybacks of $1,150 million, and lower
non-controlling
interests in subsidiaries of $300 million, due mainly to the divestitures. Risk Management
The Bank’s risk management policies and practices have not substantially changed from those outlined in the Bank’s 2025 Annual Report. For a complete discussion of the risk management policies and practices and additional information on risk factors, refer to the “Risk Management” section in the 2025 Annual Report.
Top and emerging risks
The Bank is exposed to a variety of top and emerging risks as disclosed in the Bank’s 2025 Annual Report on page 85. These risks can potentially adversely affect the Bank’s business strategies, financial performance, and reputation. As part of our risk management approach, we monitor our operating environment to identify, assess, review, and manage a broad range of top and emerging risks to undertake appropriate risk mitigation strategies. This quarter, the intensifying geopolitical tensions and evolving cyber threats were key risk drivers impacting our top and emerging risks.
Geopolitical Tensions
Escalating conflict in the Middle East remains a key concern. Geopolitical tensions are intensifying in complexity and speed, with risks increasingly manifesting through interconnected channels that could disrupt global trade, supply chains, and contribute to market volatility. Recent escalation, particularly involving Iran, has disrupted global energy markets and key shipping routes, pushing energy prices higher, reigniting inflation pressures, and tightening global financial conditions. These developments have heightened second-order macroeconomic and financial-stability risks, including for advanced economies such as Canada, where inflation and affordability pressures may partially offset the benefits of higher energy exports.
The Bank maintains ongoing monitoring of geopolitical developments through established governance forums, regional risk oversight, and coordinated threat-intelligence processes, with monitoring applied to regions affected by active conflict. Severe but plausible geopolitical and macroeconomic scenarios, including energy-price shocks and heightened market volatility, are incorporated into stress-testing and scenario-analysis programs to assess potential impacts on credit quality, liquidity, funding, and market conditions. Drawing on its experience across multiple jurisdictions, the Bank continues to assess risk concentration and adjust exposures to manage volatility and remain aligned with risk appetite.
Evolving Cyber Threats
As technology advances, cyber threats continue to evolve in sophistication and scope, which could impact the Bank directly and/or its third-party service providers. These threats manifest as attacks on critical functions or infrastructure, including but not limited to client-facing systems, and may result in financial loss, data theft, regulatory consequences, reputational damage or operational disruption to the Bank. The inherent risk of cyber threats continues to increase as attack surfaces grow with the adoption of new technologies and cloud services. Geopolitical conflicts have increased the severity and frequency of cyber threats and state-sanctioned cyber attacks on critical infrastructure, public facing services and emerging technologies. Advancements in Generative and Agentic AI and Large Language Models (LLM) create additional attack vectors that enable new forms of cyber attacks to commit fraud or exfiltrate sensitive data and personally identifiable information. Recent advancements in frontier AI (e.g., Anthropic’s Claude Mythos Preview) enable rapid identification of complex and previously unknown vulnerabilities, materially increasing exposure across industry technology landscape.
The Bank’s overall cyber security and IT program continues to adapt to the evolving and complex cyber threat landscape. The Bank has made investments in cyber defences, including proactive and adaptive security measures, and IT infrastructure to strengthen its operational resilience. As threat actors look to exploit the weakest link in a system, frequent monitoring of critical suppliers and effective contingency planning helps mitigate the vulnerability to cyber attacks on third parties and safeguards critical assets to ensure business continuity. In response to frontier AI risks, the Bank is transitioning to a
real-time,
automated security model, with enhanced focus on AI-enabled
detection, automated response and prevention, and scalable remediation. The Bank also maintains cyber insurance coverage to help mitigate potential losses linked to cyber incidents. The insurance coverage limit is regularly reviewed and evaluated to ensure it meets the Bank’s needs. Credit risk
Credit risk is the risk of loss resulting from the failure of a borrower or counterparty to honour its financial or contractual obligations to the Bank.
Credit risk exposures disclosed below are presented based on the Basel framework utilized by the Bank. The Bank uses the Internal Ratings-Based approach (IRB) for all material Canadian, U.S. and European portfolios, and for a significant portion of the international corporate and commercial portfolios. The remaining portfolios, including other international portfolios, are treated under the standardized approach. Under the IRB approach, the Bank uses internal risk parameter estimates, based on historical experience.
Under the standardized approach, credit risk is estimated using the risk weights as prescribed by the Basel framework, either based on credit assessments by external rating agencies and/or based on the counterparty type for
non-retail
exposures and product type for retail exposures. 38 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
T19 Exposure at Default
(1)
| As at | ||||||||||||||||||||
April 30, 2026 |
January 31 2026 | October 31, 2025 | ||||||||||||||||||
($ millions) |
IRB |
Standardized |
Total |
Total | Total | |||||||||||||||
By exposure sub-type |
||||||||||||||||||||
Non-retail |
||||||||||||||||||||
Drawn (2) |
$ |
442,344 |
$ |
73,489 |
$ |
515,833 |
$ | 501,761 | $ | 518,634 | ||||||||||
Undrawn commitments |
88,101 |
5,328 |
93,429 |
96,212 | 92,574 | |||||||||||||||
Other exposures (3) |
156,561 |
30,446 |
187,007 |
178,451 | 171,958 | |||||||||||||||
Total non-retail |
$ |
687,006 |
$ |
109,263 |
$ |
796,269 |
$ | 776,424 | $ | 783,166 | ||||||||||
Retail (4) |
||||||||||||||||||||
Drawn |
$ |
322,801 |
$ |
107,719 |
$ |
430,520 |
$ | 432,494 | $ | 433,967 | ||||||||||
Undrawn commitments |
132,416 |
9,245 |
141,661 |
139,447 | 139,119 | |||||||||||||||
Other exposures |
– |
77 |
77 |
80 | 76 | |||||||||||||||
Total retail |
$ |
455,217 |
$ |
117,041 |
$ |
572,258 |
$ | 572,021 | $ | 573,162 | ||||||||||
Total |
$ |
1,142,223 |
$ |
226,304 |
$ |
1,368,527 |
$ | 1,348,445 | $ | 1,356,328 | ||||||||||
| (1) | After credit risk mitigation and excludes equity securities, centralized counterparties, and other assets. |
| (2) | Non-retail drawn exposures include loans, deposits with financial institutions, and FVOCI debt securities. Exposures also include guaranteed retail exposures, such as government-guaranteed mortgages and retail loans, as well as privately insured mortgages. |
| (3) | Includes off-balance sheet lending instruments such as letters of credit, letters of guarantee, securitizations, over-the-counter |
| (4) | Retail includes residential mortgages, credit cards, lines of credit, other personal loans and small business treated as other regulatory retail. |
Allowance for credit losses
IFRS 9 , requires the consideration of past events, current conditions and reasonable and supportable forward-looking information over the life of the exposure to measure expected credit losses. Furthermore, to assess significant increases in credit risk, IFRS 9 requires that entities assess changes in the risk of a default occurring over the expected life of a financial instrument when determining staging. Consistent with the requirements of IFRS 9, the Bank considers both quantitative and qualitative information in the assessment of a significant increase in credit risk.
Financial Instruments
The Bank’s models are calibrated to consider past performance and macroeconomic forward-looking variables as inputs, as further described in Note 7 of the condensed interim consolidated financial statements. In the prior year, the Bank enhanced certain of its IFRS 9 models, with the enhanced models exhibiting higher sensitivity to changes in the macroeconomic outlook. Expert credit judgement may be applied in circumstances where, in the Bank’s view, the inputs, assumptions, and/or modelling techniques do not capture all relevant risk factors, including the emergence of economic or political events of the market up to the date of the financial statements. Expert credit judgement is also applied in the assessment of underlying credit deterioration and migration of balances to progressive stages.
The following section provides additional detail on certain key macroeconomic variables used to calculate the modelled estimate for the allowance for credit losses (see page 72 for all key variables). Further changes in these variables up to the date of the financial statements are incorporated through expert credit judgement.
● |
Gross Domestic Product (GDP): |
 |
 |
| Scotiabank Second Quarter Report 2026 | 39 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
● |
Unemployment Rate: mid-2029. From the second half of 2026 and onwards, this profile for Canada’s unemployment rate is modestly higher than in previous quarter’s base case, consistent with the lower level of real GDP for most of the forecast horizon. |
 |
 |
T20 Allowance for credit losses by business line
| As at | ||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
|||||||||
Canadian Banking |
$ |
3,269 |
$ | 3,207 | $ | 3,104 | ||||||
International Banking |
3,569 |
3,493 | 4,083 | |||||||||
Global Wealth Management |
59 |
57 | 52 | |||||||||
Global Banking and Markets |
251 |
242 | 223 | |||||||||
Other |
2 |
3 | 1 | |||||||||
Allowance for credit losses on loans |
$ |
7,150 |
$ | 7,002 | $ | 7,463 | ||||||
Allowance for credit losses on: |
||||||||||||
Acceptances |
1 |
– | 1 | |||||||||
Off-balance sheet exposures |
175 |
170 | 175 | |||||||||
Debt securities and deposits with financial institutions |
18 |
13 | 15 | |||||||||
Total Allowance for credit losses |
$ |
7,344 |
$ | 7,185 | $ | 7,654 | ||||||
The total allowance for credit losses as at April 30, 2026 was $7,344 million compared to $7,185 million in the prior quarter. The allowance for credit losses ratio was 96 basis points, an increase of two basis points. The allowance for credit losses for loans was $7,150 million compared to $7,002 million in the prior quarter, an increase of $148 million. The increase in allowance for impaired loans was due primarily to higher provisions in the International corporate portfolio, due mainly to one account. This was partly offset by the impact of foreign currency translation of $65 million.
The allowance for credit losses on performing loans was higher at $4,742 million compared to $4,715 million last quarter. The allowance for performing loans ratio was 64 basis points, unchanged from last quarter. The increase was due primarily to the unfavourable macroeconomic outlook in Canadian Banking portfolios, as well as credit migration in the International commercial portfolio. This was partly offset by the impact of foreign currency translation of $38 million.
The allowance for credit losses on impaired loans was higher at $2,408 million compared to $2,287 million last quarter. The allowance for impaired loans ratio was 32 basis points, an increase of two basis points. The increase was due primarily to higher provisions in the International corporate portfolio, due mainly to one account. This was partly offset by the impact of foreign currency translation of $27 million.
T21 Impaired loans by business line
| As at | ||||||||||||||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||||||||||||||
($ millions) |
Gross impaired loans |
Allowance for credit loans |
Net impaired loans |
Gross impaired loans |
Allowance for credit losses |
Net impaired loans |
Gross impaired loans |
Allowance for credit losses |
Net impaired loans |
|||||||||||||||||||||||||||
Canadian Banking |
$ |
2,618 |
$ |
758 |
$ |
1,860 |
$ | 2,509 | $ | 749 | $ | 1,760 | $ | 2,279 | $ | 667 | $ | 1,612 | ||||||||||||||||||
International Banking |
4,673 |
1,594 |
3,079 |
4,401 | 1,479 | 2,922 | 4,815 | 1,653 | 3,162 | |||||||||||||||||||||||||||
Global Wealth Management |
96 |
22 |
74 |
79 | 21 | 58 | 92 | 18 | 74 | |||||||||||||||||||||||||||
Global Banking and Markets |
221 |
34 |
187 |
259 | 38 | 221 | 58 | 3 | 55 | |||||||||||||||||||||||||||
Totals |
$ |
7,608 |
$ |
2,408 |
$ |
5,200 |
$ | 7,248 | $ | 2,287 | $ | 4,961 | $ | 7,244 | $ | 2,341 | $ | 4,903 | ||||||||||||||||||
Impaired loan metrics
| Net impaired loans as at | ||||||||||||
April 30, 2026 |
January 31, 2026 | October 31, 2025 | ||||||||||
Net impaired loans as a % of loans and acceptances (1) |
0.68 |
% |
0.65 | % | 0.63 | % | ||||||
Allowance against impaired loans as a % of gross impaired loans (1) |
32 |
% |
32 | % | 32 | % | ||||||
| (1) | Refer to Glossary on page 57 for the description of the measure. |
40 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Impaired loans
Gross impaired loans as at April 30, 2026 were $7,608 million compared to $7,248 million last quarter. The increase was due primarily to new formations in the International corporate portfolio, due mainly to one account, partly offset by the impact of foreign currency translation. The gross impaired loan ratio increased four basis points to 99 basis points.
Net impaired loans in Canadian Banking were $1,860 million, an increase of $100 million from last quarter, due primarily to higher commercial formations. Net impaired loans in International Banking were $3,079 million, an increase of $157 million from last quarter, due mainly to one account. Net impaired loans in Global Banking and Markets were $187 million, a decrease of $34 million from last quarter due to write-offs. Net impaired loans in Global Wealth Management were $74 million, an increase of $16 million from last quarter. Net impaired loans as a percentage of loans and acceptances increased three basis points to 0.68%.
Overview of loan portfolio
The Bank has a well-diversified portfolio by product, business, and geography. Details of certain portfolios of current focus are highlighted below.
Real estate secured lending
A large portion of the Bank’s lending portfolio is comprised of residential mortgages and consumer loans, which are well diversified by borrower. As at April 30, 2026, these loans amounted to $493 billion or 64% of the Bank’s total loans and acceptances outstanding (January 31, 2026 – $492 billion or 65%). Of these, $392 billion or 80% are real estate secured loans (January 31, 2026 – $392 billion or 80%). The tables below provide more details by portfolio.
Insured and uninsured mortgages and home equity lines of credit
(1)
The following table presents amounts of insured and uninsured residential mortgages and home equity lines of credit (HELOCs), by geographic areas.
T22 Insured and uninsured residential mortgages and HELOCs, by geographic areas
As at April 30, 2026 |
||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgages |
Home equity lines of credit |
|||||||||||||||||||||||||||||||||||||||||||||||
Insured (2) |
Uninsured |
Total |
Insured (2) |
Uninsured |
Total |
|||||||||||||||||||||||||||||||||||||||||||
($ millions) |
Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
||||||||||||||||||||||||||||||||||||
Canada: (3) |
||||||||||||||||||||||||||||||||||||||||||||||||
Atlantic provinces |
$ |
4,812 |
1.5 |
% |
$ |
7,472 |
2.4 |
% |
$ |
12,284 |
3.9 |
% |
$ |
– |
– |
% |
$ |
1,106 |
4.7 |
% |
$ |
1,106 |
4.7 |
% | ||||||||||||||||||||||||
Quebec |
7,659 |
2.4 |
14,531 |
4.6 |
22,190 |
7.0 |
– |
– |
1,330 |
5.6 |
1,330 |
5.6 |
||||||||||||||||||||||||||||||||||||
Ontario |
30,857 |
9.8 |
143,470 |
45.5 |
174,327 |
55.3 |
– |
– |
13,888 |
58.4 |
13,888 |
58.4 |
||||||||||||||||||||||||||||||||||||
Manitoba & Saskatchewan |
4,712 |
1.5 |
4,601 |
1.5 |
9,313 |
3.0 |
– |
– |
578 |
2.4 |
578 |
2.4 |
||||||||||||||||||||||||||||||||||||
Alberta |
14,041 |
4.5 |
18,216 |
5.8 |
32,257 |
10.3 |
– |
– |
2,345 |
9.9 |
2,345 |
9.9 |
||||||||||||||||||||||||||||||||||||
British Columbia & Territories |
10,705 |
3.4 |
53,987 |
17.1 |
64,692 |
20.5 |
– |
– |
4,523 |
19.0 |
4,523 |
19.0 |
||||||||||||||||||||||||||||||||||||
Canada (4)(5) |
$ |
72,786 |
23.1 |
% |
$ |
242,277 |
76.9 |
% |
$ |
315,063 |
100 |
% |
$ |
– |
– |
% |
$ |
23,770 |
100 |
% |
$ |
23,770 |
100 |
% | ||||||||||||||||||||||||
International |
– |
– |
53,432 |
100 |
53,432 |
– |
– |
– |
– |
– |
– |
– |
||||||||||||||||||||||||||||||||||||
Total |
$ |
72,786 |
19.8 |
% |
$ |
295,709 |
80.2 |
% |
$ |
368,495 |
100 |
% |
$ |
– |
– |
% |
$ |
23,770 |
100 |
% |
$ |
23,770 |
100 |
% | ||||||||||||||||||||||||
| As at January 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||
Canada (4)(5) |
$ | 70,934 | 22.5 | % | $ | 243,742 | 77.5 | % | $ | 314,676 | 100 | % | $ | – | – | % | $ | 23,363 | 100 | % | $ | 23,363 | 100 | % | ||||||||||||||||||||||||
International |
– | – | 53,943 | 100 | 53,943 | 100 | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
Total |
$ | 70,934 | 19.2 | % | $ | 297,685 | 80.8 | % | $ | 368,619 | 100 | % | $ | – | – | % | $ | 23,363 | 100 | % | $ | 23,363 | 100 | % | ||||||||||||||||||||||||
| As at October 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||
Canada (4)(5) |
$ | 70,949 | 22.7 | % | $ | 241,182 | 77.3 | % | $ | 312,131 | 100 | % | $ | – | – | % | $ | 23,493 | 100 | % | $ | 23,493 | 100 | % | ||||||||||||||||||||||||
International |
– | – | 58,060 | 100 | 58,060 | 100 | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||
Total |
$ | 70,949 | 19.2 | % | $ | 299,242 | 80.8 | % | $ | 370,191 | 100 | % | $ | – | – | % | $ | 23,493 | 100 | % | $ | 23,493 | 100 | % | ||||||||||||||||||||||||
| (1) | The measures in this section have been disclosed in this document as required by OSFI Guideline – B20 – Residential Mortgage Underwriting Practices and Procedures (January 2018). |
| (2) | Default insurance is contractual coverage for the life of eligible facilities whereby the Bank’s exposure to real estate secured lending is protected against potential shortfalls caused by borrower default. This insurance is provided by either government-backed entities or private mortgage insurers. |
| (3) | The province represents the location of the property in Canada. |
| (4) | Includes multi-residential dwellings (4+ units) of $4,941 (January 31, 2026 – $4,519; October 31, 2025 – $4,392) of which $4,322 are insured (January 31, 2026 – $3,898; October 31, 2025 – $3,767). |
| (5) | Variable rate mortgages account for 36% (January 31, 2026 – 35%; October 31, 2025 – 34%) of the Bank’s total Canadian residential mortgage portfolio. |
| Scotiabank Second Quarter Report 2026 | 41 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Amortization period ranges for residential mortgages
(1)
The following table presents the distribution of residential mortgages by remaining amortization periods, and by geographic areas.
T23 Distribution of residential mortgages by amortization periods, and by geographic areas
As at April 30, 2026 |
||||||||||||||||||||||||
Residential mortgages by amortization period |
||||||||||||||||||||||||
Less than 20 years |
20-24 years |
25-29 years |
30-34 years |
35 years and greater |
Total residential mortgages |
|||||||||||||||||||
Canada |
34.0 |
% |
33.7 |
% |
30.6 |
% |
0.8 |
% |
0.9 |
% |
100 |
% | ||||||||||||
International |
66.1 |
% |
17.5 |
% |
15.3 |
% |
1.0 |
% |
0.1 |
% |
100 |
% | ||||||||||||
| As at January 31, 2026 | ||||||||||||||||||||||||
Canada |
33.9 | % | 33.5 | % | 31.0 | % | 0.8 | % | 0.8 | % | 100 | % | ||||||||||||
International |
64.0 | % | 17.0 | % | 16.5 | % | 2.4 | % | 0.1 | % | 100 | % | ||||||||||||
| As at October 31, 2025 | ||||||||||||||||||||||||
Canada |
33.7 | % | 34.0 | % | 30.5 | % | 1.1 | % | 0.7 | % | 100 | % | ||||||||||||
International |
66.1 | % | 17.3 | % | 14.8 | % | 1.8 | % | 0.0 | % | 100 | % | ||||||||||||
| (1) | The measures in this section have been disclosed in this document as required by OSFI Guideline – B20 – Residential Mortgage Underwriting Practices and Procedures (January 2018). |
Loan to value ratios
(1)
The Canadian residential mortgage portfolio is 77% uninsured (January 31, 2026 – 77%; October 31, 2025 – 77%). The average (LTV) ratio of the uninsured portfolio is 56% (January 31, 2026 – 55%; October 31, 2025 – 54%).
loan-to-value
The following table presents the weighted average LTV ratio for total newly-originated uninsured residential mortgages and home equity lines of credit, which include mortgages for purchases, refinances with a request for additional funds and transfers from other financial institutions, by geographic areas in the current quarter.
T24 Loan to value ratios
Uninsured LTV ratios |
||||||||
For the three months ended April 30, 2026 |
||||||||
Residential mortgages |
Home equity lines of credit (2) |
|||||||
LTV% |
LTV% |
|||||||
Canada: (3) |
||||||||
Atlantic provinces |
59.8 |
% |
64.7 |
% | ||||
Quebec |
61.0 |
67.8 |
||||||
Ontario |
60.8 |
67.5 |
||||||
Manitoba & Saskatchewan |
64.4 |
67.0 |
||||||
Alberta |
62.8 |
67.5 |
||||||
British Columbia & Territories |
61.1 |
65.0 |
||||||
Canada |
61.1 |
% |
66.9 |
% | ||||
International |
72.4 |
% |
n/a |
|||||
| For the three months ended January 31, 2026 | ||||||||
Canada |
61.0 | % | 66.4 | % | ||||
International |
72.3 | % | n/a | |||||
| For the three months ended October 31, 2025 | ||||||||
Canada |
61.7 | % | 65.2 | % | ||||
International |
71.3 | % | n/a | |||||
| (1) | The measures in this section have been disclosed in this document as required by OSFI Guideline – B20 – Residential Mortgage Underwriting Practices and Procedures (January 2018). |
| (2) | Includes all home equity lines of credit (HELOC). For Scotia Total Equity Plan HELOCs, LTV is calculated based on the sum of residential mortgages and the authorized limit for related HELOCs, divided by the value of the related residential property, and presented on a weighted average basis for newly originated mortgages and HELOCs. |
| (3) | The province represents the location of the property in Canada. |
Potential impact on residential mortgages and real estate home equity lines of credit in the event of an economic downturn
As part of its stress testing program, the Bank analyzes the impact of various combinations of home price declines and unemployment increases on the Bank’s residential mortgage portfolios. Those results continue to show that credit losses and impacts on capital ratios are within a level the Bank considers manageable. In addition, the Bank has undertaken extensive enterprise-wide scenario analyses to assess the impact to the enterprise under different scenarios and is confident that it has the financial resources to withstand even a very negative outlook.
42 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Regional
non-retail
exposures The Bank’s exposures outside Canada and the U.S. are diversified by region and product and are sized appropriately relative to the creditworthiness of the counterparties (60% of the exposures are to investment grade counterparties based on a combination of internal and external ratings (January 31, 2026 – 59%; October 31, 2025 – 61%)). The Bank’s exposures are carried at amortized cost or fair value using observable inputs, with negligible amounts valued using models with unobservable inputs (Level 3). There were no significant events during the quarter that materially impacted the Bank’s exposures.
The Bank’s exposure to sovereigns was $59.6 billion as at April 30, 2026 (January 31, 2026 – $56.4 billion; October 31, 2025 – $52.6 billion), $15.2 billion to banks (January 31, 2026 – $16.1 billion; October 31, 2025 – $13.1 billion) and $91.3 billion to corporates (January 31, 2026 – $93.4 billion; October 31, 2025 – $103.8 billion).
In addition to exposures detailed in the table below, the Bank had indirect exposures consisting of securities exposures to
non-European
entities whose parent company is domiciled in Europe of $0.28 billion as at April 30, 2026 (January 31, 2026 – $0.14 billion; October 31, 2025 – $0.01 billion). The Bank’s regional credit exposures are distributed as follows:
T25 Bank’s regional credit exposures distribution
| As at | ||||||||||||||||||||||||||||||||||||
April 30, 2026 |
January 31 2026 |
October 31 2025 |
||||||||||||||||||||||||||||||||||
($ millions) |
Loans and loan equivalents (1) |
Deposits with financial institutions |
Securities (2) |
SFT and derivatives (3) |
Funded total |
Undrawn commitments (4) |
Total |
Total | Total | |||||||||||||||||||||||||||
Latin America (5) |
$ | 69,782 | $ | 11,732 | $ | 21,302 | $ | 2,245 | $ | 105,061 | $ | 10,126 | $ |
115,187 |
$ | 117,240 | $ | 119,600 | ||||||||||||||||||
Caribbean |
8,549 | 2,785 | 4,252 | 47 | 15,633 | 2,646 | 18,279 |
17,748 | 17,481 | |||||||||||||||||||||||||||
Europe, excluding U.K. |
7,180 | 4,016 | 7,258 | 2,652 | 21,106 | 12,299 | 33,405 |
30,559 | 27,788 | |||||||||||||||||||||||||||
U.K. |
5,417 | 4,063 | 1,753 | 2,416 | 13,649 | 5,404 | 19,053 |
18,314 | 16,251 | |||||||||||||||||||||||||||
Asia |
3,133 | 405 | 4,409 | 205 | 8,152 | 5,723 | 13,875 |
16,641 | 19,146 | |||||||||||||||||||||||||||
Other (6) |
2,173 | 4 | 281 | 47 | 2,505 | 283 | 2,788 |
2,812 | 7,701 | |||||||||||||||||||||||||||
Total |
$ | 96,234 | $ | 23,005 | $ | 39,255 | $ | 7,612 | $ | 166,106 | $ | 36,481 | $ |
202,587 |
$ | 203,314 | $ | 207,967 | ||||||||||||||||||
| (1) | Allowances for credit losses are $689 million (January 31, 2026 – $569 million; October 31, 2025 – $637 million). Letters of credit and guarantees are included as funded exposure as they have been issued. Included in loans and loans equivalent are letters of credit and guarantees which total $14,111 million as at April 30, 2026 (January 31, 2026 – $14,337 million; October 31, 2025 – $14,576 million). |
| (2) | Exposures for securities are calculated taking into account derivative positions where the security is the underlying reference asset and short trading positions, with net short positions in brackets. |
| (3) | SFT comprise of securities purchased under resale agreements, obligations related to securities sold under repurchase agreements and securities lending and borrowing transactions. Gross and net funded exposures represent all net positive positions after taking into account collateral. Collateral held against derivatives was $11,609 million (January 31, 2026 – $10,040 million; October 31, 2025 – $8,978 million) and collateral held against SFT was $143,206 million (January 31, 2026 – $181,281 million; October 31, 2025 – $127,966 million) . |
| (4) | Undrawn commitments represent an estimate of the contractual amount that may be drawn upon by the obligor and include commitments to issue letters of credit on behalf of other banks in a syndicated bank lending arrangement. |
| (5) | Includes Mexico, Chile, Peru, Colombia, Brazil, Uruguay, Venezuela, Ecuador and Argentina. |
| (6) | Includes Central America, Middle East and Africa. |
Market risk
Value at Risk (VaR) is a key measure of market risk in the Bank’s trading activities. The table below shows the Bank’s VaR by risk factor:
T26 Market Risk Measures
| Average for the three months ended | ||||||||||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 | April 30, 2025 | ||||||||||||||||||||||||||||||
| Risk factor ($ millions) | As at |
Average |
High |
Low |
As at | Average | As At | Average | ||||||||||||||||||||||||
Credit spread |
$ |
5.5 |
$ |
10.1 |
$ |
14.0 |
$ |
5.5 |
$ | 9.0 | $ | 10.3 | $ | 12.0 | $ | 12.4 | ||||||||||||||||
Interest rate |
8.5 |
7.6 |
12.1 |
4.6 |
5.7 | 10.1 | 8.6 | 12.8 | ||||||||||||||||||||||||
Equities |
6.4 |
5.5 |
7.8 |
3.4 |
5.8 | 4.9 | 8.2 | 6.1 | ||||||||||||||||||||||||
Foreign exchange |
2.9 |
1.9 |
3.7 |
0.6 |
3.4 | 2.1 | 1.4 | 2.0 | ||||||||||||||||||||||||
Commodities |
4.2 |
4.8 |
7.3 |
3.6 |
6.8 | 5.4 | 2.5 | 2.8 | ||||||||||||||||||||||||
Diversification effect (1) |
(16.9 |
) |
(20.6 |
) |
nm |
(2) |
nm |
(2) |
(19.8 | ) | (21.6 | ) | (20.6 | ) | (22.0 | ) | ||||||||||||||||
Total VaR |
$ |
10.6 |
$ |
9.3 |
$ |
13.7 |
$ |
6.8 |
$ | 10.9 | $ | 11.2 | $ | 12.1 | $ | 14.1 | ||||||||||||||||
| (1) | Effective Q2 2026, the combined “Credit spread plus interest rate” risk factor VaR is no longer disclosed. Prior period amounts for “Diversification effect” have been revised to conform with the current period presentation. |
| (2) | Not meaningful |
In the second quarter of 2026, the average
one-day
Total VaR decreased primarily due to lower interest rate risk. There were no trading loss days this quarter. The quality and accuracy of the VaR models is validated by back-testing, which compares daily profit and loss with the daily output of the VaR model.
Interest rate risk
Interest rate risk is the risk of loss due to the following: changes in the level, slope and curvature of the yield curve; the volatility of interest rates and changes in customer preferences (e.g. mortgage prepayment rates).
| Scotiabank Second Quarter Report 2026 | 43 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Non-trading
interest rate sensitivity The following table shows the
pro-forma
pre-tax
impact on the Bank’s net interest income over the next twelve months and economic value of equity of an immediate and sustained 100 basis points increase and decrease in interest rate across major currencies as defined by the Bank. These calculations are based on models that consider a number of inputs, are on a constant balance sheet and make no assumptions for management actions to mitigate the risk. T27 Structural interest sensitivity
| As at | ||||||||||||||||||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 | April 30, 2025 | ||||||||||||||||||||||||||||||||||||||
Net interest income |
Economic value of equity |
|||||||||||||||||||||||||||||||||||||||
($ millions) |
Canadian dollar |
Other currencies |
Total |
Canadian dollar |
Other currencies |
Total |
Net interest income |
Economic value of equity |
Net interest income |
Economic value of equity |
||||||||||||||||||||||||||||||
+100 bps |
$ |
89 |
$ |
108 |
$ |
197 |
$ |
(897 |
) |
$ |
(974 |
) |
$ |
(1,871 |
) |
$ | 215 | $ | (1,603 | ) | $ | 174 | $ | (1,299 | ) | |||||||||||||||
-100 bps |
(49 |
) |
(140 |
) |
(189 |
) |
866 |
749 |
1,615 |
(203 | ) | 1,307 | (225 | ) | 820 | |||||||||||||||||||||||||
During the second quarter of 2026, both interest rate sensitivities remained within the Bank’s approved consolidated limits.
The Board approves the risk appetite for structural interest rate risk, and the Asset Liability Committee (ALCO) and Global Risk Management (GRM) provide ongoing governance through structural interest rate risk policies, limits and operating frameworks. Structural interest rate risk reports are reviewed regularly by GRM, ALCO, and the Board.
The Bank supplements the immediate rate change impact analysis described above with more sophisticated analyses and tools for actual risk management purposes.
Non-trading
foreign currency risk Foreign currency risk is the risk of loss due to changes in spot and forward rates.
As at April 30, 2026, a one per cent increase (decrease) in the Canadian dollar against all currencies in which the Bank operates decreases (increases) the Bank’s
before-tax
annual earnings by approximately $38 million (January 31, 2026 – $44 million; April 30, 2025 – $40 million) in the absence of hedging activity, due primarily from exposure to U.S. dollars from the Bank’s operations in the U.S. and activities conducted internationally in this currency and from exposures to Latin American currencies. A similar change in the Canadian dollar as at April 30, 2026, would increase (decrease) the unrealized foreign currency translation losses in the accumulated other comprehensive income section of shareholders’ equity by approximately $411 million (January 31, 2026 – $406 million; April 30, 2025 – $357 million), net of hedging.
Market risk linkage to Consolidated Statement of Financial Position
Trading assets and liabilities are marked to market daily and included in trading risk measures such as VaR. Derivatives captured under trading risk measures are related to the activities of Global Banking and Markets, while derivatives captured under
non-trading
risk measures comprise those used in asset/liability management and designated in a hedge relationship. A comparison of Consolidated Statement of Financial Position items which are covered under the trading and non-trading
risk measures is provided in the table below. T28 Market risk linkage to Consolidated Statement of Financial Position of the Bank
As at April 30, 2026 |
Market risk measure |
|||||||||||||||||||
($ millions) |
Consolidated Statement of Financial Position |
Trading risk |
Non-trading risk |
Not subject to market risk |
Primary risk sensitivity of non-trading risk |
|||||||||||||||
Precious metals |
$ |
10,200 |
$ |
10,200 |
$ |
– |
$ |
– |
n/a |
|||||||||||
Trading assets |
157,689 |
156,161 |
1,528 |
– |
Interest rate, FX |
|||||||||||||||
Derivative financial instruments |
46,709 |
42,862 |
3,847 |
– |
Interest rate, FX, equity |
|||||||||||||||
Investment securities |
149,806 |
– |
149,806 |
– |
Interest rate, FX, equity |
|||||||||||||||
Loans |
757,434 |
– |
757,434 |
– |
Interest rate, FX |
|||||||||||||||
Assets – other (1) |
399,683 |
699 |
186,179 |
(2) |
212,805 |
Interest rate |
||||||||||||||
Total assets |
$ |
1,521,521 |
$ |
209,922 |
$ |
1,098,794 |
$ |
212,805 |
||||||||||||
Deposits |
$ |
981,489 |
$ |
– |
$ |
910,881 |
$ |
70,608 |
Interest rate, FX, equity |
|||||||||||
Financial instruments designated at fair value through profit or loss |
48,629 |
48,629 |
– |
– |
n/a |
|||||||||||||||
Obligations related to securities sold short |
38,064 |
38,064 |
– |
– |
n/a |
|||||||||||||||
Derivative financial instruments |
56,854 |
51,696 |
5,158 |
– |
Interest rate, FX, equity |
|||||||||||||||
Trading liabilities (3) |
891 |
891 |
– |
– |
n/a |
|||||||||||||||
Pension and other benefit liabilities |
1,628 |
– |
1,628 |
– |
Interest rate, credit spread, equity |
|||||||||||||||
Liabilities – other (4) |
305,384 |
344 |
219,865 |
(2) |
85,175 |
Interest rate |
||||||||||||||
Total liabilities |
$ |
1,432,939 |
$ |
139,624 |
$ |
1,137,532 |
$ |
155,783 |
||||||||||||
| (1) | Includes goodwill, intangibles, other assets and securities purchased under resale agreements and securities borrowed. |
| (2) | Effective Q2 2026, securities purchased under resale agreement and securities sold under repurchase agreements are now classified as non-trading risk. |
| (3) | Gold and silver certificates and bullion are included in other liabilities. |
| (4) | Includes obligations related to securities sold under repurchase agreements and securities lent and other liabilities. |
44 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
| As at October 31, 2025 | Market risk measure | |||||||||||||||||||
($ millions) |
Consolidated Statement of Financial Position |
Trading risk |
Non-trading risk |
Not subject to market risk |
Primary risk sensitivity of non-trading risk |
|||||||||||||||
Precious metals |
$ | 5,156 | $ | 5,156 | $ | – | $ | – | n/a | |||||||||||
Trading assets |
152,223 | 151,223 | 1,000 | – | Interest rate, FX | |||||||||||||||
Derivative financial instruments |
46,531 | 42,120 | 4,411 | – | Interest rate, FX, equity | |||||||||||||||
Investment securities |
149,948 | – | 149,948 | – | Interest rate, FX, equity | |||||||||||||||
Loans |
771,045 | – | 771,045 | – | Interest rate, FX | |||||||||||||||
Assets – other (1) |
335,139 | 403 | – | 334,736 | n/a | |||||||||||||||
Total assets |
$ | 1,460,042 | $ | 198,902 | $ | 926,404 | $ | 334,736 | ||||||||||||
Deposits |
$ | 966,279 | $ | – | $ | 898,495 | $ | 67,784 | Interest rate, FX, equity | |||||||||||
Financial instruments designated at fair value through profit or loss |
47,165 | 47,165 | – | – | n/a | |||||||||||||||
Obligations related to securities sold short |
38,104 | 38,104 | – | – | n/a | |||||||||||||||
Derivative financial instruments |
56,031 | 51,586 | 4,445 | – | Interest rate, FX, equity | |||||||||||||||
Trading liabilities (2) |
757 | 757 | – | – | n/a | |||||||||||||||
Pension and other benefit liabilities |
1,627 | – | 1,627 | – | Interest rate, credit spread, equity | |||||||||||||||
Liabilities – other (3) |
261,492 | 310 | – | 261,182 | n/a | |||||||||||||||
Total liabilities |
$ | 1,371,455 | $ | 137,922 | $ | 904,567 | $ | 328,966 | ||||||||||||
| (1) | Includes goodwill, intangibles, other assets and securities purchased under resale agreements and securities borrowed. |
| (2) | Gold and silver certificates and bullion are included in other liabilities. |
| (3) | Includes obligations related to securities sold under repurchase agreements and securities lent and other liabilities. |
Liquidity risk
Effective liquidity risk management is essential to maintain the confidence of depositors and counterparties, manage the Bank’s cost of funds and to support core business activities, even under adverse circumstances.
Liquidity risk is managed within a framework of policies and limits that are approved by the Board of Directors, as outlined on page 103 of the Bank’s 2025 Annual Report.
Liquid assets are a key component of this framework. The determination of the appropriate levels for liquid asset portfolios is based on the amount of liquidity the Bank might need to fund expected cash flows in the normal course of business, as well as what might be required in periods of stress to meet cash outflows. Stress events include periods when there are disruptions in the capital markets or events which may impair the Bank’s access to funding markets or liquidity. The Bank uses stress testing to assess the impact of stress events and to assess the amount of liquid assets that would be required in various stress scenarios.
Liquid assets
Liquid assets are a key component of liquidity management and the Bank holds these types of assets in sufficient quantity to meet potential needs.
Liquid assets can be used to generate cash either through sale, repurchase transactions or other transactions where these assets can be used as collateral to generate cash, or by allowing the asset to mature. Liquid assets include unrestricted deposits with central banks, deposits with financial institutions, marketable securities, precious metals and securities received as collateral from securities financing and derivative transactions.
Marketable securities are securities traded in active markets, which can be converted to cash within a timeframe that is in accordance with the Bank’s liquidity management framework. Assets are assessed considering a number of factors, including the expected time it would take to convert them to cash.
Marketable securities included in liquid assets are comprised of securities specifically held as a liquidity buffer or for asset/liability management purposes, trading securities primarily held by Global Banking and Markets, and collateral received from securities financing and derivative transactions.
The Bank maintains large holdings of unencumbered liquid assets to support its operations. These assets generally can be sold or pledged to meet the Bank’s obligations. As at April 30, 2026 unencumbered liquid assets were $355 billion (October 31, 2025 – $327 billion). Securities, including National Housing Act (NHA) mortgage-backed securities, comprised 76% of liquid assets (October 31, 2025 – 80%). Other unencumbered liquid assets, comprising cash and deposits with central banks, deposits with financial institutions and precious metals, were 24% (October 31, 2025 – 20%). The increase in total unencumbered liquid assets was mainly attributable to an increase in Canada government obligations, cash and deposits with central banks, foreign government obligations and precious metals, partly offset by a decrease in other liquid securities, NHA mortgage-backed securities and deposits with financial institutions.
The carrying values outlined in the liquid asset table are consistent with the carrying values in the Bank’s Consolidated Statement of Financial Position as at April 30, 2026. The liquidity value of the portfolio will vary under different stress events as different assumptions are used for the stress scenarios.
| Scotiabank Second Quarter Report 2026 | 45 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
The Bank’s liquid asset pool is summarized in the following table:
T29 Liquid asset pool
As at April 30, 2026 |
||||||||||||||||||||||||||||
Bank-owned liquid assets |
Securities received as collateral from securities financing and derivative transactions |
Encumbered liquid assets |
Unencumbered liquid assets |
|||||||||||||||||||||||||
($ millions) |
Total liquid assets |
Pledged as collateral |
Other (1) |
Available as collateral |
Other |
|||||||||||||||||||||||
Cash and deposits with central banks |
$ |
72,690 |
$ |
– |
$ |
72,690 |
$ |
– |
$ |
5,137 |
$ |
67,553 |
$ |
– |
||||||||||||||
Deposits with financial institutions |
6,611 |
– |
6,611 |
– |
62 |
6,549 |
– |
|||||||||||||||||||||
Precious metals |
10,200 |
– |
10,200 |
– |
– |
10,200 |
– |
|||||||||||||||||||||
Securities: |
||||||||||||||||||||||||||||
Canadian government obligations |
85,919 |
27,004 |
112,923 |
39,570 |
– |
73,353 |
– |
|||||||||||||||||||||
Foreign government obligations |
113,786 |
161,989 |
275,775 |
140,963 |
– |
134,812 |
– |
|||||||||||||||||||||
Other securities |
93,546 |
188,607 |
282,153 |
247,924 |
– |
34,229 |
– |
|||||||||||||||||||||
NHA mortgage-backed securities |
34,780 |
– |
34,780 |
6,600 |
– |
28,180 |
– |
|||||||||||||||||||||
Total |
$ |
417,532 |
$ |
377,600 |
$ |
795,132 |
$ |
435,057 |
$ |
5,199 |
$ |
354,876 |
$ |
– |
||||||||||||||
| As at October 31, 2025 | ||||||||||||||||||||||||||||
| Bank-owned liquid assets |
Securities received as collateral from securities financing and derivative transactions |
Encumbered liquid assets |
Unencumbered liquid assets |
|||||||||||||||||||||||||
($ millions) |
Total liquid assets |
Pledged as collateral |
Other (1) |
Available as collateral |
Other | |||||||||||||||||||||||
Cash and deposits with central banks |
$ | 58,825 | $ | – | $ | 58,825 | $ | – | $ | 5,940 | $ | 52,885 | $ | – | ||||||||||||||
Deposits with financial institutions |
7,142 | – | 7,142 | – | 56 | 7,086 | – | |||||||||||||||||||||
Precious metals |
5,156 | – | 5,156 | – | – | 5,156 | – | |||||||||||||||||||||
Securities: |
||||||||||||||||||||||||||||
Canadian government obligations |
76,593 | 21,968 | 98,561 | 40,032 | – | 58,529 | – | |||||||||||||||||||||
Foreign government obligations |
114,232 | 123,998 | 238,230 | 110,822 | – | 127,408 | – | |||||||||||||||||||||
Other securities |
93,963 | 151,055 | 245,018 | 201,717 | – | 43,301 | – | |||||||||||||||||||||
NHA mortgage-backed securities |
38,813 | – | 38,813 | 6,670 | – | 32,143 | – | |||||||||||||||||||||
Total |
$ | 394,724 | $ | 297,021 | $ | 691,745 | $ | 359,241 | $ | 5,996 | $ | 326,508 | $ | – | ||||||||||||||
| (1) | Assets which are restricted from being used to secure funding for legal or other reasons. |
A summary of total unencumbered liquid assets held by the parent bank and its branches, and domestic and foreign subsidiaries, is presented below:
T30 Total unencumbered liquid assets held by the parent bank and its branches, and domestic and foreign subsidiaries
| As at | ||||||||
($ millions) |
April 30 2026 |
October 31 2025 |
||||||
The Bank of Nova Scotia (Parent) |
$ |
282,291 |
$ | 254,103 | ||||
Bank domestic subsidiaries |
29,566 |
25,017 | ||||||
Bank foreign subsidiaries |
43,019 |
47,388 | ||||||
Total |
$ |
354,876 |
$ | 326,508 | ||||
The Bank’s liquidity pool is held across major currencies, mostly comprised of Canadian and U.S. dollar holdings. As shown above, the vast majority (88% (October 31, 2025 – 85%)) of liquid assets are held by the Bank’s corporate office, branches of the Bank, and Canadian subsidiaries of the Bank. The Bank monitors and ensures compliance in relation to minimum levels of liquidity required and assets held within each entity, and/or jurisdiction. Potential regulatory restrictions on the transferability of liquid assets held in Bank foreign subsidiaries are taken into consideration in the Bank’s liquidity management framework.
46 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Encumbered assets
In the course of the Bank’s activities, securities and other assets are pledged to secure an obligation, participate in clearing or settlement systems, or operate in a foreign jurisdiction. Securities are also pledged under repurchase agreements. A summary of encumbered and unencumbered assets is presented below:
day-to-day
T31 Asset encumbrance
As at April 30, 2026 |
||||||||||||||||||||||||||||
Bank-owned assets |
Securities received as collateral from securities financing and derivative transactions |
Encumbered assets |
Unencumbered assets |
|||||||||||||||||||||||||
($ millions) |
Total assets |
Pledged as collateral |
Other (1) |
Available as collateral (2) |
Other (3) |
|||||||||||||||||||||||
Cash and deposits with central banks |
$ |
72,690 |
$ |
– |
$ |
72,690 |
$ |
– |
$ |
5,137 |
$ |
67,553 |
$ |
– |
||||||||||||||
Deposits with financial institutions |
6,611 |
– |
6,611 |
– |
62 |
6,549 |
– |
|||||||||||||||||||||
Precious metals |
10,200 |
– |
10,200 |
– |
– |
10,200 |
– |
|||||||||||||||||||||
Liquid securities: |
||||||||||||||||||||||||||||
Canadian government obligations |
85,919 |
27,004 |
112,923 |
39,570 |
– |
73,353 |
– |
|||||||||||||||||||||
Foreign government obligations |
113,786 |
161,989 |
275,775 |
140,963 |
– |
134,812 |
– |
|||||||||||||||||||||
Other liquid securities |
93,546 |
188,607 |
282,153 |
247,924 |
– |
34,229 |
– |
|||||||||||||||||||||
Other securities |
6,260 |
18,715 |
24,975 |
13,328 |
– |
– |
11,647 |
|||||||||||||||||||||
Loans classified as liquid assets: |
||||||||||||||||||||||||||||
NHA mortgage-backed securities |
34,780 |
– |
34,780 |
6,600 |
– |
28,180 |
– |
|||||||||||||||||||||
Other loans |
729,191 |
– |
729,191 |
11,113 |
81,960 |
20,253 |
615,865 |
|||||||||||||||||||||
Other financial assets (4) |
309,148 |
(228,413 |
) |
80,735 |
18,509 |
– |
– |
62,226 |
||||||||||||||||||||
Non-financial assets |
59,390 |
– |
59,390 |
– |
– |
– |
59,390 |
|||||||||||||||||||||
Total |
$ |
1,521,521 |
$ |
167,902 |
$ |
1,689,423 |
$ |
478,007 |
$ |
87,159 |
$ |
375,129 |
$ |
749,128 |
||||||||||||||
| As at October 31, 2025 | ||||||||||||||||||||||||||||
| Securities received as collateral from securities financing and derivative transactions |
Encumbered assets | Unencumbered assets | ||||||||||||||||||||||||||
($ millions) |
Bank-owned assets |
Total assets | Pledged as collateral |
Other (1) |
Available as collateral (2) |
Other (3) |
||||||||||||||||||||||
Cash and deposits with central banks |
$ | 58,825 | $ | – | $ | 58,825 | $ | – | $ | 5,940 | $ | 52,885 | $ | – | ||||||||||||||
Deposits with financial institutions |
7,142 | – | 7,142 | – | 56 | 7,086 | – | |||||||||||||||||||||
Precious metals |
5,156 | – | 5,156 | – | – | 5,156 | – | |||||||||||||||||||||
Liquid securities: |
||||||||||||||||||||||||||||
Canadian government obligations |
76,593 | 21,968 | 98,561 | 40,032 | – | 58,529 | – | |||||||||||||||||||||
Foreign government obligations |
114,232 | 123,998 | 238,230 | 110,822 | – | 127,408 | – | |||||||||||||||||||||
Other liquid securities |
93,963 | 151,055 | 245,018 | 201,717 | – | 43,301 | – | |||||||||||||||||||||
Other securities |
6,004 | 18,613 | 24,617 | 8,971 | – | – | 15,646 | |||||||||||||||||||||
Loans classified as liquid assets: |
||||||||||||||||||||||||||||
NHA mortgage-backed securities |
38,813 | – | 38,813 | 6,670 | – | 32,143 | – | |||||||||||||||||||||
Other loans |
740,719 | – | 740,719 | 10,016 | 79,113 | 20,157 | 631,433 | |||||||||||||||||||||
Other financial assets (4) |
258,925 | (182,597 | ) | 76,328 | 16,847 | – | – | 59,481 | ||||||||||||||||||||
Non-financial assets |
59,670 | – | 59,670 | – | – | – | 59,670 | |||||||||||||||||||||
Total |
$ | 1,460,042 | $ | 133,037 | $ | 1,593,079 | $ | 395,075 | $ | 85,109 | $ | 346,665 | $ | 766,230 | ||||||||||||||
| (1) | Assets which are restricted from being used to secure funding for legal or other reasons. |
| (2) | Assets that are readily available in the normal course of business to secure funding or meet collateral needs including central bank borrowing immediately available. |
| (3) | Other unencumbered assets are not subject to any restrictions on their use to secure funding or as collateral but the Bank would not consider them to be readily available. These include loans, a portion of which may be used to access central bank facilities outside of the normal course or to raise secured funding through the Bank’s secured funding programs. |
| (4) | Securities received as collateral against other financial assets are included within liquid securities and other securities. |
As at April 30, 2026 total encumbered assets of the Bank were $565 billion (October 31, 2025 – $480 billion). Of the remaining $1,124 billion (October 31, 2025 – $1,113 billion) of unencumbered assets, $375 billion (October 31, 2025 – $347 billion) are considered readily available in the normal course of business to secure funding or meet collateral needs as detailed above.
In some derivative contracts, the Bank would be required to post additional collateral or receive less collateral in the event its credit rating was downgraded. The Bank maintains access to sufficient collateral to meet these obligations in the event of a downgrade of its ratings by one or more of the rating agencies. As at April 30, 2026 the potential adverse impact on derivatives collateral that would result from a one, two or three-notch downgrade of the Bank’s rating below its lowest current rating was $34 million, $929 million or $1,808 million, respectively (October 31, 2025 – $21 million, $1,061 million or $2,013 million).
over-the-counter
Encumbered liquid assets are not considered to be available for liquidity management purposes. Liquid assets which are used to hedge derivative positions in trading books or for hedging purposes are considered to be available for liquidity management provided they meet the criteria discussed in liquid assets above.
Credit ratings
Credit ratings are one of the factors that impact the Bank’s access to capital markets and the terms on which it can conduct derivatives, hedging transactions and borrow funds. The credit ratings and outlook that the rating agencies assign to the Bank are based on their own views and methodologies.
The Bank continues to have strong credit ratings and its deposits and issuer ratings
(1)
are rated AA+ by Fitch Ratings, Aa2 by Moody’s, AA by Morningstar DBRS and A+ by Standard and Poor’s (S&P). On May 12, 2026, Fitch upgraded the Bank’s deposits and long-term non-bail-inable senior debt rating by one notch to AA+ from AA following their updates to the global ratings criteria. The Bank’s bail-inable senior debt is rated AA-
by Fitch Ratings, A2 by Moody’s, AA (low) by Morningstar DBRS and A-
by S&P. As of April 30, 2026, all rating agencies have a Stable outlook on the Bank and there were no changes made to the Bank’s outlook during the quarter. | (1) | Applicable to long-term non-bail-inable senior unsecured debt. Rating classes may differ from rating categories used by rating agencies (e.g., Fitch Issuer Default Rating is AA-). |
| Scotiabank Second Quarter Report 2026 | 47 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Liquidity coverage ratio
The Liquidity Coverage Ratio (LCR) measure is based on a
30-day
liquidity stress scenario, with assumptions defined in the Liquidity Adequacy Requirements (LAR) Guideline issued by the Office of the Superintendent of Financial Institutions (OSFI). The LCR is calculated as the ratio of high quality liquid assets (HQLA) to net cash outflows. The Bank is subject to a regulatory minimum LCR of 100%. HQLA are defined in the LAR Guideline and are grouped into three main categories with varying haircuts applied to arrive at the amount included in the total weighted value in the table that follows.
The total weighted values for net cash outflows for the next 30 days are derived by applying the assumptions specified in the LAR Guideline to specific items, including loans, deposits, maturing debt, derivative transactions and commitments to extend credit.
The following table presents the Bank’s LCR for the quarter ended April 30, 2026, based on the average daily positions in the quarter:
T32 Bank’s average LCR
(1)
For the quarter ended April 30, 2026 ($ millions (2) |
Total unweighted Value (Average) (3) |
Total weighted Value (Average) (4) |
||||||
High-quality liquid assets |
||||||||
Total high-quality liquid assets (HQLA) |
* |
$ |
290,089 |
|||||
Cash outflows |
||||||||
Retail deposits and deposits from small business customers, of which: |
$ | 267,250 | $ | 28,565 | ||||
Stable deposits |
105,699 | 3,409 | ||||||
Less stable deposits |
161,551 | 25,156 | ||||||
Unsecured wholesale funding, of which: |
291,063 | 119,765 | ||||||
Operational deposits (all counterparties) and deposits in networks of cooperative banks |
118,568 | 28,495 | ||||||
Non-operational deposits (all counterparties) |
161,721 | 80,496 | ||||||
Unsecured debt |
10,774 | 10,774 | ||||||
Secured wholesale funding |
* |
120,873 | ||||||
Additional requirements, of which: |
301,393 | 79,536 | ||||||
Outflows related to derivative exposures and other collateral requirements |
62,017 | 40,117 | ||||||
Outflows related to loss of funding on debt products |
6,706 | 6,706 | ||||||
Credit and liquidity facilities |
232,670 | 32,713 | ||||||
Other contractual funding obligations |
4,057 | 3,885 | ||||||
Other contingent funding obligations (5) |
647,710 | 9,110 | ||||||
Total cash outflows |
* |
$ |
361,734 |
|||||
Cash inflows |
||||||||
Secured lending (e.g. reverse repos) |
$ | 389,193 | $ | 57,339 | ||||
Inflows from fully performing exposures |
34,775 | 20,076 | ||||||
Other cash inflows |
50,937 | 50,937 | ||||||
Total cash inflows |
$ |
474,905 |
$ |
128,352 |
||||
| Total adjusted value (6) |
||||||||
Total HQLA |
* |
$ |
290,089 |
|||||
Total net cash outflows |
* |
$ |
233,382 |
|||||
Liquidity coverage ratio (%) |
* |
124 |
% | |||||
| For the quarter ended January 31, 2026 ($ millions) |
Total adjusted value (6) |
|||||||
Total HQLA |
* | $ | 275,292 | |||||
Total net cash outflows |
* | $ | 224,937 | |||||
Liquidity coverage ratio (%) |
* | 122 | % | |||||
| * | Disclosure is not required under regulatory guideline. |
| (1) | The LCR is calculated in accordance with OSFI’s LAR Guideline (April 2025). |
| (2) | Based on the average of daily positions of the 62 business days in the quarter. |
| (3) | Unweighted values represent outstanding balances maturing or callable within the next 30 days. |
| (4) | Weighted values represent balances calculated after the application of HQLA haircuts or inflow and outflow rates, as prescribed by the OSFI LAR Guideline. |
| (5) | Total unweighted value includes uncommitted credit and liquidity facilities, guarantees and letters of credit, outstanding debt securities with remaining maturity greater than 30 days, and other contractual cash outflows. |
| (6) | Total adjusted value represents balances calculated after the application of both haircuts and inflow and outflow rates and any applicable caps. |
HQLA is substantially comprised of Level 1 assets (as defined in the LAR Guideline), such as cash, deposits with central banks available to the Bank in times of stress, and highly rated securities issued or guaranteed by governments, central banks and supranational entities.
The Bank’s LCR increased by 2% as at April 30, 2026 versus the previous quarter. This was mainly attributable to higher HQLA and lower net cash outflows from unsecured wholesale funding, partly offset by higher cash outflows from securities borrowing and lending activities, and higher outflows related to derivative exposures and other collateral requirements. The Bank monitors its significant currency exposures, Canadian and U.S. dollars, in accordance with its liquidity risk management framework and risk appetite.
48 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Net stable funding ratio
The Net Stable Funding Ratio (NSFR) requires institutions to maintain a stable funding profile in relation to the composition of their assets and
off-balance
sheet exposures. It is calculated as the ratio of available stable funding (ASF) to required stable funding (RSF), with assumptions defined in the OSFI LAR Guideline. The Bank is subject to a regulatory minimum NSFR of 100%. ASF is defined as the portion of capital and liabilities expected to be reliable over the time horizons considered by the NSFR. RSF is a function of the liquidity characteristics and residual maturities of the various assets held by the Bank as well as those of its
off-balance
sheet exposures. The total weighted values for ASF and RSF included in the table that follows are derived by applying the assumptions specified in the LAR Guideline to balance sheet items, including capital instruments, wholesale funding, deposits, loans and mortgages, securities, derivatives and commitments to extend credit.
The following table presents the Bank’s NSFR as at April 30, 2026:
T33 Bank’s NSFR
(1)
| Unweighted Value by Residual Maturity | Weighted Value (3) |
|||||||||||||||||||
As at April 30, 2026 ($ millions) |
No maturity (2) |
< 6 months | 6-12 months |
≥ 1 year |
||||||||||||||||
Available Stable Funding (ASF) Item |
||||||||||||||||||||
| Capital: | $ | 95,929 | $ | – | $ | – | $ | – | $ | 95,929 | ||||||||||
Regulatory capital |
95,929 | – | – | – | 95,929 | |||||||||||||||
Other capital instruments |
– | – | – | – | – | |||||||||||||||
| Retail deposits and deposits from small business customers: | 236,217 | 74,331 | 36,983 | 48,281 | 358,899 | |||||||||||||||
Stable deposits |
96,266 | 26,218 | 13,000 | 15,772 | 144,482 | |||||||||||||||
Less stable deposits |
139,951 | 48,113 | 23,983 | 32,509 | 214,417 | |||||||||||||||
| Wholesale funding: | 213,408 | 402,798 | 86,678 | 127,882 | 334,298 | |||||||||||||||
Operational deposits |
122,360 | – | – | – | 61,181 | |||||||||||||||
Other wholesale funding |
91,048 | 402,798 | 86,678 | 127,882 | 273,117 | |||||||||||||||
| Liabilities with matching interdependent assets (4) |
– | 1,296 | 530 | 14,521 | – | |||||||||||||||
| Other liabilities: | 29,429 | 151,528 | 23,665 | |||||||||||||||||
NSFR derivative liabilities |
12,859 | |||||||||||||||||||
All other liabilities and equity not included in the above categories |
29,429 | 113,946 | 2,115 | 22,608 | 23,665 | |||||||||||||||
Total ASF |
$ |
812,791 |
||||||||||||||||||
Required Stable Funding (RSF) Item |
||||||||||||||||||||
| Total NSFR high-quality liquid assets (HQLA) | $ | 29,610 | ||||||||||||||||||
| Deposits held at other financial institutions for operational purposes | $ | 2,024 | $ | – | $ | – | $ | – | $ | 1,012 | ||||||||||
| Performing loans and securities: | 129,310 | 347,633 | 96,851 | 416,089 | 569,280 | |||||||||||||||
Performing loans to financial institutions secured by Level 1 HQLA |
77 | 83,160 | 1,906 | – | 5,601 | |||||||||||||||
Performing loans to financial institutions secured by non-Level 1 HQLA and unsecured performing loans to financial institutions |
1,811 | 126,531 | 12,827 | 23,959 | 46,129 | |||||||||||||||
Performing loans to non-financial corporate clients, loans to retail and small business customers, and loans to sovereigns, central banks and PSEs, of which: |
77,560 | 100,880 | 44,546 | 137,279 | 254,758 | |||||||||||||||
With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk |
– | 559 | 950 | 4,934 | 3,962 | |||||||||||||||
Performing residential mortgages, of which: |
21,172 | 36,337 | 37,441 | 248,214 | 232,336 | |||||||||||||||
| With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk |
21,172 | 30,173 | 31,198 | 203,850 | 188,422 | |||||||||||||||
Securities that are not in default and do not qualify as HQLA, including exchange-traded equities |
28,690 | 725 | 131 | 6,637 | 30,456 | |||||||||||||||
| Assets with matching interdependent liabilities (4) |
– | 1,296 | 530 | 14,521 | – | |||||||||||||||
| Other assets: | 11,647 | 192,980 | 79,713 | |||||||||||||||||
Physical traded commodities, including gold |
11,647 | 9,900 | ||||||||||||||||||
Assets posted as initial margin for derivative contracts and contributions to default funds of CCPs |
21,235 | 18,049 | ||||||||||||||||||
NSFR derivative assets |
8,678 | – | ||||||||||||||||||
NSFR derivative liabilities before deduction of variation margin posted |
31,923 | 1,596 | ||||||||||||||||||
All other assets not included in the above categories |
– | 80,977 | – | 50,167 | 50,168 | |||||||||||||||
Off-balance sheet items |
560,779 | 21,379 | ||||||||||||||||||
Total RSF |
$ |
700,994 |
||||||||||||||||||
Net Stable Funding Ratio (%) |
116 |
% | ||||||||||||||||||
| (1) | This measure has been disclosed in this document in accordance with the LAR Guideline – Net Stable Funding Ratio Disclosure Requirements (January 2021). |
| (2) | Items in the “no maturity” time bucket do not have a stated maturity. These may include, but are not limited to, items such as capital with perpetual maturity, non-maturity deposits, short positions, open maturity positions, non-HQLA equities, and physical traded commodities. |
| (3) | Weighted values represent balances calculated after the application of ASF and RSF rates, as prescribed by the LAR Guideline. |
| (4) | Interdependent assets and liabilities are primarily comprised of transactions related to the Canada Mortgage Bond program. |
| As at January 31, 2026 ($ millions) |
Weighted Value (3) |
|||
Total ASF |
$ | 800,090 | ||
Total RSF |
692,951 | |||
Net stable funding ratio (%) |
115 | % | ||
| Scotiabank Second Quarter Report 2026 | 49 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Available stable funding is primarily provided by the Bank’s large pool of retail, small business and corporate customer deposits; secured and unsecured wholesale funding and capital. Required stable funding primarily originates from the Bank’s loan and mortgage portfolio, securities holdings,
off-balance
sheet items and other assets. The Bank’s NSFR increased by 1% as at April 30, 2026 versus the previous quarter. This was mainly attributable to higher ASF from wholesale funding, partly offset by higher RSF for mortgages and loans.
Funding
The Bank ensures that its funding sources are well diversified. Funding concentrations are regularly monitored and analyzed by type. The sources of funding are capital, deposits from retail and commercial clients sourced through the Canadian and international branch network, deposits from financial institutions as well as wholesale debt issuances.
Capital and personal deposits are key components of the Bank’s core funding and these amounted to $395 billion as at April 30, 2026 (October 31, 2025 – $403 billion). The decrease since October 31, 2025 is due primarily to lower personal deposits. A portion of commercial deposits, particularly those of an operating or relationship nature, are also considered part of the Bank’s core funding. Furthermore, core funding is augmented by longer-term wholesale debt issuances (original maturity of 1 year or more) of $212 billion (October 31, 2025 – $199 billion). Longer-term wholesale debt issuances include senior notes, mortgage securitizations, asset-backed securities and covered bonds.
The Bank operates in many different currencies and countries. From a funding perspective, the most significant currencies are Canadian and U.S. dollars. With respect to the Bank’s operations outside Canada, there are different funding strategies depending on the nature of the activities in each country. For those countries where the Bank operates a branch banking subsidiary, the strategy is for the subsidiary to be substantially self-funding in its local market. For other subsidiaries or branches outside Canada where local deposit gathering capability is not sufficient, funding is provided through the wholesale funding activities of the Bank.
From an overall funding perspective, the Bank’s objective is to achieve an appropriate balance between the cost and the stability of funding. Diversification of funding sources is a key element of the funding strategy.
The Bank’s wholesale debt diversification strategy is primarily executed via the Bank’s main wholesale funding centres, located in Toronto, New York, London and Singapore. The majority of these funds are sourced in Canadian and U.S. dollars. Where required, these funds are swapped to fund assets in different currencies. The funding strategy deployed by wholesale funding centres and the management of associated risks, such as geographic and currency risk, are managed centrally within the framework of policies and limits that are approved by the Board of Directors.
In the normal course, the Bank uses a mix of unsecured and secured wholesale funding instruments across a variety of markets. The choice of instruments and markets is based on a number of factors, including relative cost, market capacity and diversification of funding. Market conditions can change over time, impacting cost and capacity in particular markets or instruments. Changing market conditions can include periods of stress where the availability of funding in particular markets or instruments is constrained. In these circumstances, the Bank would increase its focus on sources of funding in functioning markets and secured funding instruments. Should a period of extreme stress exist such that all wholesale funding sources are constrained, the Bank maintains a pool of liquid assets to mitigate its liquidity risk. This pool includes cash, deposits with central banks and securities.
In Canada, the Bank raises short and longer-term wholesale debt through the issuance of senior unsecured notes. Additional longer-term wholesale debt may be generated through the Bank’s Canadian Debt and Equity Shelf, the securitization of Canadian insured residential mortgages through Canada Mortgage and Housing Corporation (CMHC) programs (such as Canada Mortgage Bonds), uninsured residential mortgages through the Bank’s Covered Bond Program, retail credit card receivables through the Trillium Credit Card Trust II program and retail indirect auto loan receivables through the Securitized Term Auto Receivables Trust program. CMHC securitization programs, while included in the Bank’s view of wholesale debt issuance, do not historically entail the
run-off
risk that can be experienced in funding raised from capital markets. Outside of Canada, short-term wholesale debt may be raised through the issuance of negotiable certificates of deposit in the United States, the United Kingdom and the issuance of commercial paper in the United States. The Bank operates longer-term wholesale debt issuance registered programs in the United States, such as its SEC Registered Debt and Equity Shelf, and
non-registered
programs, such as the securitization of retail indirect auto loan receivables through the Securitized Term Auto Receivables Trust program and retail credit card receivables through the Trillium Credit Card Trust II program. The Bank may issue offerings via its Covered Bond Program (listed with the U.K. Listing Authority and the Swiss Stock Exchange), in Europe, the United Kingdom, the United States, Australia, Switzerland, Canada and Norway. The Bank also issues longer-term notes across a variety of currencies through its Australian Medium Term Note Programme, European Medium Term Note Programme (listed with the U.K. Listing Authority and the Swiss Stock Exchange) and Singapore Medium Term Note Programme (listed with the Singapore Exchange). The Department of Finance’s
bail-in
regulations under the Canada Deposit Insurance Corporation (CDIC) Act and the Bank Act, became effective September 23, 2018. Senior unsecured debt issued by the Bank on or after September 23, 2018, that has an original term greater than 400 days and is marketable, subject to certain exceptions, is subject to the Canadian Bank Recapitalization (Bail-in)
regime. Under the Bail-in
regime, in circumstances when the Superintendent of Financial Institutions has determined that a bank may no longer be viable, the Governor in Council may, upon a recommendation of the Minister of Finance that they are of the opinion that it is in the public interest to do so, grant an order directing the CDIC to convert all or a portion of certain shares and liabilities of that bank into common shares. 50 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
The table below provides the remaining contractual maturities of funding raised through wholesale funding sources. In the Consolidated Statement of Financial Position, these liabilities are primarily included in Business and Government Deposits.
Wholesale funding sources
T34 Wholesale funding
(1)
As at April 30, 2026 |
||||||||||||||||||||||||||||||||||||||||
($ millions) |
Less than 1 month |
1-3 months |
3-6 months |
6-9 months |
9-12 months |
Sub-total ≤ 1 year |
1-2 years |
2-5 years |
>5 years |
Total |
||||||||||||||||||||||||||||||
Deposit by banks (2) |
$ |
2,711 |
$ |
1,047 |
$ |
181 |
$ |
129 |
$ |
64 |
$ |
4,132 |
$ |
315 |
$ |
– |
$ |
– |
$ |
4,447 |
||||||||||||||||||||
Bearer deposit notes, commercial paper and certificate of deposits |
5,308 |
18,840 |
20,034 |
22,535 |
22,167 |
88,884 |
2,709 |
345 |
114 |
92,052 |
||||||||||||||||||||||||||||||
Asset-backed commercial paper (3) |
3,407 |
5,459 |
5,068 |
– |
– |
13,934 |
– |
– |
– |
13,934 |
||||||||||||||||||||||||||||||
Senior notes (4) |
– |
2,253 |
678 |
1,695 |
4,111 |
8,737 |
3,246 |
6,956 |
13,392 |
32,331 |
||||||||||||||||||||||||||||||
Bail-inable notes (5) |
1,500 |
2,239 |
5,012 |
4,408 |
5,596 |
18,755 |
6,520 |
27,390 |
27,105 |
79,770 |
||||||||||||||||||||||||||||||
Asset-backed securities |
23 |
44 |
652 |
58 |
52 |
829 |
2,705 |
888 |
65 |
4,487 |
||||||||||||||||||||||||||||||
Covered bonds |
626 |
2,402 |
5,654 |
2,391 |
5,801 |
16,874 |
9,065 |
16,945 |
4,913 |
47,797 |
||||||||||||||||||||||||||||||
Mortgage securitization (6) |
– |
421 |
782 |
397 |
133 |
1,733 |
3,056 |
6,367 |
4,202 |
15,358 |
||||||||||||||||||||||||||||||
Subordinated debentures (7) |
– |
– |
– |
– |
– |
– |
54 |
43 |
7,941 |
8,038 |
||||||||||||||||||||||||||||||
Total wholesale funding sources |
$ |
13,575 |
$ |
32,705 |
$ |
38,061 |
$ |
31,613 |
$ |
37,924 |
$ |
153,878 |
$ |
27,670 |
$ |
58,934 |
$ |
57,732 |
$ |
298,214 |
||||||||||||||||||||
Of Which: |
||||||||||||||||||||||||||||||||||||||||
Unsecured funding |
$ |
9,520 |
$ |
24,379 |
$ |
25,905 |
$ |
28,766 |
$ |
31,938 |
$ |
120,508 |
$ |
12,843 |
$ |
34,734 |
$ |
48,552 |
$ |
216,637 |
||||||||||||||||||||
Secured funding |
4,055 |
8,326 |
12,156 |
2,847 |
5,986 |
33,370 |
14,827 |
24,200 |
9,180 |
81,577 |
||||||||||||||||||||||||||||||
| As at October 31, 2025 | ||||||||||||||||||||||||||||||||||||||||
($ millions) |
Less than 1 month |
1-3 months |
3-6 months |
6-9 months |
9-12 months |
Sub-total ≤ 1 year |
1-2 years |
2-5 years |
>5 years |
Total | ||||||||||||||||||||||||||||||
Deposit by banks (2) |
$ | 1,358 | $ | 1,362 | $ | 402 | $ | 226 | $ | 28 | $ | 3,376 | $ | – | $ | 281 | $ | – | $ | 3,657 | ||||||||||||||||||||
Bearer deposit notes, commercial paper and certificate of deposits |
9,364 | 16,089 | 23,389 | 13,655 | 3,623 | 66,120 | 1,278 | 440 | 151 | 67,989 | ||||||||||||||||||||||||||||||
Asset-backed commercial paper (3) |
3,299 | 5,806 | 4,347 | 70 | – | 13,522 | – | – | – | 13,522 | ||||||||||||||||||||||||||||||
Senior notes (4) |
138 | 77 | 2,793 | 2,278 | 672 | 5,958 | 3,796 | 7,111 | 13,203 | 30,068 | ||||||||||||||||||||||||||||||
Bail-inable notes (5) |
199 | 3,835 | 4,458 | 3,788 | 4,877 | 17,157 | 14,467 | 24,033 | 24,317 | 79,974 | ||||||||||||||||||||||||||||||
Asset-backed securities |
17 | 644 | 47 | 45 | 651 | 1,404 | 816 | 1,649 | 79 | 3,948 | ||||||||||||||||||||||||||||||
Covered bonds |
1,447 | 2,746 | 3,556 | 3,023 | 5,809 | 16,581 | 8,320 | 19,451 | 2,335 | 46,687 | ||||||||||||||||||||||||||||||
Mortgage securitization (6) |
– | 1,343 | 360 | 432 | 782 | 2,917 | 2,114 | 6,676 | 3,173 | 14,880 | ||||||||||||||||||||||||||||||
Subordinated debentures (7) |
– | 1,753 | – | 55 | – | 1,808 | 2 | 197 | 8,039 | 10,046 | ||||||||||||||||||||||||||||||
Total wholesale funding sources |
$ | 15,822 | $ | 33,655 | $ | 39,352 | $ | 23,572 | $ | 16,442 | $ | 128,843 | $ | 30,793 | $ | 59,838 | $ | 51,297 | $ | 270,771 | ||||||||||||||||||||
Of Which: |
||||||||||||||||||||||||||||||||||||||||
Unsecured funding |
$ | 11,059 | $ | 23,115 | $ | 31,042 | $ | 20,003 | $ | 9,201 | $ | 94,420 | $ | 19,544 | $ | 32,062 | $ | 45,709 | $ | 191,735 | ||||||||||||||||||||
Secured funding |
4,763 | 10,540 | 8,310 | 3,569 | 7,241 | 34,423 | 11,249 | 27,776 | 5,588 | 79,036 | ||||||||||||||||||||||||||||||
| (1) | Wholesale funding sources exclude obligations related to securities sold under repurchase agreements and bankers’ acceptances. |
| (2) | Only includes commercial bank deposits. |
| (3) | Wholesale funding sources also exclude asset-backed commercial paper (ABCP) issued by certain ABCP conduits that are not consolidated for financial reporting purposes. |
| (4) | Not subject to bail-in. Includes legacy senior debt, debt issued by international subsidiaries, and structured notes issued to institutional investors. |
| (5) | Includes structured notes issued to institutional investors. |
| (6) | Represents residential mortgages funded through Canadian Federal Government agency sponsored programs. Funding accessed through such programs does not impact the funding capacity of the Bank in its own name. |
| (7) | Although subordinated debentures are a component of regulatory capital, they are included in this table in accordance with EDTF recommended disclosures. |
Wholesale funding generally bears a higher risk of
run-off
in a stressed environment than other sources of funding. The Bank mitigates this risk through funding diversification, ongoing engagement with investors and by maintaining a large holding of unencumbered liquid assets. Unencumbered liquid assets of $355 billion as at April 30, 2026 (October 31, 2025 – $327 billion) were well in excess of wholesale funding sources which mature in the next twelve months. | Scotiabank Second Quarter Report 2026 | 51 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Capital Management
The Bank continues to manage its capital in accordance with the capital management framework and OSFI’s regulatory capital requirements as described on pages 60 to 73 of the Bank’s 2025 Annual Report.
Effective November 1, 2023 the Domestic Stability Buffer (DSB) was increased to 3.5% of total risk-weighted assets. This DSB requirement of 3.5% was maintained by OSFI in their December 2025 announcement. OSFI’s minimum regulatory capital ratio requirements, including the
D-SIB
1.0% surcharge and its DSB, are: 11.5%, 13.0% and 15.0% for Common Equity Tier 1 (CET1), Tier 1 and Total capital ratios, respectively. In addition, the Bank is presently subject to a Basel Committee on Banking Supervision (BCBS) countercyclical buffer requirement of approximately eight basis points. OSFI guideline for the capital and liquidity treatment of crypto-asset exposures
In February 2025, OSFI published its guideline for the capital and liquidity treatment of crypto-asset exposures, effective for the Bank in the first quarter of 2026. The guideline incorporates the BCBS standards for crypto-asset exposures, as updated in November 2024, and it replaces OSFI’s interim advisory on the regulatory treatment of crypto-asset exposures. In addition, OSFI published final amendments to its Pillar 3 Disclosure Guidelines, incorporating new crypto-asset disclosure requirements also effective the first quarter of fiscal 2026.
Within the guideline, crypto-asset exposures are defined and categorized by type. Regulatory capital treatments for their credit risk, counterparty credit risk and market risk are prescribed. Overall, the regulatory capital impacts from the new crypto-asset exposure requirements are not considered material to the Bank as of the second quarter of 2026.
Regulatory capital and total loss absorbing capacity (TLAC) ratios
OSFI’s current regulatory capital, leverage and TLAC requirements are as follows:
T35 Regulatory capital, leverage and TLAC requirements
As at April 30, 2026 |
||||||||||||||||||||||||
Minimum |
Capital conservation buffer |
D-SIB surcharge |
Pillar 1 targets |
Domestic Stability Buffer |
Target including all buffers and surcharges |
|||||||||||||||||||
CET1 ratio |
4.5 |
% |
2.5 |
% |
1.0 |
% |
8.0 |
% |
3.5 |
% |
11.5 |
% | ||||||||||||
Tier 1 capital ratio |
6.0 |
% |
2.5 |
% |
1.0 |
% |
9.5 |
% |
3.5 |
% |
13.0 |
% | ||||||||||||
Total capital ratio |
8.0 |
% |
2.5 |
% |
1.0 |
% |
11.5 |
% |
3.5 |
% |
15.0 |
% | ||||||||||||
Leverage ratio |
3.0 |
% |
n/a |
0.5 |
% |
3.5 |
% |
n/a |
3.5 |
% | ||||||||||||||
TLAC ratio |
18.0 |
% |
2.5 |
% |
1.0 |
% |
21.5 |
% |
3.5 |
% |
25.0 |
% | ||||||||||||
TLAC leverage ratio |
6.75 |
% |
n/a |
0.5 |
% |
7.25 |
% |
n/a |
7.25 |
% | ||||||||||||||
T36 Regulatory capital and total loss absorbing capacity ratios
| As at | ||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
|||||||||
Common Equity Tier 1 capital (1) |
$ |
62,972 |
$ | 62,972 | $ | 62,752 | ||||||
Tier 1 capital (1) |
72,961 |
72,956 | 72,790 | |||||||||
Total regulatory capital (1) |
80,724 |
80,797 | 80,908 | |||||||||
Total loss absorbing capacity (TLAC) (2) |
135,476 |
135,635 | 138,049 | |||||||||
Risk-weighted assets (1)(3) |
$ |
474,440 |
$ | 474,253 | $ | 474,453 | ||||||
Capital ratios (%) (1) : |
||||||||||||
Common Equity Tier 1 capital ratio |
13.3 |
13.3 | 13.2 | |||||||||
Tier 1 capital ratio |
15.4 |
15.4 | 15.3 | |||||||||
Total capital ratio |
17.0 |
17.0 | 17.1 | |||||||||
Total loss absorbing capacity ratio (2) |
28.6 |
28.6 | 29.1 | |||||||||
Leverage (4) : |
||||||||||||
Leverage exposures |
$ |
1,689,877 |
$ | 1,642,918 | $ | 1,622,415 | ||||||
Leverage ratio (%) |
4.3 |
4.4 | 4.5 | |||||||||
Total loss absorbing capacity leverage ratio (%) (2) |
8.0 |
8.3 | 8.5 | |||||||||
| (1) | The regulatory capital ratios as at Q1 2026 and Q2 2026 are based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2025), whereas, the regulatory capital ratios for Q4 2025 were based on the OSFI Guideline – Capital Adequacy Requirements (November 2023). |
| (2) | This measure has been disclosed in this document in accordance with OSFI Guideline – Total Loss Absorbing Capacity (September 2018). |
| (3) | As at April 30, 2026, January 31, 2026 and October 31, 2025, the Bank did not have a regulatory capital floor add-on to risk-weighted assets (RWA) for CET1, Tier 1, Total Capital and TLAC RWA. |
| (4) | The leverage ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Leverage Requirements (February 2023). |
The Bank’s CET1 capital ratio was 13.3% as at April 30, 2026, unchanged from the prior quarter. The favourable impact of earnings less dividends and organic reduction in RWA were largely offset by RWA increases from model and methodology updates, unfavourable changes in accumulated other comprehensive income, and share repurchases.
The Bank’s Tier 1 capital and Total capital ratios were 15.4% and 17.0% respectively, as at April 30, 2026, unchanged from the prior quarter, as both Tier 1 and Tier 2 capital, and RWA were in line with the prior quarter.
The Leverage ratio was 4.3% as at April 30, 2026, a decrease of 10 basis points from prior quarter, primarily from higher leverage exposures.
As at April 30, 2026, the CET1, Tier 1, Total capital, and Leverage ratios were well above OSFI’s minimum capital ratios. The TLAC and TLAC Leverage ratios were 28.6% and 8.0% respectively, well above OSFI’s minimum requirements.
52 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Continuity of Common Equity Tier 1 ratio
(1)
| (1) | This measure has been disclosed in this document in accordance with OSFI Guideline – Capital Adequacy Requirements. |
Changes in regulatory capital
The Bank’s Common Equity Tier 1 capital was $63 billion, as at April 30, 2026, and remains unchanged from the prior quarter. The favourable impact of earnings less dividends of $1.1 billion, lower regulatory capital deductions of $0.1 billion and other minor variances of $0.1 billion were offset by unfavourable changes in accumulated other comprehensive income of $0.7 billion and share buybacks net of issuances of $0.6 billion.
Risk-weighted assets
CET1 risk-weighted assets (RWA) remained largely unchanged compared to the prior quarter at $474.4 billion, as organic growth and favourable foreign exchange impact on RWA was offset by the impact of model and methodology changes.
Normal Course Issuer Bid
On April 2, 2026, the Bank announced that OSFI and the Toronto Stock Exchange (TSX) approved the Bank’s new normal course issuer bid (the “2026 NCIB”) to repurchase for cancellation up to 15 million of the Bank’s common shares. Purchases under the 2026 NCIB commenced on April 7, 2026. The 2026 NCIB will terminate upon the earlier of: (i) the Bank purchasing 15 million common shares under the 2026 NCIB, (ii) the Bank providing notice of termination, or (iii) April 6, 2027. From the commencement of the 2026 NCIB on April 7, 2026 to April 30, 2026, the Bank repurchased and cancelled 2.1 million common shares at an average price of $101.66 per share for a total amount of $218 million, including tax.
On May 28, 2025, the Bank announced that OSFI and the Toronto Stock Exchange (TSX) approved a normal course issuer bid (the “2025 NCIB”) pursuant to which it may repurchase for cancellation up to 20 million of the Bank’s common shares. The 2025 NCIB commenced on May 30, 2025, and terminated on April 6, 2026. From commencement of the 2025 NCIB until April 1, 2026, the Bank repurchased and cancelled all of the 20 million common shares at an average price of $90.47 per share for a total amount of $1,846 million, including tax.
During the quarter ended April 30, 2026, the Bank repurchased and cancelled approximately 6.4 million common shares, including 2.1 million common shares under the 2026 NCIB, at an average price of $100.65 per share for a total of $655 million, including tax.
Common dividend
The Board of Directors, at its meeting on May 26, 2026, approved a dividend of $1.14 per share, an increase of 4 cents from last quarter. This quarterly dividend is payable to shareholders of record as of July 7, 2026, on July 29, 2026.
Financial Instruments
Given the nature of the Bank’s main business activities, financial instruments make up a substantial portion of the balance sheet and are integral to the Bank’s business. There are various measures that reflect the level of risk associated with the Bank’s portfolio of financial instruments. Further discussion of some of these risk measures is included in the Risk Management section. The methods of determining the fair value of financial instruments are detailed on page 168 of the Bank’s 2025 Annual Report.
Management’s judgement on valuation inputs is necessary when observable market data is not available, and in the selection of appropriate valuation models. Uncertainty in these estimates and judgements can affect fair value and financial results recorded. During the quarter, changes in the fair value of financial instruments reflect the current economic environment, industry and market conditions.
Many financial instruments are traded products such as derivatives, and are generally transacted under industry standard International Swaps and Derivatives Association (ISDA) master netting agreements with counterparties, which allow for a single net settlement of all transactions covered by that agreement in the event of a default or early termination of the transactions. ISDA agreements are frequently accompanied by an ISDA Credit Support Annex (CSA), the terms of which may vary according to each party’s view of the other party’s creditworthiness. CSAs can require one party to post initial margin at the onset of each transaction. CSAs also allow for variation margin to be called if total uncollateralized exposure exceeds an agreed upon threshold. Such variation margin provisions can be The CSA will also detail the types of collateral that are acceptable to each party, and the haircuts that will be applied against each collateral type. The terms of the ISDA master netting agreements and CSAs are taken into consideration in the calculation of counterparty credit risk exposure (see also page 90 of the Bank’s 2025 Annual Report).
mark-to-market
one-way
(only one party will ever post collateral) or bi-lateral
(either party may post depending upon which party is in-the-money).
Total derivative notional amounts were $12,350 billion as at April 30, 2026, compared to $12,100 billion as at January 31, 2026 (October 31, 2025 – $12,671 billion). The quarterly increase was due to higher volume of interest rate contracts partly offset by lower volume of foreign currency contracts. The total notional amount of derivatives was $11,428 billion compared to $11,230 billion as at January 31, 2026 (October 31, 2025 – $11,716 billion), of which $8,702 billion was settled through central counterparties as at April 30, 2026 (January 31, 2026 – $8,516 billion; October 31, 2025 – $9,175 billion). The credit equivalent amount, which takes into account offsetting liabilities and collateral from master netting
over-the-counter
| Scotiabank Second Quarter Report 2026 | 53 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
arrangements, was $38.5 billion, compared to $38.7 billion at January 31, 2026. The decrease was primarily attributable to the impact of lower exposure to the foreign exchange contracts offset by an increase in commodity contracts.
Off-Balance
Sheet Arrangements In the normal course of business, the Bank enters into contractual arrangements that are either consolidated or not required to be consolidated in its financial statements, but could have a current or future impact on the Bank’s financial performance or financial condition. These arrangements can be classified into the following categories: structured entities, securitizations, guarantees and other commitments.
No material contractual obligations were entered into this quarter by the Bank with the structured entities that are not in the ordinary course of business. Processes for review and approval of these contractual arrangements are unchanged from last year. For a complete discussion of these types of arrangements, please refer to pages 73 to 75 of the Bank’s 2025 Annual Report and Note 13 and Note 14 in the audited consolidated financial statements.
Structured entities
The Bank sponsors a total of three Canadian multi-seller conduits that are not consolidated. These multi-seller conduits purchase high-quality financial assets and finance these assets through the issuance of highly rated commercial paper. Although the Bank has power over the relevant activities of the conduits, it has limited exposure to variability in returns, which results in the Bank not consolidating the three Canadian conduits.
A significant portion of the conduits’ assets have been structured to receive credit enhancements from the sellers, including overcollateralization protection and cash reserve accounts. Each asset purchased by the conduits is supported by a backstop liquidity facility provided by the Bank in the form of a liquidity asset purchase agreement (LAPA) or a liquidity agreement (LA). The primary purpose of the backstop liquidity facility is to provide an alternative source of financing in the event the conduits are unable to access the commercial paper market. Under the terms of the LAPA or LA, in most cases, the Bank is not obliged to purchase defaulted assets.
The Bank’s primary exposure to the Canadian-based conduits is the liquidity support provided, with total liquidity facilities of $9.4 billion as of April 30, 2026 (October 31, 2025 – $8.6 billion). As of April 30, 2026, total commercial paper outstanding for these conduits was $7.4 billion (October 31, 2025 – $7.0 billion). Funded assets purchased and held by these conduits as of April 30, 2026, as reflected at amortized cost, were $7.3 billion (October 31, 2025 – $7.0 billion). Other than the changes noted above, there has been no significant change in the composition or risk profile of these conduits since October 31, 2025.
Securitization
The Bank securitizes a portion of its Canadian personal and small business credit card receivables (receivables) through Trillium Credit Card Trust II (Trillium), a consolidated Bank-sponsored structured entity. Trillium issues senior and subordinated notes to investors. The proceeds of such issuances are used to purchase
co-ownership
interests in the receivables originated by the Bank. The sale of such co-ownership
interests does not qualify for derecognition and therefore the receivables continue to be recognized on the Bank’s Consolidated Statement of Financial Position. Recourse of the noteholders is limited to the purchased co-ownership
interests. During the quarter, $1.1 billion receivables were securitized through Trillium. As at April 30, 2026, U.S.$2.6 billion ($3.5 billion Canadian dollar equivalent) (October 31, 2025 – U.S.$2.3 billion, $3.2 billion Canadian dollar equivalent) Class A notes; and U.S.$226 million ($307 million Canadian dollar equivalent) (October 31, 2025 – U.S.$196 million, $274 million Canadian dollar equivalent) subordinated Class B and Class C notes were outstanding and included in Deposits – Business and government on the Consolidated Statement of Financial Position. As at April 30, 2026, assets pledged in relation to the offered and retained notes were credit card receivables, denominated in Canadian dollars, of $4.1 billion (October 31, 2025 – $3.6 billion). Regulatory Developments
The Bank continues to monitor global regulatory developments relating to a broad spectrum of topics, in order to ensure that control functions and business lines are responsive on a timely basis and business impacts, if any, are minimized. A high-level summary of some of the key regulatory developments that have the potential of impacting the Bank’s operations is included in the Regulatory Developments section in the Bank’s 2025 Annual Report. Updates during the quarter are as follows:
Liquidity Adequacy Requirement
OSFI’s Liquidity Adequacy Requirement (LAR) Guideline sets expectations for federally regulated financial institutions to maintain sufficient liquidity to support deposit withdrawal, and meet payment and settlement obligations, including during periods of financial stress. The 2025 LAR Guideline, published on November 21, 2024 and effective April 1, 2025, introduced an Intraday Liquidity Regulatory Return Metric to assess whether institutions that act as direct clearers in Canada’s High-Value Payment System can meet intraday payment and settlement obligations under stress scenarios, and enhanced OSFI’s intraday liquidity risk monitoring tools. The 2026 LAR Guideline, published on January 29, 2026 and effective May 1, 2026, further clarified the classification and regulatory treatment of structured notes and certain deposit products. The Bank has implemented changes in response to the updated rules.
New Anti-Money Laundering Legislation
On March 26, 2026, the (Bill (PCMLTFA). The amendments aim to strengthen the administrative monetary penalty (AMP) framework by significantly increasing the maximum monetary penalties for
Strengthening Canada’s Immigration System and Borders Act
C-12)
received royal assent, amending Canada’s anti-money laundering legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act
non-compliance.
The Bank maintains an AML/ATF and Sanctions Program reasonably designed to support compliance with the PCMLTFA, including implementing any necessary changes to comply with any new requirements. 54 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Accounting Policies and Controls
Accounting policies and estimates
These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, using the same accounting policies as described in Note 3 of the audited consolidated financial statements in the 2025 Annual Report.
Interim Financial Reporting
The preparation of financial statements requires management to make estimates, assumptions and apply judgements that affect the reported amount of assets and liabilities at the date of the condensed interim consolidated financial statements, and income and expenses during the reporting period. For more information on the Bank’s significant accounting estimates, assumptions and judgements, refer to Note 2 of the condensed interim consolidated financial statements and Note 2 of the audited consolidated financial statements in the 2025 Annual Report.
Future accounting developments
There are no significant updates to the future accounting developments disclosed in Note 4 of the audited consolidated financial statements in the 2025 Annual Report.
Changes in internal control over financial reporting
There have been no changes in the Bank’s internal control over financial reporting during the three months ended April 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Bank’s internal control over financial reporting.
Related party transactions
There were no changes to the Bank’s procedures and policies for related party transactions from those outlined in the Bank’s 2025 Annual Report. All transactions with related parties continued to be at market terms and conditions.
| Scotiabank Second Quarter Report 2026 | 55 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Share Data
T37 Shares and other instruments
| April 30, 2026 | Amount ($ millions) |
Dividends declared per share (1) |
Number outstanding (000s) |
Conversion feature |
||||||||||||
Common Shares (2) |
$ | 22,002 | $ | 1.14 | 1,226,787 | n/a | ||||||||||
NVCC Additional Tier 1 Securities (3)(5) |
Amount ($ millions) |
Distribution (4) |
Yield (%) |
Number outstanding (000s) |
||||||||||||
Subordinated Additional Tier 1 Capital Notes |
U.S.$ | 1,250 | U.S.$ | 16.6285 | 6.578 | 1,250 | ||||||||||
Limited Recourse Capital Notes Series 1 |
$ | 1,250 | $ | 9.2500 | 3.700 | 1,250 | ||||||||||
Limited Recourse Capital Notes Series 2 |
U.S.$ | 600 | U.S.$ | 9.0625 | 3.625 | 600 | ||||||||||
Limited Recourse Capital Notes Series 3 |
$ | 1,500 | $ | 17.5575 | 7.023 | 1,500 | ||||||||||
Limited Recourse Capital Notes Series 4 |
U.S.$ | 750 | U.S.$ | 21.5625 | 8.625 | 750 | ||||||||||
Limited Recourse Capital Notes Series 5 |
U.S.$ | 750 | U.S.$ | 20.0000 | 8.000 | 750 | ||||||||||
Limited Recourse Capital Notes Series 6 |
U.S.$ | 1,000 | U.S.$ | 18.3750 | 7.350 | 1,000 | ||||||||||
Limited Recourse Capital Notes Series 7 |
U.S.$ | 1,000 | U.S.$ | 17.1875 | 6.875 | 1,000 | ||||||||||
NVCC Subordinated Debentures (3) |
Amount ($ millions) |
Interest rate (%) |
||||||||||||||
Subordinated debentures due December 2025 (6) |
U.S.$ | – | 4.500 | |||||||||||||
Subordinated debentures due May 2032 |
$ | 1,750 | 3.934 | |||||||||||||
Subordinated debentures due December 2032 |
JPY | 33,000 | 1.800 | |||||||||||||
Subordinated debentures due August 2033 |
$ | 1,000 | 5.679 | |||||||||||||
Subordinated debentures due December 2033 |
JPY | 12,000 | 1.830 | |||||||||||||
Subordinated debentures due August 2034 |
$ | 1,000 | 4.959 | |||||||||||||
Subordinated debentures due May 2037 |
U.S.$ | 1,250 | 4.588 | |||||||||||||
Other |
Amount ($ millions) |
Distribution (4) |
Yield (%) |
Number outstanding (000s) |
||||||||||||
Scotiabank Trust Securities – Series 2006-1 issued by Scotiabank Capital Trust (7) |
$ | 750 | $ | 28.25 | 5.650 | 750 | ||||||||||
Options |
Number outstanding (000s) |
|||||||||||||||
Outstanding options granted under the Stock Option Plans to purchase common shares (2) |
9,599 | |||||||||||||||
| (1) | Dividends are paid quarterly, if and when declared. Represents dividends announced on May 27, 2026. The Board of Directors, at its meeting on May 26, 2026, approved a dividend payable on July 29, 2026 to shareholders of record as of July 7, 2026. |
| (2) | As at May 15, 2026, the number of outstanding common shares and options were 1,226,076 thousand and 9,583 thousand, respectively. |
| (3) | These securities contain Non-Viability Contingent Capital (NVCC) provisions necessary to qualify as regulatory capital under Basel III. Refer to Notes 20 and 23 of the audited consolidated financial statements in the 2025 Annual Report for further details. The maximum number of common shares issuable on conversion of NVCC subordinated debentures and NVCC Subordinated additional Tier 1 capital notes, including those issued to Scotiabank LRCN Trust as recourse assets in respect of NVCC Limited Recourse Capital Notes as at April 30, 2026 would be 4,256 million common shares based on the floor price and excluding the impact of any accrued and unpaid interest and any declared but unpaid dividends. |
| (4) | Distributions per face amount of $1,000 or U.S. $1,000 semi-annually or quarterly, as applicable. |
| (5) | Quarterly distributions are recorded in each fiscal quarter, if and when paid. |
| (6) | On December 16, 2025, all U.S. $1,250 million of outstanding 4.500% subordinated debentures matured. The principal plus accrued interest were paid to noteholders on the maturity date. |
| (7) | These securities have exchange features. Refer to Table 33 in the Bank’s 2025 Annual Report for further details. |
For further details on outstanding securities of the Bank, including convertibility features, refer to Notes 20, 23 and 25 of the audited consolidated financial statements in the 2025 Annual Report.
56 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Glossary
Allowance for Credit Losses:
off-balance
sheet exposures subject to impairment assessment. It includes allowances for performing financial assets and impaired financial assets. Allowance for Credit Losses Ratio:
Allowance for Impaired Loans Ratio
:
Allowance for Performing Loans Ratio
:
Allowance against Impaired Loans as a % of Gross Impaired Loans
:
Assets Under Administration (AUA
):
Assets Under Management (AUM
):
Attributed Capital:
Bankers’ Acceptances (BAs
):
Basis Point (bps):
one-hundredth
of one percent. Book Value per Common Share:
Canadian Overnight Repo Rate Average (CORRA):
Common Equity Tier 1 (CET1), Tier 1 and Total Capital Ratios:
CET1 consists primarily of common shareholders’ equity net of regulatory adjustments. These regulatory adjustments include goodwill, intangible assets net of deferred tax liabilities, deferred tax assets that rely on future profitability, defined-benefit pension fund net assets, shortfall of credit provision to expected losses and significant investments in common equity of other financial institutions.
Tier 1 includes CET1 and additional Tier 1 capital which consists primarily of qualifying
non-cumulative
preferred shares, non-cumulative
subordinated additional Tier 1 capital notes and limited recourse capital notes. Tier 2 capital consists mainly of qualifying subordinated debentures and the eligible allowances for credit losses. Total capital is comprised of CET1 capital, Tier 1 capital and Tier 2 capital.
Covered Bonds:
Derivative Products:
Dividend Yield:
Effective Tax Rate:
Fair Value:
Foreign Exchange Contracts:
Forward Rate Agreement (FRA):
Futures:
Gross Impaired Loans as a % of Loans and Acceptances:
off-balance
sheet exposures expressed as a percentage of loans and acceptances. Hedging:
Impaired Loans:
| Scotiabank Second Quarter Report 2026 | 57 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Leverage Ratio:
on-balance
sheet assets and off-balance
sheet commitments, derivatives and securities financing transactions, as defined within the OSFI Leverage Requirements Guideline. Liquidity Coverage Ratio (LCR):
Marked-To-Market:
Market Value to Book Value Multiple:
Net Impaired Loans as a % of Loans and Acceptances:
off-balance
sheet exposures expressed as a percentage of loans and acceptances. Net Interest Margin:
Net Stable Funding Ratio (NSFR):
Net Write-offs as a % of Average Net Loans and Acceptances:
Non-Viability
Contingent Capital (NVCC):non-common
Tier 1 and Tier 2 capital instruments must be capable of absorbing losses at the point of non-viability
of a financial institution. This will ensure that investors in such instruments bear losses before taxpayers where the government determines that it is in the public interest to rescue a non-viable
bank. Notional Principal Amounts:
off-balance
sheet instruments and derivatives, such as FRAs, interest rate swaps and cross-currency swaps. The amounts are termed “notional” because they are not usually exchanged themselves, serving only as the basis for calculating amounts that do change hands. Off-Balance
Sheet Instruments:Operating Leverage:
non-interest
expenses. Operating Segment Return on Equity:
Options:
OSFI:
Price to Earnings Multiple (Trailing 4 Quarters):
Productivity Ratio:
non-interest
expenses as a percentage of total revenue. Management uses the productivity ratio as a measure of the Bank’s efficiency. Provision for Credit Losses (PCL) as a % of Average Net Loans and Acceptances:
off-balance
sheet exposures expressed as a percentage of average net loans and acceptances. Provision for Credit Losses (PCL) on Impaired Loans as a % of Average Net Loans and Acceptances:
off-balance
sheet exposures as a percentage of average net loans and acceptances. Repos:
Return on Assets (ROA):
Return on Equity (ROE):
Return on Tangible Common Equity (ROTCE):
Reverse Repos:
Risk-Weighted Assets:
Securitization:
Structured Entities:
Standby Letters of Credit and Letters of Guarantee:
58 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Structured Credit Instruments:
Swaps:
Taxable Equivalent Basis (TEB):
tax-exempt
income earned on certain securities and associated corporations was grossed-up
to an equivalent before tax basis. Corresponding increases were made to the provision for income taxes; hence, there was no impact on the segment’s net income. The elimination of the TEB gross-up
was recorded in the Other segment, resulting in no impact on the consolidated results. Total Annual Shareholder Return (TSR):
Total Loss Absorbing Capacity (TLAC):
Other TLAC Instruments include prescribed shares and liabilities that are subject to conversion into common shares pursuant to the CDIC Act and which meet all of the eligibility criteria set out in the Total Loss Absorbing Capacity (TLAC) Guidelines.
Trading-Related Revenue:
non-interest
income. Included are unrealized gains and losses on trading security positions held, realized gains and losses from the purchase and sale of securities, fees and commissions from trading securities borrowing and lending activities, and gains and losses on trading derivatives. Underwriting and other advisory fees, which are shown separately in the Consolidated Statement of Income, are excluded. Value At Risk (VaR):
Yield Curve:
| Scotiabank Second Quarter Report 2026 | 59 |
Table of Contents
MANAGEMENT’S DISCUSSION & ANALYSIS
Basel III Glossary
Credit Risk Parameters
Exposure at Default (EAD):
on-balance
sheet exposure and loan equivalent amount for off-balance
sheet exposure at default. Probability of Default (PD):
one-year
time horizon, expressed as a percentage. Loss Given Default (LGD):
Exposure Types
Non-retail
Corporate:
Bank:
Sovereign:
Securitization:
On-balance
sheet investments in asset-backed securities, mortgage-backed securities, collateralized loan obligations and collateralized debt obligations, off-balance
sheet liquidity lines to the Bank’s own sponsored and third-party conduits and credit enhancements. Retail
Residential Mortgage:
Secured Lines of Credit:
Qualifying Revolving Retail Exposures:
Other Retail:
Exposure
Sub-types
Drawn:
Undrawn:
Other Exposures
Repo-Style Transactions:
OTC Derivatives:
Over-the-counter
Other
Off-balance
Sheet:Exchange-Traded Derivative Contracts:
Qualifying Central Counterparty (QCCP):
Asset Value Correlation Multiplier (AVC):
non-financial
corporate sector by introducing an AVC. The correlation factor in the risk-weight formula is multiplied by this AVC factor of 1.25 for all exposures to regulated FIs whose total assets are greater than or equal to U.S. $150 billion and all exposures to unregulated FIs. Specific
Wrong-Way
Risk (WWR):Wrong-Way
Risk arises when the exposure to a particular counterparty is positively correlated with the probability of default of the counterparty due to the nature of the transactions with the counterparty. Basel III Regulatory Capital Floor:
add-on
is determined under the Basel III Framework by comparing RWA generated for internally modelled and standardized portfolios to RWA calculated under a fully standardized approach at the required capital floor calibration. A shortfall to the capital floor RWA requirement is added to the Bank’s RWA. 60 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Condensed Interim Consolidated Financial Statements (unaudited) TABLE OF CONTENTS | ||||
62 |
Condensed Interim Consolidated Financial Statements | |||
67 |
Notes to the Condensed Interim Consolidated Financial Statements | |||
67 |
Note 1 - Reporting entity | |||
67 |
Note 2 - Basis of preparation | |||
67 |
Note 3 - Material accounting policies | |||
67 |
Note 4 - Future accounting developments | |||
67 |
Note 5 - Cash and deposits with financial institutions | |||
68 |
Note 6 - Investment securities | |||
69 |
Note 7 - Loans, impaired loans and allowance for credit losses | |||
80 |
Note 8 - Investments in associates | |||
80 |
Note 9 - Deposits | |||
81 |
Note 10 - Capital and financing transactions | |||
81 |
Note 11 - Capital management | |||
81 |
Note 12 - Share-based payments | |||
82 |
Note 13 - Employee benefits | |||
82 |
Note 14 - Operating segments | |||
84 |
Note 15 - Interest income and expense | |||
85 |
Note 16 - Earnings per share | |||
85 |
Note 17 - Fair value of financial instruments | |||
91 |
Note 18 - Corporate income taxes | |||
91 |
Note 19 - Divestitures | |||
| Scotiabank Second Quarter Report 2026 | 61 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
| As at | ||||||||||||||
(Unaudited) ($ millions) |
Note | April 30 2026 |
January 31 2026 |
October 31 2025 |
||||||||||
| Assets |
||||||||||||||
| Cash and deposits with financial institutions |
5 | $ |
$ | $ | ||||||||||
| Precious metals |
||||||||||||||
| Trading assets |
||||||||||||||
| Securities |
||||||||||||||
| Loans |
||||||||||||||
| Other |
||||||||||||||
| Securities purchased under resale agreements and securities borrowed |
||||||||||||||
| Derivative financial instruments |
||||||||||||||
| Investment securities |
6 | |||||||||||||
| Loans |
||||||||||||||
| Residential mortgages |
7 | |||||||||||||
| Personal loans |
7 | |||||||||||||
| Credit cards |
7 | |||||||||||||
| Business and government |
7 | |||||||||||||
| Allowance for credit losses |
7(c) | |||||||||||||
| Other |
||||||||||||||
| Customers’ liability under acceptances, net of allowance |
||||||||||||||
| Property and equipment |
||||||||||||||
| Investments in associates |
8 | |||||||||||||
| Goodwill and other intangible assets |
||||||||||||||
| Deferred tax assets |
||||||||||||||
| Other assets |
||||||||||||||
| Total assets |
$ |
$ | $ | |||||||||||
| Liabilities |
||||||||||||||
| Deposits |
||||||||||||||
| Personal |
9 | $ |
$ | $ | ||||||||||
| Business and government |
9 | |||||||||||||
| Financial institutions |
9 | |||||||||||||
| Financial instruments designated at fair value through profit or loss |
17( a ) |
|||||||||||||
| Other |
||||||||||||||
| Acceptances |
||||||||||||||
| Obligations related to securities sold short |
||||||||||||||
| Derivative financial instruments |
||||||||||||||
| Obligations related to securities sold under repurchase agreements and securities lent |
||||||||||||||
| Subordinated debentures |
||||||||||||||
| Other liabilities |
||||||||||||||
| Total liabilities |
||||||||||||||
| Equity |
||||||||||||||
| Common equity |
||||||||||||||
| Common shares |
10 | |||||||||||||
| Retained earnings |
||||||||||||||
| Accumulated other comprehensive income (loss) |
( |
) |
( |
) | ( |
) | ||||||||
| Other reserves |
( |
) |
( |
) | ( |
) | ||||||||
| Total common equity |
||||||||||||||
| Preferred shares and other equity instruments |
||||||||||||||
| Total equity attributable to equity holders of the Bank |
||||||||||||||
| Non-controlling interests in subsidiaries |
||||||||||||||
| Total equity |
||||||||||||||
| Total liabilities and equity |
$ |
$ | |
$ | |
|||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
62 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Income
For the three months ended |
For the six months ended |
|||||||||||||||||||||
(Unaudited) ($ millions) |
Note |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
||||||||||||||||
Revenue |
||||||||||||||||||||||
Interest income (1) |
||||||||||||||||||||||
Loans |
$ |
$ | |
$ | |
$ |
$ | |
||||||||||||||
Securities |
||||||||||||||||||||||
Securities purchased under resale agreements and securities borrowed |
||||||||||||||||||||||
Deposits with financial institutions |
||||||||||||||||||||||
| 15 | ||||||||||||||||||||||
Interest expense |
||||||||||||||||||||||
Deposits |
||||||||||||||||||||||
Subordinated debentures |
||||||||||||||||||||||
Other |
||||||||||||||||||||||
| 15 | ||||||||||||||||||||||
Net interest income |
||||||||||||||||||||||
Non-interest income |
||||||||||||||||||||||
Card revenues |
||||||||||||||||||||||
Banking services fees |
||||||||||||||||||||||
Credit fees |
||||||||||||||||||||||
Mutual funds |
||||||||||||||||||||||
Brokerage fees |
||||||||||||||||||||||
Investment management and trust |
||||||||||||||||||||||
Underwriting and advisory fees |
||||||||||||||||||||||
Non-trading foreign exchange |
||||||||||||||||||||||
Trading revenues |
||||||||||||||||||||||
Net gain on sale of investment securities |
||||||||||||||||||||||
Net income from investments in associated corporations |
||||||||||||||||||||||
Insurance service results |
||||||||||||||||||||||
Other fees and commissions |
||||||||||||||||||||||
Other |
( |
) | ( |
) |
||||||||||||||||||
Total revenue |
||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||
Non-interest expenses |
||||||||||||||||||||||
Salaries and employee benefits |
||||||||||||||||||||||
Premises and technology |
||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||
Communications |
||||||||||||||||||||||
Advertising and business development |
||||||||||||||||||||||
Professional |
||||||||||||||||||||||
Business and capital taxes |
||||||||||||||||||||||
Other |
||||||||||||||||||||||
Income before taxes |
||||||||||||||||||||||
Income tax expense |
18 | |||||||||||||||||||||
Net income |
$ |
$ | $ | $ |
$ | |||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
( |
) | ||||||||||||||||||||
Net income attributable to equity holders of the Bank |
$ |
$ | $ | $ |
$ | |||||||||||||||||
Preferred shareholders and other equity instrument holders |
||||||||||||||||||||||
Common shareholders |
$ |
$ | $ | $ |
$ | |||||||||||||||||
Earnings per common share (in dollars) |
||||||||||||||||||||||
Basic |
16 | $ |
$ | $ | $ |
$ | ||||||||||||||||
Diluted |
16 | |||||||||||||||||||||
Dividends paid per common share (in dollars) |
||||||||||||||||||||||
| (1) | Includes interest income on financial assets measured at amortized cost and FVOCI, calculated using the effective interest method, of $ |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| Scotiabank Second Quarter Report 2026 | 63 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
| For the three months ended | For the six months ended | |||||||||||||||||||
(Unaudited) ($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
| Net income |
$ |
$ | $ | $ |
$ | |||||||||||||||
| Other comprehensive income (loss) |
||||||||||||||||||||
| Items that will be reclassified subsequently to net income |
||||||||||||||||||||
| Net change in unrealized foreign currency translation gains (losses): |
||||||||||||||||||||
| Net unrealized foreign currency translation gains (losses) |
( |
) |
( |
) | ( |
) | ( |
) |
( |
) | ||||||||||
| Net gains (losses) on hedges of net investments in foreign operations |
( |
) | ||||||||||||||||||
| Income tax expense (benefit): |
||||||||||||||||||||
| Net unrealized foreign currency translation gains (losses) |
( |
) |
( |
) | ( |
) | ( |
) |
( |
) | ||||||||||
| Net gains (losses) on hedges of net investments in foreign operations |
( |
) | ||||||||||||||||||
( |
) |
( |
) | ( |
) |
( |
) | |||||||||||||
| Net change in fair value due to change in debt instruments measured at fair value through other comprehensive income: |
||||||||||||||||||||
| Net gains (losses) in fair value |
( |
) |
( |
) | ( |
) |
||||||||||||||
| Reclassification of net (gains) losses to net income |
( |
) | ( |
) | ||||||||||||||||
| Income tax expense (benefit): |
||||||||||||||||||||
| Net gains (losses) in fair value |
( |
) |
( |
) | ( |
) |
||||||||||||||
| Reclassification of net (gains) losses to net income |
( |
) | ( |
) | ||||||||||||||||
( |
) |
|||||||||||||||||||
| Net change in gains (losses) on derivative instruments designated as cash flow hedges: |
||||||||||||||||||||
| Net gains (losses) on derivative instruments designated as cash flow hedges |
( |
) |
( |
) |
||||||||||||||||
| Reclassification of net (gains) losses to net income |
( |
) | ( |
) | ( |
) | ||||||||||||||
| Income tax expense (benefit): |
||||||||||||||||||||
| Net gains (losses) on derivative instruments designated as cash flow hedges |
( |
) |
( |
) |
||||||||||||||||
| Reclassification of net (gains) losses to net income |
( |
) | ( |
) | ( |
) | ||||||||||||||
( |
) |
( |
) | ( |
) |
|||||||||||||||
| Net changes in finance income/(expense) from insurance contracts: |
||||||||||||||||||||
| Net finance income/(expense) from insurance contracts |
( |
) | ||||||||||||||||||
| Income tax expense (benefit) |
( |
) | ||||||||||||||||||
| ( |
) | |||||||||||||||||||
| Other comprehensive income (loss) from investments in associates |
( |
) |
( |
) |
||||||||||||||||
| Items that will not be reclassified subsequently to net income |
||||||||||||||||||||
| Net change in remeasurement of employee benefit plan asset and liability: |
||||||||||||||||||||
| Actuarial gains (losses) on employee benefit plans |
( |
) | ||||||||||||||||||
| Income tax expense (benefit) |
( |
) | ||||||||||||||||||
| ( |
) | ( |
) | |||||||||||||||||
| Net change in fair value due to change in equity instruments designated at fair value through other comprehensive income: |
||||||||||||||||||||
| Net gains (losses) in fair value |
||||||||||||||||||||
| Income tax expense (benefit) |
( |
) | ( |
) |
||||||||||||||||
| Net change in fair value due to change in own credit risk on financial liabilities designated under the fair value option: |
||||||||||||||||||||
| Change in fair value due to change in own credit risk on financial liabilities designated under the fair value option |
( |
) | ||||||||||||||||||
| Income tax expense (benefit) |
( |
) | ||||||||||||||||||
| ( |
) | |||||||||||||||||||
| Other comprehensive income (loss) from investments in associates |
( |
) | ( |
) |
||||||||||||||||
| Other comprehensive income (loss) |
( |
) |
( |
) | ( |
) |
||||||||||||||
| Comprehensive income (loss) |
$ |
$ | $ | $ |
$ | |||||||||||||||
| Comprehensive income (loss) attributable to non-controlling interests |
( |
) | ( |
) | ||||||||||||||||
| Comprehensive income (loss) attributable to equity holders of the Bank |
||||||||||||||||||||
| Preferred shareholders and other equity instrument holders |
||||||||||||||||||||
| Common shareholders |
$ |
$ | |
$ | $ |
$ | |
|||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
6 4 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
| For the six months ended April 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) ($ millions) |
Common shares |
Retained earnings (1) |
Foreign currency translation |
Debt instruments FVOCI |
Equity instruments FVOCI |
Cash flow hedges |
Other (2) |
Other reserves |
Total common equity |
Preferred shares and other equity instruments |
Total attributable to equity holders |
Non- controlling interests in subsidiaries |
Total | |||||||||||||||||||||||||||||||||||||||
Balance as at October 31, 2025 |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
( |
$ |
( |
) |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||||||||
Net income |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
– |
– |
( |
) |
( |
) |
– |
( |
) |
– |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||
Total comprehensive income |
$ |
– |
$ |
$ |
( |
) |
$ |
$ |
$ |
( |
) |
$ |
$ |
– |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||||||||||||
Shares/instruments issued |
– |
– |
– |
– |
– |
– |
( |
) |
– |
– |
||||||||||||||||||||||||||||||||||||||||||
Shares repurchased/redeemed |
( |
) |
( |
) |
– |
– |
– |
– |
– |
– |
( |
) |
– |
( |
) |
– |
( |
) | ||||||||||||||||||||||||||||||||||
Dividends and distributions paid to equity holders |
– |
( |
) |
– |
– |
– |
– |
– |
– |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||
Share-based payments (3) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||||||||||||||||||||||||
Other |
– |
( |
) |
– |
– |
– |
– |
– |
– |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||||||||
Balance as at April 30, 2026 |
$ |
$ |
$ |
( |
$ |
$ |
$ |
( |
$ |
( |
$ |
( |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||
| For the six months ended April 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) ($ millions) |
Common shares |
Retained earnings (1) |
Foreign currency translation |
Debt instruments FVOCI |
Equity instruments FVOCI |
Cash flow hedges |
Other (2) |
Other reserves |
Total common equity |
Preferred shares and other equity instruments |
Total attributable to equity holders |
Non- controlling interests in subsidiaries |
Total | |||||||||||||||||||||||||||||||||||||||
Balance as at October 31, 2024 |
$ | |
$ | |
$ | ( |
$ | ( |
$ | |
$ | ( |
$ | ( |
$ | ( |
$ | |
$ | $ | $ | $ | ||||||||||||||||||||||||||||||
Net income |
– | – | – | – | – | – | – | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
– | – | ( |
) | – | – | ||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income |
$ | – | $ | $ | ( |
) | $ | $ | $ | $ | $ | – | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||||||||||||||
Shares/instruments issued |
– | – | – | – | – | – | ( |
) | – | |||||||||||||||||||||||||||||||||||||||||||
Shares repurchased/redeemed |
– | – | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||
Dividends and distributions paid to equity holders |
– | ( |
) | – | – | – | – | – | – | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
Share-based payments (3) |
– | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||
Other |
– | ( |
) | – | – | – | – | – | ( |
) | ( |
) | – | ( |
) | – | ( |
) | ||||||||||||||||||||||||||||||||||
Balance as at April 30, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |
$ | |
$ | |
$ | |
|||||||||||||||||||||||||
| (1) | Includes undistributed retained earnings of $ |
| (2) | Includes Share from associates, Employee benefits, Own credit risk, and Insurance contracts. |
| (3) | Represents amounts on account of share-based payments (refer to Note 12). |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| Scotiabank Second Quarter Report 2026 | 6 5 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
(Unaudited) ($ millions) |
For the three months ended | For the six months ended | ||||||||||||||
Sources (uses) of cash flows |
April 30 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
||||||||||||
| Cash flows from operating activities |
||||||||||||||||
| Net income |
$ |
$ | $ |
$ | ||||||||||||
| Adjustment for: |
||||||||||||||||
| Net interest income |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Depreciation and amortization |
||||||||||||||||
| Provision for credit losses |
||||||||||||||||
| Equity-settled share-based payment expense |
||||||||||||||||
| Net gain on sale of investment securities |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Net (gain)/loss on divestitures |
– |
|||||||||||||||
| Net income from investments in associated corporations |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Income tax expense |
||||||||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Trading assets |
( |
) |
||||||||||||||
| Securities purchased under resale agreements and securities borrowed |
( |
) |
( |
) | ( |
) |
||||||||||
| Loans |
( |
) |
( |
) | ( |
) |
||||||||||
| Deposits |
( |
) | ||||||||||||||
| Obligations related to securities sold short |
||||||||||||||||
| Obligations related to securities sold under repurchase agreements and securities lent |
( |
) | ||||||||||||||
| Net derivative financial instruments |
( |
) |
( |
) |
||||||||||||
| Other, net |
( |
) | ( |
) |
( |
) | ||||||||||
| Interest and dividends received |
||||||||||||||||
| Interest paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Income tax paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Net cash from/(used in) operating activities |
||||||||||||||||
| Cash flows from investing activities |
||||||||||||||||
| Interest-bearing deposits with financial institutions |
( |
) |
( |
) |
||||||||||||
| Purchase of investment securities |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Proceeds from sale and maturity of investment securities |
||||||||||||||||
| Acquisition/divestiture of subsidiaries, associated corporations or business units, net of cash acquired |
– |
( |
) |
( |
) | |||||||||||
| Property and equipment, net of disposals |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Other, net |
( |
) | ( |
) | ||||||||||||
| Net cash from/(used in) investing activities |
( |
) |
( |
) |
( |
) | ||||||||||
| Cash flows from financing activities |
||||||||||||||||
| Redemption of subordinated debentures |
– |
– | ( |
) |
– | |||||||||||
| Proceeds from preferred shares and other equity instruments issued |
– |
– | – |
|||||||||||||
| Proceeds from common shares issued |
||||||||||||||||
| Common shares purchased for cancellation |
|
|
( |
) |
|
|
– | |
|
|
( |
) |
|
|
– | |
| Cash dividends and distributions paid |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Distributions to non-controlling interests |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Payment of lease liabilities |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Other, net |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Net cash from/(used in) financing activities |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
| Net change in cash and cash equivalents |
( |
) |
||||||||||||||
| Cash and cash equivalents at beginning of period (1) |
||||||||||||||||
| Cash and cash equivalents at end of period (1) |
$ |
$ | |
$ |
$ | |
||||||||||
| (1) | Represents cash and non-interest-bearing deposits with financial institutions (refer to Note 5). |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
6 6 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)
| 1. | Reporting entity |
The Bank of Nova Scotia (the Bank) is a chartered bank under the Bank Act (Canada) (the Bank Act). The Bank is a Schedule I bank under the Bank Act and is regulated by the Office of the Superintendent of Financial Institutions (OSFI). The Bank is a global financial services provider offering a diverse range of products and services, including personal, commercial, corporate and investment banking. The head office of the Bank is located at 1709 Hollis Street, Halifax, Nova Scotia, Canada and its executive offices are at 40 Temperance Street, Toronto, Canada. The common shares of the Bank are listed on the Toronto Stock Exchange and the New York Stock Exchange.
| 2. | Basis of preparation |
Statement of compliance
These condensed interim consolidated financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, using the same accounting policies as described in Note 3 of the audited consolidated financial statements in the 2025 Annual Report.
These condensed interim consolidated financial statements do not include all of the information required for a complete set of financial statements prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the 2025 Annual Report.
The condensed interim consolidated financial statements for the quarter ended April 30, 2026 have been approved by the Board of Directors for issue on May 27, 2026.
Functional and presentation currency
These condensed interim consolidated financial statements are presented in Canadian dollars, which is the Bank’s functional currency. All financial information presented in Canadian dollars has been rounded to the nearest million unless otherwise stated.
Use of estimates and judgements
The preparation of financial statements requires management to make estimates, assumptions and apply judgements that affect the reported amount of assets and liabilities at the date of the condensed interim consolidated financial statements, and income and expenses during the reporting period. Estimates made by management are based on historical experience and other assumptions that are believed to be reasonable. The areas requiring estimates, assumptions and judgements are consistent with those disclosed in Note 2 of the audited consolidated financial statements in the 2025 Annual Report. While management makes its best estimates and assumptions, actual results could differ from these estimates and assumptions.
Currently, there continues to be uncertainty surrounding U.S. trade policies and the impact of tariffs as well as geopolitical developments, including the conflict in the Middle East and its impact on global commodity markets. This results in increased measurement uncertainty for estimates used in financial reporting. In particular, the allowance for credit losses, using an expected credit loss approach as required under IFRS 9, is estimated using complex models and incorporates inputs, assumptions, and techniques that require a high degree of judgement and is heavily dependent on the forecast of macroeconomic variables. Due to the ongoing uncertainty surrounding the macroeconomic environment, estimates and valuation models applied based on conditions and information existing as at April 30, 2026 may be significantly different from the actual outcome.
| 3. | Material accounting policies |
These condensed interim consolidated financial statements should be read in conjunction with the Bank’s audited consolidated financial statements for the year ended October 31, 2025 included in the 2025 Annual Report.
The material accounting policies used in the preparation of the condensed interim consolidated financial statements are consistent with those as described in Note 3 of the audited consolidated financial statements in the 2025 Annual Report.
| 4. | Future accounting developments |
There are no significant updates to the future accounting developments disclosed in Note 4 of the Bank’s audited consolidated financial statements in the 2025 Annual Report.
| 5. | Cash and deposits with financial institutions |
| As at | ||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
|||||||||
Cash and non-interest-bearing deposits with financial institutions |
$ |
$ | $ | |||||||||
Interest-bearing deposits with financial institutions |
||||||||||||
Total |
$ |
(1) |
$ | |
(1) |
$ | |
(1) | ||||
| (1) | Net of allowances of $ |
The Bank is required to maintain balances with central banks, other regulatory authorities and certain counterparties and these amounted to $5,720 million (January 31, 2026 – $5,216 million; October 31, 2025 – $6,759 million) and are included above.
| Scotiabank Second Quarter Report 2026 | 6 7 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 6. | Investment securities |
The following table presents the carrying amounts of the Bank’s investment securities per measurement category.
| As at | ||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
|||||||||
Debt investment securities measured at FVOCI |
$ |
$ | $ | |||||||||
Debt investment securities measured at amortized cost |
||||||||||||
Equity investment securities designated at FVOCI |
||||||||||||
Equity investment securities measured at FVTPL |
||||||||||||
Debt investment securities measured at FVTPL |
||||||||||||
Total investment securities |
$ |
$ | |
$ | |
|||||||
(a) Debt investment securities measured at fair value through other comprehensive income (FVOCI)
As at April 30, 2026 ($ millions) |
Cost |
Gross unrealized gains |
Gross unrealized losses |
Fair value |
||||||||||||
Canadian federal government issued or guaranteed debt |
$ |
$ |
$ |
$ |
||||||||||||
Canadian provincial and municipal debt |
||||||||||||||||
U.S. treasury and other U.S. agency debt |
||||||||||||||||
Other foreign government debt |
||||||||||||||||
Other debt |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
As at January 31, 2026 ($ millions) |
Cost | Gross unrealized gains |
Gross unrealized losses |
Fair value | ||||||||||||
Canadian federal government issued or guaranteed debt |
$ | $ | $ | $ | ||||||||||||
Canadian provincial and municipal debt |
||||||||||||||||
U.S. treasury and other U.S. agency debt |
||||||||||||||||
Other foreign government debt |
||||||||||||||||
Other debt |
||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
As at October 31, 2025 ($ millions) |
Cost | Gross unrealized gains |
Gross unrealized losses |
Fair value | ||||||||||||
Canadian federal government issued or guaranteed debt |
$ | $ | $ | $ | ||||||||||||
Canadian provincial and municipal debt |
||||||||||||||||
U.S. treasury and other U.S. agency debt |
||||||||||||||||
Other foreign government debt |
||||||||||||||||
Other debt |
||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
(b) Debt investment securities measured at amortized cost
| As at | ||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 | October 31, 2025 | ||||||||||||||||||||||
($ millions) |
Fair value |
Carrying value (1) |
Fair value | Carrying value (1) |
Fair value | Carrying value (1) |
||||||||||||||||||
Canadian federal and provincial government issued or guaranteed debt |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||
U.S. treasury and other U.S. agency debt |
||||||||||||||||||||||||
Other foreign government debt |
||||||||||||||||||||||||
Corporate debt |
||||||||||||||||||||||||
Total |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||
| (1) | Balances are net of allowances, which are $ |
6 8 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
(c) Equity investment securities designated at fair value through other comprehensive income (FVOCI)
As at April 30, 2026 ($ millions) |
Cost |
Gross unrealized gains |
Gross unrealized losses |
Fair value |
||||||||||||
Common shares |
$ |
$ |
$ |
$ |
||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
As at January 31, 2026 ($ millions) |
Cost | Gross unrealized gains |
Gross unrealized losses |
Fair value | ||||||||||||
Common shares |
$ | $ | $ | $ | ||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
As at October 31, 2025 ($ millions) |
Cost | Gross unrealized gains |
Gross unrealized losses |
Fair value | ||||||||||||
Common shares |
$ | $ | $ | $ | ||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
Dividend income earned on equity securities designated at FVOCI of $8 million for the three months ended April 30, 2026 (January 31, 2026 – $0.1 million; April 30, 2025 – $9 million) and for the six months ended April 30, 2026 – $8 million (April 30, 2025 – $45 million) has been recognized in interest income.
During the three months ended April 30, 2026, the Bank has disposed of certain equity securities designated at FVOCI with a fair value of $87 million (January 31, 2026 – $nil ; April 30, 2025 – $2 million) and for the six months ended April 30, 2026 – $87 million (April 30, 2025 – $1,814 million) for economic reasons and according to its investment strategy. This has resulted in a realized gain of $87 million in the three months ended April 30, 2026 (January 31, 2026 – $nil ; April 30, 2025 – $0.02 million) and for the six months ended April 30, 2026 – realized gain of $87 million (April 30, 2025 – $539 million).
| 7. | Loans, impaired loans and allowance for credit losses |
(a) Loans at amortized cost
| As at | ||||||||||||
April 30, 2026 |
||||||||||||
($ millions) |
Gross carrying amount |
Allowance for credit losses |
Net carrying amount |
|||||||||
Residential mortgages |
$ |
|
$ |
|
$ |
|
||||||
Personal loans |
||||||||||||
Credit cards |
||||||||||||
Business and government |
||||||||||||
Total |
$ |
$ |
$ |
|||||||||
| As at | ||||||||||||||||||||||||
| January 31, 2026 | October 31, 2025 | |||||||||||||||||||||||
($ millions) |
Gross carrying amount |
Allowance for credit losses |
Net carrying amount |
Gross carrying amount |
Allowance for credit losses |
Net carrying amount |
||||||||||||||||||
Residential mortgages |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Personal loans |
||||||||||||||||||||||||
Credit cards |
||||||||||||||||||||||||
Business and government |
||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
| Scotiabank Second Quarter Report 2026 | 6 9 |
Table of Contents
(b) Impaired loans
(1)
| As at | ||||||||||||
April 30, 2026 |
||||||||||||
($ millions) |
Gross impaired loans |
Allowance for credit losses |
Net carrying amount |
|||||||||
Residential mortgages |
$ |
$ |
$ |
|||||||||
Personal loans |
||||||||||||
Credit cards |
||||||||||||
Business and government |
||||||||||||
Total |
$ |
$ |
$ |
|||||||||
By geography: |
||||||||||||
Canada |
$ |
$ |
$ |
|||||||||
United States |
||||||||||||
Mexico |
||||||||||||
Peru |
||||||||||||
Chile |
||||||||||||
Other international |
||||||||||||
Total |
$ |
$ |
$ |
|||||||||
| As at | ||||||||||||||||||||||||
| January 31, 2026 | October 31, 2025 | |||||||||||||||||||||||
($ millions) |
Gross impaired loans |
Allowance for credit losses |
Net carrying amount |
Gross impaired loans |
Allowance for credit losses |
Net carrying amount |
||||||||||||||||||
Residential mortgages |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Personal loans |
||||||||||||||||||||||||
Credit cards |
||||||||||||||||||||||||
Business and government |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
By geography: |
||||||||||||||||||||||||
Canada |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
United States |
– | – | – | |||||||||||||||||||||
Mexico |
||||||||||||||||||||||||
Peru |
||||||||||||||||||||||||
Chile |
||||||||||||||||||||||||
Other international |
||||||||||||||||||||||||
Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
| (1) | Interest income recognized on impaired loans during the three months ended April 30, 2026 was $ |
(c) Allowance for credit losses
| (i) | Key inputs and assumptions |
The Bank’s allowance for credit losses is measured using a three-stage approach based on the extent of credit deterioration since origination. The calculation of the Bank’s allowance for credit losses is an output of a set of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Some of the key drivers include the following:
| • | Changes in risk ratings of the borrower or instrument reflecting changes in their credit quality; |
| • | Changes in the volumes of transactions; |
| • | Changes in the forward-looking macroeconomic environment reflected in the variables used in the models such as GDP growth, unemployment rates, commodity prices, interest rates, and house price indices, which are closely related with credit losses in the relevant portfolio; |
| • | Changes in macroeconomic scenarios and the probability weights assigned to each scenario; and |
| • | Borrower migration between the three stages. |
The Bank determines its allowance for credit losses using four probability-weighted forward-looking scenarios (base case, optimistic, pessimistic and very pessimistic).
The Bank considers both internal and external sources of information and data to achieve unbiased projections and forecasts in determining the allowance for credit losses. The Bank prepares the scenarios using forecasts generated by Scotiabank Economics (SE). The forecasts are generated using models whose outputs are modified by SE as necessary to formulate a ‘base case’ view of the most probable future direction of economic developments. The development of the base case and alternative scenarios is overseen by a governance committee that consists of internal stakeholders from across the Bank. The final base case and alternative scenarios reflect significant review and oversight, and incorporate judgement both in the determination of the scenarios’ forecasts and the probability weights that are assigned to them.
70 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
| (ii) | Key macroeconomic variables |
The inputs and models used for calculating expected credit losses may not always capture all characteristics of the market at the date of the financial statements. Qualitative adjustments or overlays may be made for certain portfolios or geographies as temporary adjustments in circumstances where, in the Bank’s view, the inputs, assumptions, and/or modelling techniques do not capture all relevant risk factors, including the emergence of economic or geopolitical events, up to the date of the financial statements. As required under IFRS 9, the allowance for credit losses at each reporting period must be based on inputs, assumptions and information available up to that date.
The Bank has generated a forward-looking base case scenario and three alternative forward-looking scenarios (one optimistic and two pessimistic) as key inputs into the expected loss provisioning models. Given the uncertainty surrounding U.S. trade policies and the direction of tariffs, the scenarios as of April 30, 2026 have varying assumptions of imposed tariffs. The base case scenario assumes tariffs announced and implemented, avoiding speculation on future announcements, including potential trade deals and tariff pauses. Differing assumptions are reflected in the alternative scenarios described below. As new information comes to light in the future, the scenarios and assumptions will be updated accordingly.
The war in Iran since the end of February contributed to lift oil prices and uncertainty significantly, adding economic headwinds to those already generated by increased trade frictions imposed by the U.S. since early 2025. Our base case working assumptions are that the situation in the Middle East will start improving around mid-2026, and oil prices will start declining gradually thereafter, although expected to stay above previous baseline levels over the forecast period. The impact from this war on Canada’s economic activity is largely neutral as positive wealth inflows from its net oil exporter status, are offset by increased uncertainty and tighter financial conditions. In our current base case, Canada’s economic growth is expected to slow from 2025 to 2026 as the economy continues to adjust to the higher tariff landscape and softer economic and labour market conditions early in the year. Canada’s economy strengthens in 2027, supported by fading negative trade effects and fiscal policy initiatives, notably on defense and infrastructure. U.S. economic growth is also expected to slow modestly from 2025 to 2026 with reduced support to household and business expenditures from equity markets and weaker consumption from a soft labour market. Stronger inflation pressures in both economies, including from higher oil prices, are forecast to lead to a higher expected profile for their monetary policy rate in 2026, and also 2027 in the case of the U.S.
The optimistic scenario features somewhat stronger economic activity relative to the base case. The pessimistic scenario features a negative demand-type shock with globally tighter financial conditions, weaker growth and inflation, and lower monetary policy rates than in the base case scenario. It also assumes a combination of U.S. imposed tariffs on world economies, including an effective tariff
of
%
on imports from Canada and Mexico, while facing no retaliation from these countries. The very pessimistic scenario features a strong stagflationary impulse that leads to a protracted period of financial market uncertainty. Ongoing geopolitical events in Iran also contribute to this stagflation impulse through higher prices for oil and other commodities. This scenario also assumes U.S. imposed tariffs with a magnitude about three times that of the pessimistic scenario. Under this scenario, all countries retaliate. This results in higher inflation, requiring central banks to raise their policy rates to higher levels than in the base case in order to bring inflation under control, which will dampen economic activity.
| Scotiabank Second Quarter Report 2026 | 7 1 |
Table of Contents
The following tables show certain key macroeconomic variables used to calculate the modelled estimate for the allowance for credit losses. Further changes in these variables up to the date of the financial statements are incorporated through expert credit judgement. For the base case, optimistic and pessimistic scenarios, the projections are provided for the next 12 months and for the remaining forecast period, which represents a medium-term view.
| Base Case Scenario | Alternative Scenario Optimistic |
Alternative Scenario Pessimistic |
Alternative Scenario Very Pessimistic |
|||||||||||||||||||||||||||||
As at April 30, 2026 |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
||||||||||||||||||||||||
| Canada |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| Consumer price index, y/y % |
||||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Bank of Canada overnight rate target, average % |
||||||||||||||||||||||||||||||||
| HPI - Housing Price Index, y/y % change |
- |
- |
- |
- |
||||||||||||||||||||||||||||
| USD/CAD exchange rate, average |
||||||||||||||||||||||||||||||||
| U.S. |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| Consumer price index, y/y % |
||||||||||||||||||||||||||||||||
| Target federal funds rate, upper limit, average % |
||||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Mexico |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Chile |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Peru |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Caribbean |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Global |
||||||||||||||||||||||||||||||||
| WTI oil price, average USD/bbl |
||||||||||||||||||||||||||||||||
| Copper price, average USD/lb |
||||||||||||||||||||||||||||||||
| Global GDP, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Base Case Scenario | Alternative Scenario Optimistic |
Alternative Scenario Pessimistic |
Alternative Scenario Very Pessimistic |
|||||||||||||||||||||||||||||
As at January 31, 2026 |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
||||||||||||||||||||||||
| Canada |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| Consumer price index, y/y % |
||||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Bank of Canada overnight rate target, average % |
||||||||||||||||||||||||||||||||
| HPI - Housing Price Index, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| USD/CAD exchange rate, average |
||||||||||||||||||||||||||||||||
| U.S. |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| Consumer price index, y/y % |
||||||||||||||||||||||||||||||||
| Target federal funds rate, upper limit, average % |
||||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Mexico |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Chile |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Peru |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Unemployment rate, average % |
||||||||||||||||||||||||||||||||
| Caribbean |
||||||||||||||||||||||||||||||||
| Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
| Global |
||||||||||||||||||||||||||||||||
| WTI oil price, average USD/bbl |
||||||||||||||||||||||||||||||||
| Copper price, average USD/lb |
||||||||||||||||||||||||||||||||
| Global GDP, y/y % change |
- |
|||||||||||||||||||||||||||||||
72 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
| Base Case Scenario | Alternative Scenario Optimistic |
Alternative Scenario Pessimistic |
Alternative Scenario Very Pessimistic |
|||||||||||||||||||||||||||||
As at October 31, 2025 |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
Next 12 Months |
Remaining Forecast Period |
||||||||||||||||||||||||
Canada |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
Consumer price index, y/y % |
||||||||||||||||||||||||||||||||
Unemployment rate, average % |
||||||||||||||||||||||||||||||||
Bank of Canada overnight rate target, average % |
||||||||||||||||||||||||||||||||
HPI - Housing Price Index, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
USD/CAD exchange rate, average |
||||||||||||||||||||||||||||||||
U.S. |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
- |
||||||||||||||||||||||||||||||
Consumer price index, y/y % |
||||||||||||||||||||||||||||||||
Target federal funds rate, upper limit, average % |
||||||||||||||||||||||||||||||||
Unemployment rate, average % |
||||||||||||||||||||||||||||||||
Mexico |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
- |
- |
|||||||||||||||||||||||||||||
Unemployment rate, average % |
||||||||||||||||||||||||||||||||
Chile |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
Unemployment rate, average % |
||||||||||||||||||||||||||||||||
Peru |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
Unemployment rate, average % |
||||||||||||||||||||||||||||||||
Colombia |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
Unemployment rate, average % |
||||||||||||||||||||||||||||||||
Caribbean |
||||||||||||||||||||||||||||||||
Real GDP growth, y/y % change |
- |
|||||||||||||||||||||||||||||||
Global |
||||||||||||||||||||||||||||||||
WTI oil price, average USD/bbl |
||||||||||||||||||||||||||||||||
Copper price, average USD/lb |
||||||||||||||||||||||||||||||||
Global GDP, y/y % change |
- |
|||||||||||||||||||||||||||||||
| (iii) | Sensitivity |
Relative to the base case scenario, the weighting of these multiple scenarios increased the reported allowance for credit losses for financial assets in Stage 1 and Stage 2 to $4,936 million (January 31, 2026 – $4,898 million; October 31, 2025 – $5,313 million) from $4,644 million (January 31, 2026 – $4,598 million; October 31, 2025 – $5,018 million).
The Bank enhanced certain of its IFRS 9 models in the prior year, with the enhanced models exhibiting higher sensitivity to changes in the macroeconomic outlook. If the Bank was to apply a probability weighted average of its two pessimistic scenarios for the measurement of allowance for credit losses for such assets, the allowance for credit losses on performing financial instruments would be $591 million higher than the reported allowance for credit losses as at April 30, 2026 (January 31, 2026 – $607 million; October 31, 2025 – $786 million), excluding the consideration of changes in qualitative overlays or expert credit judgement. Actual results will differ as this does not consider the migration of exposures or incorporate changes that would occur in the portfolio due to risk mitigation actions and other factors.
Under our current probability-weighted scenarios, if all performing financial assets were in Stage 1, reflecting a 12 month expected loss period, the allowance for credit losses would be $807 million (January 31, 2026 – $753 million; October 31, 2025 – $801 million) lower than the reported allowance for credit losses on performing financial assets.
| (iv) | Allowance for credit losses |
Allowance for credit losses |
||||||||||||||||||||
($ millions) |
Balance as at November 1, 2025 |
Provision for credit losses (1) |
Net write- offs |
Other, including foreign currency adjustment |
Balance as at April 30, 2026 |
|||||||||||||||
Residential mortgages |
$ | $ | $ | ( |
) |
$ | ( |
) |
$ |
|||||||||||
Personal loans |
( |
) |
( |
) |
||||||||||||||||
Credit cards |
( |
) |
( |
) |
||||||||||||||||
Business and government |
( |
) |
( |
) |
||||||||||||||||
| $ | $ | |
$ | ( |
) |
$ | ( |
) |
$ |
|
||||||||||
Presented as: |
||||||||||||||||||||
Allowance for credit losses on loans |
$ | $ |
||||||||||||||||||
Allowance for credit losses on acceptances (2) |
||||||||||||||||||||
Allowance for credit losses on off-balance sheet exposures(3) |
|
|||||||||||||||||||
| (1) | Excludes amounts associated with other assets of $( |
| (2) | Allowance for credit losses on acceptances is recorded against the financial asset in the Consolidated Statement of Financial Position. |
| (3) | Allowance for credit losses on off-balance sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position. |
| Scotiabank Second Quarter Report 2026 | 73 |
Table of Contents
($ millions) |
Balance as at November 1, 2024 |
Provision for credit losses (1) |
Net write- offs |
Other, including foreign currency adjustment |
Balance as at April 30, 2025 |
|||||||||||||||
Residential mortgages |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||
Personal loans |
( |
) | ( |
) | ||||||||||||||||
Credit cards |
( |
) | – | |||||||||||||||||
Business and government |
( |
) | ( |
) | ||||||||||||||||
| $ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||
Presented as: |
||||||||||||||||||||
Allowance for credit losses on loans |
$ | $ | ||||||||||||||||||
Allowance for credit losses on acceptances (2) |
||||||||||||||||||||
Allowance for credit losses on off-balance sheet exposures(3) |
|
|||||||||||||||||||
| (1) | Excludes amounts associated with other assets and reversal of impairment losses of $( |
| (2) | Allowance for credit losses on acceptances is recorded against the financial asset in the Consolidated Statement of Financial Position. |
| (3) | Allowance for credit losses on off-balance sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position. |
Allowance for credit losses on loans |
As at April 30, 2026 |
|||||||||||||||
($ millions) |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
||||||||||||
Residential mortgages |
$ |
$ |
$ |
$ |
||||||||||||
Personal loans |
||||||||||||||||
Credit cards |
– |
|||||||||||||||
Business and government |
||||||||||||||||
Total (1) |
$ |
$ |
$ |
$ |
||||||||||||
| (1) | Excludes allowance for credit losses of $ off-balance sheet credit risks and reverse repos. |
| As at October 31, 2025 | ||||||||||||||||
($ millions) |
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||
Residential mortgages |
$ | $ | $ | $ | ||||||||||||
Personal loans |
||||||||||||||||
Credit cards |
– | |||||||||||||||
Business and government |
||||||||||||||||
Total (1) |
$ | |
$ | |
$ | |
$ | |
||||||||
| (1) | Excludes allowance for credit losses of $ off-balance sheet credit risks and reverse repos. |
| As at April 30, 2025 | ||||||||||||||||
($ millions) |
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||
Residential mortgages |
$ | $ | $ | $ | ||||||||||||
Personal loans |
||||||||||||||||
Credit cards |
– | |||||||||||||||
Business and government |
||||||||||||||||
Total (1) |
$ | |
$ | |
$ | |
$ | |
||||||||
| (1) | Excludes allowance for credit losses of $ off-balance sheet credit risks and reverse repos. |
7 4 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
The following table presents the changes to the allowance for credit losses on loans.
| As at and for the three months ended | ||||||||||||||||||||||||||||||||
April 30, 2026 |
April 30, 2025 | |||||||||||||||||||||||||||||||
($ millions) |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||||||||||||
Retail loans: |
||||||||||||||||||||||||||||||||
Residential mortgages |
||||||||||||||||||||||||||||||||
Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||
Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
Changes in models and methodologies |
– |
– |
– |
– |
– | – | – | – | ||||||||||||||||||||||||
Transfer to (from): |
||||||||||||||||||||||||||||||||
Stage 1 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Stage 2 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Stage 3 |
– |
( |
) |
– |
– | ( |
) | – | ||||||||||||||||||||||||
Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
Foreign exchange and other movements |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Balance at end of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Personal loans |
||||||||||||||||||||||||||||||||
Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||
Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
Changes in models and methodologies |
– |
– |
– |
– |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Transfer to (from): |
||||||||||||||||||||||||||||||||
Stage 1 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Stage 2 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Stage 3 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
Foreign exchange and other movements |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Balance at end of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Credit cards |
||||||||||||||||||||||||||||||||
Balance at beginning of period |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||
Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
Changes in models and methodologies |
– |
– |
– |
– |
– | – | – | – | ||||||||||||||||||||||||
Transfer to (from): |
||||||||||||||||||||||||||||||||
Stage 1 |
( |
) |
– |
– |
( |
) | – | – | ||||||||||||||||||||||||
Stage 2 |
( |
) |
– |
– |
( |
) | – | – | ||||||||||||||||||||||||
Stage 3 |
– |
( |
) |
– |
– | ( |
) | – | ||||||||||||||||||||||||
Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
Foreign exchange and other movements |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Balance at end of period |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
Total retail loans |
||||||||||||||||||||||||||||||||
Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||
Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
Changes in models and methodologies |
– |
– |
– |
– |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Transfer to (from): |
||||||||||||||||||||||||||||||||
Stage 1 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Stage 2 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Stage 3 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
Foreign exchange and other movements |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Balance at end of period |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
Non-retail loans: |
||||||||||||||||||||||||||||||||
Business and government |
||||||||||||||||||||||||||||||||
Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||||||||||
Remeasurement (1) |
( |
) |
||||||||||||||||||||||||||||||
Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
Derecognition of financial assets and maturities |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Changes in models and methodologies |
– |
– |
– |
– |
– | – | – | – | ||||||||||||||||||||||||
Transfer to (from): |
||||||||||||||||||||||||||||||||
Stage 1 |
( |
) |
– |
– |
( |
) | – | – | ||||||||||||||||||||||||
Stage 2 |
( |
) |
– |
– |
( |
) | ( |
) | – | |||||||||||||||||||||||
Stage 3 |
– |
( |
) |
– |
( |
) | ( |
) | – | |||||||||||||||||||||||
| Gross write-offs | – |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
Foreign exchange and other movements |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Balance at end of period including off-balance sheet exposures |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
Less: Allowance for credit losses on off-balance sheet exposures(2) |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
Balance at end of period (2) |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
(1) |
Includes credit risk changes as a result of significant increases in credit risk, changes in credit risk that did not result in a transfer between stages, changes in model inputs and assumptions and changes due to drawdowns of undrawn commitments. |
(2) |
Allowance for credit losses on off-balance sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position. |
| Scotiabank Second Quarter Report 2026 | 7 5 |
Table of Contents
| As at and for the six months ended | ||||||||||||||||||||||||||||||||
April 30, 2026 |
April 30, 2025 | |||||||||||||||||||||||||||||||
($ millions) |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||||||||||||
| Retail loans: |
||||||||||||||||||||||||||||||||
| Residential mortgages |
||||||||||||||||||||||||||||||||
| Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Provision for credit losses |
||||||||||||||||||||||||||||||||
| Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
| Changes in models and methodologies |
– |
– |
– |
– |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Transfer to (from): |
||||||||||||||||||||||||||||||||
| Stage 1 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Stage 2 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Stage 3 |
– |
( |
) |
– |
– | ( |
) | – | ||||||||||||||||||||||||
| Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
| Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Foreign exchange and other movements (2) |
( |
) |
( |
) |
( |
) |
( |
) |
– | – | ||||||||||||||||||||||
| Balance at end of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Personal loans |
||||||||||||||||||||||||||||||||
| Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Provision for credit losses |
||||||||||||||||||||||||||||||||
| Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
| Changes in models and methodologies |
– |
– |
– |
– |
– | ( |
) | ( |
) | |||||||||||||||||||||||
| Transfer to (from): |
||||||||||||||||||||||||||||||||
| Stage 1 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Stage 2 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Stage 3 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
| Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Foreign exchange and other movements (2) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Balance at end of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Credit cards |
||||||||||||||||||||||||||||||||
| Balance at beginning of period |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Provision for credit losses |
||||||||||||||||||||||||||||||||
| Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
| Changes in models and methodologies |
– |
– |
– |
– |
( |
) | ( |
) | – | ( |
) | |||||||||||||||||||||
| Transfer to (from): |
||||||||||||||||||||||||||||||||
| Stage 1 |
( |
) |
– |
– |
( |
) | – | – | ||||||||||||||||||||||||
| Stage 2 |
( |
) |
– |
– |
( |
) | – | – | ||||||||||||||||||||||||
| Stage 3 |
– |
( |
) |
– |
– | ( |
) | – | ||||||||||||||||||||||||
| Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
| Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Foreign exchange and other movements (2) |
( |
) |
( |
) |
( |
) |
( |
) | – | |||||||||||||||||||||||
| Balance at end of period |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Total retail loans |
||||||||||||||||||||||||||||||||
| Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Provision for credit losses |
||||||||||||||||||||||||||||||||
| Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Derecognition of financial assets and maturities |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
| Changes in models and methodologies |
– |
– |
– |
– |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Transfer to (from): |
||||||||||||||||||||||||||||||||
| Stage 1 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Stage 2 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Stage 3 |
( |
) |
( |
) |
– |
( |
) | ( |
) | – | ||||||||||||||||||||||
| Gross write-offs |
– |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
| Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Foreign exchange and other movements (2) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Balance at end of period |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| Non-retail loans: |
||||||||||||||||||||||||||||||||
| Business and government |
||||||||||||||||||||||||||||||||
| Balance at beginning of period |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Provision for credit losses |
||||||||||||||||||||||||||||||||
| Remeasurement (1) |
( |
) |
( |
) | ||||||||||||||||||||||||||||
| Newly originated or purchased financial assets |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Derecognition of financial assets and maturities |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Changes in models and methodologies |
– |
– |
– |
– |
– | – | – | – | ||||||||||||||||||||||||
| Transfer to (from): |
||||||||||||||||||||||||||||||||
| Stage 1 |
( |
) |
– |
– |
( |
) | – | – | ||||||||||||||||||||||||
| Stage 2 |
( |
) |
– |
– |
( |
) | ( |
) | – | |||||||||||||||||||||||
| Stage 3 |
– |
( |
) |
– |
( |
) | ( |
) | – | |||||||||||||||||||||||
| Gross write-offs | – |
– |
( |
) |
( |
) |
– | – | ( |
) | ( |
) | ||||||||||||||||||||
| Recoveries |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Foreign exchange and other movements (2) |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Balance at end of period including off-balance sheet exposures |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Less: Allowance for credit losses on off-balance sheet exposures(3) |
( |
) |
( |
) |
– |
( |
) |
( |
) | ( |
) | – | ( |
) | ||||||||||||||||||
| Balance at end of period (3) |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| (1) | Includes credit risk changes as a result of significant increases in credit risk, changes in credit risk that did not result in a transfer between stages, changes in model inputs and assumptions and changes due to drawdowns of undrawn commitments. |
| (2) | Includes impact of divested operations. |
| (3) | Allowance for credit losses on off-balance sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position. |
7 6 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
| (d) | Carrying value of exposures by risk rating |
Residential mortgages |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Category of PD grades ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 (1) |
Total |
Stage 1 | Stage 2 | Stage 3 (1) |
Total | ||||||||||||||||||||||||
| Very low |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Low |
– |
– | ||||||||||||||||||||||||||||||
| Medium |
– |
– | ||||||||||||||||||||||||||||||
| High |
– |
– | ||||||||||||||||||||||||||||||
| Very high |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (2) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses |
||||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| (1) | Stage 3 includes purchased or originated credit-impaired loans. |
| (2) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
Personal loans |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Category of PD grades ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 (1) |
Total |
Stage 1 | Stage 2 | Stage 3 (1) |
Total | ||||||||||||||||||||||||
| Very low |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Low |
– |
– | ||||||||||||||||||||||||||||||
| Medium |
– |
– | ||||||||||||||||||||||||||||||
| High |
– |
– | ||||||||||||||||||||||||||||||
| Very high |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (2) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses |
||||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| (1) | Stage 3 includes purchased or originated credit-impaired loans. |
| (2) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
Credit cards |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Category of PD grades ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||||||||||||||||
| Very low |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Low |
– |
– | ||||||||||||||||||||||||||||||
| Medium |
– |
– | ||||||||||||||||||||||||||||||
| High |
– |
– | ||||||||||||||||||||||||||||||
| Very high |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (1) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– |
– |
– | – | – | – | ||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Allowance for credit losses |
– |
– | ||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
– |
$ |
$ | |
$ | |
$ | – | $ | |
|||||||||||||||||||
| (1) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
Undrawn loan commitments – Retail |
As at April 30, 2026 |
As at October 31, 2025 |
||||||||||||||||||||||||||||||
Category of PD grades ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
Stage 1 |
Stage 2 |
Stage 3 |
Total |
||||||||||||||||||||||||
| Very low |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Low |
– |
– | ||||||||||||||||||||||||||||||
| Medium |
– |
– | ||||||||||||||||||||||||||||||
| High |
– |
– | ||||||||||||||||||||||||||||||
| Very high |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (1) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– |
– |
– | – | – | – | ||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
– |
$ |
$ | |
$ | |
$ | – | $ | |
|||||||||||||||||||
| (1) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
| Scotiabank Second Quarter Report 2026 | 7 7 |
Table of Contents
Total retail loans |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Category of PD grades ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 (1) |
Total |
Stage 1 | Stage 2 | Stage 3 (1) |
Total | ||||||||||||||||||||||||
| Very low |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Low |
– |
– | ||||||||||||||||||||||||||||||
| Medium |
– |
– | ||||||||||||||||||||||||||||||
| High |
– |
– | ||||||||||||||||||||||||||||||
| Very high |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (2) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses |
||||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| (1) | Stage 3 includes purchased or originated credit-impaired loans. |
| (2) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
Business and government loans |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Grade ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 (1) |
Total |
Stage 1 | Stage 2 | Stage 3 (1) |
Total | ||||||||||||||||||||||||
| Investment grade |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Non-investment grade |
– |
– | ||||||||||||||||||||||||||||||
| Watch list |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (2) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses |
||||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| (1) | Stage 3 includes purchased or originated credit-impaired loans. |
| (2) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
Undrawn loan commitments – Business and government |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Grade ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 (1) |
Total |
Stage 1 | Stage 2 | Stage 3 (1) |
Total | ||||||||||||||||||||||||
| Investment grade |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Non-investment grade |
– |
– | ||||||||||||||||||||||||||||||
| Watch list |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Loans not graded (2) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses |
– |
– | ||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| (1) | Stage 3 includes purchased or originated credit-impaired loans. |
| (2) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
Total non-retail loans |
As at April 30, 2026 |
As at October 31, 2025 | ||||||||||||||||||||||||||||||
Grade ($ millions) |
Stage 1 |
Stage 2 |
Stage 3 (1) |
Total |
Stage 1 | Stage 2 | Stage 3 (1) |
Total | ||||||||||||||||||||||||
| Investment grade |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
| Non-investment grade |
– |
– | ||||||||||||||||||||||||||||||
| Watch list |
– |
– | ||||||||||||||||||||||||||||||
| Loans not graded (2) |
– |
– | ||||||||||||||||||||||||||||||
| Default |
– |
– |
– | – | ||||||||||||||||||||||||||||
| Total |
$ |
$ |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses |
||||||||||||||||||||||||||||||||
| Carrying value |
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||||
| (1) | Stage 3 includes purchased or originated credit-impaired loans. |
| (2) | Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category. |
7 8 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
| (e) | Loans past due but not impaired (1) |
A loan is considered past due when a counterparty has not made a payment by the contractual due date. The following table presents the carrying value of loans that are contractually past due but not classified as impaired. In cases where borrowers have opted to participate in payment deferral programs, deferral of payments is not considered past due and such loans are not aged further during the deferral period.
As at April 30, 2026 |
||||||||||||||||
($ millions) |
31-60 days |
61-90 days |
91 days and greater (2) |
Total |
||||||||||||
Residential mortgages |
$ |
$ |
$ |
– |
$ |
|||||||||||
Personal loans |
– |
|||||||||||||||
Credit cards |
||||||||||||||||
Business and government |
– |
|||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
| As at January 31, 2026 | ||||||||||||||||
($ millions) |
31-60 days |
61-90 days |
91 days and greater (2) |
Total | ||||||||||||
Residential mortgages |
$ | $ | $ | – | $ | |||||||||||
Personal loans |
– | |||||||||||||||
Credit cards |
||||||||||||||||
Business and government |
– | |||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
| As at October 31, 2025 | ||||||||||||||||
($ millions) |
31-60 days |
61-90 days |
91 days and greater (2) |
Total | ||||||||||||
Residential mortgages |
$ | $ | $ | – | $ | |||||||||||
Personal loans |
– | |||||||||||||||
Credit cards |
||||||||||||||||
Business and government |
– | |||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
||||||||
| (1) | Loans up to 30 days past due are not presented in this analysis as they are not administratively considered past due. |
| (2) | All loans that are over 90 days past due are considered impaired with the exception of credit card receivables which are considered impaired when 180 days past due. |
| (f) | Purchased credit-impaired loans |
Certain financial assets including loans are credit-impaired on initial recognition. The following table provides details of such assets:
As at |
||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
|||||||||
Unpaid principal balance (1) |
$ |
$ | $ | |||||||||
Credit related fair value adjustments |
( |
) |
( |
) | ( |
) | ||||||
Carrying value |
||||||||||||
Stage 3 allowance |
– |
( |
) | ( |
) | |||||||
Carrying value net of related allowance |
$ |
$ | $ | |||||||||
| (1) | Represents principal amount owed net of write-offs. |
| Scotiabank Second Quarter Report 2026 | 7 9 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 8. | Investments in associates |
The Bank had significant investments in the following associates:
| As at | ||||||||||||||||||||||||||||
April 30 2026 |
January 31 2026 |
October 31 2025 |
||||||||||||||||||||||||||
($ millions) |
Country of incorporation |
Nature of business |
Ownership percentage |
Date of financial statements (1) |
Carrying value |
Carrying value |
Carrying value |
|||||||||||||||||||||
KeyCorp (2) |
% | $ |
$ | |
$ | |
||||||||||||||||||||||
Davivienda Group S.A. (3) |
% | – | ||||||||||||||||||||||||||
Bank of Xi’an Co. Ltd. (4) |
% | |||||||||||||||||||||||||||
Maduro & Curiel’s Bank N.V. (5) |
% | |||||||||||||||||||||||||||
| (1) | Represents the date of the most recent financial statements. |
| (2) | Based on the quoted price on the New York Stock Exchange, the market value of the Bank’s Investment in KeyCorp was $ |
| (3) | On December 1, 2025, the Bank completed the sale of its banking operations in Colombia, Costa Rica and Panama to Davivienda Group S.A. in exchange for non-voting preferred shares. There is no quoted market price for the common shares. Following the closing, the investment was recognized at a fair value of $ |
| (4) | Based on the quoted price on the Shanghai Stock Exchange, the Bank’s Investment in Bank of Xi’an Co. Ltd. was $ |
| (5) | The local regulator requires financial institutions to set aside reserves for general banking risks. These reserves are not required under IFRS, and represent undistributed retained earnings related to a foreign associated corporation, which are subject to local regulatory restrictions. As of April 30, 2026, these reserves amounted to $ |
| 9. | Deposits |
| As at | ||||||||||||||||||||||||||||
April 30, 2026 |
January 31 2026 |
October 31 2025 |
||||||||||||||||||||||||||
Payable on demand (1) |
Payable after notice (2) |
|||||||||||||||||||||||||||
($ millions) |
Interest- bearing |
Non-interest- bearing |
Payable on a fixed date (3) |
Total |
Total | Total | ||||||||||||||||||||||
Personal |
$ |
$ |
$ |
$ |
$ |
$ | |
$ | |
|||||||||||||||||||
Business and government |
||||||||||||||||||||||||||||
Financial institutions |
||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ |
$ | $ | ||||||||||||||||||||||
Recorded in: |
||||||||||||||||||||||||||||
Canada |
$ |
$ |
$ |
$ |
$ |
$ | $ | |||||||||||||||||||||
United States |
||||||||||||||||||||||||||||
United Kingdom |
||||||||||||||||||||||||||||
Mexico |
||||||||||||||||||||||||||||
Peru |
||||||||||||||||||||||||||||
Chile |
||||||||||||||||||||||||||||
Colombia |
– | |||||||||||||||||||||||||||
Other International |
||||||||||||||||||||||||||||
Total (4) |
$ |
$ |
$ |
$ |
$ |
$ | $ | |||||||||||||||||||||
| (1) | Deposits payable on demand include all deposits for which the Bank may not have the right to notice of withdrawal, generally chequing accounts. |
| (2) | Deposits payable after notice include all deposits for which the Bank may require notice of withdrawal, generally savings accounts. |
| (3) | All deposits that mature on a specified date, generally term deposits, guaranteed investments certificates and similar instruments. |
| (4) | Deposits denominated in U.S. dollars amount to $ |
The following table presents the maturity schedule for term deposits in Canada greater than $100,000
(1)
. ($ millions) |
Within three months |
Three to six months |
Six to twelve months |
One to five years |
Over five years |
Total | ||||||||||||||||||
As at April 30, 2026 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
As at January 31, 2026 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
As at October 31, 2025 |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
| (1) | The majority of foreign term deposits are in excess of $ |
80 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 10. | Capital and financing transactions |
Common shares
For the three months ended |
||||||||||||||||
April 30, 2026 |
April 30, 2025 |
|||||||||||||||
($ millions) |
Number of shares |
Amount |
Number of shares |
Amount |
||||||||||||
Outstanding at beginning of period |
$ |
$ | |
|||||||||||||
Issued in relation to share-based payments, net |
||||||||||||||||
Repurchased for cancellation under the Normal Course Issuer Bid |
( |
) |
( |
) |
– | – | ||||||||||
Outstanding at end of period |
$ |
$ | ||||||||||||||
For the six months ended |
||||||||||||||||
April 30, 2026 |
April 30, 2025 |
|||||||||||||||
($ millions) |
Number of shares |
Amount |
Number of shares |
Amount |
||||||||||||
Outstanding at beginning of period |
$ |
$ | |
|||||||||||||
Issued in relation to share-based payments, net |
||||||||||||||||
Repurchased for cancellation under the Normal Course Issuer Bid |
( |
) |
( |
) |
– | – | ||||||||||
Outstanding at end of period |
$ |
$ | ||||||||||||||
Normal Course Issuer Bid
On April 2, 2026, the Bank announced that OSFI and the Toronto Stock Exchange (TSX) approved the Bank’s new normal course issuer bid (the “2026 NCIB”) to repurchase for cancellation up to 15 million of the Bank’s common shares. Purchases under the 2026 NCIB commenced on April 7, 2026. The 2026 NCIB will terminate upon the earlier of: (i) the Bank purchasing 15 million common shares under the 2026 NCIB, (ii) the Bank providing notice of termination, or (iii) April 6, 2027. From the commencement o2.1 million common shares at an average price of $101.66 per share for a total amount of $218 million, including tax.
f
the 2026 NCIB on April 7, 2026 to April 30, 2026, the Bank repurchased and cancelled On May 28, 2025, the Bank announced that OSFI and the Toronto Stock Exchange (TSX) approved a normal course issuer bid (the “2025 NCIB”) pursuant to which it may repurchase for cancellation up to 20 million of the Bank’s common shares. Th20 million common shares at an average price of $90.47 per share for a total amount of $1,846 million, including tax.
e
2025 NCIB commenced on May 30, 2025, and terminated on April 6, 2026. From commencement of the 2025 NCIB until April 1,2026, the Bank repurchased and cancelled all of the During the quarter ended April 30, 2026, the Bank repurchased and cancelled approximately 6.4
million common shares, including 2.1
million common shares under the 2026 NCIB, at an average price of
$100.65 per share for a total of $655 million, including tax.
| 11. | Capital management |
The Bank’s regulatory capital, total loss absorbing capacity and leverage measures were as follows:
As at |
||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
October 31 2025 |
|||||||||
Capital (1) |
||||||||||||
Common Equity Tier 1 capital |
$ |
$ | $ | |||||||||
Net Tier 1 capital |
||||||||||||
Total regulatory capital |
||||||||||||
Total loss absorbing capacity (TLAC) (2) |
||||||||||||
Risk-weighted assets/exposures used in calculation of capital ratios |
||||||||||||
Risk-weighted assets (1) |
$ |
$ | $ | |||||||||
Leverage exposures (3) |
|
|
||||||||||
Regulatory ratios (1) |
||||||||||||
Common Equity Tier 1 capital ratio |
% |
% | % | |||||||||
Tier 1 capital ratio |
% |
% | % | |||||||||
Total capital ratio |
% |
% | % | |||||||||
Total loss absorbing capacity ratio (2) |
% |
% | % | |||||||||
Leverage ratio (3) |
% |
% | % | |||||||||
Total loss absorbing capacity leverage ratio (2) |
% |
% | % | |||||||||
| (1) | The Q1 2026 and Q2 2026 regulatory capital ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2025). The prior period regulatory capital ratios were based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2023). |
| (2) | This measure has been disclosed in this document in accordance with OSFI Guideline – Total Loss Absorbing Capacity (September 2018). |
| (3) | The leverage ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Leverage Requirements (February 2023). |
The Bank substantially exceeded the OSFI minimum regulatory capital and TLAC ratios as at April 30, 2026, including the Domestic Stability Buffer requirement. In addition, the Bank substantially exceeded the OSFI minimum leverage and TLAC leverage ratios as at April 30, 2026.
| 12. | Share-based payments |
In Q1 2026, the Bank granted 1,428,056 options with an exercise price of $100.35 per option and a weighted average fair value of $10.68 to select employees, under the terms of the Employee Stock Option Plan. These stock options vest 50 % at the end of the third year and 50 % at the end of the fourth year.
The Bank recorded an increase to equity – other reserves of $2 million for the three months ended April 30, 2026 and $10 million for the six months ended April 30, 2026 (April 30, 2025 – $3 million and $11 million), as a result of equity-classified share-based payment expense.
| Scotiabank Second Quarter Report 2026 | 81 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 13. | Employee benefits |
Employee benefits include pensions, other post-retirement benefits, and post-employment benefits. The following table summarizes the expenses for the Bank’s principal plans
(1)
. | For the three months ended | ||||||||||||||||||||||||
| Pension plans | Other benefit plans | |||||||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
January 31 2026 |
April 30 2025 |
||||||||||||||||||
Defined benefit service cost |
$ |
$ | $ | $ |
$ | $ | ||||||||||||||||||
Interest on net defined benefit (asset) liability |
( |
) |
( |
) | ( |
) | ||||||||||||||||||
Other |
( |
) |
– | ( |
) | |||||||||||||||||||
Defined benefit expense |
$ |
$ | $ | $ |
$ | $ | ||||||||||||||||||
Defined contribution expense |
$ |
$ | $ | $ |
– |
$ | – | $ | – | |||||||||||||||
Actuarial gains (losses) on employee benefit plans in other comprehensive income (2) |
$ |
$ | |
$ | ( |
) | $ |
( |
) |
$ | ( |
) | $ | ( |
) | |||||||||
For the six months ended |
||||||||||||||||
Pension plans |
Other benefit plans |
|||||||||||||||
($ millions) |
April 30 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
||||||||||||
Defined benefit service cost |
$ |
$ | $ |
$ | ||||||||||||
Interest on net defined benefit (asset) liability |
( |
) |
( |
) | ||||||||||||
Other |
( |
) |
– | |||||||||||||
Defined benefit expense |
$ |
$ | $ |
$ | ||||||||||||
Defined contribution expense |
$ |
$ | $ |
– |
$ | |||||||||||
Actuarial gains (losses) on employee benefit plans in other comprehensive income (2) |
$ |
$ | |
$ |
( |
) |
$ | ( |
) | |||||||
| (1) | Other plans operated by certain subsidiaries of the Bank are not considered material and are not included in this note. |
| (2) | Changes in discount rates and return on plan assets are reviewed and updated on a quarterly basis. In the absence of legislated changes, all other assumptions are updated annually. |
| 14. | Operating segments |
Effective Q1 2026, the Bank no longer analyzes business segment revenues on a taxable equivalent basis (TEB). Under the TEB methodology, 9 for the three months ended April 30, 2025 and $17 for the six months ended April 30, 2025, impacting the International Banking business segment.
tax-exempt
income earned on certain securities reported in either net interest income or non-interest
income was grossed up to an equivalent before tax basis. It also grossed up net income from associated corporations to normalize the effective tax rate in the business lines. Corresponding increases were made to the provision for income taxes; hence, there was no impact on the segment’s net income. The elimination of the TEB gross-up
was recorded in the Other segment, resulting in no impact on the consolidated results. The TEB gross-up
recorded in the business segments has significantly decreased in recent quarters as the Bank no longer claims the dividend received deduction on Canadian shares, following the enactment of Bill C-59
in January 2024. Prior period results have not been restated and include a TEB gross-up
of $For the three months ended April 30, 2026 |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other |
Total |
||||||||||||||||||
Net interest income (1) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Non-interest income(2)(3) |
||||||||||||||||||||||||
Total revenues |
||||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Other non-interest expenses |
||||||||||||||||||||||||
Provision for income taxes |
( |
) |
||||||||||||||||||||||
Net income |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
– |
$ |
$ |
$ |
– |
$ |
– |
$ |
|||||||||||||||
Net income attributable to equity holders of the Bank |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Average assets ($ billions) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Average liabilities ($ billions) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
(1) |
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure. |
(2) |
Card revenues and Banking services fees are mainly earned in Canadian and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets. |
| ( 3 ) |
Includes income from associated corporations for Canadian Banking – $( |
82 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
| For the three months ended January 31, 2026 | ||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||
Net interest income (1) |
$ | |
$ | |
$ | $ | $ | – | $ | |
||||||||||||||
Non-interest income(2)(3) |
|
|
( |
) ( 4 ) |
||||||||||||||||||||
Total revenues |
( |
) | ||||||||||||||||||||||
Provision for credit losses |
– | |||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Other non-interest expenses |
( 4 ) |
|||||||||||||||||||||||
Provision for income taxes |
( |
) | ||||||||||||||||||||||
Net income |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ | – | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||
Net income attributable to equity holders of the Bank |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
Average assets ($ billions) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Average liabilities ($ billions) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
(1) |
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure. |
(2) |
Card revenues and Banking services fees are mainly earned in Canadian and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets. |
| ( 3 ) |
Includes income from associated corporations for Canadian Banking – $( |
| (4) | Includes the loss related to the sale of the banking operations in Colombia, Costa Rica and Panama. Refer to Note 19 for further details. |
| For the three months ended April 30, 2025 | ||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||
Net interest income (1) |
$ | |
$ | |
$ | $ | $ | ( |
) | $ | |
|||||||||||||
Non-interest income(2)(3) |
|
|
( |
) | ||||||||||||||||||||
Total revenues |
( |
) | ||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Other non-interest expenses |
||||||||||||||||||||||||
Provision for income taxes |
( |
) | ||||||||||||||||||||||
Net income |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ | – | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||
Net income attributable to equity holders of the Bank |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
Average assets ($ billions) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Average liabilities ($ billions) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
(1) |
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure. |
(2) |
Card revenues and Banking services fees are mainly earned in Canadian and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets. |
| ( 3 ) |
Includes income (on a taxable equivalent basis) from associated corporations for Canadian Banking – $( |
| Scotiabank Second Quarter Report 2026 | 83 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended April 30, 2026 |
||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other |
Total |
||||||||||||||||||
Net interest income (1) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Non-interest income(2)(3) |
( |
) ( 4 ) |
||||||||||||||||||||||
Total revenues |
( |
) |
||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Other non-interest expenses |
( 4 ) |
|||||||||||||||||||||||
Provision for income taxes |
( |
) |
||||||||||||||||||||||
Net income |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ |
– |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||
Net income attributable to equity holders of the Bank |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||||
Average assets ($ billions) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Average liabilities ($ billions) |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
(1) |
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure. |
(2) |
Card revenues and Banking services fees are mainly earned in Canadian and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets. |
| ( 3 ) |
Includes income from associated corporations for Canadian Banking – $( |
| (4) | Includes the loss related to the sale of the banking operations in Colombia, Costa Rica and Panama. Refer to Note 19 for further details. |
| For the six months ended April 30, 2025 | ||||||||||||||||||||||||
($ millions) |
Canadian Banking |
International Banking |
Global Wealth Management |
Global Banking and Markets |
Other | Total | ||||||||||||||||||
Net interest income (1) |
$ |
|
$ | |
$ | $ | $ | ( |
) | $ | |
|||||||||||||
Non-interest income(2)(3) |
|
|
( |
) | ||||||||||||||||||||
Total revenues |
( |
) | ||||||||||||||||||||||
Provision for credit losses |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Other non-interest expenses |
|
( 4 ) |
||||||||||||||||||||||
Provision for income taxes |
( |
) | ||||||||||||||||||||||
Net income |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
Net income attributable to non-controlling interests in subsidiaries |
$ | – | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||
Net income attributable to equity holders of the Bank |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||
Average assets ($ billions) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Average liabilities ($ billions) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
(1) |
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure. |
(2) |
Card revenues and Banking services fees are mainly earned in Canadian Banking and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets. |
| ( 3 ) |
Includes income (on a taxable equivalent basis) from associated corporations for Canadian Banking – $ |
| (4) | Includes the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. Refer to Note 19 for further details. |
| 15. | Interest income and expense |
For the three months ended |
For the six months ended |
|||||||||||||||||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 |
April 30, 2025 |
April 30, 2026 |
April 30, 2025 |
||||||||||||||||||||||||||||||||||||
($ millions) |
Interest income |
Interest expense |
Interest income |
Interest expense |
Interest income |
Interest expense |
Interest income |
Interest expense |
Interest income |
Interest expense |
||||||||||||||||||||||||||||||
Measured at amortized cost (1) |
$ |
$ |
$ | $ | $ | $ | $ |
$ |
$ | $ | ||||||||||||||||||||||||||||||
Measured at FVOCI (1) |
– |
– | – | – |
– | |||||||||||||||||||||||||||||||||||
Other |
(2) |
(3) |
(2) |
(3) |
(2) |
(3) |
(2) |
(3) |
(2) |
(3) | ||||||||||||||||||||||||||||||
Total |
$ |
$ |
$ | |
$ | |
$ | |
$ | $ |
$ |
$ | $ | |||||||||||||||||||||||||||
| (1) | The interest income/expense on financial assets/liabilities are calculated using the effective interest method. |
| (2) | Includes dividend income on equity securities. |
| (3) | Includes interest on lease liabilities for the three months ended April 30, 2026 – $ |
8 4 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 16. | Earnings per share |
For the three months ended |
For the six months ended |
|||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
April 30 2025 |
|||||||||||||||
Basic earnings per common share |
||||||||||||||||||||
Net income attributable to common shareholders |
$ |
$ | |
$ | |
$ |
$ | |
||||||||||||
Weighted average number of common shares outstanding (millions) |
||||||||||||||||||||
Basic earnings per common share (1) (in dollars) |
$ |
$ | $ | $ |
$ | |||||||||||||||
Diluted earnings per common share |
||||||||||||||||||||
Net income attributable to common shareholders |
$ |
$ | $ | $ |
$ | |||||||||||||||
Dilutive impact of share-based payment options and others (2) |
– |
( |
) | – | ( |
) |
( |
) | ||||||||||||
Net income attributable to common shareholders (diluted) |
$ |
$ | $ | $ |
$ | |||||||||||||||
Weighted average number of common shares outstanding (millions) |
||||||||||||||||||||
Dilutive impact of share-based payment options and others (2) (millions) |
– | |||||||||||||||||||
Weighted average number of diluted common shares outstanding (millions) |
||||||||||||||||||||
Diluted earnings per common share (1) (in dollars) |
$ |
$ | $ | $ |
$ | |||||||||||||||
| (1) | Earnings per share calculations are based on full dollar and share amounts. |
| (2) | Certain options were not included in the calculation of diluted earnings per share as they were anti-dilutive. |
| 17. | Fair value of financial instruments |
(a) Financial instruments designated at fair value through profit or loss
In accordance with its risk management strategy, the Bank has elected to designate certain senior note liabilities at fair value through profit or loss to reduce an accounting mismatch between fair value changes in these instruments and fair value changes in related derivatives, and where a hybrid financial liability contains one or more embedded derivatives that are not closely related to the host contract. Changes in fair value of financial liabilities arising from the Bank’s own credit risk are recognized in other comprehensive income, without subsequent reclassification to net income.
The cumulative fair value adjustment due to own credit risk is determined at a point in time by comparing the present value of expected future cash flows over the term of these liabilities discounted at the Bank’s effective funding rate, and the present value of expected future cash flows discounted at a benchmark rate.
The following table presents the fair value of liabilities designated at fair value through profit or loss and their changes in fair value.
Fair value |
Change in fair value (1) Gains/(Losses) |
Cumulative change in fair value (2) Gains/(Losses) |
||||||||||||||||||||||||||||||||||
As at |
For the three months ended |
As at |
||||||||||||||||||||||||||||||||||
($ millions) |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
January 31 2026 |
April 30 2025 |
April 30 2026 |
January 31 2026 |
April 30 2025 |
|||||||||||||||||||||||||||
Liabilities |
||||||||||||||||||||||||||||||||||||
Senior note liabilities (3) |
$ |
$ | $ | $ |
$ | ( |
) | $ | $ |
$ | $ | |||||||||||||||||||||||||
| (1) | Change in the difference between the contractual maturity amount and the carrying value. |
| (2) | The cumulative change in fair value is measured from the instrument’s date of initial recognition. |
| (3) | Changes in fair value attributable to changes in the Bank’s own credit risk are recorded in other comprehensive income. Other changes in fair value are recorded in non-interest income – trading revenues. The offsetting fair value changes from associated derivatives is also recorded in non-interest income – trading revenues. |
The following table presents the changes in fair value attributable to changes in the Bank’s own credit risk for financial liabilities designated at fair value through profit or loss as well as their contractual maturity and carrying amounts.
| Senior note liabilities | ||||||||||||||||||||
($ millions) |
|
Contractual maturity amount |
|
Carrying value | |
Difference between contractual maturity amount and carrying value |
|
|
Changes in fair value for the three months period attributable to changes in own credit risk recorded in other comprehensive income Gains/(Losses) |
|
|
Cumulative changes in fair value attributable to changes in own credit risk (1) Gains/(Losses) |
| |||||||
As at April 30, 2026 |
$ |
$ |
$ |
$ |
$ |
( |
) | |||||||||||||
As at January 31, 2026 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||
As at April 30, 2025 |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | |||||||||
| (1) | The cumulative change in fair value is measured from the instruments’ date of initial recognition. |
| Scotiabank Second Quarter Report 2026 | 8 5 |
Table of Contents
(b) Financial instruments – fair value
Fair value of financial instruments
The calculation of fair value is based on market conditions at a specific point in time and therefore may not be reflective of future fair values. The Bank has controls and processes in place to ensure that the valuation of financial instruments is appropriately determined.
Refer to Note 6 of the audited consolidated financial statements in the 2025 Annual Report for the valuation techniques used to fair value its significant financial assets and liabilities.
The following table sets out the fair values of financial instruments of the Bank and excludes
non-financial
assets, such as property and equipment, investments in associates, precious metals, goodwill and other intangible assets. As at |
||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 |
October 31, 2025 |
||||||||||||||||||||||
($ millions) |
Total fair value |
Total carrying value |
Total fair value |
Total carrying value |
Total fair value |
Total carrying value |
||||||||||||||||||
| Assets: |
||||||||||||||||||||||||
| Cash and deposits with financial institutions |
$ |
$ |
$ | $ | $ | $ | ||||||||||||||||||
| Trading assets |
|
|
|
|
||||||||||||||||||||
| Securities purchased under resale agreements and securities borrowed |
||||||||||||||||||||||||
| Derivative financial instruments |
||||||||||||||||||||||||
| Investment securities – FVOCI and FVTPL |
||||||||||||||||||||||||
| Investment securities – amortized cost |
||||||||||||||||||||||||
| Loans |
||||||||||||||||||||||||
| Customers’ liability under acceptances |
||||||||||||||||||||||||
| Other financial assets |
||||||||||||||||||||||||
| Liabilities: |
||||||||||||||||||||||||
| Deposits |
||||||||||||||||||||||||
| Financial instruments designated at fair value through profit or loss |
||||||||||||||||||||||||
| Acceptances |
||||||||||||||||||||||||
| Obligations related to securities sold short |
||||||||||||||||||||||||
| Derivative financial instruments |
||||||||||||||||||||||||
| Obligations related to securities sold under repurchase agreements and securities lent |
||||||||||||||||||||||||
| Subordinated debentures |
||||||||||||||||||||||||
| Other financial liabilities |
||||||||||||||||||||||||
(c) Fair value hierarchy
The best evidence of fair value for a financial instrument is the quoted price in an active market. Unadjusted quoted market prices for identical instruments represent a Level 1 valuation. Where possible, valuations are based on quoted prices or observable inputs obtained from active markets.
Quoted prices are not always available for transactions, as well as transactions in inactive or illiquid markets. In these instances, internal models that maximize the use of observable inputs are used to estimate fair value. The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction. When all significant inputs to models are observable, the valuation is classified as Level 2. Financial instruments traded in a less active market are valued using indicative market prices or other valuation techniques. Fair value estimates do not consider forced or liquidation sales.
over-the-counter
Where financial instruments trade in inactive markets, illiquid markets or when using models where observable parameters do not exist, greater management judgement is required for valuation purposes. Valuations that require the significant use of unobservable inputs are classified as Level 3.
8 6 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
The following table outlines the fair value hierarchy and instruments carried at fair value on a recurring basis.
| As at | ||||||||||||||||||||||||||||||||
April 30, 2026 |
January 31, 2026 | |||||||||||||||||||||||||||||||
($ millions) |
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Instruments carried at fair value on a recurring basis: |
||||||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||
Precious metals (1) |
$ |
– |
$ |
$ |
– |
$ |
$ | – | $ | $ | – | $ | ||||||||||||||||||||
Trading assets |
||||||||||||||||||||||||||||||||
Loans |
– |
– | ||||||||||||||||||||||||||||||
Canadian federal government and government guaranteed debt |
– |
– | ||||||||||||||||||||||||||||||
Canadian provincial and municipal debt |
– |
– | ||||||||||||||||||||||||||||||
U.S. treasury and other U.S. agencies’ debt |
– |
– |
– | – | ||||||||||||||||||||||||||||
Other foreign governments’ debt |
– |
– | ||||||||||||||||||||||||||||||
Corporate and other debt |
– |
– | ||||||||||||||||||||||||||||||
Equity securities |
||||||||||||||||||||||||||||||||
Other |
– |
– |
– | – | ||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ | |
$ | |
$ | $ | |||||||||||||||||||||||
Investment securities (2) |
||||||||||||||||||||||||||||||||
Canadian federal government and government guaranteed debt |
$ |
$ |
$ |
– |
$ |
$ | $ | $ | – | $ | ||||||||||||||||||||||
Canadian provincial and municipal debt |
– |
– | ||||||||||||||||||||||||||||||
U.S. treasury and other U.S. agencies’ debt |
– |
– | ||||||||||||||||||||||||||||||
Other foreign governments’ debt |
– |
– | ||||||||||||||||||||||||||||||
Corporate and other debt |
||||||||||||||||||||||||||||||||
Equity securities |
||||||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ | $ | $ | |
$ | |
|||||||||||||||||||||||
Derivative financial instruments |
||||||||||||||||||||||||||||||||
Interest rate contracts |
$ |
– |
$ |
$ |
– |
$ |
$ | – | $ | $ | – | $ | ||||||||||||||||||||
Foreign exchange and gold contracts |
– |
– | ||||||||||||||||||||||||||||||
Equity contracts |
||||||||||||||||||||||||||||||||
Credit contracts |
– |
– | ||||||||||||||||||||||||||||||
Commodity contracts |
– |
– | ||||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ | $ | $ | $ | |||||||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||||||
Deposits (3) |
$ |
– |
$ |
$ |
– |
$ |
$ | – | $ | $ | – | $ | ||||||||||||||||||||
Financial liabilities designated at fair value through profit or loss |
– |
– |
– | – | ||||||||||||||||||||||||||||
Obligations related to securities sold short |
– |
– | ||||||||||||||||||||||||||||||
Derivative financial instruments |
||||||||||||||||||||||||||||||||
Interest rate contracts |
– |
– | ||||||||||||||||||||||||||||||
Foreign exchange and gold contracts |
– |
– |
– | – | ||||||||||||||||||||||||||||
Equity contracts |
||||||||||||||||||||||||||||||||
Credit contracts |
– |
– | ||||||||||||||||||||||||||||||
Commodity contracts |
– |
– | ||||||||||||||||||||||||||||||
$ |
$ |
$ |
$ |
$ | $ | $ | $ | |||||||||||||||||||||||||
| (1) | The fair value of precious metals is determined based on quoted market prices and forward spot prices, where applicable, less the cost to sell. |
| (2) | Excludes debt investment securities measured at amortized cost of $ |
| (3) | These amounts represent embedded derivatives bifurcated from structured note liabilities measured at amortized cost. |
| Scotiabank Second Quarter Report 2026 | 8 7 |
Table of Contents
| As at October 31, 2025 | ||||||||||||||||
($ millions) |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Instruments carried at fair value on a recurring basis: |
||||||||||||||||
Assets: |
||||||||||||||||
Precious metals (1) |
$ | – | $ | $ | – | $ | ||||||||||
Trading assets |
||||||||||||||||
Loans |
– | |||||||||||||||
Canadian federal government and government guaranteed debt |
– | |||||||||||||||
Canadian provincial and municipal debt |
– | |||||||||||||||
U.S. treasury and other U.S. agencies’ debt |
– | – | ||||||||||||||
Other foreign governments’ debt |
– | |||||||||||||||
Corporate and other debt |
– | |||||||||||||||
Equity securities |
||||||||||||||||
Other |
– | – | ||||||||||||||
| $ | |
$ | |
$ | $ | |
||||||||||
Investment securities (2) |
||||||||||||||||
Canadian federal government and government guaranteed debt |
$ | $ | $ | – | $ | |||||||||||
Canadian provincial and municipal debt |
– | |||||||||||||||
U.S. treasury and other U.S. agencies’ debt |
– | |||||||||||||||
Other foreign governments’ debt |
– | |||||||||||||||
Corporate and other debt |
||||||||||||||||
Equity securities |
||||||||||||||||
| $ | $ | $ | |
$ | ||||||||||||
Derivative financial instruments |
||||||||||||||||
Interest rate contracts |
$ | – | $ | $ | $ | |||||||||||
Foreign exchange and gold contracts |
– | |||||||||||||||
Equity contracts |
||||||||||||||||
Credit contracts |
– | |||||||||||||||
Commodity contracts |
– | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Liabilities: |
||||||||||||||||
Deposits (3) |
$ | – | $ | $ | – | $ | ||||||||||
Financial liabilities designated at fair value through profit or loss |
– | – | ||||||||||||||
Obligations related to securities sold short |
– | |||||||||||||||
Derivative financial instruments |
||||||||||||||||
Interest rate contracts |
– | |||||||||||||||
Foreign exchange and gold contracts |
– | – | ||||||||||||||
Equity contracts |
||||||||||||||||
Credit contracts |
– | |||||||||||||||
Commodity contracts |
– | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| (1) | The fair value of precious metals is determined based on quoted market prices and forward spot prices, where applicable, less the cost to sell. |
| (2) | Excludes debt investment securities measured at amortized cost of $ |
| (3) | These amounts represent embedded derivatives bifurcated from structured note liabilities measured at amortized cost. |
8 8 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
Level 3 instrument fair value changes
Financial instruments categorized as Level 3 as at April 30, 2026, in the fair value hierarchy comprised of loans, corporate bonds, equity securities and derivatives.
The following table summarizes the changes in Level 3 instruments carried at fair value for the three and six months ended April 30, 2026.
All positive balances represent assets and negative balances represent liabilities. Consequently, positive amounts indicate purchases of assets or settlements of liabilities and negative amounts indicate sales of assets or issuances of liabilities.
For the three months ended April 30, 2026 |
||||||||||||||||||||||||||||||||||||
($ millions) |
|
Fair value, beginning of the quarter |
|
|
Gains/ (losses) recorded in income (1) |
|
|
Gains/ (losses) recorded in OCI |
|
|
Purchases/ Issuances |
|
|
Sales/ Settlements |
|
|
Transfers into Level 3 |
|
|
Transfers out of Level 3 |
|
Fair value, end of the quarter |
|
Changes in unrealized gains/(losses) recorded in income for instruments still held (2) |
| |||||||||||
Trading assets |
||||||||||||||||||||||||||||||||||||
Loans |
$ | $ | ( |
) | $ | – | $ | $ | – | $ | $ | – | $ |
$ | ( |
) | ||||||||||||||||||||
Equity securities |
– | – | – | ( |
) | – | – | |||||||||||||||||||||||||||||
| ( |
) | – | ( |
) | – | ( |
) | |||||||||||||||||||||||||||||
Investment securities |
||||||||||||||||||||||||||||||||||||
Corporate and other debt |
– | ( |
) | ( |
) | – | – | – | ||||||||||||||||||||||||||||
Equity securities |
( |
) | – | – | ||||||||||||||||||||||||||||||||
| ( |
) | – | – | |||||||||||||||||||||||||||||||||
Derivative financial instruments – assets |
||||||||||||||||||||||||||||||||||||
Foreign exchange and gold contracts |
( |
) | – | – | – | – | ( |
) | ||||||||||||||||||||||||||||
Equity contracts |
( |
) | – | – | – | ( |
) | ( |
) (3) | |||||||||||||||||||||||||||
Credit contracts |
– | – | – | – | – | – | ||||||||||||||||||||||||||||||
Commodity contracts |
( |
) | – | – | – | – | – | ( |
) | |||||||||||||||||||||||||||
Derivative financial instruments – liabilities |
||||||||||||||||||||||||||||||||||||
Interest rate contracts |
( |
) | – | – | – | – | ( |
) | ( |
) |
– | |||||||||||||||||||||||||
Equity contracts |
( |
) | – | ( |
) | – | – | ( |
) |
(3) | ||||||||||||||||||||||||||
Credit contracts |
( |
) | – | – | – | – | – | – | ( |
) |
– | |||||||||||||||||||||||||
Commodity contracts |
( |
) | – | – | – | – | – | ( |
) |
– | ||||||||||||||||||||||||||
| ( |
) | – | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
$ | ( |
) | $ |
$ | |
|||||||||||||||||
| (1) | Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 2. |
| (2) | These amounts represent the gains and losses from fair value changes of Level 3 instruments still held at the end of the period that are recorded in the Consolidated Statement of Income. |
| (3) | Certain unrealized gains and losses on derivative assets and liabilities are largely offset by mark-to-market |
The following table summarizes the changes in Level 3 instruments carried at fair value for the three months ended April 30, 2025.
For the three months ended April 30, 2025 |
||||||||||||||||||||||||||||||||
($ millions) |
Fair value, beginning of the quarter |
Gains/ (losses) recorded in income (1) |
Gains/ (losses) recorded in OCI |
Purchases/ Issuances |
Sales/ Settlements |
Transfers into Level 3 |
Transfers out of Level 3 |
Fair value, end of the quarter |
||||||||||||||||||||||||
Trading assets |
$ | $ | – | $ | – | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||||||
Investment securities |
|
|
|
|
( |
) | – | ( |
) | |
||||||||||||||||||||||
Derivative financial instruments |
( |
) | – | – | ( |
) |
( |
) | ( |
) | ||||||||||||||||||||||
| (1) | Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 2. |
| Scotiabank Second Quarter Report 2026 | 8 9 |
Table of Contents
For the six months ended April 30, 2026 |
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($ millions) |
|
Fair value, beginning of the period |
|
|
Gains/ (losses) recorded in income (1) |
|
|
Gains/ (losses) recorded in OCI |
|
|
Purchases/ Issuances |
|
|
Sales/ Settlements |
|
|
Transfers into Level 3 |
|
|
Transfers out of Level 3 |
|
Fair value, end of the period |
|
Changes in unrealized gains/(losses) recorded in income for instruments still held (2) |
| |||||||||||
| Trading assets |
||||||||||||||||||||||||||||||||||||
| Loans |
$ | $ | ( |
) | $ | ( |
) | $ | $ | – | $ | $ | ( |
) | $ |
$ | ( |
) | ||||||||||||||||||
| Equity securities |
( |
) | – | ( |
) | ( |
) | – | ||||||||||||||||||||||||||||
| ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Investment securities |
||||||||||||||||||||||||||||||||||||
| Corporate and other debt |
– | ( |
) | ( |
) | – | – | – | ||||||||||||||||||||||||||||
| Equity securities |
( |
) | – | – | ||||||||||||||||||||||||||||||||
| ( |
) | – | – | |||||||||||||||||||||||||||||||||
| Derivative financial instruments – assets |
||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
( |
) | – | – | ( |
) | – | – | – |
( |
) (3) | |||||||||||||||||||||||||
| Foreign exchange and gold contracts |
– | – | – | – | ( |
) | – | |||||||||||||||||||||||||||||
| Equity contracts |
( |
) | – | ( |
) | ( |
) | (4) | ||||||||||||||||||||||||||||
| Credit contracts |
– | – | – | – | ||||||||||||||||||||||||||||||||
| Commodity contracts |
( |
) | – | – | – | – | – | ( |
) | |||||||||||||||||||||||||||
| Derivative financial instruments – liabilities |
||||||||||||||||||||||||||||||||||||
| Interest rate contracts |
( |
) | – | ( |
) | ( |
) | ( |
) |
( |
) (3) | |||||||||||||||||||||||||
| Equity contracts |
( |
) | – | ( |
) | – | – | ( |
) |
(4) | ||||||||||||||||||||||||||
| Credit contracts |
( |
) | – | – | – | – | – | – | ( |
) |
– | |||||||||||||||||||||||||
| Commodity contracts |
( |
) | – | – | – | – | ( |
) |
||||||||||||||||||||||||||||
| ( |
) | – | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Total |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
$ | ( |
) | $ |
$ | |
|||||||||||||||||
| (1) | Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 2. |
| (2) | These amounts represent the gains and losses from fair value changes of Level 3 instruments still held at the end of the period that are recorded in the Consolidated Statement of Income. |
| (3) | Certain unrealized gains and losses on interest rate derivative contracts are largely offset by mark-to-market |
| (4) | Certain unrealized gains and losses on derivative assets and liabilities are largely offset by mark-to-market |
The following table summarizes the changes in Level 3 instruments carried at fair value for the six months ended April 30, 2025.
| For the six months ended April 30, 2025 | ||||||||||||||||||||||||||||||||
($ millions) |
Fair value, beginning of the period |
Gains/ (losses) recorded in income (1) |
Gains/ (losses) recorded in OCI |
Purchases/ Issuances |
Sales/ Settlements |
Transfers into Level 3 |
Transfers out of Level 3 |
Fair value, end of the period |
||||||||||||||||||||||||
| Trading assets |
$ | $ | $ | – | $ | $ | ( |
) | $ | $ | ( |
) | $ | |||||||||||||||||||
| Investment securities |
|
|
|
|
( |
) | – | ( |
) | |
||||||||||||||||||||||
| Derivative financial instruments |
( |
) | – | ( |
( |
) | ( |
) | ||||||||||||||||||||||||
| Obligations related to securities sold short |
( |
) | – | – | – | – | – | – | ||||||||||||||||||||||||
| (1) | Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 2. |
Significant transfers
Significant transfers can occur between the fair value hierarchy levels when additional or new information regarding valuation inputs and their refinement and observability become available. The Bank recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
The following significant transfers made between Level 1 and 2, were based on whether the fair value was determined using quoted market prices from an active market.
During the three months ended April 30, 2026:
| • | Trading assets of $ |
| • | Trading assets of $ |
90 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
During the three months ended April 30, 2025:
| • | Trading assets of $ |
| • | Trading assets of $ |
During the three months ended April 30, 2026, equity contracts of $65 million were transferred out of Level 3 into Level 2. Transfers were a result of the change in the observability of the inputs used for valuing the derivatives. There were
significant transfers into and out of Level 3 during the three months ended April 30, 2025.
During the six months ended April 30, 2026:
| • | Trading assets of $ |
| • | Trading assets of $ |
During the six months ended April 30, 2025:
| • | Trading assets of $ |
| • | Trading assets of $ |
During the six months ended April 30, 2026, equity contracts of $90 million were transferred out of Level 3 into Level 2. Transfers were a result of the change in the observability of the inputs used for valuing the derivatives. There were
significant transfers into and out of Level 3 during the six months ended April 30, 2025.
Level 3 sensitivity
The Bank applies judgement in determining unobservable inputs used to calculate the fair value of Level 3 instruments.
Refer to Note 6 of the Bank’s audited consolidated financial statements in the 2025 Annual Report for a description of the significant unobservable inputs for Level 3 instruments and the potential effect that a change in each unobservable input may have on the fair value measurement. There have been no significant changes to the Level 3 sensitivities during the quarter.
| 18. | Corporate income taxes |
Tax assessments
The Bank received reassessments totaling $1,808 million (January 31, 2026 – $1,808
million) of tax and interest as a result of the Canada Revenue Agency (CRA) denying the tax deductibility of certain Canadian dividends received during the 2011-2020 taxation years. The dividends subject to these reassessments are similar to those prospectively addressed by tax rules introduced in 2015 and 2018. The Bank has filed Notices of Appeal with the Tax Court of Canada against the federal reassessment in respect of its 2011 and 2012 taxation years. In addition, a subsidiary of the Bank received reassessments on the same matter in respect of its 2018-2020 taxation years totaling
$4 million of tax and interest.
A subsidiary of the Bank received withholding tax assessments from the CRA in respect of certain of its securities lending transactions for its 637 million (January 31, 2026 – $637
2014-2019
taxation years totaling $million) of tax, penalties and interest. The subsidiary has filed a Notice of Appeal with the Tax Court of Canada against the federal assessment in respect of its 2014-2019 taxation years.
In respect of both matters, the Bank is confident that its tax filing position was appropriate and in accordance with the relevant provisions of the Income Tax Act (Canada) and intends to vigorously defend its position.
| 19. | Divestitures |
Closed divestitures impacting the current fiscal year
Sale of banking operations in Colombia, Costa Rica and Panama
On December 1, 2025, the Bank completed the sale of its banking operations in Colombia, Costa Rica and Panama to Davivienda Group S.A. in exchange for a 20.3 % ownership stake in the combined Davivienda Group S.A. The Bank’s ownership consists of 14.99 % voting common shares and the remainder in
non-voting
preferred shares. Following this date, the Bank designated two individuals to serve on Davivienda Group S.A.’s Board of Directors. Upon closing, the Bank derecognized total assets of $24 billion and total liabilities of $22 billion consisting primarily of loans and deposits. The Bank recognized an additional loss of $11 million in 423 million in 377 million aftertax). The loss primarily represents the release of cumulative foreign currency translation losses, inclusive of 1,342 million 1,370 million as the Bank has significant influence, given its board representation and ownership interest and it is accounted for under the equity method.
non-interest
expense and $non-interest
income (collectively $-
hedges,
and was recorded in the Other segment. As of October 31, 2025, the Bank recognized an impairment loss of $after-tax.
Following the closing, the Bank recognized the investment in Davivienda Group S.A. as an investment in associate at a fair value of $The closing of the transaction increased the Bank’s CET1 capital ratio by approximately 15 basis points.
Scotiabank Second Quarter Report 2026 |
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SHAREHOLDER INFORMATION
Direct Deposit Service
Shareholders may have dividends deposited directly into accounts held at financial institutions which are members of the Canadian Payments Association. To arrange direct deposit service, please write to the transfer agent.
Dividend and Share Purchase Plan
Scotiabank’s Shareholder Dividend 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.
Normal Course Issuer Bid
A copy of the Notice of Intention to commence the Normal Course Issuer Bid is available without charge by contacting the Investor Relations Department at (416) 775-0798 or investor.relations@scotiabank.com.
Dividend Dates for 2026
Record and payment dates for common and preferred shares, subject to approval by the Board of Directors.
| Record Date | Payment Date | |
| January 6, 2026 | January 28, 2026 | |
| April 7, 2026 | April 28, 2026 | |
| July 7, 2026 | July 29, 2026 | |
| October 6, 2026 | October 28, 2026 |
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 27, 2026, at 7:15 am ET and is expected to last approximately one hour. Interested parties are invited to access the call live, in listen-only mode, by telephone at or toll-free at using ID 1863444# (please call shortly before 7:15 am ET). In addition, an audio webcast, with accompanying slide presentation, may be accessed via the Investor Relations page at www.scotiabank.com/investorrelations.
647-557-5524,
1-888-440-4083
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 27, 2026, to June 3, 2026, by calling or toll-free at and entering the access code 1863444#.
647-362-9199
1-800-770-2030
Contact Information
Investors:
Financial Analysts, Portfolio Managers and other Institutional Investors requiring financial information, please contact Investor Relations:
Scotiabank
40 Temperance Street, Toronto, Ontario
Canada M5H 0B4
Telephone:
416-775-0798
E-mail:
investor.relations@scotiabank.com Global Communications:
Scotiabank
40 Temperance Street, Toronto, Ontario
Canada M5H 0B4
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
320 Bay Street, 14th Floor
Toronto, Ontario, Canada M5H 4A6
Telephone:
1-877-982-8767
E-mail:
service@computershare.com 92 |
Scotiabank Second Quarter Report 2026 |
Table of Contents
SHAREHOLDER INFORMATION
Co-Transfer
Agent (USA) Computershare Trust Company, N.A.
Telephone:
1-781-575-2000
E-mail:
service@computershare.com Street Courier/Address:
C/O: Shareholder Services
150 Royall Street, Suite 101
Canton, MA, USA 02021
Mailing Address:
PO Box 43078
Providence, RI, USA 02940-3006
For other shareholder enquiries, please contact the Corporate Secretary’s Department:
Scotiabank
40 Temperance Street
Toronto, Ontario, Canada M5H 0B4
Telephone:
(416) 866-3672
E-mail:
corporate.secretary@scotiabank.com Rapport trimestriel disponible en français
Le rapport trimestriel 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 avec les investisseurs, La Banque de Nouvelle-Écosse, 40, rue Temperance, Toronto (Ontario), Canada M5H 0B4, en joignant, si possible, l’étiquette d’adresse, afin que nous puissions prendre note du changement.
| Scotiabank Second Quarter Report 2026 | 93 |
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 |
 The Bank of Nova Scotia is a chartered bank under the Bank Act (Canada) and is a public company incorporated in Canada. |