株探米国株
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false2025-01-31Q10000009631--10-31Includes interest income on financial assets measured at amortized cost and FVOCI, calculated using the effective interest method, of $14,577 for the three months ended January 31, 2025 (October 31, 2024 –$14,967; January 31, 2024 – $14,898).Includes Share from associates, Employee benefits, Own credit risk, and Insurance contracts.Includes undistributed retained earnings of $77 (January 31, 2024 – $70) related to a foreign associated corporation, which is subject to local regulatory restriction.Represents amounts on account of share-based payments (refer to Note 13).Represents cash and non-interest-bearing deposits with financial institutions (refer to Note 5).Net of allowances of $3 (October 31, 2024 – $3).The fair value of precious metals is determined based on quoted market prices and forward spot prices, where applicable, less the cost to sell.Excludes debt investment securities measured at amortized cost of $28,494 (October 31, 2024 – $29,412).These amounts represent embedded derivatives bifurcated from structured note liabilities measured at amortized cost.Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 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 Certain unrealized gains and losses on derivative assets and liabilities are largely offset by mark-to-market changes on other instruments included in trading revenues in the Consolidated Statement of Income, since these instruments act as an economic hedge to certain derivative assets and liabilities. Certain unrealized losses on interest rate derivative contracts are largely offset by mark-to-market changes on embedded derivatives on certain deposit liabilities in the Consolidated Statement of Income.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.Change in the difference between the contractual maturity amount and the carrying value.The cumulative change in fair value is measured from the instrument’s date of initial recognition.Balances are net of allowances, which are $1 (October 31, 2024 – $1).Interest income recognized on impaired loans during the three months ended January 31, 2025 was $26 (October 31, 2024 – $22).Excludes amounts associated with other assets and reversal of impairment losses of $(18). The provision for credit losses, net of these amounts, is $1,162.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 acceptances is recorded against the financial asset in the Consolidated Statement of Financial Position.Excludes amounts associated with other assets and reversal of impairment losses of $(1). The provision for credit losses, net of these amounts, is $962.Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.Stage 3 includes purchased or originated credit-impaired loans.Excludes allowance for credit losses of $223 for other financial assets including acceptances, investment securities, deposits with banks, off-balance sheet credit risks and reverse repos.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.Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology.Business line revenues and provision for income taxes are reported on a taxable equivalent basis, with the offset in the Other segment.Includes all other smaller operating segments and corporate adjustments, such as the elimination of the tax-exempt income gross-up reported in net interest income and non-interest income and provision for income taxes of $43 to arrive at the amounts reported in the Consolidated Statement of Income, differences in the actual amount of costs incurred and charged to the operating segments.Includes all other smaller operating segments and corporate adjustments, such as the elimination of the tax-exempt income gross-up reported in net interest income and non-interest income and provision for income taxes of $0 to arrive at the amounts reported in the Consolidated Statement of Income, differences in the actual amount of costs incurred and charged to the operating segments.Other plans operated by certain subsidiaries of the Bank are not considered material and are not included in this note.Retail includes residential mortgages, credit cards, lines of credit, other personal loans and small business treated as other regulatory retail.After credit risk mitigation and excludes equity securities, centralized counterparties, and other assets.Effective November 1, 2024, credit spread VaR also captures issuer-specific credit spread volatility which was previously included in debt specific VaR.The interest income/expense on financial assets/liabilities are calculated using the effective interest method.Includes dividend income on equity securities.Includes interest on lease liabilities for the three months ended January 31, 2025 – $32 (October 31, 2024 – $30; January 31, 2024 – $30) and insurance finance expense for the three months ended January 31, 2025 – $8 (October 31, 2024 – $8; January 31, 2024 – $7).Non-retail drawn exposures include government guaranteed and privately insured mortgages and retail loans.Non-retail drawn includes loans, bankers’ acceptances, deposits with financial institutions and FVOCI debt securities.Includes off-balance sheet lending instruments such as letters of credit, letters of guarantee, securitizations, over-the-counter derivatives and repo-style transactions net of related collateral.The cumulative change in fair value is measured from the instruments’ date of initial recognition.Includes all other smaller operating segments and corporate adjustments, such as the elimination of the tax-exempt income gross-up reported in net interest income and non-interest income and provision for income taxes of $2 to arrive at the amounts reported in the Consolidated Statement of Income.This measure has been disclosed in this document in accordance with OSFI Guideline – Total Loss Absorbing Capacity (September 2018).The regulatory capital ratios are based on Revised Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2023).Includes the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama.Effective November 1, 2024, and until such time as the Bank elects otherwise, the Bank has suspended the discount to the Average Market Price (as defined in the Plan) for dividend reinvestments and stock dividends under the Plan and has discontinued issuances of common shares from treasury under the Plan. Additionally, effective November 1, 2024, and until such time as the Bank elects otherwise, purchases of common shares under the Plan will be made in the secondary market in accordance with the provisions of the Plan.As at January 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 (as at October 31, 2024, the Bank did not have a regulatory capital floor add-on to risk-weighted assets for CET1, Tier 1, Total Capital and TLAC RWA).Earnings per share calculations are based on full dollar and share amounts.Certain options were not included in the calculation of diluted earnings per share as they were anti-dilutive.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.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 January 31, 2025, these reserves amounted to $77 (October 31, 2024 – $74).Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure.Includes all other smaller operating segments and corporate adjustments, such as the elimination of the tax-exempt income gross-up reported in net interest income and non-interest income and provision for income taxes of $0 to arrive at the amounts reported in the Consolidated Statement of Income.On December 27, 2024, the Bank completed the acquisition of an additional 10% ownership interest, bringing the total ownership interest in KeyCorp to 14.92% (refer to Note 20 for further details). The Bank has significant influence over KeyCorp through a combination of its ownership interest and board representation. Based on the quoted price on the New York Stock Exchange, the Bank’s Investment in KeyCorp was $4,257 as at January 31, 2025.Based on the quoted price on the Shanghai Stock Exchange, the Bank’s Investment in Bank of Xi’an Co. Ltd. was $567 (October 31, 2024 – $570). The market value of the investment has remained below the carrying amount. The Bank performed an impairment test as at January 31, 2025 using a value in use (VIU) discounted cash flow model. The Bank concluded that there is no impairment as at January 31, 2025 (October 31, 2024 – $343).The Bank has significant influence over the Bank of Xi’an Co. Ltd. through a combination of its ownership interest and board representation. Represents the date of the most recent financial statements. Where available, financial statements prepared by the associates’ management or other published information is used to estimate the change in the Bank’s interest since the most recent financial statements. 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.Includes net income (on a taxable equivalent basis) from investments in associated corporations for Canadian Banking – $(2); International Banking – $36, and Other – $7.Includes impairment charge of software intangible assets of $97 in the Other segment.Loans past due 30 days or less are not presented in this analysis as they are not administratively considered past due.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.Represents principal amount owed net of write-offs.The fair value of the transferred assets is $16,799 (October 31, 2024 – $18,092) and the fair value of the associated liabilities is $16,769 (October 31, 2024 – $17,692) for a net position of $30 (October 31, 2024 – $400). These include cash held in trust and trust permitted investment assets, including repurchase style transactions of mortgage-backed securities, acquired as part of the principal reinvestment account that the Bank is required to maintain in order to participate in the programs. The fair value of transferred assets is $234,994 (October 31, 2024 – $232,811) and the fair value of the associated liabilities is $182,259 (October 31, 2024 – $190,449) for a net position of $52,735 (October 31, 2024 – $42,362). Does not include over-collateralization of assets pledged. Liabilities for securities lending arrangements only include amounts related to cash collateral received. In most cases, securities are received as collateral. Deposits denominated in U.S. dollars amount to $309,983 (October 31, 2024 – $295,316), deposits denominated in Chilean pesos amount to $20,198 (October 31, 2024 – $19,271), deposits denominated in Mexican pesos amount to $34,709 (October 31, 2024 – $34,416) and deposits denominated in other foreign currencies amount to $115,267 (October 31, 2024 – $109,683).Deposits payable on demand include all deposits for which the Bank does not have the right to notice of withdrawal, generally chequing accounts.Deposits payable after notice include all deposits for which the Bank requires notice of withdrawal, generally savings accounts. Includes $122 (October 31, 2024 – $124) of non-interest-bearing deposits.All deposits that mature on a specified date, generally term deposits, guaranteed investments certificates and similar instruments.Excludes allowance for credit losses of $200 for other financial assets including acceptances, investment securities, deposits with banks, off-balance sheet credit risks and reverse repos.Excludes allowance for credit losses of $269 for other financial assets including acceptances, investment securities, deposits with banks, off-balance sheet credit risks and reverse repos.The majority of foreign term deposits are in excess of $100,000.The leverage ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Leverage Requirements (February 2023).Includes income (on a taxable equivalent basis) from associated corporations for Canadian Banking – $24, International Banking – $35, and Other – $54.Includes income (on a taxable equivalent basis) from 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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: February, 2025
Commission File Number:
002-09048
THE BANK OF NOVA SCOTIA
(Name of registrant)
40 Temperance Street, Toronto, Ontario, M5H 0B4
(416)
933-4103
(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: February 2
5
, 2025
    By:  
/s/ Roula Kataras
      Name: Roula Kataras
      Title: Senior Vice-President and Chief Accountant

EXHIBIT INDEX
 
Exhibit
  
Description of Exhibit
99.1    202
5
First 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)

Table of Contents
Exhibit 99.1
 
 
 
 
 
 
Live audio Web
broadcast of the
Bank’s analysts’
conference call.
See page 83
for details.
 
 
 
 
 
Quarterly Report
to Shareholders
 
 
Scotiabank reports first quarter results
 
TORONTO, February 25, 2025 –
The Bank of Nova Scotia (“Scotiabank”) (TSX: BNS; NYSE: BNS) reported first quarter net income of $993 million compared to $2,199 million in the same period last year. This quarter’s net income includes an impairment loss of $1,355 million related to the announced sale of the banking operations in Colombia, Costa Rica and Panama to Davivienda. Diluted earnings per share (EPS) were $0.66, compared to $1.68 in the same period a year ago.
 
Adjusted net income
(1)
for the first quarter was $2,362 million and diluted EPS
(1)
was $1.76, up from $1.69 last year. Adjusted return on equity
(1)
was 11.8% compared to 11.9% a year ago.
 
“Our results this quarter demonstrate the value of our diversified franchise and continued focus on deepening relationships with clients across our footprint,” said Scott Thomson, President and CEO of Scotiabank. “We are encouraged by the progress towards our stated medium-term financial objectives and remain focused on supporting our clients as they navigate through this challenging period of economic uncertainty.”
 
Canadian Banking delivered adjusted earnings
(1)
of $914 million, down 6% year-over-year, as higher revenue from solid loan and deposit growth were more than offset by higher provision for credit losses and non-interest expenses.
 
International Banking generated adjusted earnings
(1)
of $692 million, down 7% year-over-year, reflecting solid but more normalized business banking and capital markets performance relative to the record results in the same quarter last year. Strong 6% quarter-over-quarter earnings growth driven by solid revenue growth, expense management, and the favourable impact of foreign exchange, was partly offset by higher provision for credit losses. Positive operating leverage continues to reflect the impact of successful productivity initiatives in the region.
 
Global Wealth Management adjusted earnings
(1)
were $416 million, up 22% year-over-year driven by solid revenue growth from higher mutual fund fees, brokerage revenues, and net interest income across the Canadian and International wealth businesses. Additionally, assets under management of $396 billion grew 16% year-over-year.
 
Global Banking and Markets had a strong start to the year with earnings of $517 million, up 33% compared to the prior year. The results were driven by strong performance across our capital markets business as well as higher underwriting and advisory fees in our corporate and investment banking business.
 
The Bank reported a Common Equity Tier 1 (CET1) capital ratio
(2)
of 12.9%.
 
“Consistent with our strategy, we have recently executed on initiatives to generate additional profitability in our priority North American markets and to simplify our International Banking portfolio, with the closing of our KeyCorp investment in the United States and the announcement of our agreement to sell our Colombia and Central America operations,” continued Mr. Thomson.
 
 
 
(1)
    Refer to
Non-GAAP
Measures section starting on page 5.
(2)
    The regulatory capital ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2023).
 

 
 

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
 
    Q1 2025           2024 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 to terminology, measures and key parameters.  
 
       
75-78
   
    3      Top and emerging risks, and the changes during the reporting period.  
 
       
80-81,
85-91
   
    4      Discussion on the regulatory development and plans to meet new regulatory ratios.     46-49    
 
 
 
 
 
 
 
   
55-58, 100-103,

116
 
 
 
 
 
 
Risk governance, risk management and business model     5      The Bank’s Risk Governance structure.  
 
       
72-74
   
    6      Description of risk culture and procedures applied to support the culture.  
 
       
75-78
   
    7      Description of key risks from the Bank’s business model.  
 
        79    
    8      Stress testing use within the Bank’s risk governance and capital management.  
 
 
 
 
 
 
 
 
 
 
 
   
75-76
   
 
 
 
Capital Adequacy and risk-weighted assets     9      Pillar 1 capital requirements, and the impact for global systemically important banks.     46-48      
4-5
       
55-58
      205  
    10      a) Regulatory capital components.     46-47, 73       21-23         59    
     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.     46-47       93        
60-61
   
    12      Discussion of targeted level of capital, and the plans on how to establish this.  
 
       
55-58
   
    13      Analysis of risk-weighted assets by risk type, business, and market risk RWAs.  
 
   
6, 36-39,
43-60,

69-74, 78, 90, 96, 102
 
 
     
63-68,
79, 123
      174  
    14      Analysis of the capital requirements for each Basel asset class.  
 
   
16-17,
36-61,

67-74, 78, 83-86
 
 
     
63-68
     
174,
223-229
 
 
    15      Tabulate credit risk in the Banking Book.     76      
16-17, 36-61, 78, 83-86
       
63-68
      224  
    16      Flow statements reconciling the movements in risk-weighted assets for each risk-weighted asset type.  
 
    62, 77, 95        
63-68
   
 
    17      Discussion of Basel III Back-testing requirement including credit risk model performance and validation.  
 
 
 
    100    
 
 
 
   
64-66
   
 
 
 
Liquidity Funding     18      Analysis of the Bank’s liquid assets.     38-40          
98-103
   
    19      Encumbered and unencumbered assets analyzed by balance sheet category.     38-40           100    
    20      Consolidated total assets, liabilities and
off-balance
sheet commitments analyzed by remaining contractual maturity at the balance sheet date.
    44-45          
104-106
   
    21      Analysis of the Bank’s sources of funding and a description of the Bank’s funding strategy.     42-43    
 
 
 
 
 
 
 
   
103-104
   
 
 
 
Market Risk     22      Linkage of market risk measures for trading and
non-trading
portfolios and the balance sheet.
    37           97    
    23      Discussion of significant trading and
non-trading
market risk factors.
    77          
92-98
     
228-229
 
    24      Discussion of changes in period on period VaR results as well as VaR assumptions, limitations, backtesting and validation.     36, 77          
92-98
     
228-229
 
    25      Other risk management techniques e.g. stress tests, stressed VaR, tail risk and market liquidity horizon.  
 
 
 
 
 
 
 
 
 
 
 
   
92-98
      228  
Credit Risk     26      Analysis of the aggregate credit risk exposures, including details of both personal and wholesale lending.  
 
   
6,
36-39,
43-60,

69-74
 
 
     
85-91,
118-123
     
184-185,

224-227
 
 
    27      Discussion of the policies for identifying impaired loans, defining impairments and renegotiated loans, and explaining loan forbearance policies.  
 
     
 
   
154-156,

185
 
 
    28      Reconciliations of the opening and closing balances of impaired loans and impairment allowances during the year.     63      
33-34
        88,
118-121
      185  
    29      Analysis of counterparty credit risk that arises from derivative transactions.     48, 76       101        
82-84
     
172-175
 
 
    30      Discussion of credit risk mitigation, including collateral held for all sources of credit risk.     76    
 
 
 
 
 
 
 
   
83-85,
89
   
 
 
 
Other risks
    31      Quantified measures of the management of operational risk.  
 
        67,
107-108
   
    32      Discussion of publicly known risk items.     48           71    
 
2
   Scotiabank First Quarter Report 2025 

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 January 31, 2025. 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 2024 Annual Report. This MD&A is dated February 25, 2025.
Additional information relating to the Bank, including the Bank’s 2024 Annual Report, is available on the Bank’s website at www.scotiabank.com. As well, the Bank’s 2024 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
14
  Overview of Performance
16
  Group Financial Performance
18
  Business Segment Review
Forward-looking Statements
From time to time, our public communications include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission (SEC), or in other communications. In addition, representatives of the Bank may include forward-looking statements orally to analysts, investors, the media and others. All such statements are made pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may include, but are not limited to, statements made in this document, the Management’s Discussion and Analysis in the Bank’s 2024 Annual Report under the headings “Outlook” and in other statements regarding the Bank’s objectives, strategies to achieve those objectives, the regulatory environment in which the Bank operates, anticipated financial results, and the outlook for the Bank’s businesses and for the Canadian, U.S. and global economies. Such statements are typically identified by words or phrases such as “believe,” “expect,” “aim,” “achieve,” “foresee,” “forecast,” “anticipate,” “intend,” “estimate,” “outlook,” “seek,” “schedule,” “plan,” “goal,” “strive,” “target,” “project,” “commit,” “objective,” and similar expressions of future or conditional verbs, such as “will,” “may,” “should,” “would,” “might,” “can” and “could” and positive and negative variations thereof.
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; 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 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 in business areas in which we operate, including through internet and mobile banking and
non-traditional
competitors; exposure related to significant litigation and regulatory matters; environmental, social and governance risks, including climate change, 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 global economy, 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 2024 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 2024 Annual Report under the headings “Outlook”, as updated by quarterly reports. The “Outlook” and “2025 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 First Quarter Report 2025   
 
3
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Financial Highlights
T1 Financial highlights
      As at and for the three months ended  
(Unaudited)
  
January 31
2025
     October 31
2024
     January 31
2024
 
Operating results
($ millions)
        
Net interest income
  
 
5,173
 
     4,923        4,773  
Non-interest
income
  
 
4,199
 
     3,603        3,660  
Total revenue
  
 
9,372
 
     8,526        8,433  
Provision for credit losses
  
 
1,162
 
     1,030        962  
Non-interest
expenses
  
 
6,491
 
     5,296        4,739  
Income tax expense
  
 
726
 
     511        533  
Net income
  
 
993
 
     1,689        2,199  
Net income attributable to common shareholders
  
 
1,025
 
     1,521        2,066  
Operating performance
        
Basic earnings per share
($)
  
 
0.82
 
     1.23        1.70  
Diluted earnings per share
 ($)
  
 
0.66
 
     1.22        1.68  
Return on equity
(%)
(1)
  
 
5.5
 
     8.3        11.8  
Return on tangible common equity
(%)
(2)
  
 
6.8
 
     10.1        14.6  
Productivity ratio
(%)
(1)
  
 
69.3
 
     62.1        56.2  
Net interest margin
(%)
(2)
  
 
2.23
 
     2.15        2.19  
Financial position information
($ millions)
        
Cash and deposits with financial institutions
  
 
70,198
 
     63,860        67,249  
Trading assets
  
 
136,708
 
     129,727        126,387  
Loans
  
 
766,305
 
     760,829        743,892  
Total assets
  
 
1,439,151
 
     1,412,027        1,392,886  
Deposits
  
 
966,049
 
     943,849        939,773  
Common equity
  
 
74,563
 
     73,590        69,977  
Preferred shares and other equity instruments
  
 
10,232
 
     8,779        8,779  
Assets under administration
(1)
  
 
807,547
 
     771,454        715,941  
Assets under management
(1)
  
 
395,546
 
     373,030        339,604  
Capital and liquidity measures
        
Common Equity Tier 1 (CET1) capital ratio
(%)
(3)
  
 
12.9
 
     13.1        12.9  
Tier 1 capital ratio
(%)
(3)
  
 
15.1
 
     15.0        14.8  
Total capital ratio
(%)
(3)
  
 
16.8
 
     16.7        16.7  
Total loss absorbing capacity (TLAC) ratio
(%)
(4)
  
 
28.8
 
     29.7        28.9  
Leverage ratio
(%)
(5)
  
 
4.4
 
     4.4        4.3  
TLAC Leverage ratio
(%)
(4)
  
 
8.5
 
     8.8        8.4  
Risk-weighted assets
($ millions)
(3)
  
 
468,124
 
     463,992        451,018  
Liquidity coverage ratio (LCR)
(%)
(6)
  
 
128
 
     131        132  
Net stable funding ratio (NSFR)
(%)
(7)
  
 
117
 
     119        117  
Credit quality
        
Net impaired loans
($ millions)
  
 
4,874
 
     4,685        4,215  
Allowance for credit losses
($ millions)
(8)
  
 
7,080
 
     6,736        6,597  
Gross impaired loans as a % of loans and acceptances
(1)
  
 
0.91
 
     0.88        0.80  
Net impaired loans as a % of loans and acceptances
(1)
  
 
0.63
 
     0.61        0.55  
Provision for credit losses as a % of average net loans and acceptances (annualized)
(1)(9)
  
 
0.60
 
     0.54        0.50  
Provision for credit losses on impaired loans as a % of average net loans and acceptances (annualized)
(1)(9)
  
 
0.55
 
     0.55        0.49  
Net write-offs as a % of average net loans and acceptances (annualized)
(1)
  
 
0.49
 
     0.51        0.42  
Adjusted results
(2)
        
Adjusted total revenue
($ millions)
  
 
9,372
 
     8,526        8,433  
Adjusted
non-interest
expenses
($ millions)
  
 
5,111
 
     4,784        4,721  
Adjusted net income
($ millions)
  
 
2,362
 
     2,119        2,212  
Adjusted diluted earnings per share
($)
  
 
1.76
 
     1.57        1.69  
Adjusted return on equity
(%)
  
 
11.8
 
     10.6        11.9  
Adjusted return on tangible common equity
(%)
  
 
14.3
 
     12.8        14.6  
Adjusted productivity ratio
(%)
  
 
54.5
 
     56.1        56.0  
Common share information
        
Closing share price
($)
(TSX)
  
 
74.36
 
     71.69        62.87  
Shares outstanding
(millions)
        
Average – Basic
  
 
1,245
 
     1,238        1,214  
Average – Diluted
  
 
1,250
 
     1,243        1,221  
End of period
  
 
1,246
 
     1,244        1,222  
Dividends paid per share
($)
  
 
1.06
 
     1.06        1.06  
Dividend yield
(%)
(1)
  
 
5.6
 
     6.3        7.0  
Market capitalization
($ millions)
(TSX)
  
 
92,617
 
     89,214        76,835  
Book value per common share
($)
(1)
  
 
59.86
 
     59.14        57.26  
Market value to book value multiple
(1)
  
 
1.2
 
     1.2        1.1  
Price to earnings multiple (trailing 4 quarters)
(1)
  
 
14.7
 
     12.0        10.3  
Other information
        
Employees (full-time equivalent)
  
 
88,722
 
     88,488        89,249  
Branches and offices
  
 
2,221
 
     2,236        2,351  
(1)
Refer to Glossary on page 51 for the description of the measure.
(2)
Refer to
Non-GAAP
Measures section starting on page 5.
(3)
The regulatory capital ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2023).
(4)
This measure has been disclosed in this document in accordance with OSFI Guideline – Total Loss Absorbing Capacity (September 2018).
(5)
The leverage ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Leverage Requirements (February 2023).
(6)
This measure has been disclosed in this document in accordance with OSFI Guideline – Public Disclosure Requirements for Domestic Systemically Important Banks on Liquidity Coverage Ratio (April 2015).
(7)
This measure has been disclosed in this document in accordance with OSFI Guideline – Net Stable Funding Ratio Disclosure Requirements (January 2021).
(8)
Includes allowance for credit losses on all financial assets – loans, acceptances,
off-balance
sheet exposures, debt securities and deposits with financial institutions.
(9)
Includes provision for credit losses on certain financial assets – loans, acceptances and
off-balance
sheet exposures.
 
4
   Scotiabank First Quarter Report 2025 

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 and 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 First Quarter Report 2025   
 
5
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
T2 Reconciliation of reported and adjusted results and diluted earnings per share
 
      For the three months ended  
($ millions)
  
January 31
2025
     October 31
2024
     January 31
2024
 
Reported Results
        
Net interest income
  
$
5,173
 
   $ 4,923      $ 4,773  
Non-interest
income
  
 
4,199
 
     3,603        3,660  
Total revenue
  
 
9,372
 
     8,526        8,433  
Provision for credit losses
  
 
1,162
 
     1,030        962  
Non-interest
expenses
  
 
6,491
 
     5,296        4,739  
Income before taxes
  
 
1,719
 
     2,200        2,732  
Income tax expense
  
 
726
 
     511        533  
Net income
  
$
993
 
   $ 1,689      $ 2,199  
Net income attributable to
non-controlling
interests in subsidiaries (NCI)
  
 
(154
     47        25  
Net income attributable to equity holders
  
 
1,147
 
     1,642        2,174  
Net income attributable to preferred shareholders and other equity instrument holders
  
 
122
 
     121        108  
Net income attributable to common shareholders
  
$
1,025
 
   $ 1,521      $ 2,066  
Diluted earnings per share
(in dollars)
  
$
0.66
 
   $ 1.22      $ 1.68  
Weighted average number of diluted common shares outstanding
(millions)
  
 
1,250
 
     1,243        1,221  
Adjustments
        
Adjusting items impacting
non-interest
expenses
(Pre-tax)
        
(a) Divestitures and wind-down of operations
  
$
1,362
 
   $      $  
(b) Amortization of acquisition-related intangible assets
  
 
18
 
     19        18  
(c) Restructuring charge and severance provisions
  
 
 
     53         
(d) Impairment of
non-financial
assets
  
 
 
     440         
Total
non-interest
expense adjusting items
(Pre-tax)
  
 
1,380
 
     512        18  
Total impact of adjusting items on net income before taxes
  
 
1,380
 
     512        18  
Impact of adjusting items on income tax expense
        
Divestitures and wind-down of operations
  
 
(7
             
Amortization of acquisition-related intangible assets
  
 
(4
     (6      (5
Restructuring charge and severance provisions
  
 
 
     (15       
Impairment of
non-financial
assets
  
 
 
     (61       
Total impact of adjusting items on income tax expense
  
 
(11
     (82      (5
Total impact of adjusting items on net income
  
$
1,369
 
   $ 430      $ 13  
Impact of adjusting items on NCI
  
 
(191
             
Total impact of adjusting items on net income attributable to equity holders
  
$
1,178
 
   $ 430      $ 13  
Adjusted Results
        
Net interest income
  
$
5,173
 
   $ 4,923      $ 4,773  
Non-interest
income
  
 
4,199
 
     3,603        3,660  
Total revenue
  
 
9,372
 
     8,526        8,433  
Provision for credit losses
  
 
1,162
 
     1,030        962  
Non-interest
expenses
  
 
5,111
 
     4,784        4,721  
Income before taxes
  
 
3,099
 
     2,712        2,750  
Income tax expense
  
 
737
 
     593        538  
Net income
  
$
2,362
 
   $ 2,119      $ 2,212  
Net income attributable to NCI
  
 
37
 
     47        25  
Net income attributable to equity holders
  
 
2,325
 
     2,072        2,187  
Net income attributable to preferred shareholders and other equity instrument holders
  
 
122
 
     121        108  
Net income attributable to common shareholders
  
$
2,203
 
   $ 1,951      $ 2,079  
Diluted earnings per share
(in dollars)
  
$
1.76
 
   $ 1.57      $ 1.69  
Impact of adjustments on diluted earnings per share
(in dollars)
  
$
1.10
 
   $ 0.35      $ 0.01  
Weighted average number of diluted common shares outstanding
(millions)
  
 
1,250
 
     1,243        1,221  
 
6
   Scotiabank First Quarter Report 2025 

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 2025
, the Bank entered into an agreement to transfer its banking operations in Colombia, Costa Rica and Panama to Davivienda. The banking operations that are part of the transaction are classified as
held-for-sale
and as such, an impairment loss of $1,362 million ($1,355 million
after-tax)
was recognized this quarter in
non-interest
expenses – other. For further details, please refer to Note 20 of the Q1 2025 Quarterly Report to Shareholders.
In Q3 2024, the Bank entered into an agreement to sell CrediScotia Financiera, a wholly-owned consumer finance subsidiary in Peru, to Banco Santander. The Bank recognized an impairment loss of $143 million in
non-interest
income – other 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. In Q4 2023, the Bank sold its 20% equity interest in Canadian Tire’s Financial Services business (CTFS) to Canadian Tire Corporation. The sale resulted in a net gain of $367 million ($319 million
after-tax).
For further details, please refer to Note 37 of the Consolidated Financial Statements in the 2024 Annual Report to Shareholders.
b) Amortization of acquisition-related intangible assets
These costs relate to the amortization of intangible assets recognized upon the acquisition of businesses, excluding software, and are recorded in the Canadian Banking, International Banking and Global Wealth Management operating segments. These costs are recorded in non-interest expenses – depreciation and amortization.
c) Restructuring charge and severance provisions
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. In Q4 2023, the Bank recorded a restructuring charge and severance provisions of $354 million ($258 million
after-tax)
related to workforce reductions and changes as a result of the Bank’s
end-to-end
digitization, automation, changes in customers’
day-to-day
banking preferences, as well as the ongoing efforts to streamline operational processes and optimize distribution channels. For further details, please refer to Note 24 of the Consolidated Financial Statements in the 2024 Annual Report to Shareholders.
d) Impairment of
non-financial
assets
In Q4 2024, the Bank recorded impairment charges of $343 million ($309 million
after-tax)
related to its investment in associate, Bank of Xi’an Co. Ltd. in China, driven primarily by the continued weakening of the economic outlook in China and whose market value has remained below the Bank’s carrying value for a prolonged period (Q4 2023 – $185 million
pre-tax
and $159 million
after-tax).
In Q4 2024, the Bank recorded an impairment of software intangible assets of $97 million ($70 million
after-tax).
In Q4 2023, the Bank recorded an impairment of software and other intangible assets of $161 million ($114 million
after-tax).
For further details, please refer to Notes 18 and 19 of the Consolidated Financial Statements in the 2024 Annual Report to Shareholders.
e) Legal provision
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 24 of the Consolidated Financial Statements in the 2024 Annual Report to Shareholders.
f) Consolidation of real estate and contract termination costs
In Q4 2023, the Bank recorded costs of $87 million ($63 million
after-tax)
related to the consolidation and exit of certain real estate premises, as well as service contract termination costs, as part of the Bank’s optimization strategy.
 
 Scotiabank First Quarter Report 2025   
 
7
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
T2A Reconciliation of reported and adjusted results by business line
 
   
For the three months ended January 31, 2025
(1)
 
($ millions)
 
Canadian
Banking
   
International
Banking
   
Global
Wealth
Management
   
Global
Banking
and Markets
   
Other
   
Total
 
Reported net income (loss)
 
$
913
 
 
$
686
 
 
$
409
 
 
$
517
 
 
$
(1,532
 
$
993
 
Net income attributable to
non-controlling
interests in subsidiaries (NCI)
 
 
 
 
 
35
 
 
 
2
 
 
 
 
 
 
(191
 
 
(154
Reported net income attributable to equity holders
 
 
913
 
 
 
651
 
 
 
407
 
 
 
517
 
 
 
(1,341
 
 
1,147
 
Reported net income attributable to preferred shareholders and other equity instrument holders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
122
 
 
 
122
 
Reported net income attributable to common shareholders
 
$
913
 
 
$
651
 
 
$
407
 
 
$
517
 
 
$
(1,463
 
$
1,025
 
Adjustments:
           
Adjusting items impacting
non-interest
expenses
(Pre-tax)
           
Divestitures and wind-down of operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,362
 
 
 
1,362
 
Amortization of acquisition-related intangible assets
 
 
1
 
 
 
8
 
 
 
9
 
 
 
 
 
 
 
 
 
18
 
Total
non-interest
expenses adjustments
(Pre-tax)
 
 
1
 
 
 
8
 
 
 
9
 
 
 
 
 
 
1,362
 
 
 
1,380
 
Total impact of adjusting items on net income before taxes
 
 
1
 
 
 
8
 
 
 
9
 
 
 
 
 
 
1,362
 
 
 
1,380
 
Total impact of adjusting items on income tax expense
 
 
 
 
 
(2
 
 
(2
 
 
 
 
 
(7
 
 
(11
Total impact of adjusting items on net income
 
 
1
 
 
 
6
 
 
 
7
 
 
 
 
 
 
1,355
 
 
 
1,369
 
Impact of adjusting items on NCI
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(191
 
 
(191
Total impact of adjusting items on net income attributable to equity holders
 
 
1
 
 
 
6
 
 
 
7
 
 
 
 
 
 
1,164
 
 
 
1,178
 
Adjusted net income (loss)
 
$
914
 
 
$
692
 
 
$
416
 
 
$
517
 
 
$
(177
 
$
2,362
 
Adjusted net income attributable to equity holders
 
$
914
 
 
$
657
 
 
$
414
 
 
$
517
 
 
$
(177
 
$
2,325
 
Adjusted net income attributable to common shareholders
 
$
914
 
 
$
657
 
 
$
414
 
 
$
517
 
 
$
(299
 
$
2,203
 
(1)
Refer to Business Segment Review on page 18.
 
    For the three months ended October 31, 2024
(1)
 
($ millions)
  Canadian
Banking
(2)
    International
Banking
(2)
    Global
Wealth
Management
(2)
    Global
Banking
and Markets
(2)
    Other
(2)
    Total  
Reported net income (loss)
  $ 934     $ 644     $ 382     $ 347     $ (618   $ 1,689  
Net income attributable to
non-controlling
interests in subsidiaries (NCI)
          44       2             1       47  
Reported net income attributable to equity holders
    934       600       380       347       (619     1,642  
Reported net income attributable to preferred shareholders and other equity instrument holders
                            121       121  
Reported net income attributable to common shareholders
  $ 934     $ 600     $ 380     $ 347     $ (740   $ 1,521  
Adjustments:
           
Adjusting items impacting
non-interest
expenses
(Pre-tax)
           
Restructuring charge and severance provisions
                            53       53  
Impairment of
non-financial
assets
                            440       440  
Amortization of acquisition-related intangible assets
    1       9       9                   19  
Total
non-interest
expenses adjustments
(Pre-tax)
    1       9       9                493       512  
Total impact of adjusting items on net income before taxes
    1       9       9             493       512  
Total impact of adjusting items on income tax expense
          (3     (3           (76     (82
Total impact of adjusting items on net income
    1       6       6             417       430  
Total impact of adjusting items on net income attributable to equity holders
    1       6       6             417       430  
Adjusted net income (loss)
  $ 935     $ 650     $ 388     $ 347     $ (201   $ 2,119  
Adjusted net income attributable to equity holders
  $ 935     $ 606     $ 386     $ 347     $ (202   $ 2,072  
Adjusted net income attributable to common shareholders
  $ 935     $ 606     $ 386     $ 347     $ (323   $ 1,951  
(1)
Refer to Business Segment Review on page 18.
(2)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
 
8
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
    For the three months ended January 31, 2024
(1)
 
($ millions)
  Canadian
Banking
(2)
    International
Banking
(2)
    Global
Wealth
Management
(2)
    Global
Banking
and Markets
(2)
    Other
(2)
    Total  
Reported net income (loss)
  $ 973     $ 735     $ 333     $ 388     $ (230   $ 2,199  
Net income attributable to
non-controlling
interests in subsidiaries (NCI)
          22       3                   25  
Reported net income attributable to equity holders
    973       713       330       388       (230     2,174  
Reported net income attributable to preferred shareholders and other equity instrument holders
    1       1                   106       108  
Reported net income attributable to common shareholders
  $ 972     $ 712     $ 330     $ 388     $ (336   $ 2,066  
Adjustments:
           
Adjusting items impacting
non-interest
expenses
(Pre-tax)
           
Amortization of acquisition-related intangible assets
    1       8       9                   18  
Total
non-interest
expenses adjustments
(Pre-tax)
    1       8       9                   18  
Total impact of adjusting items on net income before taxes
    1       8       9                   18  
Total impact of adjusting items on income tax expense
          (2     (3                 (5
Total impact of adjusting items on net income
    1       6       6                   13  
Total impact of adjusting items on net income attributable to equity holders
    1       6       6                   13  
Adjusted net income (loss)
  $ 974     $ 741     $ 339     $ 388     $ (230   $ 2,212  
Adjusted net income attributable to equity holders
  $ 974     $ 719     $ 336     $ 388     $ (230   $ 2,187  
Adjusted net income attributable to common shareholders
  $ 973     $ 718     $ 336     $ 388     $ (336   $ 2,079  
(1)
Refer to Business Segment Review on page 18.
(2)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
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, adjusted 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 15.
T3 Reconciliation of International Banking’s reported and adjusted results and constant dollar results
 
Reported Results
  For the three months ended  
($ millions)
  October 31, 2024
(1)
    January 31, 2024
(1)
 
(Taxable equivalent basis)
  Reported     Foreign
exchange
    Constant
dollar
    Reported     Foreign
exchange
    Constant
dollar
 
Net interest income
  $ 2,147     $ (30   $ 2,177     $ 2,240     $ 55     $ 2,185  
Non-interest
income
    712       (13     725       834       18       816  
Total revenue
    2,859       (43     2,902       3,074       73       3,001  
Provision for credit losses
    556       (4     560       574       16       558  
Non-interest
expenses
    1,491       (12     1,503       1,582       46       1,536  
Income before taxes
    812       (27     839       918       11       907  
Income tax expense
    168       (6     174       183       3       180  
Net income
  $ 644     $ (21   $ 665     $ 735     $ 8     $ 727  
Net income attributable to
non-controlling
interests in subsidiaries (NCI)
  $ 44     $ (2   $ 46     $ 22     $ (2   $ 24  
Net income attributable to equity holders of the Bank
  $ 600     $ (19   $ 619     $ 713     $ 10     $ 703  
Other measures
           
Average assets
($ billions)
  $ 224     $ (3   $ 227     $ 235     $ 3     $ 232  
Average liabilities
($ billions)
  $ 171     $ (2   $ 173     $ 183     $ 5     $ 178  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
 
 Scotiabank First Quarter Report 2025   
 
9
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Adjusted Results
  For the three months ended  
($ millions)
  October 31, 2024
(1)
    January 31, 2024
(1)
 
(Taxable equivalent basis)
  Adjusted     Foreign
exchange
    Constant
dollar
adjusted
    Adjusted     Foreign
exchange
    Constant
dollar
adjusted
 
Net interest income
  $ 2,147     $ (30   $ 2,177     $ 2,240     $ 55     $ 2,185  
Non-interest
income
    712       (13     725       834       18       816  
Total revenue
    2,859       (43     2,902       3,074       73       3,001  
Provision for credit losses
    556       (4     560       574       16       558  
Non-interest
expenses
    1,482       (13     1,495       1,574       46       1,528  
Income before taxes
    821       (26     847       926       11       915  
Income tax expense
    171       (5     176       185       2       183  
Net income
  $ 650     $ (21   $ 671     $ 741     $ 9     $ 732  
Net income attributable to
non-controlling
interests in subsidiaries (NCI)
  $ 44     $ (2   $ 46     $ 22     $ (2   $ 24  
Net income attributable to equity holders of the Bank
  $ 606     $ (19   $ 625     $ 719     $ 11     $ 708  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
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.
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.
T4 Calculation of net interest margin
Consolidated Bank
 
      For the three months ended  
($ millions)
  
January 31
2025
     October 31
2024
     January 31
2024
 
Average total assets – Reported
(1)
  
$
1,460,615
 
   $ 1,418,795      $ 1,423,337  
Less:
Non-earning
assets
  
 
115,155
 
     106,621        110,932  
Average total earning assets
(1)
  
$
1,345,460
 
   $ 1,312,174      $ 1,312,405  
Less:
        
Trading assets
  
 
156,540
 
     145,195        142,014  
Securities purchased under resale agreements and securities borrowed
  
 
200,930
 
     196,305        194,807  
Other deductions
  
 
33,491
 
     31,292        72,504  
Average core earning assets
(1)
  
$
954,499
 
   $ 939,382      $ 903,080  
Net interest income – Reported
  
$
5,173
 
   $ 4,923      $ 4,773  
Less:
Non-core
net interest income
  
 
(200
     (158      (198
Core net interest income
  
$
5,373
 
   $ 5,081      $ 4,971  
Net interest margin
  
 
2.23
     2.15      2.19
(1)
Average balances represent the average of daily balances for the period.
 
10
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Canadian Banking
 
      For the three months ended  
($ millions)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Average total assets – Reported
(2)
  
$
459,895
 
   $ 456,806      $ 444,856  
Less:
Non-earning
assets
  
 
4,753
 
     4,756        4,312  
Average total earning assets
(2)
  
$
455,142
 
   $ 452,050      $ 440,544  
Less:
        
Other deductions
  
 
187
 
     1,187        28,843  
Average core earning assets
(2)
  
$
454,955
 
   $ 450,863      $ 411,701  
Net interest income – Reported
  
$
2,647
 
   $ 2,635      $ 2,491  
Less:
Non-core
net interest income
  
 
 
     2         
Core net interest income
  
$
2,647
 
   $ 2,633      $ 2,491  
Net interest margin
  
 
2.31
     2.32      2.41
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Average balances represent the average of daily balances for the period.
International Banking
 
      For the three months ended  
($ millions)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Average total assets – Reported
(2)
  
$
228,877
 
   $ 223,525      $ 235,485  
Less:
Non-earning
assets
  
 
14,883
 
     14,973        16,956  
Average total earning assets
(2)
  
$
213,994
 
   $ 208,552      $ 218,529  
Less:
        
Trading assets
  
 
6,408
 
     5,549        6,778  
Securities purchased under resale agreements and securities borrowed
  
 
4,195
 
     4,070        3,431  
Other deductions
  
 
6,612
 
     6,369        6,768  
Average core earning assets
(2)
  
$
196,779
 
   $ 192,564      $ 201,552  
Net interest income – Reported
  
$
2,169
 
   $ 2,147      $ 2,240  
Less:
Non-core
net interest income
  
 
(12
     10        36  
Core net interest income
  
$
2,181
 
   $ 2,137      $ 2,204  
Net interest margin
  
 
4.40
     4.42      4.35
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
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. Attributed capital is a
non-GAAP
measure. 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. This is a
non-GAAP
measure.
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
measure.
 
 Scotiabank First Quarter Report 2025   
 
11
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Return on equity by operating segment
T5 Return on equity by operating segment
 
     
For the three months ended January 31, 2025
 
($ millions)
  
Canadian
Banking
   
International
Banking
    
Global
Wealth
Management
    
Global
Banking
and Markets
   
Other
    
Total
 
Reported
               
Net income attributable to common shareholders
  
$
913
 
 
$
651
 
  
$
407
 
  
$
517
 
 
$
(1,463
  
$
1,025
 
Total average common equity
(1)
  
 
21,636
 
 
 
18,191
 
  
 
10,183
 
  
 
15,361
 
 
 
8,706
 
  
 
74,077
 
Return on equity
  
 
16.7
 
 
14.2
  
 
15.8
  
 
13.3
 
 
nm
(2)
 
  
 
5.5
Adjusted
(3)
               
Net income attributable to common shareholders
  
$
914
 
 
$
657
 
  
$
414
 
  
$
517
 
 
$
(299
  
$
2,203
 
Return on equity
  
 
16.7
 
 
14.3
  
 
16.1
  
 
13.3
 
 
nm
(2)
 
  
 
11.8
(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 three months ended October 31, 2024
(1)
    For the three months ended January 31, 2024
(1)
 
($ 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
 
$
934
 
 
$
600
 
 
$
380
 
 
$
347
 
 
$
(740
 
$
1,521
 
 
$
972
 
 
$
712
 
 
$
330
 
 
$
388
 
 
$
(336
 
$
2,066
 
Total average common equity
(2)
 
 
21,280
 
 
 
18,788
 
 
 
10,230
 
 
 
15,369
 
 
 
7,491
 
 
 
73,158
 
 
 
20,015
 
 
 
19,582
 
 
 
10,193
 
 
 
15,734
 
 
 
3,848
 
 
 
69,372
 
Return on equity
 
 
17.5
 
 
12.7
 
 
14.8
 
 
9.0
 
 
nm
(3)
 
 
 
8.3
 
 
19.3
 
 
14.5
 
 
12.9
 
 
9.8
 
 
nm
(3)
 
 
 
11.8
Adjusted
(4)
           
 
           
Net income attributable to common shareholders
 
$
935
 
 
$
606
 
 
$
386
 
 
$
347
 
 
$
(323
 
$
1,951
 
 
$
973
 
 
$
718
 
 
$
336
 
 
$
388
 
 
$
(336
 
$
2,079
 
Return on equity
 
 
17.5
 
 
12.8
 
 
15.0
 
 
9.0
 
 
nm
(3)
 
 
 
10.6
 
 
19.3
 
 
14.6
 
 
13.1
 
 
9.8
 
 
nm
(3)
 
 
 
11.9
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Average amounts calculated using methods intended to approximate the daily average balances for the period.
(3)
Not meaningful.
(4)
Refer to Table on page 6.
Return on tangible common equity
Return on tangible common equity 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.
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.
 
12
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
T6 Return on tangible common equity
 
     For the three months ended  
($ millions)
 
January 31
2025
     October 31
2024
     January 31
2024
 
Reported
       
Average common equity – Reported
(1)
 
$
74,077
 
   $ 73,158      $ 69,372  
Average goodwill
(1)(2)
 
 
(9,539
     (8,984      (9,108
Average acquisition-related intangibles (net of deferred tax)
(1)
 
 
(3,597
     (3,609      (3,651
Average tangible common equity
(1)
 
$
60,941
 
   $ 60,565      $ 56,613  
Net income attributable to common shareholders – reported
 
$
1,025
 
   $ 1,521      $ 2,066  
Amortization of acquisition-related intangible assets
(after-tax)
(3)
 
 
14
 
     13        13  
Net income attributable to common shareholders adjusted for amortization of acquisition-related intangible assets
(after-tax)
 
$
1,039
 
   $ 1,534      $ 2,079  
Return on tangible common equity
 
 
6.8
     10.1      14.6
Adjusted
(3)
       
Adjusted net income attributable to common shareholders
 
$
2,203
 
   $ 1,951      $ 2,079  
Return on tangible common equity – adjusted
 
 
14.3
     12.8      14.6
(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.
Trading-related revenue (Taxable equivalent basis)
Trading-related revenue consists of net interest income and
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. Trading-related revenue includes certain net interest income and
non-interest
income items on a taxable equivalent basis (TEB). This methodology grosses up
tax-exempt
income earned on certain securities to an equivalent before tax basis. This is a
non-GAAP
measure.
Management believes that this basis for measurement of trading-related revenue provides a uniform comparability of net interest income and
non-interest
income arising from both taxable and
non-taxable
sources and facilitates a consistent basis of measurement. While other banks also use TEB, their methodology may not be comparable to the Bank’s methodology.
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 First Quarter Report 2025   
 
13
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Overview of Performance
Financial performance summary
The Bank’s reported net income this quarter was $993 million, compared to $2,199 million in the same period last year and $1,689 million last quarter. The decrease in net income this quarter was due mainly to higher
non-interest
expenses which included an impairment loss of $1,362 million related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. In addition, there were higher provision for credit losses and income taxes, partly offset by higher revenues.
Diluted earnings per share were $0.66 compared to $1.68 in the same period last year and $1.22 last quarter. Return on equity was 5.5%, compared to 11.8% in the same period last year and 8.3% last quarter.
Adjusted net income was $2,362 million compared to $2,212 million last year, an increase of 7%. The increase was driven mainly by higher revenues, partly offset by higher provision for credit losses,
non-interest
expenses and provision for income taxes. Compared to last quarter, adjusted net income increased 11% from $2,119 million. The increase was driven mainly by higher revenues, partly offset by higher provision for credit losses,
non-interest
expenses and provision for income taxes.
Adjusted diluted earnings per share were $1.76 compared to $1.69 last year and $1.57 last quarter. Adjusted return on equity was 11.8% compared to 11.9% a year ago and 10.6% last quarter.
Refer to
Non-GAAP
Measures starting on page 5 for details of adjustments.
Recent developments
Acquisition of KeyCorp
On August 12, 2024, the Bank announced an agreement to acquire an approximate 14.9%
pro-forma
ownership interest in KeyCorp for approximately U.S. $2.8 billion through an
all-cash
purchase of newly issued voting common shares, at a fixed price of U.S.$17.17 per share.
The acquisition was completed in two stages – an initial investment of 4.9% (Initial Investment) on August 30, 2024, and an additional investment of approximately 10% (Additional Investment) this quarter. The Bank completed the Additional Investment of approximately 115 million shares in KeyCorp for cash consideration of approximately U.S. $2.0 billion on December 27, 2024. This increased the Bank’s ownership interest from 4.9% to 14.92%, with total common share ownership of approximately 163 million shares. Following completion of the Additional Investment, the Bank designated two individuals to serve on KeyCorp’s Board of Directors.
Effective December 27, 2024, the combined 14.92% investment is accounted for as an investment in associate as the Bank has significant influence over KeyCorp as defined under IFRS, given its board representation and ownership interest. The Initial Investment of 4.9% previously accounted for at fair value through other comprehensive income was derecognized and included in the cost base of the investment in associate. The difference between the fixed transaction price and the quoted share price of KeyCorp at the date of Additional Investment (U.S.$17.20) was recognized as a gain in non-interest income – other this quarter, with a corresponding increase in the carrying value of the investment in associate. The carrying amount of the investment in associate upon closing was U.S. $2.8 billion (CAD $4.1 billion). For the three months ended January 31, 2025, the contribution to the Bank’s profit and loss from KeyCorp, net of funding costs, was $28 million after-tax, and $40 million ($35 million after-tax) was recorded in net income from investments in associated corporations representing the Bank’s approximate one-month share of KeyCorp’s financial results under IFRS.
Upon completion of the Additional Investment, the total impact to the Bank’s CET1 ratio from both stages of the transaction was a decrease of approximately 51 basis points.
Sale of banking operations in Colombia, Costa Rica and Panama
On January 6, 2025, the Bank entered into an agreement with Davivienda to sell Scotiabank’s banking operations in Colombia, Costa Rica and Panama in exchange for an approximately 20% ownership stake in the newly combined entity of Davivienda. The Bank’s ownership will consist of 14.99% voting common shares and the remainder in
non-voting
preferred shares. At the closing date, the Bank will have the right to designate individuals to serve on the Board of Directors of Davivienda’s combined operations commensurate with its ownership stake.
The transaction is expected to be completed in approximately 12 months from the signing date, subject to regulatory approvals in all jurisdictions and customary closing conditions.
The Bank’s operations that are part of this transaction have met the criteria for classification as held for sale in accordance with IFRS 5 and as at January 31, 2025, include total assets of $23 billion, consisting primarily of loans ($17 billion), investment securities ($2.4 billion) and cash and deposits ($2.1 billion) and total liabilities of $22 billion consisting primarily of deposits ($17.6 billion) and other liabilities ($3.3 billion).
The Bank recorded an impairment loss on the announcement date of $1,362 million, representing the write-down of goodwill ($589 million), intangibles ($151 million), property and equipment ($290 million) and the remaining in other assets. The impairment loss was recorded in
non-interest
expenses – other in the consolidated statement of income and in the Other operating segment. The impact to the Bank’s CET1 capital ratio was a decrease of approximately 12 basis points this quarter.
At each future reporting period, any changes in carrying value of the net assets being sold and the fair value of the shares to be received, will be recognized in profit and loss. In addition, upon closing, the net cumulative foreign currency translation reserve at that date, related to these operations will be recorded in the consolidated statement of income. As at January 31, 2025, the net cumulative foreign currency translation losses were $132 million.
Upon closing, the Bank’s investment in Davivienda will be accounted for as an investment in associate, as the Bank will have significant influence over Davivienda in accordance with IFRS, given its board representation and ownership interest.
Economic summary and outlook
The global economic landscape remains in flux due to the change in administration in the United States and ensuing uncertainty surrounding future policy, particularly as it relates to trade. The global easing cycle has supported a recovery in economic activity. However, uncertainty surrounding the U.S. approach towards trade clouds the outlook significantly and tempers growth prospects in the short run.
The U.S. central bank rate is expected to hold through the first half of this year and maintain a significantly tighter stance relative to other central banks, as the U.S. economy continues to outperform and inflation remains elevated. This resilience provides the U.S. central bank with the flexibility to prioritize its inflation goal and assess the potential impacts of policy changes as they unfold, given the inflationary effect of tariffs should they be implemented. Restrictive monetary policy and extreme uncertainty surrounding tariffs are expected to contribute to a more moderate growth in 2025, even as planned corporate tax cuts support growth in the short run. The economy is expected to slow to 1.9% in 2025 from a roughly 2.8% pace in 2024. Certain tariffs have already been imposed, and while other policy changes advertised may never materialize, assuming only a fraction of such policies is expected to lower the economy’s potential growth, further slowing GDP growth in 2026 to 1.7%.
On the other hand, Canada’s central bank is expected to cut interest rates once more this year and hold at the mid-point of its neutral range thereafter. This wider differential with the U.S. monetary stance is supported by near-target inflation and reflects concerns about the damaging economic impact of trade uncertainty to Canada’s economy that is particularly vulnerable to tariffs. A surprising underlying momentum in the economy that seems to be largely a result of lower policy rates is creating a more positive backdrop in the face of tariffs threats and associated uncertainty. This underpins the expected acceleration in GDP growth from 1.3% in 2024 to 1.8% in 2025, before moderating to 1.6% in 2026. However, trade policy uncertainties from the U.S. pose significant risks, with the potential for a recession if large and broad-based tariffs are implemented.
 
14
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Central banks in Latin America continue to normalize interest rates, with further reductions expected to support growth across the region, albeit weighed down by policy uncertainty that is clouding the global outlook. Mexico faces the most headwinds, given its position alongside Canada as largely dependent on trade with the U.S. and subject to sweeping tariffs threats. No country in the region will be immune to the uncertainty created by the U.S. President’s approach to policymaking. Should trade wars begin, the resulting slowdown in global growth would weigh on commodity prices and risk assets, depressing growth in all Latin American countries even if there are fewer direct linkages to the U.S.
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 9.
T7 Impact of foreign currency translation
 
      Average exchange rate      % Change  
For the three months ended   
January 31
2025
     October 31
2024
     January 31
2024
     January 31, 2025
vs. October 31, 2024
    January 31, 2025
vs. January 31, 2024
 
U.S. dollar/Canadian dollar
  
 
0.704
 
     0.732        0.740        (3.8 )%      (4.9 )% 
Mexican Peso/Canadian dollar
  
 
14.344
 
     14.257        12.734        0.6     12.6
Peruvian Sol/Canadian dollar
  
 
2.641
 
     2.748        2.772        (3.9 )%      (4.7 )% 
Colombian Peso/Canadian dollar
  
 
3,069.839
 
     3,056.235        2,932.809        0.4     4.7
Chilean Peso/Canadian dollar
  
 
693.703
 
     681.854        659.613        1.7     5.2
Impact on net income
(1)
($ millions except EPS)
                           January 31, 2025
vs. October 31, 2024
    January 31, 2025
vs. January 31, 2024
 
Net interest income
            $ 31     $ (47
Non-interest
income
(2)
              5       (66
Total revenue
              36       (113
Non-interest
expenses
              (66     2  
Other items (net of tax)
(2)
  
 
 
 
  
 
 
 
  
 
 
 
     11       59  
Net income
  
 
 
 
  
 
 
 
  
 
 
 
   $ (19   $ (52
Earnings per share (diluted)
  
 
 
 
  
 
 
 
  
 
 
 
   $ (0.02   $ (0.04
Impact by business line
($ millions)
             
Canadian Banking
(3)
            $ 2     $ 1  
International Banking
(2)(3)
              18       (3
Global Wealth Management
(3)
              1       (2
Global Banking and Markets
(3)
              14       16  
Other
(2)(3)
  
 
 
 
  
 
 
 
  
 
 
 
     (54     (64
Net income
  
 
 
 
  
 
 
 
  
 
 
 
   $ (19   $ (52
(1)
Includes the impact of all currencies.
(2)
Includes the impact of foreign currency hedges.
(3)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
 
 Scotiabank First Quarter Report 2025   
 
15
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Group Financial Performance
Net income
Q1 2025 vs Q1 2024
Net income was $993 million compared to $2,199 million, a decrease of 55%. The decrease was due mainly to higher
non-interest
expenses which included an impairment loss of $1,362 million related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. In addition, there were higher provision for credit losses and income taxes, partly offset by higher revenues.
Adjusted net income was $2,362 million compared to $2,212 million, an increase of 7%. The increase was driven mainly by higher revenues, partly offset by higher provision for credit losses,
non-interest
expenses and provision for income taxes.
Q1 2025 vs Q4 2024
Net income was $993 million compared to $1,689 million, a decrease of 41%. The decrease was due mainly to higher
non-interest
expenses which included the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama, and higher provision for credit losses and income taxes, partly offset by higher revenues.
Adjusted net income was $2,362 million compared to $2,119 million, an increase of 11%. The increase was driven mainly by higher revenues, partly offset by higher provision for credit losses,
non-interest
expenses and provision for income taxes.
Total revenue
Q1 2025 vs Q1 2024
Revenues were $9,372 million compared to $8,433 million, an increase of 11%.
Net interest income was $5,173 million, an increase of $400 million or 8%, due primarily to loan growth, inclusive of the conversion of bankers’ acceptances to loans resulting from the cessation of CDOR in June 2024 (“BA conversion”) and a higher net interest margin, partly offset by the negative impact of foreign currency translation. The net interest margin was 2.23%, an increase of four basis points driven mainly by a higher contribution from asset/liability management activities related to lower funding costs which benefitted from lower interest rates. This was partly offset by lower margins in Canadian Banking and lower levels of higher yielding loans in International Banking.
Non-interest
income was $4,199 million, up $539 million or 15%. The increase was due mainly to higher trading-related revenues, wealth management revenues, underwriting and advisory fees, and income from associated corporations. This was partly offset by lower bankers’ acceptance fees due to the BA conversion, and the negative impact of foreign currency translation.
Q1 2025 vs Q4 2024
Revenues were $9,372 million compared to $8,526 million, an increase of 10%.
Net interest income increased $250 million or 5%, due primarily to a higher net interest margin, loan growth, and the positive impact of foreign currency translation. The net interest margin increased eight basis points, driven mainly by a higher contribution from asset/liability management activities related to lower funding costs which benefitted from lower interest rates.
Non-interest
income was up $596 million or 17%. The increase was due mainly to higher trading-related revenues, income from associated corporations, wealth management revenues, underwriting and advisory fees, and banking fees.
Provision for credit losses
Q1 2025 vs Q1 2024
The provision for credit losses was $1,162 million, compared to $962 million, an increase of $200 million. The provision for credit losses ratio increased by 10 basis points to 60 basis points.
The provision for credit losses on performing loans was $98 million, compared to $20 million. The provision this quarter was due primarily to credit migration mainly in retail unsecured lines, corporate and commercial portfolios along with the continued unfavourable macroeconomic outlook including the uncertainties related to the impact of tariffs in Canada and Mexico.
The provision for credit losses on impaired loans was $1,064 million compared to $942 million, an increase of $122 million. The provision for credit losses ratio on impaired loans was 55 basis points, an increase of six basis points. The provision this quarter was due primarily to higher Canadian retail formations across most products, as well as higher Canadian commercial provisions, mainly related to one account.
Q1 2025 vs Q4 2024
The provision for credit losses was $1,162 million, compared to $1,030 million. The provision for credit losses ratio increased by six basis points to 60 basis points.
Provision for credit losses on performing loans was $98 million, compared to a net reversal of $13 million. The provision this period was due primarily to credit migration mainly in retail unsecured lines, corporate and commercial portfolios as well as the continued unfavourable macroeconomic outlook including the uncertainties related to the impact of tariffs in Canada and Mexico.
The provision for credit losses on impaired loans was $1,064 million compared to $1,043 million, an increase of $21 million or 2%. The provision for credit losses ratio on impaired loans remained unchanged at 55 basis points. The provision this quarter is due primarily to higher provisions in Canadian and International retail portfolios, partly offset by lower provisions in the International commercial portfolio.
Non-interest expenses
Q1 2025 vs Q1 2024
Non-interest
expenses were $6,491 million, up $1,752 million or 37%, which included an impairment loss of $1,362 million related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. Adjusted
non-interest
expenses were $5,111 million, up $390 million or 8%, driven by higher performance-based compensation and personnel costs, higher technology-related costs, and higher professional fees.
The productivity ratio was 69.3% compared to 56.2%. The adjusted productivity ratio was 54.5% compared to 56.0%. Operating leverage was negative 25.9% this quarter and positive 2.8% on an adjusted basis.
 
16
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Q1 2025 vs Q4 2024
Non-interest
expenses were $6,491 million, up $1,195 million or 23%, including the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. Adjusted
non-interest
expenses were $5,111 million, up $327 million or 7%, driven by seasonally higher share-based compensation and business and capital taxes, higher personnel costs, technology-related costs and the unfavourable impact of foreign currency translation.
The productivity ratio was 69.3% compared to 62.1%. The adjusted productivity ratio was 54.5% compared to 56.1%.
Taxes
Q1 2025 vs Q1 2024
The effective tax rate was 42.2% compared to 19.5% due primarily to the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama, lower income in lower tax jurisdictions and the implementation of Global Minimum Tax (GMT
)
. On an adjusted basis, the effective tax rate was 23.8% compared to 19.6% due primarily to lower income in lower tax jurisdictions and the implementation of GMT. For the three months ended January 31, 2025, the impact of the GMT on the Bank’s effective tax rate was approximately 1%.
Q1 2025 vs Q4 2024
The effective tax rate was 42.2% compared to 23.2% due primarily to the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama and the implementation of GMT, partly offset by the impairment on the Bank’s investment in Bank of Xi’an Co. Ltd in the prior quarter. On an adjusted basis, the effective tax rate was 23.8% compared to 21.8% due primarily to lower income in lower tax jurisdictions and the implementation of GMT, partly offset by adjustments related to prior year taxes in the prior quarter. For the three months ended January 31, 2025, the impact of the GMT on the Bank’s effective tax rate was approximately 1%.
 
 Scotiabank First Quarter Report 2025   
 
17
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Business Segment Review
 
   
The Bank analyzes revenue on a taxable equivalent basis (TEB) for business lines. This methodology grosses up
tax-exempt
income earned on certain securities reported in either net interest income or
non-interest
income to an equivalent before tax basis. A corresponding increase is made to the provision for income taxes; hence, there is no impact on net income. Management believes that this basis for measurement provides a uniform comparability of net interest income and
non-interest
income arising from both taxable and
non-taxable
sources and facilitates a consistent basis of measurement. While other banks also use TEB, their methodology may not be comparable to the Bank’s methodology. A segment’s revenue and provision for income taxes are grossed up by the taxable equivalent amount. The elimination of the TEB
gross-up
is recorded in the Other segment.
 
   
For business line performance assessment and reporting, net income from associated corporations, which is an
after-tax
number, is adjusted to normalize for income taxes. The tax normalization adjustment grosses up the amount of net income from associated corporations and normalizes the effective tax rate in the business lines to better present the contribution of the associated corporations to the business line results.
 
   
International Banking business segment results are analyzed on a constant dollar basis. Under 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.
 
   
The Other segment includes Group Treasury, investments in 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 (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 economic conditions and other factors, which may impact the financial results of the business segments.
Effective the first quarter of 2025, the Bank made voluntary changes to its allocation methodology impacting business segment presentation. The new methodology includes updates related to the Bank’s funds transfer pricing, head office expense allocations, and allocations between business segments. Prior period results and ratios for each segment have been revised to conform with the current period’s methodology. Further details on the changes are as follows:
 
  1.
Funds transfer pricing methodology was updated, primarily related to the allocation of substantially all liquidity costs to the business lines from the Other segment, reflecting the Bank’s strategic objective to maintain higher liquidity ratios.
 
  2.
Periodically, the Bank updates its allocation methodologies. This includes a comprehensive update to the allocation of head office expenses across countries within International Banking, updates to the allocation of clients and associated revenue, expenses, and balances between International Banking, Global Banking and Markets, and Global Wealth Management to align with the strategy, as well as updates to the allocation of head office expenses and taxes from the Other segment to the business segments.
 
  3.
To be consistent with the reporting of Scotiabank’s recent minority investment in KeyCorp, the Bank has also made changes to the reporting of certain minority investments in International Banking (Bank of Xi’an Co. Ltd.) and Global Wealth Management (Bank of Beijing Scotia Asset Management) which will now be reported in the Other segment.
The TEB
gross-up
to net interest income,
non-interest
income, total revenue, and provision for income taxes is presented below:
 
T8 TEB Gross up
                    
      For the three months ended  
($ millions)
  
January 31
2025
     October 31
2024
     January 31
2024
 
Net interest income
  
$
 
   $      $ 2  
Non-interest
income
  
 
 
     2        41  
Total revenue and provision for taxes
  
$
 
   $ 2      $ 43  
 
18
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Canadian Banking
                    
T9 Canadian Banking financial performance
                    
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Reported Results
        
Net interest income
  
$
2,647
 
   $ 2,635      $ 2,491  
Non-interest
income
(2)
  
 
765
 
     684        734  
Total revenue
  
 
3,412
 
     3,319        3,225  
Provision for credit losses
  
 
538
 
     450        378  
Non-interest
expenses
  
 
1,611
 
     1,578        1,499  
Income before taxes
  
 
1,263
 
     1,291        1,348  
Income tax expense
  
 
350
 
     357        375  
Net income
  
$
913
 
   $ 934      $ 973  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
 
   $      $  
Net income attributable to equity holders of the Bank
  
$
913
 
   $ 934      $ 973  
Other financial data and measures
        
Return on equity
(3)
  
 
16.7
     17.5      19.3
Net interest margin
(3)
  
 
2.31
     2.32      2.41
Provision for credit losses – performing (Stage 1 and 2)
  
$
51
 
   $ (11    $ 12  
Provision for credit losses – impaired (Stage 3)
  
$
487
 
   $ 461      $ 366  
Provision for credit losses as a percentage of average net loans and acceptances (annualized)
(4)
  
 
0.47
     0.40      0.34
Provision for credit losses on impaired loans as a percentage of average net loans and acceptances (annualized)
(4)
  
 
0.43
     0.41      0.33
Net write-offs as a percentage of average net loans and acceptances (annualized)
(4)
  
 
0.37
     0.37      0.29
Average assets
($ billions)
  
$
460
 
   $ 457      $ 445  
Average liabilities
($ billions)
  
$
386
 
   $ 385      $ 393  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Includes income (on a taxable equivalent basis) from associated corporations for the three months ended January 31, 2025 – $24 (October 31, 2024 – $(2); January 31, 2024 – nil).
(3)
Refer to
Non-GAAP
Measures starting on page 5.
(4)
Refer to Glossary on page 51 for the description of the measure.
 
T9A Adjusted Canadian Banking financial performance
                    
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Adjusted Results
(2)
        
Net interest income
  
$
2,647
 
   $ 2,635      $ 2,491  
Non-interest
income
  
 
765
 
     684        734  
Total revenue
  
 
3,412
 
     3,319        3,225  
Provision for credit losses
  
 
538
 
     450        378  
Non-interest
expenses
(3)
  
 
1,610
 
     1,577        1,498  
Income before taxes
  
 
1,264
 
     1,292        1,349  
Income tax expense
  
 
350
 
     357        375  
Net income
  
$
914
 
   $ 935      $ 974  
Net income attributable to equity holders of the Bank
  
$
914
 
   $ 935      $ 974  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to
Non-GAAP
Measures starting on page 5 for adjusted results.
(3)
Includes adjustment for amortization of acquisition-related intangible assets, excluding software for the three months ended January 31, 2025 – $1 (October 31, 2024 – $1; January 31, 2024 – $1).
Net income
Q1 2025 vs Q1 2024
Net income attributable to equity holders was $913 million, compared to $973 million. Adjusted net income attributable to equity holders was $914 million, a decrease of $60 million or 6%. The decrease was due primarily to higher provision for credit losses and
non-interest
expenses, partly offset by higher revenues.
Q1 2025 vs Q4 2024
Net income attributable to equity holders decreased $21 million or 2%. The decline was due primarily to higher provision for credit losses and
non-interest
expenses, partly offset by higher revenues.
Average assets
Q1 2025 vs Q1 2024
Average assets increased $15 billion to $460 billion. The growth included $10 billion or 4% in residential mortgages, $3 billion or 3% in business loans, $1 billion or 9% in credit card loans, and $1 billion or 1% in personal loans.
 
 Scotiabank First Quarter Report 2025   
 
19
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Q1 2025 vs Q4 2024
Average assets increased $3 billion or 1%. The growth included $4 billion or 2% in residential mortgages, partly offset by a decline of $1 billion in business loans.
Average liabilities
Q1 2025 vs Q1 2024
Average liabilities decreased $7 billion to $386 billion. The decrease was due primarily to a reduction of $29 billion in bankers’ acceptances liabilities, partly offset by growth of $13 billion or 10% in
non-personal
deposits primarily in demand accounts and $10 billion or 4% in personal deposits, mostly in term products.
Q1 2025 vs Q4 2024
Average liabilities of $386 billion increased $1 billion. The growth included $2 billion or 1% in personal deposits, primarily in demand and notice accounts, partly offset by a reduction of $1 billion in bankers’ acceptances liabilities.
Total revenue
Q1 2025 vs Q1 2024
Revenues were $3,412 million, an increase of $187 million or 6%.
Net interest income of $2,647 million increased $156 million or 6% due primarily to asset and deposit growth, and the benefit of the BA conversion. The net interest margin declined 10 basis points to 2.31% due primarily to deposit margins declining 17 basis points reflecting the impact of Bank of Canada’s recent rate cuts, partly offset by an increase in asset margins of eight basis points.
Non-interest
income of $765 million increased $31 million or 4% due primarily to elevated private equity gains, and higher mutual fund distribution fees, insurance income, and foreign exchange fees, partly offset by lower banking fees, including the impact of the BA conversion.
Q1 2025 vs Q4 2024
Revenues increased $93 million or 3%.
Net interest income increased $12 million as asset and deposit growth was largely offset by a lower net interest margin. The net interest margin decreased one basis point to 2.31% due primarily to a decline in deposit margins of two basis points, reflecting the impact of Bank of Canada’s recent rate cuts, partly offset by an increase in asset margins of one basis point.
Non-interest
income increased $81 million or 12% due primarily to elevated private equity gains, higher mutual fund distribution fees, insurance income, and foreign exchange fees.
Provision for credit losses
Q1 2025 vs Q1 2024
The provision for credit losses was $538 million, compared to $378 million, an increase of $160 million. The provision for credit losses ratio increased 13 basis points to 47 basis points.
The provision for credit losses on performing loans was $51 million, compared to $12 million. The provision this period was due primarily to credit migration mainly in retail unsecured lines and commercial portfolios, and the continued unfavourable macroeconomic outlook including the uncertainties related to tariffs.
Provision for credit losses on impaired loans was $487 million, compared to $366 million, an increase of $121 million. The provision for credit losses ratio on impaired loans was 43 basis points, an increase of 10 basis points. The provision this quarter was due primarily to higher retail formations across most products, as well as higher commercial provisions, mainly related to one account in the Food and Beverage Industry.
Q1 2025 vs Q4 2024
The provision for credit losses was $538 million, compared to $450 million, an increase of $88 million. The provision for credit losses ratio increased seven basis points to 47 basis points.
The provision for credit losses on performing loans was $51 million, compared to a net reversal of $11 million. The provision this period was due primarily to credit migration mainly in retail unsecured lines and commercial portfolios, and the continued unfavourable macroeconomic outlook including the uncertainties related to tariffs.
Provision for credit losses on impaired loans was $487 million, compared to $461 million, an increase of $26 million. The provision for credit losses ratio on impaired loans was 43 basis points, an increase of two basis points. The provision this quarter is driven primarily by higher retail provisions mainly in retail unsecured lines and auto loans, and one account in commercial in the Food and Beverage Industry.
Non-interest expenses
Q1 2025 vs Q1 2024
Non-interest
expenses were $1,611 million, an increase of $112 million or 8%, due primarily to higher investments to execute the Bank’s strategy and increases in technology and volume-related costs to support business growth.
Q1 2025 vs Q4 2024
Non-interest
expenses increased $33 million or 2%, due primarily to higher technology costs to support business growth and seasonally higher share-based compensation.
 
20
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Taxes
The effective tax rate was 27.7%, compared to 27.8% in the prior year and 27.7% in the prior quarter.
 
International Banking
                    
T10 International Banking financial performance
                    
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Reported Results
        
Net interest income
  
$
2,169
 
   $ 2,147      $ 2,240  
Non-interest
income
(2)
  
 
861
 
     712        834  
Total revenue
  
 
3,030
 
     2,859        3,074  
Provision for credit losses
  
 
602
 
     556        574  
Non-interest
expenses
  
 
1,553
 
     1,491        1,582  
Income before taxes
  
 
875
 
     812        918  
Income tax expense
  
 
189
 
     168        183  
Net income
  
$
686
 
   $ 644      $ 735  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
35
 
   $ 44      $ 22  
Net income attributable to equity holders of the Bank
  
$
651
 
   $ 600      $ 713  
Other financial data and measures
        
Return on equity
(3)
  
 
14.2
     12.7      14.5
Net interest margin
(3)
  
 
4.40
     4.42      4.35
Provision for credit losses – performing (Stage 1 and 2)
  
$
27
 
   $ (20    $ (3
Provision for credit losses – impaired (Stage 3)
  
$
575
 
   $ 576      $ 577  
Provision for credit losses as a percentage of average net loans and acceptances (annualized)
(4)
  
 
1.46
     1.37      1.35
Provision for credit losses on impaired loans as a percentage of average net loans and acceptances (annualized)
(4)
  
 
1.39
     1.42      1.35
Net write-offs as a percentage of average net loans and acceptances (annualized)
(4)
  
 
1.27
     1.31      1.13
Average assets
($ billions)
  
$
229
 
   $ 224      $ 235  
Average liabilities
($ billions)
  
$
174
 
   $ 171      $ 183  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Includes income (on a taxable equivalent basis) from associated corporations for the three months ended January 31, 2025 – $35 (October 31, 2024 – $36; January 31, 2024 – $34).
(3)
Refer to
Non-GAAP
Measures starting on page 5.
(4)
Refer to Glossary on page 51 for the description of the measure.
 
T10A Adjusted International Banking financial performance
                    
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Adjusted Results
(2)
        
Net interest income
  
$
2,169
 
   $ 2,147      $ 2,240  
Non-interest
income
  
 
861
 
     712        834  
Total revenue
  
 
3,030
 
     2,859        3,074  
Provision for credit losses
  
 
602
 
     556        574  
Non-interest
expenses
(3)
  
 
1,545
 
     1,482        1,574  
Income before taxes
  
 
883
 
     821        926  
Income tax expense
  
 
191
 
     171        185  
Net income
  
$
692
 
   $ 650      $ 741  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
35
 
   $ 44      $ 22  
Net income attributable to equity holders of the Bank
  
$
657
 
   $ 606      $ 719  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to
Non-GAAP
Measures starting on page 5 for adjusted results.
(3)
Includes adjustment for amortization of acquisition-related intangible assets, excluding software for the three months ended January 31, 2025 – $8 (October 31, 2024 – $9; January 31, 2024 – $8).
Net income
Q1 2025 vs Q1 2024
Net income attributable to equity holders decreased $62 million or 9% to $651 million. Adjusted net income attributable to equity holders decreased $62 million or 9% to $657 million. The decrease was driven by lower net interest income, higher provision for credit losses, higher income taxes and the negative impact of foreign currency translation. This was partly offset by higher
non-interest
income and lower
non-interest
expenses.
Q1 2025 vs Q4 2024
Net income attributable to equity holders increased $51 million or 8%. Adjusted net income attributable to equity holders increased $51 million or 8%. The increase was driven by higher
non-interest
income, net interest income and the positive impact of foreign currency translation. This was partly offset by higher provision for credit losses,
non-interest
expenses, and income taxes.
 
 Scotiabank First Quarter Report 2025   
 
21
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
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.
 
T11 International Banking financial performance on reported and constant dollar basis
        
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Constant dollars – Reported
(2)
        
Net interest income
  
$
2,169
 
   $ 2,177      $ 2,185  
Non-interest
income
(3)
  
 
861
 
     725        816  
Total revenue
  
 
3,030
 
     2,902        3,001  
Provision for credit losses
  
 
602
 
     560        558  
Non-interest
expenses
  
 
1,553
 
     1,503        1,536  
Income before taxes
  
 
875
 
     839        907  
Income tax expense
  
 
189
 
     174        180  
Net income
  
$
686
 
   $ 665      $ 727  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
35
 
   $ 46      $ 24  
Net income attributable to equity holders of the Bank
  
$
651
 
   $ 619      $ 703  
Other financial data and measures
        
Average assets
($ billions)
  
$
229
 
   $ 227      $ 232  
Average liabilities
($ billions)
  
$
174
 
   $ 173      $ 178  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to Constant Dollar reconciliation on page 9.
(3)
Includes income (on a taxable equivalent basis) from associated corporations for the three months ended January 31, 2025 – $35 (October 31, 2024 – $38; January 31, 2024 – $35).
 
T11A International Banking financial performance on adjusted and constant dollar basis
        
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Constant dollars – Adjusted
(2)
        
Net interest income
  
$
2,169
 
   $ 2,177      $ 2,185  
Non-interest
income
  
 
861
 
     725        816  
Total revenue
  
 
3,030
 
     2,902        3,001  
Provision for credit losses
  
 
602
 
     560        558  
Non-interest
expenses
  
 
1,545
 
     1,495        1,528  
Income before taxes
  
 
883
 
     847        915  
Income tax expense
  
 
191
 
     176        183  
Net income
  
$
692
 
   $ 671      $ 732  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
35
 
   $ 46      $ 24  
Net income attributable to equity holders of the Bank
  
$
657
 
   $ 625      $ 708  
Other financial data and measures
        
Average assets
($ billions)
  
$
229
 
   $ 227      $ 232  
Average liabilities
($ billions)
  
$
174
 
   $ 173      $ 178  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to Constant Dollar reconciliation on page 9.
Net income
Q1 2025 vs Q1 2024
Net income attributable to equity holders was $651 million, down $52 million or 7%. Adjusted net income attributable to equity holders was $657 million, down $51 million or 7%. The decrease was driven by higher provision for credit losses, non-interest expenses, lower net interest income and higher income taxes. This was partly offset by higher
non-interest
income.
Q1 2025 vs Q4 2024
Net income attributable to equity holders increased $32 million or 5%. Adjusted net income attributable to equity holders increased $32 million or 5%. The increase was due primarily to higher
non-interest
income. This was partly offset by higher provision for credit losses, income taxes,
non-interest
expenses and lower net interest income.
Average assets
Q1 2025 vs Q1 2024
Average assets were $229 billion, a reduction of $3 billion or 1%. Total loans decreased 2%, primarily in Brazil, Peru and Colombia. The decrease included an 8% reduction in business loans, partly offset by an increase of 4% in residential mortgages.
 
22
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Q1 2025 vs Q4 2024
Average assets were $229 billion, up $2 billion or 1%, mainly in investment securities in Mexico, Peru and Chile. Loan balances were in line with the prior quarter, as an increase in retail loans of 1% was offset by a reduction in business loans of 2%.
Average liabilities
Q1 2025 vs Q1 2024
Average liabilities were $174 billion, a reduction of $4 billion or 2%. Deposits declined by $1 billion or 1%, primarily in Brazil and Mexico, partly offset by growth in Peru and Colombia. The decrease included a 2% decline in
non-personal
deposits offset by a 1% increase in personal deposits. The remaining decrease was due to the repayment of a central bank loan facility in Chile.
Q1 2025 vs Q4 2024
Average liabilities were $174 billion, an increase of $1 billion or 1%.
Total revenue
Q1 2025 vs Q1 2024
Revenues were $3,030 million compared to $3,001 million, an increase of $29 million or 1%.
Net interest income was $2,169 million, a decrease of $16 million or 1%, driven by business mix. Net interest margin increased by five basis points to 4.40%, driven by lower funding costs due to decline in central bank rates. Margins improved in Brazil, Chile and Colombia.
Non-interest
income was $861 million, an increase of $45 million or 5%, driven mainly by higher capital markets revenue in Brazil.
Q1 2025 vs Q4 2024
Revenues were $3,030 million compared to $2,902 million, an increase of $128 million or 4%.
Net interest income decreased by $8 million, driven mainly by lower loan volumes in Peru, Colombia and Brazil, and lower loan margins in Mexico. Net interest margin decreased by two basis points to 4.40%, driven by lower loan margins.
Non-interest
income increased by $136 million or 19%, driven mainly by higher capital markets revenue in Brazil, Chile and Peru, as well as higher banking fees, mainly in Mexico, Peru and the Caribbean.
Provision for credit losses
Q1 2025 vs Q1 2024
The provision for credit losses was $602 million compared to $558 million, an increase of $44 million. The provision for credit losses ratio increased 11 basis points to 146 basis points.
Provision for credit losses on performing loans was $27 million, compared to a net reversal of $5 million. The provision this period was driven by retail portfolio growth and continued unfavourable macroeconomic outlook including the uncertainties related to tariffs.
Provision for credit losses on impaired loans was $575 million, compared to $563 million, an increase of $12 million. The provisions this quarter was driven by higher retail formations mainly in Mexico and Chile, partly offset by lower commercial provisions. The provision for credit losses ratio on impaired loans was 139 basis points, an increase of four basis points.
Q1 2025 vs Q4 2024
The provision for credit losses was $602 million, compared to $560 million, an increase of $42 million. The provision for credit losses ratio was 146 basis points, an increase of nine basis points.
Provision for credit losses on performing loans was $27 million, compared to a net reversal of $20 million. The provision this period was driven primarily by retail portfolio growth and the continued unfavourable macroeconomic outlook including the uncertainties of tariffs
.
Provision for credit losses on impaired loans was $575 million, compared to $580 million, a decrease of $5 million driven by lower commercial provisions. The provision for credit losses ratio on impaired loans decreased three basis points to 139 basis points.
Non-interest expenses
Q1 2025 vs Q1 2024
Non-interest
expenses were $1,553 million, an increase of $17 million or 1%. Adjusted
non-interest
expenses were $1,545 million, an increase of $17 million or 1%, driven mainly by higher salaries and employee benefits, partly off set by the continued benefits of efficiency initiatives.
Q1 2025 vs Q4 2024
Non-interest
expenses were $1,553 million, compared to $1,503 million. Adjusted
non-interest
expenses increased $50 million or 3% from $1,495 million, driven by higher employee benefits, and seasonal expenses in Jamaica, partly offset by lower depreciation and amortization in Colombia, Mexico and Peru.
Taxes
Q1 2025 vs Q1 2024
The effective tax rate was 21.6%, compared to 19.9%. On an adjusted basis, the effective tax rate was 21.7%, compared to 20.0%. This was due primarily to lower inflationary adjustments in Mexico and Chile, as well as the impact of the GMT.
Q1 2025 vs Q4 2024
The effective tax rate was 21.6%, compared to 20.6%. On an adjusted basis, the effective tax rate was 21.7%, compared to 20.7%. This was due primarily to lower inflationary adjustments in Mexico and Chile, as well as the impact of the GMT. This was partly offset by tax benefits in Brazil.
 
 Scotiabank First Quarter Report 2025   
 
23
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Global Wealth Management
                    
T12 Global Wealth Management financial performance
                    
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Reported Results
        
Net interest income
  
$
232
 
   $ 207      $ 185  
Non-interest
income
  
 
1,347
 
     1,259        1,139  
Total revenue
  
 
1,579
 
     1,466        1,324  
Provision for credit losses
  
 
4
 
     5        5  
Non-interest
expenses
  
 
1,022
 
     949        874  
Income before taxes
  
 
553
 
     512        445  
Income tax expense
  
 
144
 
     130        112  
Net income
  
$
409
 
   $ 382      $ 333  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
2
 
   $ 2      $ 3  
Net income attributable to equity holders of the Bank
  
$
407
 
   $ 380      $ 330  
Other financial data and measures
        
Return on equity
(2)
  
 
15.8
     14.8      12.9
Assets under administration
($ billions)
(3)
  
$
738
 
   $ 704      $ 655  
Assets under management
($ billions)
(3)
  
$
396
 
   $ 373      $ 340  
Average assets
($ billions)
  
$
37
 
   $ 36      $ 35  
Average liabilities
($ billions)
  
$
43
 
   $ 41      $ 41  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to
Non-GAAP
Measures starting on page 5.
(3)
Refer to Glossary on page 51 for the description of the measure.
 
T12A Adjusted Global Wealth Management financial performance
      
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Adjusted Results
(2)
        
Net interest income
  
$
232
 
   $ 207      $ 185  
Non-interest
income
  
 
1,347
 
     1,259        1,139  
Total revenue
  
 
1,579
 
     1,466        1,324  
Provision for credit losses
  
 
4
 
     5        5  
Non-interest
expenses
(3)
  
 
1,013
 
     940        865  
Income before taxes
  
 
562
 
     521        454  
Income tax expense
  
 
146
 
     133        115  
Net income
  
$
416
 
   $ 388      $ 339  
Net income attributable to
non-controlling
interests in subsidiaries
  
$
2
 
   $ 2      $ 3  
Net income attributable to equity holders of the Bank
  
$
414
 
   $ 386      $ 336  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to
Non-GAAP
Measures starting on page 5 for adjusted results.
(3)
Includes adjustment for Amortization of acquisition-related intangible assets, excluding software for the three months ended January 31, 2025 – $9 (October 31, 2024 – $9; January 31, 2024 – $9).
Net income
Q1 2025 vs Q1 2024
Net income attributable to equity holders was $407 million, an increase of $77 million or 23%. Adjusted net income attributable to equity holders was $414 million, up $78 million or 23%. The increase was due primarily to higher mutual fund fees, brokerage revenues, and net interest income across the Canadian and International wealth businesses. This was partly offset by higher
non-interest
expenses due largely to volume-related expenses.
Q1 2025 vs Q4 2024
Net income attributable to equity holders increased $27 million or 7%. Adjusted net income attributable to equity holders increased $28 million or 7%, due primarily to higher brokerage revenues, mutual fund fees, and net interest income, partly offset by higher
non-interest
expenses.
Assets under management (AUM) and assets under administration (AUA)
Q1 2025 vs Q1 2024
Assets under management of $396 billion increased $56 billion or 16% driven primarily by market appreciation and higher net sales. Assets under administration of $738 billion increased $83 billion or 13% due primarily to market appreciation and higher net sales
.
 
24
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Q1 2025 vs Q4 2024
Assets under management increased $23 billion or 6% due primarily to market appreciation and higher net sales. Assets under administration increased $34 billion or 5% due primarily to market appreciation and higher net sales.
Total revenue
Q1 2025 vs Q1 2024
Revenues were $1,579 million, an increase of $255 million or 19%. The increase was due primarily to higher mutual fund fees driven by assets under management growth, and higher brokerage revenues, investment management fees, and net interest income, driven by loan and deposit growth.
Q1 2025 vs Q4 2024
Revenues increased $113 million or 8%, due primarily to higher brokerage revenues, mutual fund fees, and net interest income driven by loan and deposit growth.
Provision for credit losses
The provision for credit losses was $4 million, a decrease of $1 million from prior year and prior quarter.
Non-interest
expenses
Q1 2025 vs Q1 2024
Non-interest
expenses of $1,022 million increased by $148 million or 17%, of which more than half was due to volume-related expenses, in addition to higher technology costs, and salesforce expansion to support business growth.
Q1 2025 vs Q4 2024
Non-interest
expenses increased by $73 million or 8%, driven largely by higher volume-related expenses, technology costs, and salesforce expansion to support business growth.
Taxes
The effective tax rate was 26.0% compared to 25.2% in the prior year and 25.4% in the prior quarter due to the GMT implementation in certain jurisdictions.
 
 Scotiabank First Quarter Report 2025   
 
25
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Global Banking and Markets
T13 Global Banking and Markets financial performance
 
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
(1)
     October 31
2024
(1)(2)
     January 31
2024
(1)(2)
 
Reported Results
        
Net interest income
  
$
319
 
   $ 280      $ 270  
Non-interest
income
  
 
1,275
 
     992        1,023  
Total revenue
  
 
1,594
 
     1,272        1,293  
Provision for credit losses
  
 
18
 
     19        5  
Non-interest
expenses
  
 
891
 
     807        781  
Income before taxes
  
 
685
 
     446        507  
Income tax expense
  
 
168
 
     99        119  
Net income
  
$
517
 
   $ 347      $ 388  
Net income attributable to equity holders of the Bank
  
$
517
 
   $ 347      $ 388  
Other financial data and measures
        
Return on equity
(3)
  
 
13.3
     9.0      9.8
Provision for credit losses – performing (Stage 1 and 2)
  
$
18
 
   $ 13      $ 10  
Provision for credit losses – impaired (Stage 3)
  
$
 
   $ 6      $ (5
Provision for credit losses as a percentage of average net loans and acceptances (annualized)
(4)
  
 
0.06
     0.06      0.02
Provision for credit losses on impaired loans as a percentage of average net loans and acceptances (annualized)
(4)
  
 
     0.02      (0.02 )% 
Net write-offs as a percentage of average net loans and acceptances (annualized)
(4)
  
 
          (0.02 )% 
Average assets
($ billions)
  
$
511
 
   $ 486      $ 505  
Average liabilities
($ billions)
  
$
511
 
   $ 478      $ 476  
(1)
Includes the
gross-up
of
tax-exempt
income earned on certain securities reported in either net interest income or
non-interest
income for the three months ended January 31, 2025 – nil (October 31, 2024 – $2; January 31, 2024 – $41).
(2)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(3)
Refer to
Non-GAAP
Measures starting on page 5.
(4)
Refer to Glossary on page 51 for the description of the measure.
Net income
Q1 2025 vs Q1 2024
Net income attributable to equity holders was $517 million compared to $388 million, an increase of $129 million or 33%. The increase was driven primarily by higher net interest income and
non-interest
income, partly offset by higher
non-interest
expenses and higher provision for credit losses.
Q1 2025 vs Q4 2024
Net income attributable to equity holders was $517 million compared to $347 million, an increase of $170 million or 49%. The increase was driven primarily by higher net interest income and
non-interest
income, partly offset by higher
non-interest
expenses.
Average assets
Q1 2025 vs Q1 2024
Average assets of $511 billion increased $6 billion or 1% due mainly to higher trading securities, securities purchased under resale agreements and derivative-related assets and the impact of foreign currency translation, partly offset by lower loans and acceptances of $19 billion or 15%.
Q1 2025 vs Q4 2024
Average assets of $511 billion increased $25 billion or 5% due mainly to higher trading securities, securities purchased under resale agreements and derivative-related assets, higher loans and acceptances of $2 billion or 2% and the impact of foreign currency translation.
Average liabilities
Q1 2025 vs Q1 2024
Average liabilities of $511 billion increased $35 billion or 7% due mainly to higher securities sold under repurchase agreements, higher deposit volumes of $5 billion or 3% and the impact of foreign currency translation.
Q1 2025 vs Q4 2024
Average liabilities of $511 billion increased $33 billion or 7% due mainly to higher securities sold under repurchase agreements, higher deposit volumes of $8 billion or 5% and the impact of foreign currency translation.
 
26
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Total revenue
Q1 2025 vs Q1 2024
Revenues were $1,594 million, up $301 million or 23%.
Net interest income of $319 million increased $49 million or 18% due mainly to higher corporate lending and deposit margins, lower trading-related funding costs and the impact of foreign currency translation.
Non-interest
income of $1,275 million increased $252 million or 25% due mainly to higher client-driven trading-related revenue from fixed income, equities and foreign exchange, higher underwriting and advisory fees and the impact of foreign currency translation.
Q1 2025 vs Q4 2024
Revenues increased $322 million or 25%.
Net interest income of $319 million increased $39 million or 14% due mainly to higher corporate lending margins, lower trading-related funding costs and the impact of foreign currency translation.
Non-interest
income of $1,275 million increased $283 million or 28% due mainly to higher client-driven trading-related revenue from fixed income, equities and foreign exchange and higher underwriting and advisory fees.
Provision for credit losses
Q1 2025 vs Q1 2024
The provision for credit losses was $18 million compared to a provision of $5 million. The provision for credit losses ratio was six basis points, an increase of four basis points.
Provision for credit losses on performing loans was $18 million, compared to a provision of $10 million. The provision this period was driven by credit migration and the continued unfavourable macroeconomic outlook.
Provision for credit losses on impaired loans was nil this quarter, compared to a net reversal of $5 million in the prior period. The provision for credit losses ratio on impaired loans was nil, an increase of two basis points compared to prior period.
Q1 2025 vs Q4 2024
The provision for credit losses was $18 million, compared to a provision of $19 million in the prior quarter. The provision for credit losses ratio was six basis points, unchanged from last quarter.
Provision for credit losses on performing loans was $18 million compared to a provision of $13 million. The provision this period was driven by credit migration and the continued unfavourable macroeconomic outlook.
Provision for credit losses on impaired loans was nil, compared to a provision of $6 million. The provision in the prior quarter was related primarily to one account partly offset by reversals. The provision for credit losses ratio on impaired loans was nil, a decrease of two basis points.
Non-interest expenses
Q1 2025 vs Q1 2024
Non-interest
expenses were $891 million compared to $781 million, an increase of 14% due mainly to higher personnel costs including performance-based compensation pursuant to stronger performance, higher technology costs to support business growth and the negative impact of foreign currency translation.
Q1 2025 vs Q4 2024
Non-interest
expenses were $891 million compared to $807 million, an increase of 10% due mainly to seasonally higher share-based compensation and higher personnel and technology costs to support business growth.
Taxes
The effective tax rate for the quarter increased to 24.5% from 23.4% in the prior year and 22.1% in the prior quarter due mainly to the change in earnings mix across jurisdictions.
 
 Scotiabank First Quarter Report 2025   
 
27
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Other
(1)
T14 Other financial performance
 
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(2)
     January 31
2024
(2)
 
Reported Results
        
Net interest income
(3)
  
$
(194
   $ (346    $ (413
Non-interest
income
(3)(4)
  
 
(49
     (44      (70
Total revenue
  
 
(243
     (390      (483
Provision for credit losses
  
 
 
             
Non-interest
expenses
  
 
1,414
 
     471        3  
Income before taxes
  
 
(1,657
     (861      (486
Income tax expense/(benefit)
(3)
  
 
(125
     (243      (256
Net income (loss)
  
$
(1,532
   $ (618    $ (230
Net income (loss) attributable to
non-controlling
interests in subsidiaries
  
$
(191
   $ 1      $  
Net income (loss) attributable to equity holders
  
$
(1,341
   $ (619    $ (230
Other measures
        
Average assets
($ billions)
  
$
224
 
   $ 216      $ 203  
Average liabilities
($ billions)
  
$
262
 
   $ 260      $ 251  
(1)
Includes smaller operating segments, investments in associated corporations and corporate adjustments, such as the elimination of the
tax-exempt
income
gross-up
reported in net interest income,
non-interest
income and provision for income taxes.
(2)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(3)
Includes the elimination of the
tax-exempt
income
gross-up
reported in net interest income,
non-interest
income and provision for income taxes for the three months ended January 31, 2025 – $0 (October 31, 2024 – $2; January 31, 2024 – $43) to arrive at the amounts reported in the Consolidated Statement of Income.
(4)
Income (on a taxable equivalent basis) from associated corporations and the provision for income taxes in each period include the tax normalization adjustments related to the
gross-up
of income from associated companies for the three months ended January 31, 2025 – $54 (October 31, 2024 – $7; January 31, 2024 – $12).
T14A Adjusted Other financial performance
 
      For the three months ended  
(Unaudited) ($ millions)

(Taxable equivalent basis)
  
January 31
2025
     October 31
2024
(1)
     January 31
2024
(1)
 
Adjusted Results
(2)
        
Net interest income
  
$
(194
   $ (346    $ (413
Non-interest
income
  
 
(49
     (44      (70
Total revenue
  
 
(243
     (390      (483
Provision for credit losses
  
 
 
             
Non-interest
expenses
(3)
  
 
52
 
     (22      3  
Income before taxes
  
 
(295
     (368      (486
Income tax expense/(benefit)
  
 
(118
     (167      (256
Net income (loss)
  
$
(177
   $ (201    $ (230
Net income (loss) attributable to
non-controlling
interests in subsidiaries
  
$
 
   $ 1      $  
Net income (loss) attributable to equity holders
  
$
(177
   $ (202    $ (230
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
(2)
Refer to
Non-GAAP
Measures starting on page 5 for adjusted results.
(3)
Adjusted for net (gain)/loss on divestitures and wind down of operations of $1,362 in Q1 2025. Adjusted for restructuring charge and severance provisions of $53 and impairment of
non-financial
assets of $440 in Q4 2024.
The Other segment includes Group Treasury, investments in 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.
Net interest income,
non-interest
income, and the provision for income taxes in each period include the elimination of
tax-exempt
income
gross-up.
This amount is included in the operating segments, which are reported on a taxable equivalent basis.
Net income from associated corporations and the provision for income taxes in each period include the tax normalization adjustments related to the
gross-up
of income from associated companies. This adjustment normalizes the effective tax rate in the divisions to better present the contribution of the associated companies to the divisional results.
Q1 2025 vs Q1 2024
Net loss attributable to equity holders was $1,341 million which included an impairment loss of $1,164 million related to the announced sale of the banking operations in Colombia, Costa Rica and Panama, compared to a net loss of $230 million in the prior year. The adjusted net loss attributable to equity holders was $177 million compared to an adjusted net loss of $230 million in the prior year. The lower loss of $53 million was due to higher revenues, partly offset by higher expenses and higher income taxes. The higher revenues were driven mainly by higher net interest income related to asset/liability management activities which benefitted from lower interest rates, higher revenue from investments in associated corporations related to the KeyCorp acquisition, and a lower taxable equivalent basis (TEB)
gross-up
as the Bank no longer claims the dividend received deduction on Canadian shares that are
mark-to-market
property. The TEB
gross-up
is offset in income taxes.
Q1 2025 vs Q4 2024
Net loss attributable to equity holders increased $722 million from the prior quarter and included the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama. The adjusted net loss attributable to equity holders decreased $25 million from the prior quarter. The lower loss was due to higher revenues, which were partially offset by higher expenses and higher income taxes. The higher revenues were due primarily to higher net interest income from asset/liability management activities which benefitted from lower interest rates, and higher revenue from investments in associated corporations related to the KeyCorp acquisition.
 
28
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Geographic Highlights
T15 Geographic highlights
 
    
For the three months ended January 31, 2025
 
(Unaudited) ($ millions)
 
Canada
   
U.S.
   
Mexico
   
Peru
   
Chile
   
Colombia
   
Caribbean
and
Central
America
   
Other
   
Total
 
Reported results
                 
Net interest income
 
$
2,721
 
 
$
153
 
 
$
557
 
 
$
375
 
 
$
487
 
 
$
169
 
 
$
489
 
 
$
222
 
 
$
5,173
 
Non-interest
income
 
 
2,311
 
 
 
638
 
 
 
269
 
 
 
172
 
 
 
133
 
 
 
114
 
 
 
330
 
 
 
232
 
 
 
4,199
 
Total revenue
 
 
5,032
 
 
 
791
 
 
 
826
 
 
 
547
 
 
 
620
 
 
 
283
 
 
 
819
 
 
 
454
 
 
 
9,372
 
Provision for credit losses
 
 
547
 
 
 
12
 
 
 
128
 
 
 
112
 
 
 
192
 
 
 
107
 
 
 
48
 
 
 
16
 
 
 
1,162
 
Non-interest
expenses
 
 
4,279
(2)
 
 
 
382
 
 
 
442
 
 
 
228
 
 
 
291
 
 
 
191
 
 
 
398
 
 
 
280
 
 
 
6,491
 
Income tax expense
 
 
392
 
 
 
81
 
 
 
68
 
 
 
41
 
 
 
20
 
 
 
(4
 
 
113
 
 
 
15
 
 
 
726
 
Net income
 
$
(186
 
$
316
 
 
$
188
 
 
$
166
 
 
$
117
 
 
$
(11
 
$
260
 
 
$
143
 
 
$
993
 
Net income attributable to
non-controlling
interests in subsidiaries
 
 
(191
 
 
 
 
 
6
 
 
 
2
 
 
 
6
 
 
 
(5
 
 
28
 
 
 
 
 
 
(154
Net income attributable to equity holders of the Bank
 
$
5
 
 
$
316
 
 
$
182
 
 
$
164
 
 
$
111
 
 
$
(6
 
$
232
 
 
$
143
 
 
$
1,147
 
Adjusted results
(1)
                 
Adjustments
 
 
1,171
 
 
 
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
1
 
 
 
1
 
 
 
1,178
 
Adjusted net income (loss) attributable to equity holders of the Bank
 
$
1,176
 
 
$
316
 
 
$
182
 
 
$
164
 
 
$
116
 
 
$
(6
 
$
233
 
 
$
144
 
 
$
2,325
 
Average Assets
($ billions)
 
$
898
 
 
$
231
 
 
$
60
 
 
$
29
 
 
$
55
 
 
$
14
 
 
$
38
 
 
$
136
 
 
$
1,461
 
Average Liabilities
($ billions)
 
$
883
 
 
$
192
 
 
$
55
 
 
$
22
 
 
$
50
 
 
$
14
 
 
$
34
 
 
$
126
 
 
$
1,376
 
                 
     For the three months ended October 31, 2024
(3)
 
(Unaudited) ($ millions)
  Canada     U.S.     Mexico     Peru     Chile     Colombia     Caribbean
and
Central
America
    Other     Total  
Reported results
                 
Net interest income
  $ 2,508     $ 147     $ 552     $ 368     $ 475     $ 173     $ 468     $ 232     $ 4,923  
Non-interest
income
    2,155       412       241       130       125       121       296       123       3,603  
Total revenue
    4,663       559       793       498       600       294       764       355       8,526  
Provision for credit losses
    442       6       109       118       151       114       45       45       1,030  
Non-interest
expenses
    3,202       343       423       230       282       190       359       267       5,296  
Income tax expense
    272       37       57       34       29       1       78       3       511  
Net income
  $ 747     $ 173     $ 204     $ 116     $ 138     $ (11   $ 282     $ 40     $ 1,689  
Net income attributable to
non-controlling
interests in subsidiaries
                6       1       12       (4     32             47  
Net income attributable to equity holders of the Bank
  $ 747     $ 173     $ 198     $ 115     $ 126     $ (7   $ 250     $ 40     $ 1,642  
Adjusted results
(1)
                 
Adjustments
    423                   1       4             1       1       430  
Adjusted net income (loss) attributable to equity holders of the Bank
  $ 1,170     $ 173     $ 198     $ 116     $ 130     $ (7   $ 251     $ 41     $ 2,072  
Average Assets
($ billions)
  $ 888     $ 215     $ 58     $ 28     $ 54     $ 14     $ 36     $ 126     $ 1,419  
Average Liabilities
($ billions)
  $ 870     $ 186     $ 54     $ 21     $ 50     $ 13     $ 32     $ 109     $ 1,335  
                 
     For the three months ended January 31, 2024
(3)
 
(Unaudited) ($ millions)
  Canada     U.S.     Mexico     Peru     Chile     Colombia     Caribbean
and
Central
America
    Other     Total  
Reported results
                 
Net interest income
  $ 2,208     $ 176     $ 619     $ 344     $ 536     $ 165     $ 448     $ 277     $ 4,773  
Non-interest
income
    2,126       362       277       162       130       123       301       179       3,660  
Total revenue
    4,334       538       896       506       666       288       749       456       8,433  
Provision for credit losses
    381       7       82       128       174       138       37       15       962  
Non-interest
expenses
    2,591       320       479       208       299       202       378       262       4,739  
Income tax expense
    260       29       83       38       37       (14     70       30       533  
Net income
  $ 1,102     $ 182     $ 252     $ 132     $ 156     $ (38   $ 264     $ 149     $ 2,199  
Net income attributable to
non-controlling
interests in subsidiaries
                7       1       8       (15     24             25  
Net income attributable to equity holders of the Bank
  $ 1,102     $ 182     $ 245     $ 131     $ 148     $ (23   $ 240     $ 149     $ 2,174  
Adjusted results
(1)
                 
Adjustments
    6                         5             1       1       13  
Adjusted net income (loss) attributable to equity holders of the Bank
  $ 1,108     $ 182     $ 245     $ 131     $ 153     $ (23   $ 241     $ 150     $ 2,187  
Average Assets
($ billions)
  $ 869     $ 220     $ 64     $ 27     $ 59     $ 14     $ 35     $ 135     $ 1,423  
Average Liabilities
($ billions)
  $ 847     $ 191     $ 60     $ 21     $ 56     $ 14     $ 31     $ 124     $ 1,344  
(1)
Refer to
Non-GAAP
Measures section starting on page 5.
(2)
Includes the impairment loss related to the Bank’s announced sale of the banking operations in Colombia, Costa Rica and Panama.
(3)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 18 for further details.
 
 Scotiabank First Quarter Report 2025   
 
29
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Quarterly Financial Highlights
T16 Quarterly financial highlights
 
        For the three months ended  
(Unaudited) ($ millions)
    
January 31
2025
    October 31
2024
    July 31
2024
     April 30
2024
     January 31
2024
     October 31
2023
    July 31
2023
     April 30
2023
 
Reported results
              
 
       
Net interest income
    
$
5,173
 
  $ 4,923     $ 4,862      $ 4,694      $ 4,773      $ 4,666     $ 4,573      $ 4,460  
Non-interest
income
    
 
4,199
 
    3,603       3,502        3,653        3,660        3,606       3,494        3,453  
Total revenue
    
$
9,372
 
  $ 8,526     $ 8,364      $ 8,347      $ 8,433      $ 8,272     $ 8,067      $ 7,913  
Provision for credit losses
    
 
1,162
 
    1,030       1,052        1,007        962        1,256       819        709  
Non-interest
expenses
    
 
6,491
 
    5,296       4,949        4,711        4,739        5,527       4,559        4,574  
Income tax expense
    
 
726
 
    511       451        537        533        135       497        484  
Net income
    
$
993
 
  $ 1,689     $ 1,912      $ 2,092      $ 2,199      $ 1,354     $ 2,192      $ 2,146  
Basic earnings per share
($)
    
 
0.82
 
    1.23       1.43        1.59        1.70        1.01       1.72        1.69  
Diluted earnings per share
($)
    
 
0.66
 
    1.22       1.41        1.57        1.68        0.99       1.70        1.68  
Net interest margin
(%)
(1)
    
 
2.23
 
    2.15       2.14        2.17        2.19        2.15       2.10        2.12  
Effective tax rate
(%)
(2)
    
 
42.2
 
    23.2       19.1        20.4        19.5        9.1       18.5        18.4  
Adjusted results
(1)
              
 
       
Adjusting items impacting
non-interest
income and total revenue
(Pre-tax)
              
 
       
Divestitures and wind-down of operations
    
$
 
  $     $ 143      $      $      $ (367   $      $  
Adjusting items impacting
non-interest
expenses
(Pre-tax)
              
 
       
Divestitures and wind-down of operations
    
 
1,362
 
          (7                                  
Restructuring charge and severance provisions
    
 
 
    53                            354               
Consolidation of real estate and contract termination costs
    
 
 
                               87               
Impairment of
non-financial
assets
    
 
 
    440                            346               
Amortization of acquisition-related intangible assets
    
 
18
 
    19       17        18        18        19       20        21  
Legal provision
    
 
 
          176                                    
Total
non-interest
expenses adjustments
(Pre-tax)
    
 
1,380
 
    512       186        18        18        806       20        21  
Total impact of adjusting items on net income before taxes
    
 
1,380
 
    512       329        18        18        439       20        21  
Impact of adjusting items on income tax expense
    
 
(11
    (82     (50      (5      (5      (150     (5      (6
Total impact of adjusting items on net income
    
 
1,369
 
    430       279        13        13        289       15        15  
Adjusted net income
    
$
2,362
 
  $ 2,119     $ 2,191      $ 2,105      $ 2,212      $ 1,643     $ 2,207      $ 2,161  
Adjusted diluted earnings per share 
($)
    
 
1.76
 
    1.57       1.63        1.58        1.69        1.23       1.72        1.69  
(1)
Refer to
Non-GAAP
Measures section starting on page 5.
(2)
Refer to Glossary on page 51 for the description of the measure.
Trending analysis
Earnings over the period were driven by higher net interest income and generally higher non-interest income, partly offset by higher provision for credit losses and increased term funding costs. Earnings for the current quarter were impacted by adjusting items.
Total revenue
Canadian Banking revenue has steadily increased from continued volume growth, improved business mix, and growing client activity. International Banking net interest income has generally trended upward driven by improvements in lending mix and rates, and the impact of lower funding costs. Global Wealth Management
fee-based
revenues increased during the period and are impacted by market conditions. Global Banking and Markets revenues are affected by market conditions that impact client activity in the capital markets and business banking businesses. Revenues in the Other segment were impacted by higher term funding costs and asset/liability management activities.
Provision for credit losses
Provision for credit losses have generally trended upward during the period driven by higher impaired loan provisions due mainly to higher formations and retail credit migration. There were also higher provisions due to the uncertainty around the impact of higher interest rates, retail portfolio growth and continued unfavorable macroeconomic outlook.
 
30
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Non-interest
expenses
Non-interest
expenses for 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 foreign currency translation also contributed to fluctuations over the period.
Non-interest
expenses for the current quarter were impacted by adjusting items.
Provision for income taxes
The effective tax rate was 42.2% this quarter, impacted by adjusting items. The effective tax rate average was 21.3% over the period and was impacted by increased statutory tax rates, divestitures, restructuring charge and net income earned in foreign jurisdictions, as well as the variability of
tax-exempt
dividend income and inflationary benefits.
Financial Position
T17 Condensed statement of financial position
 
      As at                          
(Unaudited) ($ billions)
  
January 31
2025
     October 31
2024
     Change      Volume
Change
     FX
Change
 
Assets
              
Cash, deposits with financial institutions and precious metals
  
$
73.9
 
   $ 66.4        11.3      8.0      3.3
Trading assets
  
 
136.7
 
     129.7        5.4        3.3        2.1  
Securities purchased under resale agreements and securities borrowed
  
 
195.3
 
     200.6        (2.6      (5.1      2.5  
Derivative financial instruments
  
 
48.0
 
     44.4        8.2        5.8        2.4  
Investment securities
  
 
153.0
 
     152.8        0.1        (2.7      2.8  
Loans
  
 
766.3
 
     760.8        0.7        (0.5      1.2  
Other
  
 
66.0
 
     57.3        15.0        13.1        1.9  
Total assets
  
$
1,439.2
 
   $ 1,412.0        1.9      0.1      1.8
Liabilities
              
Deposits
  
$
966.0
 
   $ 943.8        2.4      0.7      1.7
Derivative financial instruments
  
 
59.9
 
     51.3        16.8        13.0        3.8  
Obligations related to securities sold under repurchase agreements and securities lent
  
 
182.3
 
     190.5        (4.3      (7.2      2.9  
Other liabilities
  
 
136.6
 
     134.5        1.5        0.6        0.9  
Subordinated debentures
  
 
8.0
 
     7.8        2.7        0.6        2.1  
Total liabilities
  
$
1,352.8
 
   $ 1,327.9        1.9           1.9
Equity
              
Common equity
(1)
  
$
74.6
 
   $ 73.6        1.3      (0.1 )%       1.4
Preferred shares and other equity instruments
  
 
10.2
 
     8.8        16.6        16.6         
Non-controlling
interests in subsidiaries
  
 
1.6
 
     1.7        (4.7      (3.3      (1.4
Total equity
  
$
86.4
 
   $ 84.1        2.8      1.6      1.2
Total liabilities and equity
  
$
1,439.2
 
   $ 1,412.0        1.9      0.1      1.8
(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 $1,439 billion as at January 31, 2025, an increase of $27 billion or 2% from October 31, 2024. Cash and deposits with financial institutions increased $6 billion due primarily to higher balances with central banks. Trading securities increased $6 billion due mainly to higher client activity. Loans increased $5 billion. Residential mortgages were up $8 billion due mainly to growth in Canada. Personal and credit card loans were in line with last quarter. Business and government loans decreased $2 billion mainly in Canada and Asia. Securities purchased under resale agreements and securities borrowed decreased $5 billion due mainly to lower client activity. Derivative instrument assets and liabilities increased by $4 billion and $9 billion, respectively, due to changes in interest rates and foreign exchange rates. Investment securities were consistent with last quarter with increased holdings of U.S. and Canadian government debt offset by lower holdings of common equities. Investments in associates increased $4 billion due to the Bank’s purchase of a 14.92% investment in KeyCorp. Other assets increased $5 billion due mainly to higher collateral requirements.
Total liabilities were $1,353 billion as at January 31, 2025, an increase of $25 billion or 2% from October 31, 2024. Total deposits increased $22 billion. Personal deposits of $304 billion increased $5 billion due to growth in all regions. Business and government deposits were higher by $18 billion, mainly in the U.S. and Canada. Deposits by financial institutions were consistent with last quarter. Financial instruments designated at fair value through profit or loss increased $3 billion due to new issuances and changes in fair value. Obligations related to securities sold under repurchase agreements and securities lent decreased $8 billion due mainly to client activity.
Total shareholders’ equity was $86 billion, an increase of $2 billion from October 31, 2024. Equity was higher due to current year earnings of $993 million, other comprehensive income of $1,447 million due mainly to foreign currency translation, and preferred share and other equity instrument issuances of $1,453 million. Partly offsetting these items were dividends paid of $1,442 million.
Risk Management
The Bank’s risk management policies and practices have not substantially changed from those outlined in the Bank’s 2024 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 2024 Annual Report.
Top and emerging risks
The Bank is exposed to a variety of top and emerging risks as disclosed in the Bank’s 2024 Annual Report on Page 80. 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
 
 Scotiabank First Quarter Report 2025   
 
31
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
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 threat of U.S.-imposed tariffs and risk of resulting retaliatory measures, including the general unpredictability of U.S. government policy, was a key risk driver impacting our top and emerging risks and amplifying uncertainty.
Impact of Tariffs
The heightened economic uncertainty driven by the threat of tariffs and changing government policy could reignite inflationary pressures, impact central bank policy, and raise recessionary risks. This will be occurring in an already uncertain macroeconomic environment for the Bank’s clients who are already dealing with higher borrowing costs and could further dampen consumer demand and investor confidence. In addition, the North American economic corridor may be negatively impacted by this uncertainty which could include impacts to key exports like energy, agriculture, and automotive, creating headwinds for the Bank in its priority markets.
Credit risk
Allowance for credit losses
IFRS 9
Financial Instruments
, 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.
The Bank’s models are calibrated to consider past performance and macroeconomic forward-looking variables as inputs, as further described below. In the current year and 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 Bank has generated a forward-looking base case scenario and three alternate forward-looking scenarios (one optimistic and two pessimistic) as key inputs into the expected credit loss provisioning models. 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. Given the extreme uncertainty surrounding future U.S. trade policies and where tariffs would land, the scenarios this quarter have varying assumptions of imposed tariffs. The base case scenario assumed modest tariffs to provide directional guidance as tariffs remained to be negotiated. While these tariffs represent a fraction of the proposed measures contemplated by the U.S. administration, more severe assumptions are reflected in the pessimistic and very pessimistic scenarios which are described below. As new information comes to light in future quarters, the scenarios and assumptions will be updated accordingly.
Stronger than expected domestic demand along with the positive wealth effects of the new U.S. administration’s
de-regulation
agenda and planned tax cuts are behind a higher growth profile for the U.S. economy in 2024 and 2025 relative to last quarter. These growth drivers are somewhat offset by the increase in uncertainty, especially as it relates to trade policy changes. Beyond 2025, we expect some of the U.S. administration’s advertised tariffs and associated trade uncertainty to lower the economy’s potential growth and slow GDP growth, driving a downward revision relative to last quarter. Canada’s GDP growth in 2024 is higher than in previous quarter largely due to historical revisions that resulted in a higher level of GDP in the first half of the year. Growth is expected to firm up in 2025 as interest rate-sensitive components react to the monetary policy rate easing that started in June of 2024, as well as a stronger U.S. economy and support from the Canadian government in the form of GST relief and cheques. Growth in Canada’s economic activity slows beyond 2025 due to slower population growth consistent with the announced change in the Government of Canada’s immigration policy, a softer U.S. economic growth and the impact on Canada’s economy from assumed U.S. tariffs.
The optimistic scenario features somewhat stronger economic activity relative to the base case. The pessimistic scenario features a negative demand-type shock on the world economy with globally tighter private financial conditions, weaker growth and inflation, and lower monetary policy rates than in the baseline scenario. It also assumes U.S. imposed tariffs equivalent to 12.5% on imports from Canada and Mexico, 10% on China, and 5% everywhere else – facing no retaliation from these countries. Lastly, the very pessimistic scenario features a strong stagflationary impulse that leads to a protracted period of financial market uncertainty. It also assumes U.S. imposed tariffs with a magnitude twice that of the pessimistic scenario. Here, all countries retaliate. This results in higher inflation, requiring central banks to raise their policy rate to higher levels than in the base case in order to bring inflation under control, which is dampening economic activity.
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 64 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):
The base case scenario assumes a pickup in economic activity in Canada into 2025, compared with a slowdown in the U.S. after its remarkable performance in 2024. In Canada, we expect the economy will grow by about 2.1% in 2025 after an orderly slowdown to the pace of 1.2% in 2024. In the U.S., 2.7% in 2024 is followed by a still strong growth of 2.1% in 2025. Both economies are expected to slow thereafter, to 1.5% in Canada and 1.6% in the U.S. in 2026. Relative to last quarter, the profiles for both countries GDP levels are higher due to historical data revisions as well as stronger growth projections in the short run. Despite an initially higher level, the slower growth expected beyond 2025 eventually returns their GDP levels in line with last quarter.
 
 
  
 
32
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Unemployment Rate:
The base case scenario assumes a gradual decline in Canada’s unemployment rate from its Q4 2024 peak of 6.7% starting 2025 and throughout the forecast horizon. On the other hand, the U.S. unemployment rate is expected to remain largely stable throughout the forecast horizon with minor fluctuations. U.S. projected unemployment rate in 2025 and 2026 is lower than in last quarter owing to resilient labour markets and stronger growth in the near term, while weaker potential and GDP growth are behind a higher unemployment rate later in the forecast horizon.
 
 
  
The total allowance for credit losses as at January 31, 2025 was $7,080 million compared to $6,736 million in the prior quarter. The allowance for credit losses ratio was 91 basis points, an increase of three basis points. The allowance for credit losses for loans was $6,857 million, an increase of $321 million compared to last quarter. The increase was driven by higher allowance for credit losses on impaired loans due primarily to higher provisions in Canadian Banking and International retail portfolios as well as higher allowances on performing loans in commercial, corporate and Canadian retail portfolios due to credit migration and the continued unfavourable macroeconomic outlook. The impact of foreign currency translation increased the allowance by $155 million.
The allowance for credit losses on performing loans was higher at $4,667 million compared to $4,482 million compared to last quarter. The allowance for performing loans ratio was 63 basis points. The increase was due primarily to credit migration in corporate, Canadian retail and commercial portfolios as well as continued unfavourable macroeconomic outlook. The impact of foreign currency translation increased the allowance by $101 million.
The allowance on impaired loans increased by $136 million to $2,190 million from $2,054 million last quarter. The allowance for impaired loans ratio was 28 basis points, an increase of one basis point. The increase was due primarily to higher provisions in Canadian Banking and International retail portfolios. The impact of foreign currency translation increased the allowance by $54 million.
Impaired loans
Gross impaired loans increased to $7,064 million as at January 31, 2025, from $6,739 million last quarter. The increase was due primarily to the impact of foreign currency translation and higher formations in International retail mainly in Mexico and Chile. The gross impaired loan ratio was 91 basis points, an increase of three basis points from last quarter.
Net impaired loans in Canadian Banking were $1,588 million, an increase of $87 million from last quarter, due primarily to new formations partly offset by higher provisions. Net impaired loans in International Banking were $3,101 million, an increase of $100 million from last quarter, due to the impact of foreign currency translation and higher formations in International retail. Net impaired loans in Global Banking and Markets were $136 million, an increase of $3 million from last quarter due to the impact of foreign currency translation. Net impaired loans in Global Wealth Management were $49 million, a decrease of $1 million from last quarter.
Net impaired loans as a percentage of loans and acceptances were 0.63%, an increase of two basis points from last quarter.
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 January 31, 2025, these loans amounted to $483 billion or 62% of the Bank’s total loans and acceptances outstanding (October 31, 2024 – $475 billion or 62%). Of these, $382 billion or 79% are real estate secured loans (October 31, 2024 – $374 billion or 79%). The tables below provide more details by portfolios.
 
 Scotiabank First Quarter Report 2025   
 
33
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
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.
T18 Insured and uninsured residential mortgages and HELOCs, by geographic areas
 
    
As at January 31, 2025
 
    
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
 
$
4,619
 
1.5
 
$
7,102
 
2.4
 
$
11,721
 
3.9
 
$
 
 
$
1,060
 
4.6
 
$
1,060
 
4.6
Quebec
 
7,266
 
2.4
 
12,768
 
4.2
 
20,034
 
6.6
 
 
 
1,190
 
5.2
 
1,190
 
5.2
Ontario
 
29,181
 
9.7
 
139,819
 
46.0
 
169,000
 
55.7
 
 
 
13,655
 
59.2
 
13,655
 
59.2
Manitoba & Saskatchewan
 
4,925
 
1.6
 
4,625
 
1.5
 
9,550
 
3.1
 
 
 
576
 
2.5
 
576
 
2.5
Alberta
 
14,874
 
4.9
 
17,188
 
5.7
 
32,062
 
10.6
 
 
 
2,195
 
9.5
 
2,195
 
9.5
British Columbia & Territories
 
10,168
 
3.3
 
51,144
 
16.8
 
61,312
 
20.1
 
 
 
4,385
 
19.0
 
4,385
 
19.0
Canada
(4)(5)
 
$
71,033
 
23.4
 
$
232,646
 
76.6
 
$
303,679
 
100
 
$
 
 
$
23,061
 
100
 
$
23,061
 
100
International
 
 
 
55,112
 
100
 
55,112
 
100
 
 
 
 
 
 
Total
 
$
71,033
 
19.8
 
$
287,758
 
80.2
 
$
358,791
 
100
 
$
 
 
$
23,061
 
100
 
$
23,061
 
100
     As at October 31, 2024  
Canada
(4)(5)
  $ 71,696       24.1   $ 225,981       75.9   $ 297,677       100   $         $ 23,297       100   $ 23,297       100
International
                53,264       100       53,264       100                                      
Total
  $ 71,696       20.4   $ 279,245       79.6   $ 350,941       100   $         $ 23,297       100   $ 23,297       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 $3,505 (October 31, 2024 – $3,796) of which $2,764 are insured (October 31, 2024 – $3,024).
(5)
Variable rate mortgages account for 31% (October 31, 2024 – 30%) of the Bank’s total Canadian residential mortgage portfolio.
Amortization period ranges for residential mortgages
(1)
The following table presents the distribution of residential mortgages by remaining amortization periods, and by geographic areas.
T19 Distribution of residential mortgages by amortization periods, and by geographic areas
 
     
As at January 31, 2025
 
     
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
  
 
35.4
 
 
34.4
  
 
28.9
  
 
0.9
 
 
0.4
  
 
100
International
  
 
64.2
 
 
17.8
  
 
16.7
  
 
1.3
 
 
0.0
  
 
100
      As at October 31, 2024  
Canada
     36.1     34.9      27.7      0.9     0.4      100
International
     64.5     17.9      16.6      1.0          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 (October 31, 2024 – 76%). The average
loan-to-value
(LTV) ratio of the uninsured portfolio is 52% (October 31, 2024 – 51%).
 
34
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
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.
T20 Loan to value ratios
 
     
Uninsured LTV ratios
 
     
For the three months ended January 31, 2025
 
     
Residential
mortgages
    
Home equity lines
of credit
(2)
 
     
LTV%
    
LTV%
 
Canada:
(3)
     
Atlantic provinces
     61.3      63.7
Quebec
     61.4        65.9  
Ontario
     61.9        63.2  
Manitoba & Saskatchewan
     66.6        66.0  
Alberta
     65.5        65.6  
British Columbia & Territories
     61.1        60.0  
Canada
(3)
  
 
62.1
  
 
62.9
International
  
 
71.0
  
 
n/a
 
      For the three months ended October 31, 2024  
Canada
(3)
     61.5      62.5
International
     70.4      n/a  
(1)
The measures in this section have been disclosed in this document as required 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
all-Bank
scenario analyses to assess the impact to the enterprise of different scenarios and is confident that it has the financial resources to withstand even a very negative outlook.
Commercial real estate exposures
The Bank’s commercial real estate portfolio was $64.3 billion (October 31, 2024 – $66.0 billion), or 8.3% (October 31, 2024 – 8.6%) of the Bank’s total loans and acceptances outstanding as at January 31, 2025. This portfolio is comprised of 73% of loans to the residential and industrial sector (October 31, 2024 – 73%) both with relatively stable fundamentals. Total exposure to the Office subsector (entities engaged in the construction, development, or ownership of office properties as a business) represents approximately 9% (October 31, 2024 – 9%) of the commercial real estate portfolio, of which approximately 58% (October 31, 2024 – 60%) are investment grade facilities. U.S. office exposure represents approximately 0.4% (October 31, 2024 – 0.4%) of the portfolio.
Loans to Canadian condominium developers
The Bank had loans outstanding to Canadian condominium developers of $3,455 million as at January 31, 2025 (October 31, 2024 – $3,238 million), representing approximately 5% of the commercial real estate portfolio (October 31, 2024 – 5%), of which approximately 75% are investment grade facilities (October 31, 2024 – 72%). This is a portfolio comprised of well capitalized and experienced developers who have long-term relationships with the Bank.
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 credit worthiness of the counterparties (59% of the exposures are to investment grade counterparties based on a combination of internal and external ratings). 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 has no direct exposure to Russia or Ukraine. While some customers may be negatively impacted by the conflict in the region and by trade restrictions as a result of sanctions, the impact to the Bank, to date, is immaterial and appropriately mitigated.
The Bank’s exposure to sovereigns was $56.6 billion as at January 31, 2025 (October 31, 2024 – $58.9 billion), $17.4 billion to banks (October 31, 2024 – $15.5 billion) and $108.8 billion to corporates (October 31, 2024 – $111.0 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 $0.5 billion as at January 31, 2025 (October 31, 2024 – $0.3 billion).
 
 Scotiabank First Quarter Report 2025   
 
35
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
The Bank’s regional credit exposures are distributed as follows:
T21 Bank’s regional credit exposures distribution
 
     As at         
    
January 31, 2025
    October 31
2024
 
($ millions)
  Loans and
loan
equivalents
(1)
    Deposits
with
financial
institutions
    Securities
(2)
    SFT and
derivatives
(3)
    Funded
total
   
Undrawn
commitments
(4)
   
Total
    Total  
Latin America
(5)
  $ 81,272     $ 9,745     $ 20,043     $ 949     $ 112,009     $ 8,871    
$
120,880
 
  $ 125,228  
Caribbean and Central America America
    13,884       3,845       5,192       62       22,983       3,770    
 
26,753
 
    24,521  
Europe, excluding U.K.
    7,168       2,259       4,049       4,209       17,685       10,046    
 
27,731
 
    25,083  
U.K.
    7,152       584       878       2,372       10,986       6,987    
 
17,973
 
    18,192  
Asia
    7,990       1,171       8,090       772       18,023       8,605    
 
26,628
 
    29,458  
Other
(6)
    255       3       68       778       1,104       276    
 
1,380
 
    778  
Total
  $ 117,721     $ 17,607     $ 38,320     $ 9,142     $ 182,790     $ 38,555    
$
221,345
 
  $ 223,260  
(1)
Allowances for credit losses are $598. 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 $14,740 as at January 31, 2025 (October 31, 2024 – $14,446).
(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 $6,598 and collateral held against SFT was $146,315.
(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 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:
T22 Market Risk Measures
 
      Average for the three months ended  
Risk factor
($ millions)
  
January 31
2025
     October 31
2024
 
Credit spread plus interest rate
  
$
17.4
 
   $ 10.9  
Credit spread
(1)
  
 
8.0
 
     7.7  
Interest rate
  
 
21.8
 
     9.8  
Equities
  
 
5.7
 
     4.8  
Foreign exchange
  
 
2.6
 
     2.7  
Commodities
  
 
2.8
 
     2.4  
Debt specific
(1)
  
 
n/a
 
     3.6  
Diversification effect
  
 
(11.4
     (13.5
Total VaR
  
$
17.1
 
   $ 10.9  
(1)
Effective November 1, 2024, credit spread VaR also captures issuer-specific credit spread volatility which was previously included in debt specific VaR.
The increase in average Total VaR in Q1 2025, was driven primarily by higher interest rate risk exposure.
There were no trading loss days this quarter. The quality and accuracy of the VaR models is validated by back-testing, which compares daily actual and theoretical 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).
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 and are on a constant balance sheet and make no assumptions for management actions to mitigate the risk.
 
36
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
T23 Structural interest sensitivity
 
                  As at  
    
January 31, 2025
    October 31, 2024     January 31, 2024  
    
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
 
$
140
 
 
$
(38
 
$
102
 
 
$
(118
 
$
(1,029
 
$
(1,147
  $ (21   $ (1,338   $ (94   $ (1,131
-100 bps
 
 
(157
 
 
11
 
 
 
(146
 
 
(138
 
 
761
 
 
 
623
 
    (31     780       42       643  
During the first quarter of 2025, 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.
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.
T24 Market risk linkage to Consolidated Statement of Financial Position of the Bank
 
As at January 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
 
$
3,687
 
 
$
3,687
 
 
$
 
 
$
 
 
 
n/a
 
Trading assets
 
 
136,708
 
 
 
136,110
 
 
 
598
 
 
 
 
 
 
Interest rate, FX
 
Derivative financial instruments
 
 
48,035
 
 
 
42,296
 
 
 
5,739
 
 
 
 
 
 
Interest rate, FX, equity
 
Investment securities
 
 
153,019
 
 
 
 
 
 
153,019
 
 
 
 
 
 
Interest rate, FX, equity
 
Loans
 
 
766,305
 
 
 
 
 
 
766,305
 
 
 
 
 
 
Interest rate, FX
 
Assets – other
(1)
 
 
331,397
 
 
 
360
 
 
 
 
 
 
331,037
 
 
 
n/a
 
Total assets
 
$
1,439,151
 
 
$
182,453
 
 
$
925,661
 
 
$
331,037
 
 
 
 
 
Deposits
 
$
966,049
 
 
$
 
 
$
921,130
 
 
$
44,919
 
 
 
Interest rate, FX, equity
 
Financial instruments designated at fair value through profit or loss
 
 
39,594
 
 
 
39,594
 
 
 
 
 
 
 
 
 
Interest rate, equity
 
Obligations related to securities sold short
 
 
34,855
 
 
 
34,855
 
 
 
 
 
 
 
 
 
n/a
 
Derivative financial instruments
 
 
59,847
 
 
 
52,025
 
 
 
7,822
 
 
 
 
 
 
Interest rate, FX, equity
 
Trading liabilities
(2)
 
 
578
 
 
 
578
 
 
 
 
 
 
 
 
 
n/a
 
Pension and other benefit liabilities
 
 
1,627
 
 
 
 
 
 
1,627
 
 
 
 
 
 
Interest rate, credit spread, equity
 
Liabilities – other
(3)
 
 
250,180
 
 
 
246
 
 
 
 
 
 
249,934
 
 
 
n/a
 
Total liabilities
 
$
1,352,730
 
 
$
127,298
 
 
$
930,579
 
 
$
294,853
 
 
 
 
 
(1)
Includes goodwill, intangibles, other assets and securities purchased under resale agreements and securities borrowed.
(2)
Gold and silver certificates and bullion included in other liabilities.
(3)
Includes obligations related to securities sold under repurchase agreements and securities lent and other liabilities.
 
As at October 31, 2024   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
  $ 2,540     $ 2,540     $     $       n/a  
Trading assets
    129,727       129,032       695             Interest rate, FX  
Derivative financial instruments
    44,379       39,736       4,643             Interest rate, FX, equity  
Investment securities
    152,832             152,832             Interest rate, FX, equity  
Loans
    760,829             760,829             Interest rate, FX  
Assets – other
(1)
    321,720       448             321,272       n/a  
Total assets
  $ 1,412,027     $ 171,756     $ 918,999     $ 321,272    
 
 
 
Deposits
  $ 943,849     $     $ 901,328     $ 42,521       Interest rate, FX, equity  
Financial instruments designated at fair value through profit or loss
    36,341       36,341                   Interest rate, equity  
Obligations related to securities sold short
    35,042       35,042                   n/a  
Derivative financial instruments
    51,260       45,652       5,608             Interest rate, FX, equity  
Trading liabilities
(2)
    578       578                   n/a  
Pension and other benefit liabilities
    1,587             1,587             Interest rate, credit spread, equity  
Liabilities – other
(3)
    259,294       275             259,019       n/a  
Total liabilities
  $ 1,327,951     $ 117,888     $ 908,523     $ 301,540    
 
 
 
(1)
Includes goodwill, intangibles, other assets and securities purchased under resale agreements and securities borrowed.
(2)
Gold and silver certificates and bullion included in other liabilities.
(3)
Includes obligations related to securities sold under repurchase agreements and securities lent and other liabilities.
 
 Scotiabank First Quarter Report 2025   
 
37
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
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 in Note 18 to the Condensed Interim Consolidated Financial Statements and in Note 36 to the Consolidated Financial Statements in the Bank’s 2024 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 January 31, 2025 unencumbered liquid assets were $325 billion (October 31, 2024 – $310 billion). Securities, including National Housing Act (NHA) mortgage-backed securities, comprised 79% of liquid assets (October 31, 2024 – 81%). Other unencumbered liquid assets, comprising cash and deposits with central banks, deposits with financial institutions and precious metals, were 21% (October 31, 2024 – 19%). The increase in total unencumbered liquid assets was mainly attributable to an increase in cash and deposits with central banks, NHA mortgage-backed securities, Canada Government securities and precious metals.
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 January 31, 2025. The liquidity value of the portfolio will vary under different stress events as different assumptions are used for the stress scenarios.
The Bank’s liquid asset pool is summarized in the following table:
T25 Liquid asset pool
 
     
As at January 31, 2025
 
    
Bank-owned

liquid assets
    
Securities received
as collateral from
securities financing
and derivative
transactions
    
Total liquid
assets
    
Encumbered
liquid assets
    
Unencumbered
liquid assets
 
($ millions)
  
Pledged as
collateral
    
Other
(1)
    
Available as
collateral
    
Other
 
Cash and deposits with central banks
  
$
62,869
 
  
$
 
  
$
62,869
 
  
$
 
  
$
6,213
 
  
$
56,656
 
  
$
 
Deposits with financial institutions
  
 
7,329
 
  
 
 
  
 
7,329
 
  
 
 
  
 
54
 
  
 
7,275
 
  
 
 
Precious metals
  
 
3,687
 
  
 
 
  
 
3,687
 
  
 
 
  
 
 
  
 
3,687
 
  
 
 
Securities:
                    
Canadian government obligations
  
 
71,545
 
  
 
27,006
 
  
 
98,551
 
  
 
33,325
 
  
 
 
  
 
65,226
 
  
 
 
Foreign government obligations
  
 
119,167
 
  
 
115,753
 
  
 
234,920
 
  
 
108,837
 
  
 
 
  
 
126,083
 
  
 
 
Other securities
  
 
79,670
 
  
 
115,490
 
  
 
195,160
 
  
 
161,698
 
  
 
 
  
 
33,462
 
  
 
 
NHA mortgage-backed securities
  
 
38,598
 
  
 
 
  
 
38,598
 
  
 
6,339
 
  
 
 
  
 
32,259
 
  
 
 
Total
  
$
382,865
 
  
$
258,249
 
  
$
641,114
 
  
$
310,199
 
  
$
6,267
 
  
$
324,648
 
  
$
 
      As at October 31, 2024  
     Bank-owned
liquid assets
     Securities received
as collateral from
securities financing
and derivative
transactions
     Total liquid
assets
     Encumbered
liquid assets
     Unencumbered
liquid assets
 
($ millions)
  
Pledged as
collateral
     Other
(1)
     Available as
collateral
     Other  
Cash and deposits with central banks
   $ 55,976      $      $ 55,976      $      $ 5,991      $ 49,985      $  
Deposits with financial institutions
     7,884               7,884               82        7,802         
Precious metals
     2,540               2,540                      2,540         
Securities:
                    
Canadian government obligations
     71,915        26,062        97,977        34,572               63,405         
Foreign government obligations
     121,072        129,991        251,063        126,371               124,692         
Other securities
     75,223        101,262        176,485        143,862               32,623         
NHA mortgage-backed securities
     35,546               35,546        6,584               28,962         
Total
   $ 370,156      $ 257,315      $ 627,471      $ 311,389      $ 6,073      $ 310,009      $  
(1)
Assets which are restricted from being used to secure funding for legal or other reasons.
 
38
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
A summary of total unencumbered liquid assets held by the parent bank and its branches, and domestic and foreign subsidiaries, is presented below:
T26 Total unencumbered liquid assets held by the parent bank and its branches, and domestic and foreign subsidiaries
 
      As at     
($ millions)
  
January 31
2025
     October 31
2024
 
The Bank of Nova Scotia (Parent)
  
$
249,685
 
   $ 235,378  
Bank domestic subsidiaries
  
 
28,400
 
     32,769  
Bank foreign subsidiaries
  
 
46,563
 
     41,862  
Total
  
$
324,648
 
   $ 310,009  
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 (86%) 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.
Encumbered assets
In the course of the Bank’s
day-to-day
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:
T27 Asset encumbrance
 
    
As at January 31, 2025
 
   
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
 
$
62,869
 
 
$
 
 
$
62,869
 
 
$
 
 
$
6,213
 
 
$
56,656
 
  
$
 
Deposits with financial institutions
 
 
7,329
 
 
 
 
 
 
7,329
 
 
 
 
 
 
54
 
 
 
7,275
 
  
 
 
Precious metals
 
 
3,687
 
 
 
 
 
 
3,687
 
 
 
 
 
 
 
 
 
3,687
 
  
 
 
Liquid securities:
              
Canadian government obligations
 
 
71,545
 
 
 
27,006
 
 
 
98,551
 
 
 
33,325
 
 
 
 
 
 
65,226
 
  
 
 
Foreign government obligations
 
 
119,167
 
 
 
115,753
 
 
 
234,920
 
 
 
108,837
 
 
 
 
 
 
126,083
 
  
 
 
Other liquid securities
 
 
79,670
 
 
 
115,490
 
 
 
195,160
 
 
 
161,698
 
 
 
 
 
 
33,462
 
  
 
 
Other securities
 
 
8,657
 
 
 
14,197
 
 
 
22,854
 
 
 
9,032
 
 
 
 
 
 
 
  
 
13,822
 
Loans classified as liquid assets:
              
NHA mortgage-backed securities
 
 
38,598
 
 
 
 
 
 
38,598
 
 
 
6,339
 
 
 
 
 
 
32,259
 
  
 
 
Other loans
 
 
735,755
 
 
 
 
 
 
735,755
 
 
 
9,335
 
 
 
79,065
 
 
 
19,873
 
  
 
627,482
 
Other financial assets
(4)
 
 
252,081
 
 
 
(175,723
 
 
76,358
 
 
 
17,337
 
 
 
 
 
 
 
  
 
59,021
 
Non-financial
assets
 
 
59,793
 
 
 
 
 
 
59,793
 
 
 
 
 
 
 
 
 
 
  
 
59,793
 
Total
 
$
1,439,151
 
 
$
96,723
 
 
$
1,535,874
 
 
$
345,903
 
 
$
85,332
 
 
$
344,521
 
  
$
760,118
 
     As at October 31, 2024  
    Bank-owned
assets
    Securities received as
collateral from
securities financing and
derivative transactions
    Total assets     Encumbered assets     Unencumbered assets  
($ millions)
 
Pledged as
collateral
    Other
(1)
    Available as
collateral
(2)
     Other
(3)
 
Cash and deposits with central banks
  $ 55,976     $     $ 55,976     $     $ 5,991     $ 49,985      $  
Deposits with financial institutions
    7,884             7,884             82       7,802         
Precious metals
    2,540             2,540                   2,540         
Liquid securities:
              
Canadian government obligations
    71,915       26,062       97,977       34,572             63,405         
Foreign government obligations
    121,072       129,991       251,063       126,371             124,692         
Other liquid securities
    75,223       101,262       176,485       143,862             32,623         
Other securities
    4,534       10,677       15,211       4,415                    10,796  
Loans classified as liquid assets:
              
NHA mortgage-backed securities
    35,546             35,546       6,584             28,962         
Other loans
    732,932             732,932       6,642       79,812       17,173        629,305  
Other financial assets
(4)
    249,058       (193,018     56,040       13,148                    42,892  
Non-financial
assets
    55,347             55,347                          55,347  
Total
  $ 1,412,027     $ 74,974     $ 1,487,001     $ 335,594     $ 85,885     $ 327,182      $ 738,340  
(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.
 
 Scotiabank First Quarter Report 2025   
 
39
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
As at January 31, 2025 total encumbered assets of the Bank were $431 billion (October 31, 2024 – $421 billion). Of the remaining $1,105 billion (October 31, 2024 – $1,066 billion) of unencumbered assets, $345 billion (October 31, 2024 – $327 billion) are considered readily available in the normal course of business to secure funding or meet collateral needs as detailed above.
In some
over-the-counter
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 January 31, 2025, the potential adverse impact on derivatives collateral that would result from a
one-notch
or
two-notch
downgrade of the Bank’s rating below its lowest current rating was $8 million or $513 million, respectively.
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.
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 January 31, 2025, based on the average daily positions in the quarter:
T28 Bank’s average LCR
(1)
 
For the quarter ended January 31, 2025
($ millions)
(2)
   Total
unweighted
Value
(Average)
(3)
     Total
weighted
Value
(Average)
(4)
 
High-quality liquid assets
     
Total high-quality liquid assets (HQLA)
  
 
*
 
  
$
263,213
 
Cash outflows
     
Retail deposits and deposits from small business customers, of which:
   $ 249,430      $ 26,045  
Stable deposits
     103,304        3,333  
Less stable deposits
     146,126        22,712  
Unsecured wholesale funding, of which:
     293,186        125,714  
Operational deposits (all counterparties) and deposits in networks of cooperative banks
     113,037        27,333  
Non-operational
deposits (all counterparties)
     168,839        87,071  
Unsecured debt
     11,310        11,310  
Secured wholesale funding
  
 
*
 
     78,168  
Additional requirements, of which:
     259,603        56,012  
Outflows related to derivative exposures and other collateral requirements
     39,197        20,817  
Outflows related to loss of funding on debt products
     5,251        5,251  
Credit and liquidity facilities
     215,155        29,944  
Other contractual funding obligations
     1,688        1,687  
Other contingent funding obligations
(5)
     594,856        8,527  
Total cash outflows
  
 
*
 
  
$
296,153
 
Cash inflows
     
Secured lending (e.g. reverse repos)
   $ 306,895      $ 42,263  
Inflows from fully performing exposures
     36,056        21,252  
Other cash inflows
     27,093        27,093  
Total cash inflows
  
$
370,044
 
  
$
90,608
 
              Total
adjusted
value
(6)
 
Total HQLA
  
 
*
 
  
$
263,213
 
Total net cash outflows
  
 
*
 
  
$
205,545
 
Liquidity coverage ratio (%)
  
 
*
 
  
 
128
For the quarter ended October 31, 2024 ($ millions)            Total
adjusted
value
(6)
 
Total HQLA
     *      $ 261,820  
Total net cash outflows
     *      $ 200,386  
Liquidity coverage ratio (%)
     *        131
*
Disclosure is not required under regulatory guideline.
(1)
This measure has been disclosed in this document in accordance with OSFI Guideline – Public Disclosure Requirements for Domestic Systemically Important Banks on Liquidity Coverage Ratio (April 2015).
(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 decrease in the Bank’s average LCR for the quarter ended January 31, 2025 versus the average of the previous quarter was mainly attributable to higher cash outflows from securities financing transactions, partly offset by higher other cash inflows and HQLA. The Bank monitors its significant currency exposures, Canadian and U.S. dollars, in accordance with its liquidity risk management framework and risk appetite.
 
40
   Scotiabank First Quarter Report 2025 

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 January 31, 2025:
T29 Bank’s NSFR
(1)
 
     Unweighted Value by Residual Maturity    
Weighted
Value
(3)
 
As at January 31, 2025
($ millions)
  No maturity
(2)
    < 6 months    
6-12 months
   
 1 year
 
Available Stable Funding (ASF) Item
 
Capital:   $  93,456     $     –     $     –     $     –     $  93,456  
Regulatory capital
    93,456                         93,456  
Other capital instruments
                             
Retail deposits and deposits from small business customers:     219,799       84,935       40,744       46,971       355,935  
Stable deposits
    90,250       34,248       15,568       13,994       147,056  
Less stable deposits
    129,549       50,687       25,176       32,977       208,879  
Wholesale funding:      211,208        356,678        56,914        127,888       312,817  
Operational deposits
    114,537                         57,269  
Other wholesale funding
    96,671       356,678       56,914       127,888       255,548  
Liabilities with matching interdependent assets
(4)
          3,175       1,707       13,300        
Other liabilities:     27,677       119,784       22,652  
NSFR derivative liabilities
       10,224    
All other liabilities and equity not included in the above categories
    27,677       86,143       1,529       21,888       22,652  
Total ASF
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 784,860
 
Required Stable Funding (RSF) Item
 
Total NSFR high-quality liquid assets (HQLA)           $ 22,469  
Deposits held at other financial institutions for operational purposes   $ 1,514     $     $     $     $ 757  
Performing loans and securities:     113,731       286,633       98,381       430,746       555,217  
Performing loans to financial institutions secured by Level 1 HQLA
    38       63,093       1,830       727       4,847  
Performing loans to financial institutions secured by
non-Level
1 HQLA and unsecured performing loans to financial institutions
    2,792       98,099       10,874       16,488       35,550  
Performing loans to
non-financial
corporate clients, loans to retail and small business customers, and loans to sovereigns, central banks and PSEs, of which:
    65,101       92,421       47,812       172,593       271,765  
With a risk weight of less than or equal to 35% under the Basel II standardized approach for credit risk
          884       537       2,523       2,350  
Performing residential mortgages, of which:
    21,356       31,646       37,752       233,917       215,566  
With a risk weight of less than or equal to 35% under the Basel II standardised approach for credit risk
    21,356       31,169       37,564       221,782       204,918  
Securities that are not in default and do not qualify as HQLA, including exchange-traded equities
    24,444       1,374       113       7,021       27,489  
Assets with matching interdependent liabilities
(4)
          3,175       1,707       13,300        
Other assets:     6,328       155,965       70,189  
Physical traded commodities, including gold
    6,328             5,379  
Assets posted as initial margin for derivative contracts and contributions to default funds of CCPs
       14,439       12,273  
NSFR derivative assets
        4,428        
NSFR derivative liabilities before deduction of variation margin posted
       29,664       1,483  
All other assets not included in the above categories
          56,381             51,053       51,054  
Off-balance
sheet items
 
 
 
 
    526,599       20,004  
Total RSF
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
668,636
 
Net Stable Funding Ratio (%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
117
As at October 31, 2024
($ millions)
  Weighted
Value
(3)
 
Total ASF
  $ 781,957  
Total RSF
    656,747  
Net stable funding ratio (%)
    119
(1)
This measure has been disclosed in this document in accordance with OSFI 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 OSFI LAR Guideline.
(4)
Interdependent assets and liabilities are primarily comprised of transactions related to the Canada Mortgage Bond program.
 
 Scotiabank First Quarter Report 2025   
 
41
 

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 decline in the Bank’s NSFR as at January 31, 2025 versus the previous quarter was mainly attributable to higher RSF for trading assets, loans, and equity investment in KeyCorp, partly offset by higher ASF from retail deposits and deposits from small business customers.
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 $404 billion as at January 31, 2025 (October 31, 2024 – $398 billion). The increase since October 31, 2024 is due primarily to growth in 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 $201 billion (October 31, 2024 – $206 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, retail indirect auto loan receivables through the Securitized Term Auto Receivables Trust program and unsecured personal lines of credit receivables through the Halifax 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, Hong Kong, the United Kingdom and Australia 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 and the Taiwan 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.
 
42
   Scotiabank First Quarter Report 2025 

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
T30 Wholesale funding
(1)
 
    
As at January 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)
 
$
4,428
 
 
$
1,907
 
 
$
896
 
 
$
115
 
 
$
50
 
 
$
7,396
 
 
$
70
 
 
$
 
 
$
 
 
$
7,466
 
Bearer deposit notes, commercial paper and certificate of deposits
 
 
8,033
 
 
 
14,224
 
 
 
19,123
 
 
 
13,528
 
 
 
13,765
 
 
 
68,673
 
 
 
1,419
 
 
 
290
 
 
 
185
 
 
 
70,567
 
Asset-backed commercial paper
(3)
 
 
2,590
 
 
 
7,257
 
 
 
2,898
 
 
 
 
 
 
 
 
 
12,745
 
 
 
 
 
 
 
 
 
 
 
 
12,745
 
Senior notes
(4)(5)
 
 
84
 
 
 
2,144
 
 
 
2,634
 
 
 
827
 
 
 
200
 
 
 
5,889
 
 
 
4,529
 
 
 
7,094
 
 
 
12,577
 
 
 
30,089
 
Bail-inable notes
(5)
 
 
3,561
 
 
 
3,069
 
 
 
6,788
 
 
 
1,676
 
 
 
3,890
 
 
 
18,984
 
 
 
17,694
 
 
 
26,110
 
 
 
18,829
 
 
 
81,617
 
Asset-backed securities
 
 
 
 
 
 
 
 
 
 
 
949
 
 
 
637
 
 
 
1,586
 
 
 
637
 
 
 
804
 
 
 
1,163
 
 
 
4,190
 
Covered bonds
 
 
 
 
 
4,984
 
 
 
2,181
 
 
 
903
 
 
 
4,032
 
 
 
12,100
 
 
 
14,485
 
 
 
15,100
 
 
 
4,132
 
 
 
45,817
 
Mortgage securitization
(6)
 
 
 
 
 
1,260
 
 
 
887
 
 
 
235
 
 
 
1,365
 
 
 
3,747
 
 
 
2,021
 
 
 
7,202
 
 
 
3,487
 
 
 
16,457
 
Subordinated debentures
(7)
 
 
 
 
 
 
 
 
281
 
 
 
 
 
 
1,817
 
 
 
2,098
 
 
 
52
 
 
 
200
 
 
 
7,580
 
 
 
9,930
 
Total wholesale funding sources
 
$
18,696
 
 
$
34,845
 
 
$
35,688
 
 
$
18,233
 
 
$
25,756
 
 
$
133,218
 
 
$
40,907
 
 
$
56,800
 
 
$
47,953
 
 
$
278,878
 
Of Which:
                   
Unsecured funding
 
$
16,106
 
 
$
21,343
 
 
$
29,722
 
 
$
16,146
 
 
$
19,722
 
 
$
103,039
 
 
$
23,765
 
 
$
33,694
 
 
$
39,170
 
 
$
199,668
 
Secured funding
 
 
2,590
 
 
 
13,502
 
 
 
5,966
 
 
 
2,087
 
 
 
6,034
 
 
 
30,179
 
 
 
17,142
 
 
 
23,106
 
 
 
8,783
 
 
 
79,210
 
     As at October 31, 2024  
($ 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)
  $ 3,858     $ 1,455     $ 455     $ 318     $ 158     $ 6,244     $     $     $     $ 6,244  
Bearer deposit notes, commercial paper and certificate of deposits
    6,612       12,754       17,407       12,087       8,307       57,167       1,251       269       182       58,869  
Asset-backed commercial paper
(3)
    2,248       5,831       2,435       139             10,653                         10,653  
Senior notes
(4)(5)
    2,073       88       2,200       2,613       794       7,768       2,949       7,934       12,337       30,988  
Bail-inable notes
(5)
    243       5,699       6,429       6,613       1,682       20,666       16,714       29,520       17,945       84,845  
Asset-backed securities
          1                   908       909       1,218       770       844       3,741  
Covered bonds
          1,515       4,983       2,088       916       9,502       16,039       17,251       4,143       46,935  
Mortgage securitization
(6)
          650       1,710       887       235       3,482       3,061       7,099       3,844       17,486  
Subordinated debentures
(7)
          47             280             327       1,788       201       7,430       9,746  
Total wholesale funding sources
  $ 15,034     $ 28,040     $ 35,619     $ 25,025     $ 13,000     $ 116,718     $ 43,020     $ 63,044     $ 46,725     $ 269,507  
Of Which:
                   
Unsecured funding
  $ 12,786     $ 20,042     $ 26,492     $ 21,911     $ 10,941     $ 92,172     $ 22,702     $ 37,924     $ 37,894     $ 190,692  
Secured funding
    2,248       7,998       9,127       3,114       2,059       24,546       20,318       25,120       8,831       78,815  
(1)
Wholesale funding sources exclude obligations related to securities sold under repurchase agreements and bankers’ acceptances, which are disclosed in the contractual maturities table below. Amounts are principal at maturity based on remaining term.
(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.
(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 $323 billion as at January 31, 2025 (October 31, 2024 – $310 billion) were well in excess of wholesale funding sources which mature in the next twelve months.
 
 Scotiabank First Quarter Report 2025   
 
43
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Contractual maturities
The table below provides the maturity of assets and liabilities as well as the
off-balance
sheet commitments as at January 31, 2025, based on the contractual maturity date. From a liquidity risk perspective the Bank considers factors other than contractual maturity in the assessment of liquid assets or in determining expected future cash flows. In particular, for securities with a fixed maturity date, the ability and time horizon to raise cash from these securities is more relevant to liquidity management than contractual maturity. For other assets and deposits the Bank uses assumptions about rollover rates to assess liquidity risk for normal course and stress scenarios. Similarly, the Bank uses assumptions to assess the potential drawdown of credit commitments in various scenarios.
T31 Contractual maturities
 
    
As at January 31, 2025
 
($ millions)
 
Less
than one
month
   
One to
three
months
   
Three
to six
months
   
Six to
nine
months
   
Nine to
twelve
months
   
One to
two
years
   
Two
to five
years
   
Over
five
years
   
No
specific
maturity
   
Total
 
Assets
                   
Cash and deposits with financial institutions and precious metals
 
$
67,522
 
 
$
95
 
 
$
199
 
 
$
65
 
 
$
41
 
 
$
145
 
 
$
272
 
 
$
222
 
 
$
5,324
 
 
$
73,885
 
Trading assets
 
 
2,741
 
 
 
3,501
 
 
 
4,351
 
 
 
2,309
 
 
 
1,691
 
 
 
8,594
 
 
 
18,902
 
 
 
23,816
 
 
 
70,803
 
 
 
136,708
 
Securities purchased under resale agreements and securities borrowed
 
 
151,992
 
 
 
28,213
 
 
 
10,735
 
 
 
2,544
 
 
 
1,047
 
 
 
 
 
 
727
 
 
 
 
 
 
 
 
 
195,258
 
Derivative financial instruments
 
 
3,899
 
 
 
4,542
 
 
 
3,967
 
 
 
2,215
 
 
 
4,390
 
 
 
6,152
 
 
 
10,613
 
 
 
12,257
 
 
 
 
 
 
48,035
 
Investment securities – FVOCI
 
 
3,823
 
 
 
6,874
 
 
 
5,240
 
 
 
4,093
 
 
 
3,222
 
 
 
22,918
 
 
 
47,781
 
 
 
28,208
 
 
 
263
 
 
 
122,422
 
Investment securities – amortized cost
 
 
96
 
 
 
667
 
 
 
1,113
 
 
 
1,002
 
 
 
467
 
 
 
1,604
 
 
 
4,746
 
 
 
18,799
 
 
 
 
 
 
28,494
 
Investment securities – FVTPL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,103
 
 
 
2,103
 
Loans
 
 
38,936
 
 
 
43,356
 
 
 
57,996
 
 
 
51,031
 
 
 
52,521
 
 
 
162,500
 
 
 
236,610
 
 
 
57,918
 
 
 
65,437
 
 
 
766,305
 
Residential mortgages
 
 
4,528
 
 
 
11,629
 
 
 
19,749
 
 
 
21,543
 
 
 
20,661
 
 
 
98,167
 
 
 
136,102
 
 
 
42,046
 
 
 
4,366
(1)
 
 
 
358,791
 
Personal loans
 
 
3,449
 
 
 
2,258
 
 
 
4,944
 
 
 
3,772
 
 
 
4,176
 
 
 
12,730
 
 
 
24,889
 
 
 
6,592
 
 
 
43,825
 
 
 
106,635
 
Credit cards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17,548
 
 
 
17,548
 
Business and government
 
 
30,959
 
 
 
29,469
 
 
 
33,303
 
 
 
25,716
 
 
 
27,684
 
 
 
51,603
 
 
 
75,619
 
 
 
9,280
 
 
 
6,555
(2)
 
 
 
290,188
 
Allowance for credit losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6,857
 
 
(6,857
Customers’ liabilities under acceptances
 
 
58
 
 
 
85
 
 
 
53
 
 
 
7
 
 
 
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
207
 
Other assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65,734
 
 
 
65,734
 
Total assets
 
$
269,067
 
 
$
87,333
 
 
$
83,654
 
 
$
63,266
 
 
$
63,383
 
 
$
201,913
 
 
$
319,651
 
 
$
141,220
 
 
$
209,664
 
 
$
1,439,151
 
Liabilities and equity
                   
Deposits
 
$
83,370
 
 
$
82,698
 
 
$
76,258
 
 
$
48,706
 
 
$
56,204
 
 
$
62,272
 
 
$
70,210
 
 
$
25,957
 
 
$
460,374
 
 
$
966,049
 
Personal
 
 
17,821
 
 
 
22,156
 
 
 
25,809
 
 
 
20,738
 
 
 
21,101
 
 
 
17,471
 
 
 
12,594
 
 
 
199
 
 
 
165,909
 
 
 
303,798
 
Non-personal
 
 
65,549
 
 
 
60,542
 
 
 
50,449
 
 
 
27,968
 
 
 
35,103
 
 
 
44,801
 
 
 
57,616
 
 
 
25,758
 
 
 
294,465
 
 
 
662,251
 
Financial instruments designated at fair value through profit or loss
 
 
1,013
 
 
 
1,415
 
 
 
1,561
 
 
 
1,747
 
 
 
2,220
 
 
 
5,768
 
 
 
9,403
 
 
 
16,467
 
 
 
 
 
 
39,594
 
Acceptances
 
 
61
 
 
 
85
 
 
 
53
 
 
 
7
 
 
 
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
210
 
Obligations related to securities sold short
 
 
88
 
 
 
1,747
 
 
 
1,397
 
 
 
844
 
 
 
712
 
 
 
3,149
 
 
 
7,661
 
 
 
10,372
 
 
 
8,885
 
 
 
34,855
 
Derivative financial instruments
 
 
2,778
 
 
 
3,877
 
 
 
3,626
 
 
 
2,953
 
 
 
4,230
 
 
 
8,845
 
 
 
12,681
 
 
 
20,857
 
 
 
 
 
 
59,847
 
Obligations related to securities sold under repurchase agreements and securities lent
 
 
178,611
 
 
 
2,659
 
 
 
217
 
 
 
552
 
 
 
 
 
 
220
 
 
 
 
 
 
 
 
 
 
 
 
182,259
 
Subordinated debentures
 
 
 
 
 
 
 
 
250
 
 
 
 
 
 
1,819
 
 
 
 
 
 
 
 
 
5,973
 
 
 
 
 
 
8,042
 
Other liabilities
 
 
1,097
 
 
 
653
 
 
 
1,351
 
 
 
1,295
 
 
 
567
 
 
 
3,113
 
 
 
6,992
 
 
 
8,554
 
 
 
38,252
 
 
 
61,874
 
Total equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
86,421
 
 
 
86,421
 
Total liabilities and equity
 
$
267,018
 
 
$
93,134
 
 
$
84,713
 
 
$
56,104
 
 
$
65,756
 
 
$
83,367
 
 
$
106,947
 
 
$
88,180
 
 
$
593,932
 
 
$
1,439,151
 
Off-balance
sheet commitments
                   
Credit commitments
(3)
 
$
1,186
 
 
$
10,830
 
 
$
21,391
 
 
$
13,321
 
 
$
18,275
 
 
$
54,638
 
 
$
156,777
 
 
$
7,687
 
 
 
 
 
$
284,105
 
Guarantees and letters of credit
(4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
61,285
 
 
 
61,285
 
Outsourcing obligations
(5)
 
 
2
 
 
 
5
 
 
 
7
 
 
 
7
 
 
 
7
 
 
 
27
 
 
 
47
 
 
 
10
 
 
 
 
 
 
112
 
(1)
Includes impaired mortgages.
(2)
Includes overdrafts and impaired loans.
(3)
Includes the undrawn component of committed credit and liquidity facilities.
(4)
Includes outstanding balances of guarantees, standby letters of credit and commercial letters of credit which may expire undrawn.
(5)
The Bank relies on outsourcing arrangements for certain support and/or business functions, including, but not limited to, computer operations and cheque and bill payment processing.
 
44
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
     As at October 31, 2024  
($ millions)
  Less
than one
month
    One to
three
months
    Three
to six
months
    Six to
nine
months
    Nine to
twelve
months
   
One to
two
years
    Two
to five
years
   
Over
five
years
    No
specific
maturity
    Total  
Assets
                   
Cash and deposits with financial institutions and precious metals
  $ 59,871     $ 600     $ 100     $ 45     $ 53     $ 152     $ 272     $ 221     $ 5,086     $ 66,400  
Trading assets
    2,183       3,233       3,782       3,925       3,620       8,484       21,126       22,003       61,371       129,727  
Securities purchased under resale agreements and securities borrowed
    165,155       19,828       10,573       1,722       2,569             696                   200,543  
Derivative financial instruments
    3,545       5,929       3,118       2,584       1,844       6,774       9,718       10,867             44,379  
Investment securities – FVOCI
    3,404       7,194       6,525       4,316       3,825       19,546       46,178       27,238       3,162       121,388  
Investment securities – amortized cost
    16       919       706       1,136       994       1,860       4,935       18,846             29,412  
Investment securities – FVTPL
    2                                     26             2,004       2,032  
Loans
    40,996       43,071       49,443       52,476       48,186       163,815       242,835       55,047       64,960       760,829  
Residential mortgages
    5,215       9,719       17,163       19,002       21,784       97,508       135,961       40,720       3,869
(1)
 
    350,941  
Personal loans
    3,499       3,470       3,379       4,807       3,598       12,012       25,695       6,582       43,337       106,379  
Credit cards
                                                    17,374       17,374  
Business and government
    32,282       29,882       28,901       28,667       22,804       54,295       81,179       7,745       6,916
(2)
 
    292,671  
Allowance for credit losses
                                                    (6,536     (6,536
Customers’ liabilities under acceptances
    39       57       36       10       6                               148  
Other assets
                                                    57,169       57,169  
Total assets
  $ 275,211     $ 80,831     $ 74,283     $ 66,214     $ 61,097     $ 200,631     $ 325,786     $ 134,222     $ 193,752     $ 1,412,027  
Liabilities and equity
                   
Deposits
  $ 88,575     $ 77,322     $ 68,891     $ 57,925     $ 43,415     $ 64,530     $ 76,309     $ 24,977     $ 441,905     $ 943,849  
Personal
    16,273       23,956       24,000       22,746       19,827       19,423       12,430       138       160,028       298,821  
Non-personal
    72,302       53,366       44,891       35,179       23,588       45,107       63,879       24,839       281,877       645,028  
Financial instruments designated at fair value through profit or loss
    510       1,045       2,132       1,609       1,833       5,330       8,887       14,995             36,341  
Acceptances
    40       57       36       10       6                               149  
Obligations related to securities sold short
    272       1,988       1,120       1,803       816       3,638       7,114       9,413       8,878       35,042  
Derivative financial instruments
    2,754       4,595       2,429       2,301       1,857       7,647       11,705       17,972             51,260  
Obligations related to securities sold under repurchase agreements and securities lent
    186,240       3,427       93       437       44       208                         190,449  
Subordinated debentures
                      251             1,740             5,842             7,833  
Other liabilities
(2)
    533       759       1,285       1,267       979       3,142       6,860       8,954       39,249       63,028  
Total equity
                                                    84,076       84,076  
Total liabilities and equity
  $ 278,924     $ 89,193     $ 75,986     $ 65,603     $ 48,950     $ 86,235     $ 110,875     $ 82,153     $ 574,108     $ 1,412,027  
Off-balance
sheet commitments
                   
Credit commitments
(3)
  $ 1,538     $ 9,568     $ 15,403     $ 18,291     $ 12,075     $ 58,806     $ 144,972     $ 8,818           $ 269,471  
Guarantees and letters of credit
(4)
                                                    64,016       64,016  
Outsourcing obligations
(5)
    12       23       7       7       7       29       56       13             154  
(1)
Includes impaired mortgages.
(2)
Includes overdrafts and impaired loans.
(3)
Includes the undrawn component of committed credit and liquidity facilities.
(4)
Includes outstanding balances of guarantees, standby letters of credit and commercial letters of credit which may expire undrawn.
(5)
The Bank relies on outsourcing arrangements for certain support and/or business functions, including, but not limited to, computer operations and cheque and bill payment processing.
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 legacy senior debt are rated AA by Fitch, Aa2 by Moody’s, AA by Morningstar DBRS, and A+ by Standard and Poor’s (S&P). The Bank’s bail-inable senior debt is rated
AA-
by Fitch, A2 by Moody’s, AA (low) by Morningstar DBRS and
A-
by S&P. As of January 31, 2025, all rating agencies have a Stable outlook on the Bank. There were no changes made to the Bank’s credit ratings or outlooks during the quarter.
 
 Scotiabank First Quarter Report 2025   
 
45
 

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 55 to 68 of the Bank’s 2024 Annual Report.
In June 2023, OSFI announced that the Domestic Stability Buffer (DSB) will increase to 3.5% of total risk-weighted assets (RWA), effective November 1, 2023. This DSB requirement of 3.5% was maintained by OSFI in their December 2024 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 defers further increases to the Basel III standardized capital output floor
In February 2025, OSFI announced its deferral of increases to the Basel III standardized capital output floor until further notice. OSFI has noted that there remains uncertainty about when other jurisdictions will fully implement Basel III and it will not extend its implementation lead.
Canada concluded its implementation of the revised Basel III 2017 reforms in early 2024 and established an accelerated phase-in of the Basel III standardized capital output floor, calibrated at 65% in 2023, increasing in the first quarter by 2.5% per year through to 72.5% in 2026. OSFI’s announcement of a deferral maintains the capital floor calibration at the 2024 level of 67.5% indefinitely, delaying further increases to 70% and 72.5%, until further notice. Moreover, OSFI has committed to notifying affected banks at least two years prior to resuming an increase to the Basel III standardized capital output floor.
Regulatory capital and total loss absorbing capacity ratios
The Bank’s various regulatory capital and total loss absorbing capacity measures consist of the following:
T32 Regulatory capital and total loss absorbing capacity ratios
 
      As at   
($ millions)
  
January 31
2025
     October 31
2024
 
Common Equity Tier 1 capital
(1)
  
$
60,294
 
   $ 60,631  
Tier 1 capital
(1)
  
 
70,592
 
     69,499  
Total regulatory capital
(1)
  
 
78,622
 
     77,708  
Total loss absorbing capacity (TLAC)
(2)
  
 
135,010
 
     137,752  
Risk-weighted assets
(1)(3)
  
$
468,124
 
   $ 463,992  
Capital ratios (%)
(1)
:
     
Common Equity Tier 1 capital ratio
  
 
12.9
 
     13.1  
Tier 1 capital ratio
  
 
15.1
 
     15.0  
Total capital ratio
  
 
16.8
 
     16.7  
Total loss absorbing capacity ratio
(2)
  
 
28.8
 
     29.7  
Leverage
(4)
:
     
Leverage exposures
  
$
1,586,812
 
   $ 1,563,140  
Leverage ratio (%)
  
 
4.4
 
     4.4  
Total loss absorbing capacity leverage ratio (%)
(2)
  
 
8.5
 
     8.8  
(1)
The regulatory capital ratios are 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)
As at January 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 (as at October 31, 2024, the Bank did not have a regulatory capital floor
add-on
to risk-weighted assets 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 12.9% as at January 31, 2025, a decrease of approximately 20 basis points from the prior quarter, due primarily to the close of the Bank’s investment in KeyCorp and impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama to Davivienda, partly offset by strong internal generation and the Bank’s risk-weighted asset optimization activities.
The Bank’s Tier 1 capital ratio was 15.1% as at January 31, 2025, an increase of approximately 10 basis points from the prior quarter, mainly from the issuance of USD $1 billion of Limited Recourse Capital Notes, partly offset by the above noted impacts to the CET1 ratio.
The Bank’s Total capital ratio was 16.8% as at January 31, 2025, an increase of approximately 10 basis points from the prior quarter, primarily from the above noted impacts to the Tier 1 capital ratio.
The Leverage ratio was 4.4% as at January 31, 2025, largely unchanged from the prior quarter, as the higher Tier 1 capital issuance was offset by higher leverage exposures.
The TLAC and TLAC Leverage ratios were 28.8% and 8.5% respectively, as at January 31, 2025, representing decreases of approximately 90 and 30 basis points from the prior quarter, mainly from lower available TLAC.
As at January 31, 2025, the CET1, Tier 1, Total capital, Leverage, TLAC and TLAC Leverage ratios were well above OSFI’s minimum capital ratios.
 
46
   Scotiabank First Quarter Report 2025 

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 (November 2023).
Changes in regulatory capital
The Bank’s Common Equity Tier 1 capital was $60.3 billion, as at January 31, 2025, a decrease of $0.3 billion from the prior quarter, due primarily to higher regulatory capital deductions of $1.2 billion, mainly from the completion of the Bank’s investment in KeyCorp, reported quarterly earnings less dividends of – $0.3 billion, partly offset by higher accumulated other comprehensive income included for regulatory capital of $1.2 billion, primarily from cumulative translation gains from foreign currencies.
Risk-weighted assets
CET1 risk-weighted assets (RWA) increased during the quarter by $4.1 billion (or 0.9%) to $468.1 billion. RWA increased in the quarter primarily from foreign exchange translation, partly offset by the Bank’s RWA optimization activities.
Global systemically important bank
(G-SIB)
disclosures
In 2013, the Basel Committee on Banking Supervision (BCBS), in conjunction with the Financial Stability Board (FSB), issued “Global systemically important banks: updated assessment methodology and the higher loss absorbency requirement” which assesses the systemic importance of banks to the global financial system and wider economy. Banks with Basel III leverage exposures in excess of EUR 200 billion or those classified as a
G-SIB
in the past year are required to participate in an annual survey.
The
G-SIB
indicators as defined by the BCBS are intended to reflect the size of banks, their interconnectedness, the amount of financial institution infrastructure they provide, their cross-jurisdictional activity and their complexity. According to the most recent assessment by the FSB communicated in November 2024, the Bank is not considered to be a
G-SIB
based on October 31, 2023 indicators. However, the Bank is required to disclose the values of its indicators in accordance with the “Global systemically important banks – Public disclosure requirements” as revised by OSFI in 2021. The
G-SIB
indicators provided below are calculated based on specific instructions issued by the BCBS and may not be directly comparable against other disclosed information.
T33
G-SIB
indicators
 
As at and for the year ended October 31
($ millions)
 
Category
(1)
  
Indicator
(1)
  
2024
     2023  
Cross-jurisdictional activity
   Cross-jurisdictional claims   
$
645,228
 
   $ 621,748  
 
   Cross-jurisdictional liabilities   
 
518,240
 
     568,961  
Size
   Total exposures as defined for use in the Basel III leverage ratio   
 
1,570,253
 
     1,568,857  
Interconnectedness
   Intra-financial system assets   
 
130,710
 
     137,060  
   Intra-financial system liabilities   
 
128,848
 
     113,679  
 
   Securities outstanding   
 
338,146
 
     329,609  
Substitutability/financial institution infrastructure
   Payments activity   
 
13,000,256
 
     15,688,250  
   Assets under custody   
 
262,211
 
     398,517  
   Underwritten transactions in debt and equity markets   
 
113,189
 
     86,683  
   Trading volume      
   – Trading volume fixed income   
 
3,752,069
 
     3,608,810  
 
   – Trading volume equities and other securities   
 
1,933,054
 
     1,453,062  
Complexity
   Notional amount of
over-the-counter
derivatives
  
 
8,316,758
 
     7,439,646  
   Trading, FVTPL, and FVOCI securities   
 
47,965
 
     49,485  
 
   Level 3 assets   
 
1,979
 
     1,810  
(1)
As defined by the BCBS publication “Global systemically important banks: updated assessment methodology and the higher loss absorbency requirement” (July 2018).
 
 Scotiabank First Quarter Report 2025   
 
47
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Changes in
G-SIB
indicators
During 2024, payment activity decreased primarily due to lower volumes in USD and EUR. Notional amounts of over-the counter derivatives increased primarily in interest rate contracts. Other year-over-year movements generally reflect changes in business activity and/or impacts from foreign currency translation.
Common dividend
The Board of Directors, at its meeting on February 24, 2025, approved a dividend of $1.06 per share, unchanged from last quarter. This quarterly dividend is payable to shareholders of record as of April 1, 2025, on April 28, 2025.
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 164 of the Bank’s 2024 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
mark-to-market
exposure exceeds an agreed upon threshold. Such variation margin provisions can be
one-way
(only one party will ever post collateral) or
bi-lateral
(either party may post depending upon which party is
in-the-money).
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 84 of the Bank’s 2024 Annual Report).
Total derivative notional amounts were $9,811 billion as at January 31, 2025, compared to $9,058 billion as at October 31, 2024. The quarterly increase was due to higher volume of interest rate contracts and the impact of foreign currency translation. The total notional amount of
over-the-counter
derivatives was $9,053 billion compared to $8,313 billion as at October 31, 2024, of which $6,669 billion was settled through central counterparties as at January 31, 2025 (October 31, 2024 – $6,094 billion). The credit equivalent amount, after taking master netting arrangements into account, was $34.1 billion, compared to $32.6 billion at October 31, 2024. The increase was primarily attributable to the impact of higher foreign currency translation and currency contracts partially offset by lower commodity contracts.
Selected credit instruments
A complete discussion of selected credit instruments which markets regarded as higher risk during the financial crisis was provided on page 71 of the Bank’s 2024 Annual Report. The Bank’s net exposures have remained substantially unchanged from year end.
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 and 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 68 to 70 of the Bank’s 2024 Annual Report.
Structured entities
The Bank sponsors two 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 two 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). 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, 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 $7.5 billion as at January 31, 2025 (October 31, 2024 – $7.7 billion). As at January 31, 2025, total commercial paper outstanding for these conduits was $6.2 billion (October 31, 2024 – $6.4 billion). Funded assets purchased and held by these conduits as at January 31, 2025, as reflected at original cost, were $6.1 billion (October 31, 2024 – $6.3 billion). There has been no significant change in the composition or risk profile of these conduits since October 31, 2024.
Securitizations
The Bank securitizes a portion of its Canadian auto loans through its Securitized Term Auto Receivables Trust (START) Program. During the quarter, $2,990 million of its Canadian auto loan receivables were securitized through Securitized Term Auto Receivables Trust
2025-A
(START
2025-A),
a Bank-sponsored consolidated structured entity. The START entity issues offered notes to third-party investors and retained notes to the Bank. Recourse of the noteholders is limited to the receivables and a cash reserve account. The sale of such receivables does not qualify for derecognition, and the receivables continue to be recognized on the Bank’s Consolidated Statement of Financial Position. As of January 31, 2025, USD $200 million (CAD $291 million) offered notes issued to third party investors were outstanding and included in deposits – business and government on the Consolidated Statement of Financial Position.
 
48
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Other off-balance sheet arrangements
The Bank uses a capital vehicle to transfer credit exposure to security holders of the vehicle. While credit exposures are transferred, the related assets are not derecognized from the balance sheet. During the quarter, USD $490 million of guarantee-linked notes (October 31, 2024 – nil) were issued from this vehicle and included in deposits – business and government on the Consolidated Statement of Financial Position.
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 2024 Annual Report, and may be updated below.
Canadian Federal Tax Measures
On August 12, 2024, the Department of Finance released draft legislation on the proposed increase to the capital gains inclusion rate from 50% to 66.7% for gains or losses realized after June 24, 2024. On January 31, 2025, the federal government announced that it would defer the implementation date to January 1, 2026.
Global Minimum Tax
The Organisation for Economic
Co-operation
and Development (OECD) published Pillar Two model rules in December 2021 as part of its efforts toward international tax reform. The rules aim to have large multinational enterprises, with consolidated revenues in excess of
750 million, pay a minimum effective tax of 15%. These rules apply to the Bank effective November 1, 2024, and have been enacted or substantively enacted in certain jurisdictions in which the Bank operates, including Canada, whose Global Minimum Tax (GMT) Act was enacted in June 2024.
The IASB previously issued amendments to IAS 12 Income Taxes for a temporary mandatory exception from the recognition and disclosure of deferred taxes related to the implementation of Pillar Two GMT rules, which the Bank has applied.
For the three months ended January 31, 2025, the impact of the GMT on the Bank’s effective tax rate was approximately 1%, and was primarily related to its operations in certain Caribbean jurisdictions and Ireland.
Accounting Policies and Controls
Accounting policies and estimates
The condensed interim consolidated financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting
, using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The material accounting policies used in the preparation of the condensed interim consolidated financial statements are consistent with those used in the Bank’s audited consolidated financial statements for the year ended October 31, 2024, as described in Note 3 of the Bank’s audited consolidated financial statements in the 2024 Annual Report.
The preparation of financial statements, in conformity with IFRS, requires management to make estimates, apply judgements and make assumptions 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. Key areas where management has made difficult, complex or subjective judgements, often as a result of matters that are inherently uncertain, include those relating to the allowance for credit losses, the fair value of financial instruments (including derivatives), corporate income taxes, employee benefits, the fair value of all identifiable assets and liabilities as a result of business combinations, impairment of non-financial assets and derecognition of financial assets and liabilities. While management makes its best estimates and assumptions, actual results could differ from these estimates and assumptions.
Currently, there is high uncertainty surrounding future trade policy and tariffs to be implemented by the new U.S. administration. 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 high level of uncertainty surrounding future U.S. trade policy and tariffs, estimates and valuation models applied based on conditions and information existing as at January 31, 2025 may be significantly different from the actual outcome.
Future accounting developments
There are no significant updates to the future accounting developments disclosed in Note 6 of the Bank’s audited consolidated financial statements in the 2024 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 January 31, 2025, 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 2024 Annual Report. All transactions with related parties continued to be at market terms and conditions.
 
 Scotiabank First Quarter Report 2025   
 
49
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Share Data
T34 Shares and other instruments
 
January 31, 2025   
Amount
($ millions)
    
Dividends
declared per
share
(1)
    
Number
outstanding
(000s)
    
Conversion
feature
 
Common Shares
(2)
   $ 22,136      $ 1.06        1,245,528        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.$ 17.9964        7.199        1,250  
Subordinated Additional Tier 1 Capital Notes
   U.S.$ 1,250      U.S.$ 12.25        4.900        1,250  
Limited Recourse Capital Notes Series 1
   $ 1,250      $ 9.25        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
(6)
   U.S.$ 1,000      U.S.$  17.7625        7.350        1,000  
NVCC Subordinated Debentures
(3)
                  
Amount
($ millions)
    
Interest rate
(%)
 
Subordinated debentures due December 2025
         U.S.$ 1,250        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)
  
 
 
 
  
 
 
 
  
 
 
 
     11,925  
(1)
Dividends are paid quarterly, if and when declared. Represents dividends announced on February 25, 2025. The Board of Directors, at its meeting on February 24, 2025, approved a dividend payable on April 28, 2025 to shareholders of record as of April 1, 2025.
(2)
As at February 14, 2025, the number of outstanding common shares and options were 1,245,532 thousand and 11,922 thousand, respectively.
(3)
These securities contain
Non-Viability
Contingent Capital (NVCC) provisions necessary to qualify as regulatory capital under Basel III. Refer to Notes 22 and 25 of the Consolidated Financial Statements in the Bank’s 2024 Annual Report for further details. The maximum number of common shares issuable on conversion of NVCC subordinated debentures, 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 January 31, 2025 would be 5,064 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 January 31, 2025, the Bank issued U.S.$1,000 million 7.350% Fixed Rate Resetting Limited Recourse Capital Notes Series 6 (NVCC) (LRCN Series 6). In connection with the issuance of LRCN Series 6, the Bank issued U.S.$1,000 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (Series 6 AT1 Notes) to a consolidated trust to be held as trust assets in connection with the Limited Recourse Capital Notes structure. For more details, refer to Note 11 of the Consolidated Financial Statements.
(7)
These securities have exchange features. Refer to Table 32 in the Bank’s 2024 Annual Report for further details.
For further details on outstanding securities of the Bank, including convertibility features, refer to Notes 22, 25 and 27 of the Bank’s Consolidated Financial Statements in the 2024 Annual Report.
 
50
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Glossary
Allowance for Credit Losses:
An allowance set aside which, in management’s opinion, is adequate to absorb credit-related losses on all financial assets and
off-balance
sheet exposures subject to impairment assessment. It includes allowances for performing financial assets and impaired financial assets.
Allowance for Credit Losses Ratio:
The ratio of period end total allowance for credit losses (excluding debt securities and deposits with financial institutions) divided by gross loans and acceptances.
Allowance for Impaired Loans Ratio:
The ratio of period end impaired allowance for credit losses (excluding debt securities and deposits with financial institutions) divided by gross loans and acceptances.
Allowance for Performing Loans Ratio:
The ratio of period end performing allowance for credit losses (excluding debt securities and deposits with financial institutions) divided by gross loans and acceptances.
Allowance against Impaired Loans as a % of Gross Impaired Loans:
The ratio of allowance against impaired loans to gross impaired loans.
Assets Under Administration (AUA):
Assets administered by the Bank which are beneficially owned by clients and therefore not reported on the Bank’s Consolidated Statement of Financial Position. Services provided for AUA are of an administrative nature, such as trusteeship, custodial, safekeeping, income collection and distribution, securities trade settlements, customer reporting, and other similar services.
Assets Under Management (AUM):
Assets managed by the Bank on a discretionary basis and in respect of which the Bank earns investment management fees. AUM are beneficially owned by clients and are therefore not reported on the Bank’s Consolidated Statement of Financial Position. Some AUM are also administered assets and are therefore included in assets under administration.
Bankers’ Acceptances (BAs):
Negotiable, short-term debt securities, guaranteed for a fee by the issuer’s bank.
Basis Point:
A unit of measure defined as
one-hundredth
of one percent.
Book Value per Common Share:
Common shareholders’ equity divided by the number of outstanding common shares at the end of the period.
Canadian Overnight Repo Rate Average (CORRA):
CORRA measures the cost of overnight general collateral funding in Canadian dollars using Government of Canada treasury bills and bonds as collateral for repurchase transactions.
Common Equity Tier 1 (CET1), Tier 1 and Total Capital Ratios:
Under Basel III, there are three primary regulatory capital ratios used to assess capital adequacy, CET1, Tier 1 and Total capital ratios, which are determined by dividing those capital components by their respective risk-weighted assets.
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:
Debt obligations of the Bank for which the payment of all amounts of interest and principal are unconditionally and irrevocably guaranteed by a limited partnership and secured by a pledge of the covered bond portfolio. The assets in the covered bond portfolio held by the limited partnership consist of first lien Canadian uninsured residential mortgages or first lien Canadian residential mortgages insured under CMHC Mortgage Insurance, respectively, and their related security interest.
Derivative Products:
Financial contracts whose value is derived from an underlying price, interest rate, exchange rate or price index. Forwards, options and swaps are all derivative instruments.
Dividend Yield:
Dividends per common share divided by the average of the high and low share price in the relevant period.
Effective Tax Rate:
The effective tax rate is the overall tax rate paid by the Bank on its earned income. The effective tax rate is calculated by dividing the Bank’s income tax expenses by the income before taxes.
Fair Value:
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal, or in its absence, the most advantageous market to which the Bank has access at the measurement date.
Foreign Exchange Contracts:
Commitments to buy or sell a specified amount of foreign currency on a set date and at a predetermined rate of exchange.
Forward Rate Agreement (FRA):
A contract between two parties, whereby a designated interest rate, applied to a notional principal amount, is locked in for a specified period of time. The difference between the contracted rate and prevailing market rate is paid in cash on the settlement date. These agreements are used to protect against, or take advantage of, future interest rate movements.
Futures:
Commitments to buy or sell designated amounts of commodities, securities or currencies on a specified date at a predetermined price. Futures are traded on recognized exchanges. Gains and losses on these contracts are settled daily, based on closing market prices.
Gross Impaired Loans as a % of Loans and Acceptances:
The ratio of gross impaired loans, debt investments and
off-balance
sheet exposures expressed as a percentage of loans and acceptances.
Hedging:
Protecting against price, interest rate or foreign exchange exposures by taking positions that are expected to react to market conditions in an offsetting manner.
Impaired Loans:
Loans on which the Bank no longer has reasonable assurance as to the timely collection of interest and principal, or where a contractual payment is past due for a prescribed period or the customer is declared to be bankrupt.
Leverage Ratio:
The ratio of Basel III Tier 1 capital to a leverage exposure measure which includes
on-balance
sheet assets and
off-balance
sheet commitments, derivatives and securities financing transactions, as defined within the OSFI Leverage Requirements Guideline.
 
 Scotiabank First Quarter Report 2025   
 
51
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Liquidity Coverage Ratio (LCR):
The ratio of high quality liquid assets to stressed net cash outflows over a 30 calendar day time horizon, as defined within the OSFI Liquidity Adequacy Requirements Guideline.
Marked-To-Market:
The valuation of certain financial instruments at fair value as of the Consolidated Statement of Financial Position date.
Market Value to Book Value Multiple:
This financial valuation metric is calculated by dividing the current closing share price of the period by the book value per common share.
Net Impaired Loans as a % of Loans and Acceptances:
The ratio of net impaired loans, debt investments and
off-balance
sheet exposures expressed as a percentage of loans and acceptances.
Net Interest Margin:
Net interest margin 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.
Net Stable Funding Ratio (NSFR):
The ratio of available stable funding to required stable funding, as defined within the OSFI Liquidity Adequacy Requirements Guideline.
Net Write-offs as a % of Average Net Loans and Acceptances:
The ratio of net write-offs expressed as a percentage of average net loans and acceptances.
Non-Viability
Contingent Capital (NVCC):
In order to qualify for inclusion in regulatory capital, all
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:
The contract or principal amounts used to determine payments for certain
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:
These are indirect credit commitments, including undrawn commitments to extend credit and derivative instruments, which are not recorded on the Bank’s balance sheet under IFRS.
Operating Leverage:
This financial metric measures the rate of growth in total revenue less the rate of growth in
non-interest
expenses.
Options:
Contracts between buyer and seller giving the buyer of the option the right, but not the obligation, to buy (call) or sell (put) a specified commodity, financial instrument or currency at a set price or rate on or before a specified future date.
OSFI:
The Office of the Superintendent of Financial Institutions Canada, the regulator of Canadian banks.
Price to Earnings Multiple (Trailing 4 Quarters):
Closing share price at period end divided by cumulative basic earnings per common share (EPS) of the past 4 quarters.
Productivity Ratio:
This ratio represents
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:
The ratio of PCL on loans, acceptances and
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:
PCL on impaired loans ratio under IFRS 9 is calculated using PCL on impaired loans, acceptances and
off-balance
sheet exposures as a percentage of average net loans and acceptances.
Repos:
Repos is short for “obligations related to securities sold under repurchase agreements” – a short-term transaction where the Bank sells assets, normally government bonds, to a client and simultaneously agrees to repurchase them on a specified date and at a specified price. It is a form of short-term funding.
Return on Assets (ROA):
Net income expressed as a percentage of total average assets.
Return on Equity (ROE):
Net income attributable to common shareholders, expressed as a percentage of average common shareholders’ equity. The Bank attributes capital to its business lines on a basis that approximates 11.5% of Basel III common equity capital requirements which includes credit, market and operational risks and leverage inherent in each operating segment. 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.
Return on Tangible Common Equity (ROTCE):
Return on Tangible Common Equity is calculated by dividing the net income attributable to common shareholders, 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 acquisition-related intangible assets (excluding software), net of deferred taxes.
Reverse Repos:
Reverse repos is short for “securities purchased under resale agreements” – a short-term transaction where the Bank purchases assets, normally government bonds, from a client and simultaneously agrees to resell them on a specified date and at a specified price. It is a form of short-term collateralized lending.
Risk-Weighted Assets:
Comprised of three broad categories including credit risk, market risk and operational risk, which are computed under the Basel III Framework in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2023). Risk-weighted assets for credit risk are calculated using modelled parameters, formulas and risk-weight requirements as specified by the Basel III Framework. In addition, the Bank uses both internal models and standardized approaches to calculate market risk capital and standardized approaches for operational risk capital which are converted to risk-weighted assets.
Securitization:
The process by which financial assets (typically loans) are transferred to a trust, which normally issues a series of different classes of asset-backed securities to investors to fund the purchase of loans.
Structured Entities:
A structured entity is defined as an entity created to accomplish a narrow and well-defined objective. A structured entity may take the form of a corporation, trust, partnership or unincorporated entity. Structured entities are often created with legal arrangements that impose strict and sometimes permanent limits on the decision-making powers of their governing board, trustee or management over the operations of the entity.
Standby Letters of Credit and Letters of Guarantee:
Written undertakings by the Bank, at the request of the customer, to provide assurance of payment to a third-party regarding the customer’s obligations and liabilities to that third-party.
 
52
   Scotiabank First Quarter Report 2025 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Structured Credit Instruments:
A wide range of financial products which includes Collateralized Debt Obligations, Collateralized Loan Obligations, Structured Investment Vehicles, and Asset-Backed Securities. These instruments represent investments in pools of credit-related assets, whose values are primarily dependent on the performance of the underlying pools.
Swaps:
Interest rate swaps are agreements to exchange streams of interest payments, typically one at a floating rate, the other at a fixed rate, over a specified period of time, based on notional principal amounts. Cross-currency swaps are agreements to exchange payments in different currencies over predetermined periods of time.
Taxable Equivalent Basis (TEB):
The Bank analyzes net interest income,
non-interest
income, and total revenue on a taxable equivalent basis (TEB). This methodology grosses up
tax-exempt
income earned on certain securities reported in either net interest income or
non-interest
income to an equivalent before tax basis. A corresponding increase is made to the provision for income taxes; hence, there is no impact on net income. Management believes that this basis for measurement provides a uniform comparability of net interest income and
non-interest
income arising from both taxable and
non-taxable
sources and facilitates a consistent basis of measurement. While other banks also use TEB, their methodology may not be comparable to the Bank’s methodology. For purposes of segmented reporting, a segment’s revenue and provision for income taxes are grossed up by the taxable equivalent amount. The elimination of the TEB
gross-up
is recorded in the Other segment.
Total Annual Shareholder Return (TSR):
Total annual shareholder return is calculated as the overall change in share price, plus any dividends paid during the year; this sum is then divided by the share price at the beginning of the year to arrive at the TSR. Total annual shareholder return assumes reinvestment of quarterly dividends.
Total Loss Absorbing Capacity (TLAC):
The aggregate of NVCC Tier 1 capital, NVCC Tier 2 capital, and other TLAC instruments that are subject to conversion in whole or in part into common shares under the CDIC Act and meet all of the eligibility criteria under the OSFI guideline – Total Loss Absorbing Capacity (September 2018).
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.
Value At Risk (VaR):
An estimate of the potential loss that might result from holding a position for a specified period of time, with a given level of statistical confidence.
Yield Curve:
A graph showing the term structure of interest rates, plotting the yields of similar quality bonds by term to maturity.
 
 Scotiabank First Quarter Report 2025   
 
53
 

MANAGEMENT’S DISCUSSION & ANALYSIS
 
Basel III Glossary
Credit Risk Parameters
Exposure at Default (EAD):
Generally represents the expected gross exposure – outstanding amount for
on-balance
sheet exposure and loan equivalent amount for
off-balance
sheet exposure at default.
Probability of Default (PD):
Measures the likelihood that a borrower will default within a
one-year
time horizon, expressed as a percentage.
Loss Given Default (LGD):
Measures the severity of loss on a facility in the event of a borrower’s default, expressed as a percentage of exposure at default.
Exposure Types
Non-retail
Corporate:
Defined as a debt obligation of a corporation, partnership, or proprietorship.
Bank:
Defined as a debt obligation of a bank or bank equivalent.
Sovereign:
Defined as a debt obligation of a sovereign, central bank, multi development banks and public sector entities (PSEs) as defined in the OSFI Guideline – Capital Adequacy Requirements (November 2023).
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:
Loans to individuals against residential property (four units or less).
Secured Lines of Credit:
Revolving personal lines of credit secured by residential real estate.
Qualifying Revolving Retail Exposures:
Credit cards and unsecured lines of credit for individuals.
Other Retail:
All other personal loans.
Exposure
Sub-types
Drawn:
Outstanding amounts for loans, leases, acceptances, deposits with banks and FVOCI debt securities.
Undrawn:
Unutilized portion of authorized committed credit lines.
Other Exposures
Repo-Style Transactions:
Reverse repurchase agreements (reverse repos) and repurchase agreements (repos), securities lending and borrowing.
OTC Derivatives:
Over-the-counter
derivatives contracts refers to financial instruments which are traded through a dealer network rather than through an exchange.
Other
Off-balance
Sheet:
Direct credit substitutes, such as standby letters of credit and guarantees, trade letters of credit, and performance letters of credit and guarantees.
Exchange-Traded Derivative Contracts:
Exchange-traded derivative contracts are derivative contracts (e.g., futures contracts and options) that are transacted on an organized futures exchange. These include futures contracts (both long and short positions), purchased options and written options.
Qualifying Central Counterparty (QCCP):
A licensed central counterparty is considered “qualifying” when it is compliant with the International Organization of Securities Commissions (IOSCO) standards and is able to assist clearing member banks in properly capitalizing for CCP exposures.
Asset Value Correlation Multiplier (AVC):
Basel III has higher risk-weights on exposures to certain Financial Institutions (FIs) relative to the
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):
Specific
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:
Since the introduction of Basel II in 2008, OSFI has prescribed a minimum regulatory capital floor for institutions that use the advanced internal ratings-based approach for credit risk. Effective Q2 2023, the capital floor
add-on
is determined under the Basel III Framework by comparing RWA generated for IRB and standardized portfolios to RWA calculated under a standardized approach at the required capital floor calibration. A shortfall to the capital floor RWA requirement is added to the Bank’s RWA.
 
54
   Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Condensed Interim Consolidated Financial Statements (unaudited)
TABLE OF CONTENTS
 
 Scotiabank First Quarter Report 2025   
 
55
 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Consolidated Statement of Financial Position
 
As at
(Unaudited) ($ millions)
Note
January 31
2025
October 31
2024
Assets
Cash and deposits with financial institutions
   5   
$
70,198
   $ 63,860  
Precious metals
     
3,687
     2,540  
Trading assets
        
Securities
     
126,019
     119,912  
Loans
     
8,048
     7,649  
Other
  
  
2,641
     2,166  
     
136,708
     129,727  
Securities purchased under resale agreements and securities borrowed
     
195,258
     200,543  
Derivative financial instruments
     
48,035
     44,379  
Investment securities
   6   
153,019
     152,832  
Loans
        
Residential mortgages
   7   
358,791
     350,941  
Personal loans
   7   
106,635
     106,379  
Credit cards
   7   
17,548
     17,374  
Business and government
   7   
290,188
     292,671  
     
773,162
     767,365  
Allowance for credit losses
   7(c)   
6,857
     6,536  
     
766,305
     760,829  
Other
        
Customers’ liability under acceptances, net of allowance
     
207
     148  
Property and equipment
     
4,902
     5,252  
Investments in associates
   9   
5,940
     1,821  
Goodwill and other intangible assets
     
16,218
     16,853  
Deferred tax assets
     
2,892
     2,942  
Other assets
  
  
35,782
     30,301  
  
  
65,941
     57,317  
Total assets
  
  
$
1,439,151
   $ 1,412,027  
Liabilities
        
Deposits
        
Personal
   10   
$
303,798
   $ 298,821  
Business and government
   10   
617,874
     600,114  
Financial institutions
   10   
44,377
     44,914  
     
966,049
     943,849  
Financial instruments designated at fair value through profit or loss
   18(b)   
39,594
     36,341  
Other
        
Acceptances
     
210
     149  
Obligations related to securities sold short
     
34,855
     35,042  
Derivative financial instruments
     
59,847
     51,260  
Obligations related to securities sold under repurchase agreements and securities lent
     
182,259
     190,449  
Subordinated debentures
       
8,042
     7,833  
Other liabilities
  
  
61,874
     63,028  
  
  
347,087
     347,761  
Total liabilities
  
  
1,352,730
     1,327,951  
Equity
        
Common equity
        
Common shares
   11   
22,136
     22,054  
Retained earnings
     
57,445
     57,751  
Accumulated other comprehensive income (loss)
     
(4,789
)
     (6,147
Other reserves
  
  
(229
     (68
Total common equity
     
74,563
     73,590  
Preferred shares and other equity instruments
   11   
10,232
     8,779  
Total equity attributable to equity holders of the Bank
     
84,795
     82,369  
Non-controlling
interests in subsidiaries
  
  
1,626
     1,707  
Total equity
  
  
86,421
     84,076  
Total liabilities and equity
  
  
$
 1,439,151
   $  1,412,027  
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
 
56
 Scotiabank First Quarter Report
2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
 
Consolidated Statement of Income
 
For the three months ended
(Unaudited) ($ millions)
Note
January 31
2025
October 31
2024
January 31
2024
Revenue
Interest income
(1)
Loans
     
$
 11,537
   $  11,970      $  11,912  
Securities
     
2,164
     2,213        2,303  
Securities purchased under resale agreements and securities borrowed
     
616
     471        346  
Deposits with financial institutions
  
  
663
     671        878  
   16   
14,980
     15,325        15,439  
Interest expense
           
Deposits
     
9,088
     9,700        9,913  
Subordinated debentures
     
99
     112        135  
Other
  
  
620
     590        618  
   16   
9,807
     10,402        10,666  
Net interest income
  
  
5,173
     4,923        4,773  
Non-interest
income
           
Card revenues
     
218
     226        209  
Banking services fees
     
502
     484        500  
Credit fees
     
326
     282        496  
Mutual funds
     
635
     623        538  
Brokerage fees
     
353
     310        291  
Investment management and trust
     
286
     279        266  
Underwriting and advisory fees
     
223
     168        136  
Non-trading
foreign exchange
     
264
     221        228  
Trading revenues
     
655
     408        473  
Net gain on sale of investment securities
     
31
     24        3  
Net income from investments in associated corporations
     
113
     41        46  
Insurance service results
     
125
     133        114  
Other fees and commissions
     
422
     362        291  
Other
  
  
46
     42        69  
  
  
4,199
     3,603        3,660  
Total revenue
     
9,372
     8,526        8,433  
Provision for credit losses
  
  
1,162
     1,030        962  
  
  
8,210
     7,496        7,471  
Non-interest
expenses
           
Salaries and employee benefits
     
2,709
     2,499        2,446  
Premises and technology
     
800
     752        708  
Depreciation and amortization
     
403
     501        421  
Communications
     
97
     87        106  
Advertising and business development
     
156
     168        152  
Professional
     
205
     225        162  
Business and capital taxes
     
184
     161        183  
Other
  
  
1,937
     903        561  
  
  
6,491
     5,296        4,739  
Income before taxes
     
1,719
     2,200        2,732  
Income tax expense
   19   
726
     511        533  
Net income
     
$
993
   $ 1,689      $ 2,199  
Net income attributable to
non-controlling
interests in subsidiaries
  
  
(154
)
     47        25  
Net income attributable to equity holders of the Bank
     
$
1,147
   $ 1,642      $ 2,174  
Preferred shareholders and other equity instrument holders
     
122
     121        108  
Common shareholders
  
  
$
1,025
   $ 1,521      $ 2,066  
Earnings per common share
(in dollars)
           
Basic
   17   
$
0.82
   $ 1.23      $ 1.70  
Diluted
   17   
0.66
     1.22        1.68  
Dividends paid per common share
(in dollars)
  
  
1.06
     1.06        1.06  
(1)
Includes interest income on financial assets measured at amortized cost and FVOCI, calculated using the effective interest method, of $14,577
 
for the three months ended January 31, 2025 (October 31, 2024 
–$
14,967; January 31, 2024 – $14,898).
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
 
 Scotiabank First Quarter Report 2025 
57

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Consolidated Statement of Comprehensive Income
 
For the three months ended
(Unaudited) ($ millions)
January 31
2025
October 31
2024
January 31
2024
Net income
  
$
  993
   $   1,689      $   2,199  
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)
  
1,645
     (698      (1,752
Net gains (losses) on hedges of net investments in foreign operations
  
(683
)
     268        616  
Income tax expense (benefit):
        
Net unrealized foreign currency translation gains (losses)
  
4
     6        (5
Net gains (losses) on hedges of net investments in foreign operations
  
(190
)
     73        168  
  
1,148
     (509      (1,299
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
  
140
     160        2,378  
Reclassification of net (gains) losses to net income
  
(107
)
     (212      (1,538
Income tax expense (benefit):
        
Net gains (losses) in fair value
  
32
     43        639  
Reclassification of net (gains) losses to net income
  
(24
)
     (56      (402
  
25
     (39      603  
Net change in gains (losses) on derivative instruments designated as cash flow hedges:
        
Net gains (losses) on derivative instruments designated as cash flow hedges
  
(204
)
     1,494        1,647  
Reclassification of net (gains) losses to net income
  
663
     (652      (145
Income tax expense (benefit):
        
Net gains (losses) on derivative instruments designated as cash flow hedges
  
(32
)
     328        497  
Reclassification of net (gains) losses to net income
  
155
     (143      (72
  
336
     657        1,077  
Net changes in finance income/(expense) from insurance contracts:
        
Net finance income/(expense) from insurance contracts
  
5
     (3      8  
Income tax expense (benefit)
  
1
            2  
  
4
     (3      6  
Other comprehensive income (loss) from investments in associates
  
(62
)
     1        (4
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
  
260
     (74      (530
Income tax expense (benefit)
  
78
     (20      (153
  
182
     (54      (377
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
  
4
     138        240  
Income tax expense (benefit)
  
(8
)
     47        60  
  
12
     91        180  
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
  
(264
)
     (46      (411
Income tax expense (benefit)
  
(73
)
     (13      (114
  
(191
)
     (33      (297
Other comprehensive income (loss) from investments in associates
  
(7
)
            1  
Other comprehensive income (loss)
  
1,447
     111        (110
Comprehensive income (loss)
  
$
2,440
   $ 1,800      $ 2,089  
Comprehensive income (loss) attributable to
non-controlling
interests
  
(65
     7        (18
Comprehensive income (loss) attributable to equity holders of the Bank
  
2,505
     1,793        2,107  
Preferred shareholders and other equity instrument holders
  
122
     121        108  
Common shareholders
  
$
2,383
   $ 1,672      $ 1,999  
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
 
58
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL 
STATEMENTS
 
Consolidated Statement of Changes in Equity
 
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
 
$
22,054
 
$
57,751
 
$
(3,559
 
$
(491
 
$
339
 
$
(2,197
 
$
(239
 
$
(68
 
$
73,590
 
$
8,779
 
$
82,369
 
$
1,707
 
$
84,076
Net income
 
 
1,025
 
 
 
 
 
 
 
1,025
 
122
 
1,147
 
(154
)
 
 
993
Other comprehensive income (loss)
 
 
 
1,078
 
24
 
15
 
337
 
(96
)
 
 
1,358
 
 
1,358
 
89
 
1,447
Total comprehensive income
 
$
 
$
1,025
 
$
1,078
 
$
24
 
$
15
 
$
337
 
$
(96
)
 
$
 
$
2,383
 
$
122
 
$
2,505
 
$
(65
)
 
$
2,440
Shares/instruments issued
 
82
 
 
 
 
 
 
 
(5
)
 
77
 
1,453
 
1,530
 
 
1,530
Shares repurchased/redeemed
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends and distributions paid to equity holders
 
 
(1,320
)
 
 
 
 
 
 
 
 
(1,320
)
 
 
(122
)
 
 
(1,442
)
 
 
(16
)
 
(1,458
)
Share-based payments
(3)
 
 
 
 
 
 
 
 
8
 
8
 
 
8
 
 
8
Other
 
 
(11
)
 
 
 
 
 
 
(164
)
 
(175
)
 
 
(175
)
 
 
(175
)
Balance as at January 31, 2025
 
$
22,136
 
$
57,445
 
$
(2,481
)
 
 
$
(467
)
 
 
$
354
 
$
(1,860
)
 
$
(335
)
 
$
(229
)
 
$
74,563
 
$
10,232
 
$
84,795
 
$
1,626
 
$
86,421
Balance as at October 31, 2023
  $ 20,109     $ 55,673     $ (1,755   $ (1,104   $ 14     $ (4,545   $ 459     $ (84   $ 68,767     $ 8,075     $ 76,842     $ 1,729     $ 78,571  
Net income
          2,066                                           2,066       108       2,174       25       2,199  
Other comprehensive income (loss)
                (1,270     606       166       1,083       (652           (67           (67     (43     (110
Total comprehensive income
  $     $ 2,066     $ (1,270   $ 606     $ 166     $ 1,083     $ (652   $     $ 1,999     $ 108     $ 2,107     $ (18   $ 2,089  
Shares/instruments issued
    490                                                 490       1,004       1,494             1,494  
Shares repurchased/redeemed
                                                          (300     (300           (300
Dividends and distributions paid to equity holders
          (1,287                                         (1,287     (108     (1,395     (15     (1,410
Share-based payments
(3)
                                              10       10             10             10  
Other
          (9                                   7       (2           (2           (2
Balance as at January 31, 2024
  $ 20,599     $ 56,443     $ (3,025   $ (498   $ 180     $ (3,462   $ (193   $ (67   $ 69,977     $ 8,779     $ 78,756     $ 1,696     $ 80,452  
(1)
Includes undistributed retained earnings of $77 (January 31, 2024 – $70) related to a foreign associated corporation, which is subject to local regulatory restriction.
(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 13).
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
 
 Scotiabank First Quarter Report 2025 
59

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Consolidated Statement of Cash Flows
 
(Unaudited) ($ millions)
For the three months ended
Sources (uses) of cash flows
January 31
2025
January 31
2024
Cash flows from operating activities
Net income
  
$
993
   $ 2,199  
Adjustment for:
     
Net interest income
  
(5,173
)
     (4,773
Depreciation and amortization
  
403
     421  
Provision for credit losses
  
1,162
     962  
Equity-settled share-based payment expense
  
8
     10  
Net gain on sale of investment securities
  
(31
)
     (3
Net (gain)/loss on divestitures
  
1,362
      
Net income from investments in associated corporations
  
(113
)
     (46
Income tax expense
  
726
     533  
Changes in operating assets and liabilities:
     
Trading assets
  
(4,277
)
     (9,682
Securities purchased under resale agreements and securities borrowed
  
10,288
     (3,332
Loans
  
2,872
     (473)  
Deposits
  
8,050
     2,645  
Obligations related to securities sold short
  
(727
)
     7,552  
Obligations related to securities sold under repurchase agreements and securities lent
  
(13,728
)
     5,230  
Net derivative financial instruments
  
4,567
     1,272  
Other, net
  
(5,348
)
     (4,763
Interest and dividends received
  
15,455
     14,903  
Interest paid
  
(10,511
)
     (10,327
Income tax paid
  
(1,244
)
     (31
Net cash from/(used in) operating activities
  
4,734
     2,297  
Cash flows from investing activities
     
Interest-bearing deposits with financial institutions
  
(4,065
)
     21,038  
Purchase of investment securities
  
(17,115
)
      (39,777
Proceeds from sale and maturity of investment securities
  
20,067
     17,859  
Acquisition/divestiture of subsidiaries, associated corporations or business units, net of cash acquired
  
(2,848
      
Property and equipment, net of disposals
  
(8
)
     (146
Other, net
  
(143
)
     (167
Net cash from/(used in) investing activities
  
(4,112
)
     (1,193
Cash flows from financing activities
     
Redemption of subordinated debentures
  
     (1,750
Proceeds from preferred shares and other equity instruments issued
  
1,453
     1,004  
Redemption of preferred shares
  
     (300
Proceeds from common shares issued
  
82
     490  
Cash dividends and distributions paid
  
(1,442
)
     (1,395
Distributions to
non-controlling
interests
  
(16
)
     (15
Payment of lease liabilities
  
(76
     (80
Other, net
  
(407
)
     184  
Net cash from/(used in) financing activities
  
(406
)
     (1,862
Effect of exchange rate changes on cash and cash equivalents
  
275
     (204
Net change in cash and cash equivalents
  
491
     (962
Cash and cash equivalents at beginning of period
(1)
  
9,406
      10,173  
Cash and cash equivalents at end of period
(1)
  
$
   9,897
   $ 9,211  
(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.
 
60
 Scotiabank First Quarter Report 2025 

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 of the Bank have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and accounting requirements of OSFI in accordance with Section 308 of the Bank Act. Section 308 states that except as otherwise specified by OSFI, the financial statements are to be prepared in accordance with IFRS.
These condensed interim consolidated financial statements were prepared in accordance with International Accounting Standard 34,
Interim Financial Reporting
(IAS 34) and do not include all of the information required for full annual financial statements. 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, 2024.
The condensed interim consolidated financial statements for the quarter ended January 31, 2025 have been approved by the Board of Directors for issue on February 25, 2025.
Basis of measurement
The condensed interim consolidated financial statements have been prepared on the historical cost basis except for the following material items that are measured at fair value in the Consolidated Statement of Financial Position:
 
   
Financial assets and liabilities measured at fair value through profit or loss
 
   
Financial assets and liabilities designated at fair value through profit or loss
 
   
Derivative financial instruments
 
   
Equity instruments designated at fair value through other comprehensive income
 
   
Debt instruments measured at fair value through other comprehensive income
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, in conformity with IFRS, requires management to make estimates, apply judgements and make assumptions 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. Key areas where management has made difficult, complex or subjective judgements, often as a result of matters that are inherently uncertain, include those relating to the allowance for credit losses, the fair value of financial instruments (including derivatives), corporate income taxes, employee benefits, the fair value of all identifiable assets and liabilities as a result of business combinations, impairment of
non-financial
assets and derecognition of financial assets and liabilities. While management makes its best estimates and assumptions, actual results could differ from these estimates and assumptions.
Currently, there is high uncertainty surrounding future trade policy and tariffs to be implemented by the new U.S. administration. 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 high level of uncertainty surrounding future U.S. trade policy and tariffs, estimates and valuation models applied based on conditions and information existing as at January 31, 2025 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, 2024 included in the 2024 Annual Report.
The material accounting policies used in the preparation of the condensed interim consolidated financial statements are consistent with those used in the Bank’s audited consolidated financial statements for the year ended October 31, 2024 as described in Note 3 of the Bank’s audited consolidated financial statements in the 2024 Annual Report.
 
4.
Future accounting developments
There are no significant updates to the future accounting developments disclosed in Note 6 of the Bank’s audited consolidated financial statements in the 2024 Annual Report.
 
 Scotiabank First Quarter Report 2025   
61

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
5.
Cash and deposits with financial institutions
 
  As at
($ millions)
January 31
2025
October 31
2024
Cash and
non-interest-bearing
deposits with financial institutions
  
$
9,897
   $ 9,406  
Interest-bearing deposits with financial institutions
  
60,301
     54,454  
Total
  
$
70,198
(1)
 
   $    63,860
(1)
 
  (1)
Net of allowances of $3 (October 31, 2024 – $3).
The Bank is required to maintain balances with central banks, other regulatory authorities and certain counterparties and these amounted to $5,793 million (October 31, 2024 – $5,322 million) and are included above.
 
6.
Investment securities
The following table presents the carrying amounts of the Bank’s investment securities per measurement category.
 
  As at
($ millions)
January 31
2025
October 31
2024
Debt investment securities measured at FVOCI
  
$
122,132
   $ 118,226  
Debt investment securities measured at amortized cost
  
28,494
     29,412  
Equity investment securities designated at FVOCI
  
290
     3,162  
Equity investment securities measured at FVTPL
  
2,076
     2,004  
Debt investment securities measured at FVTPL
  
27
     28  
Total investment securities
  
$
153,019
   $   152,832  
(a) Debt investment securities measured at fair value through other comprehensive income (FVOCI)
 

As at January 31, 2025 ($ millions)
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Canadian federal government issued or guaranteed debt
  
$
21,039
  
$
315
  
$
124
  
$
21,230
Canadian provincial and municipal debt
  
19,090
  
335
  
197
  
19,228
U.S. treasury and other U.S. agency debt
  
49,249
  
124
  
1,072
  
48,301
Other foreign government debt
  
29,882
  
218
  
382
  
29,718
Other debt
  
3,668
  
23
  
36
  
3,655
Total
  
$
 122,928
  
$
1,015
  
$
 1,811
  
$
 122,132
 
As at October 31, 2024 ($ millions)
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair value
Canadian federal government issued or guaranteed debt
   $ 21,473      $ 219      $ 152      $ 21,540  
Canadian provincial and municipal debt
     17,500        234        209        17,525  
U.S. treasury and other U.S. agency debt
     47,156        214        994        46,376  
Other foreign government debt
     29,505        181        400        29,286  
Other debt
     3,514        22        37        3,499  
Total
   $  119,148      $  870      $  1,792      $  118,226  
(b) Debt investment securities measured at amortized cost
 
  As at 
January 31, 2025
October 31, 2024
($ millions)
Fair value
Carrying
value
(1)
Fair value
Carrying
value
(1)
Canadian federal and provincial government issued or guaranteed debt
  
$
7,886
  
$
7,831
   $ 8,722      $ 8,721  
U.S. treasury and other U.S. agency debt
  
17,496
  
18,399
     17,440        18,440  
Other foreign government debt
  
2,056
  
2,055
     2,044        2,041  
Corporate debt
  
215
  
209
     216        210  
Total
  
$
 27,653
  
$
 28,494
   $  28,422      $  29,412  
 
  (1)
Balances are net of allowances, which are $1 (October 31, 2024 – $1).
  
62
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
(c) Equity investment securities designated at fair value through other comprehensive income (FVOCI)
 
As at January 31, 2025 ($ millions)
  
Cost
    
Gross
unrealized
gains
    
Gross
unrealized
losses
    
Fair value
 
Common shares
  
$
183
  
$
136
  
$
29
  
$
290
Total
  
$
183
  
$
136
  
$
29
  
$
290
As at October 31, 2024 ($ millions)
   Cost      Gross
unrealized
gains
     Gross
unrealized
losses
     Fair value  
Common shares
   $ 2,522      $ 713      $ 73      $ 3,162  
Total
   $  2,522      $  713      $  73      $  3,162  
Dividend income earned on equity securities designated at FVOCI of $36 million for the three months ended January 31, 2025 (October 31, 2024 – $21 million; January 31, 2024 – $47 million) has been recognized in interest income.
During the three months ended January 31, 2025, the Bank has disposed of certain equity securities designated at FVOCI with a fair value of $1,812 million (October 31, 2024 –
nil
; January 31, 2024 – $485
million) for economic reasons and according to its investment strategy. This has resulted in a realized gain of $
539 million in the three months ended January 31, 2025 (October 31, 2024 –
nil
; January 31, 2024 – realized loss of $
18
million).
 
7.
Loans, impaired loans and allowance for credit losses
(a) Loans at amortized cost
 
 As at
January 31, 2025
October 31, 2024
($ millions)
Gross
carrying
amount
Allowance
for credit
losses
Net
carrying
amount
Gross
carrying
amount
Allowance
for credit
losses
Net
carrying
amount
Residential mortgages
  
$
358,791
  
$
1,280
  
$
357,511
   $ 350,941      $ 1,208      $ 349,733  
Personal loans
  
106,635
  
2,426
  
104,209
     106,379        2,319        104,060  
Credit cards
  
17,548
  
1,185
  
16,363
     17,374        1,160        16,214  
Business and government
  
290,188
  
1,966
  
288,222
     292,671        1,849        290,822  
Total
  
$
 773,162
  
$
 6,857
  
$
 766,305
   $  767,365      $  6,536      $  760,829  
(b) Impaired loans
(1)
 
 As at
January 31, 2025
October 31, 2024
($ millions)
Gross
impaired
loans
Allowance
for credit
losses
Net
carrying
amount
Gross
impaired
loans
Allowance
for credit
losses
Net
carrying
amount
Residential mortgages
$
2,563
$
711
$
1,852
$
2,372
$
645
$
1,727
Personal loans
1,169
647
522
1,117
621
496
Credit cards
Business and government
3,332
832
2,500
3,250
788
2,462
Total
$
7,064
$
2,190
$
4,874
$
6,739
$
2,054
$
4,685
By geography:
     
     
     
     
     
     
Canada
$
2,299
$
623
$
1,676
$
2,158
$
569
$
1,589
United States
110
20
90
109
22
87
Mexico
1,371
438
933
1,343
424
919
Peru
730
404
326
715
385
330
Chile
1,343
293
1,050
1,249
281
968
Colombia
364
128
236
322
109
213
Other international
847
284
563
843
264
579
Total
$
 7,064
$
 2,190
$
 4,874
$
   6,739
$
 2,054
$
   4,685
 
  (1)
Interest income recognized on impaired loans during the three months ended January 31, 2025 was $26 (October 31, 2024 – $22).
 
(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.
 
 Scotiabank First Quarter Report 2025 
63

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
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.
 
(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 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. Given the extreme uncertainty surrounding future U.S. trade policies and where tariffs would land, the scenarios this quarter have varying assumptions of imposed tariffs. The base case scenario assumed modest tariffs to provide directional guidance as tariffs remained to be negotiated. While these tariffs represent a fraction of the proposed measures contemplated by the U.S. administration, more severe assumptions are reflected in the pessimistic and very pessimistic scenarios which are described below. As new information comes to light in future quarters, the scenarios and assumptions will be updated accordingly.
Stronger than expected domestic demand along with the positive wealth effects of the new U.S. administration’s de-regulation agenda and planned tax cuts are behind a higher growth profile for the U.S. economy in 2024 and 2025 relative to last quarter. These growth drivers are somewhat offset by the increase in uncertainty, especially as it relates to trade policy changes. Beyond 2025, we expect some of the U.S. administration’s advertised tariffs and associated trade uncertainty to lower the economy’s potential growth and slow GDP growth, driving a downward revision relative to last quarter. Canada’s GDP growth in 2024 is higher than in previous quarter largely due to historical revisions that resulted in a higher level of GDP in the first half of the year. Growth is expected to firm up in 2025 as interest rate-sensitive components react to the monetary policy rate easing that started in June of 2024, as well as a stronger U.S. economy and support by the Canadian government in the form of GST relief and cheques. Growth in Canada’s economic activity slows beyond 2025 due to slower population growth consistent with the announced change in the Government of Canada’s immigration policy, a softer U.S. economic growth and the impact on Canada’s economy from assumed U.S. tariffs.
The optimistic scenario features somewhat stronger economic activity relative to the base case. The pessimistic scenario features a negative demand-type shock on the world economy with globally tighter private financial conditions, weaker growth and inflation, and lower monetary policy rates than in the baseline scenario. It also assumes U.S. imposed tariffs equivalent to 12.5% on imports from Canada and Mexico, 10% on China, and 5% everywhere else – facing no retaliation from these countries. Lastly, the very pessimistic scenario features a strong stagflationary impulse that leads to a protracted period of financial market uncertainty. It also assumes U.S. imposed tariffs with a magnitude twice that of the pessimistic scenario. Here, all countries retaliate. This results in higher inflation, requiring central banks to raise their policy rate to higher levels than in the base case in order to bring inflation under control, which is dampening economic activity.
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 is 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 January 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
  
2.1
 
1.7
  
2.9
 
2.6
  
-1.4
 
2.5
  
-4.5
 
3.1
Consumer price index, y/y %
  
2.0
 
2.0
  
2.2
 
2.4
  
1.3
 
1.7
  
5.7
 
2.1
Unemployment rate, average %
  
6.6
 
6.1
  
6.2
 
5.2
  
8.2
 
6.9
  
11.1
 
7.5
Bank of Canada overnight rate target, average %
  
3.0
 
2.7
  
3.2
 
3.6
  
2.6
 
2.1
  
3.8
 
3.3
HPI - Housing Price Index, y/y % change
  
3.4
 
2.8
  
4.3
 
4.1
  
-2.0
 
3.5
  
-4.8
 
2.8
USD/CAD exchange rate, average
  
1.44
 
1.35
  
1.43
 
1.33
  
1.55
 
1.34
  
1.62
 
1.36
U.S.
                   
Real GDP growth, y/y % change
  
2.1
 
1.8
  
2.9
 
2.5
  
-1.4
 
2.7
  
-3.8
 
3.1
Consumer price index, y/y %
  
2.3
 
2.3
  
2.5
 
2.6
  
2.5
 
2.1
  
6.3
 
2.5
Target federal funds rate, upper limit, average %
  
4.1
 
3.0
  
4.2
 
3.5
  
4.0
 
2.5
  
5.0
 
3.6
Unemployment rate, average %
  
4.1
 
4.4
  
4.0
 
4.1
  
5.9
 
5.0
  
8.0
 
5.3
Mexico
                   
Real GDP growth, y/y % change
  
0.8
 
2.1
  
1.6
 
2.9
  
-2.4
 
2.8
  
-5.3
 
3.5
Unemployment rate, average %
  
3.4
 
3.9
  
3.2
 
3.3
  
4.3
 
4.1
  
6.6
 
5.0
Chile
                   
Real GDP growth, y/y % change
  
2.5
 
2.3
  
4.1
 
3.1
  
-0.5
 
3.0
  
-4.5
 
3.9
Unemployment rate, average %
  
8.0
 
7.0
  
7.7
 
6.4
  
9.6
 
7.3
  
11.9
 
7.7
Peru
                   
Real GDP growth, y/y % change
  
2.8
 
3.1
  
3.8
 
4.2
  
-0.7
 
3.9
  
-1.7
 
4.3
Unemployment rate, average %
  
5.9
 
5.9
  
5.3
 
4.8
  
7.4
 
6.5
  
11.6
 
7.6
Colombia
                   
Real GDP growth, y/y % change
  
2.9
 
2.7
  
4.3
 
3.7
  
-0.4
 
3.4
  
-1.5
 
3.9
Unemployment rate, average %
  
10.4
 
10.1
  
10.0
 
9.2
  
13.0
 
11.1
  
20.3
 
13.2
Caribbean
                   
Real GDP growth, y/y % change
  
3.8
 
3.9
  
4.5
 
4.7
  
0.5
 
4.6
  
-2.4
 
5.2
Global
                   
WTI oil price, average USD/bbl
  
66
 
67
  
70
 
81
  
54
 
60
  
47
 
56
Copper price, average USD/lb
  
4.50
 
5.17
  
4.66
 
5.71
  
4.04
 
5.04
  
3.78
 
4.91
Global GDP, y/y % change
  
3.0
 
2.6
  
3.9
 
3.4
  
0.2
 
3.3
  
-2.1
 
3.8
 
64
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
      Base Case Scenario      Alternative Scenario
Optimistic
     Alternative Scenario
Pessimistic
     Alternative Scenario
Very Pessimistic
 
As at October 31, 2024
   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
     1.8       2.2        2.8       3.1        -1.6       2.9        -4.4       3.4  
Consumer price index, y/y %
     2.2       2.0        2.4       2.5        1.6       1.7        5.8       2.2  
Unemployment rate, average %
     6.7       6.0        6.3       5.0        8.4       6.9        11.1       7.3  
Bank of Canada overnight rate target, average %
     3.3       2.6        3.5       3.6        2.9       2.0        4.0       3.2  
HPI - Housing Price Index, y/y % change
     1.6       4.2        2.4       5.5        -3.7       4.8        -5.8       4.1  
USD/CAD exchange rate, average
     1.34       1.30        1.33       1.28        1.43       1.28        1.49       1.30  
U.S.
                   
Real GDP growth, y/y % change
     1.6       2.2        2.3       3.1        -1.6       3.0        -4.0       3.4  
Consumer price index, y/y %
     2.4       2.3        2.6       2.7        1.3       2.0        6.2       2.5  
Target federal funds rate, upper limit, average %
     4.1       2.9        4.1       3.4        3.6       1.8        4.8       3.4  
Unemployment rate, average %
     4.3       4.3        4.2       3.9        6.0       4.9        8.1       5.2  
Mexico
                   
Real GDP growth, y/y % change
     1.3       2.1        2.6       2.9        -0.8       2.6        -2.9       3.2  
Unemployment rate, average %
     3.3       3.9        3.0       3.1        4.1       4.0        6.3       4.9  
Chile
                   
Real GDP growth, y/y % change
     3.0       2.2        4.6       3.2        0.1       3.0        -3.6       3.8  
Unemployment rate, average %
     7.9       6.7        7.6       6.0        9.5       7.0        11.5       7.4  
Peru
                   
Real GDP growth, y/y % change
     2.6       3.4        3.6       4.5        1.5       3.7        -0.5       4.3  
Unemployment rate, average %
     6.7       6.2        6.2       5.2        8.1       6.5        11.8       8.0  
Colombia
                   
Real GDP growth, y/y % change
     2.6       2.7        3.7       3.8        1.4       3.1        -0.5       3.6  
Unemployment rate, average %
     11.1       10.1        10.7       9.1        13.5       10.6        19.8       13.0  
Caribbean
                   
Real GDP growth, y/y % change
     3.6       3.8        4.2       4.5        2.5       4.2        0.6       4.7  
Global
                   
WTI oil price, average USD/bbl
     73       69        78       83        60       60        53       58  
Copper price, average USD/lb
     4.99       5.29        5.16       5.86        4.50       5.13        4.32       5.02  
Global GDP, y/y % change
     3.4       2.4        4.3       3.3        0.6       3.1        -1.5       3.5  
 
  (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 $4,890 million (October 31, 2024 – $4,682 million) from $4,475 million (October 31, 2024 – $4,316 million).
The Bank enhanced certain of its IFRS 9 models in the current year and 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 $
1,082
 
million higher than the reported allowance for credit losses as at January 31, 2025 (October 31, 2024 – $942 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 $732 million (October 31, 2024 – $693 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,
2024
Provision for
credit losses
(1)
Net write-offs
Other, including
foreign currency
adjustment
Balance as at
January 31,
2025
Residential mortgages
   $ 1,208      $ 64      $ (16 )    $ 24     
$
1,280
Personal loans
     2,319        548        (485      44     
2,426
Credit cards
     1,160        325        (331 )      31     
1,185
Business and government
     2,036        243        (122 )      17     
2,174
   $  6,723      $  1,180      $  (954 )    $  116     
$
 7,065
Presented as:
              
Allowance for credit losses on loans
   $ 6,536              
$
6,857
Allowance for credit losses on acceptances
(2)
     1              
1
Allowance for credit losses on
off-balance
sheet exposures
(3)
     186     
  
  
  
207
  (1)
Excludes amounts associated with other assets and reversal of impairment losses of $
(18
)
. The provision for credit losses, net of these amounts, is $1,162.
  (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 First Quarter Report 2025 
65

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
($ millions)
   Balance as at
November 1,
2023
     Provision for
credit losses
(1)
    
Net write-offs
     Other, including
foreign currency
adjustment
     Balance as at
January 31,
2024
 
Residential mortgages
   $ 1,084      $ 63      $ (18    $ (14    $ 1,115  
Personal loans
     2,414        411        (427      (96      2,302  
Credit cards
     1,237        290        (273      (22      1,232  
Business and government
     1,876        199        (86      (58      1,931  
   $  6,611      $  963      $  (804    $  (190    $  6,580  
Presented as:
              
Allowance for credit losses on loans
   $ 6,372               $ 6,328  
Allowance for credit losses on acceptances
(2)
     90                 96  
Allowance for credit losses on
off-balance
sheet exposures
(3)
     149     
  
  
     156  
  (1)
Excludes amounts associated with other assets and reversal of impairment losses of $
(1)
. The provision for credit losses, net of these amounts, is $
962
.
  (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 January 31, 2025
($ millions)
Stage 1
Stage 2
Stage 3
Total
Residential mortgages
  
$
160
  
$
409
  
$
711
  
$
1,280
Personal loans
  
554
  
1,225
  
647
  
2,426
Credit cards
  
295
  
890
  
  
1,185
Business and government
  
614
  
520
  
832
  
1,966
Total
(1)
  
$
 1,623
  
$
 3,044
  
$
 2,190
  
$
 6,857
  (1)
Excludes allowance for credit losses of $223 for other financial assets including acceptances, investment securities, deposits with banks,
off-balance
sheet credit risks and reverse repos.
 
      As at October 31, 2024  
($ millions)
   Stage 1      Stage 2      Stage 3      Total  
Residential mortgages
   $ 165      $ 398      $ 645      $ 1,208  
Personal loans
     544        1,154        621        2,319  
Credit cards
     288        872               1,160  
Business and government
     586        475        788        1,849  
Total
(1)
   $  1,583      $  2,899      $  2,054      $  6,536  
  (1)
Excludes allowance for credit losses of $200 for other financial assets including acceptances, investment securities, deposits with banks,
off-balance
sheet credit risks and reverse repos.
 
      As at January 31, 2024  
($ millions)
   Stage 1      Stage 2      Stage 3      Total  
Residential mortgages
   $ 246      $ 336      $ 533      $ 1,115  
Personal loans
     629        1,050        623        2,302  
Credit cards
     381        851               1,232  
Business and government
     512        419        748        1,679  
Total
(1)
   $  1,768      $  2,656      $  1,904      $  6,328  
  (1)
Excludes allowance for credit losses of $269 for other financial assets including acceptances, investment securities, deposits with banks,
off-balance
sheet credit risks and reverse repos.
 
66
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The following table presents the changes to the allowance for credit losses on loans.
 
As at and for the three months ended
January 31, 2025
January 31, 2024
($ millions)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Retail loans:
Residential mortgages
Balance at beginning of period
 
$
165
 
$
398
 
$
645
 
$
1,208
  $ 265     $ 321     $ 498     $ 1,084  
Provision for credit losses
               
Remeasurement
(1)
 
(58
)
 
36
 
89
 
67
    (65     36       88       59  
Newly originated or purchased financial assets
 
12
 
 
 
12
    11                   11  
Derecognition of financial assets and maturities
 
(2
)
 
(6
)
 
 
 
(8
)
    (2     (5           (7
Changes in models and methodologies
 
(2
)
 
(14
)
 
9
 
(7
)
                       
Transfer to (from):
               
Stage 1
 
53
 
(43
)
 
(10
)
 
    50       (37     (13      
Stage 2
 
(10
)
 
55
 
(45
)
 
    (11     49       (38      
Stage 3
 
 
(25
)
 
25
 
          (21     21        
Gross write-offs
 
 
 
(24
)
 
(24
)
                (23     (23
Recoveries
 
 
 
8
 
8
                5       5  
Foreign exchange and other movements
 
2
 
8
 
14
 
24
    (2     (7     (5     (14
Balance at end of period
 
$
160
 
$
409
 
$
711
 
$
1,280
  $ 246     $ 336     $ 533     $ 1,115  
Personal loans
               
Balance at beginning of period
 
$
544
 
$
1,154
 
$
621
 
$
2,319
  $ 647     $ 1,103     $ 664     $ 2,414  
Provision for credit losses
               
Remeasurement
(1)
 
(162
)
 
279
 
390
 
507
    (186     221       352       387  
Newly originated or purchased financial assets
 
101
 
 
 
101
    93                   93  
Derecognition of financial assets and maturities
 
(23
)
 
(41
)
 
 
(64
)
    (23     (46           (69
Changes in models and methodologies
 
(7
)
 
3
 
8
 
4
                       
Transfer to (from):
               
Stage 1
 
150
 
(146
)
 
(4
)
 
    172       (169     (3      
Stage 2
 
(58
)
 
85
 
(27
)
 
    (58     82       (24      
Stage 3
 
(2
)
 
(124
)
 
126
 
    (3     (126     129        
Gross write-offs
 
 
 
(558
)
 
(558
)
                (488     (488
Recoveries
 
 
 
73
 
73
                61       61  
Foreign exchange and other movements
 
11
 
15
 
18
 
44
    (13     (15     (68     (96
Balance at end of period
 
$
554
 
$
1,225
 
$
647
 
$
2,426
  $ 629     $ 1,050     $ 623     $ 2,302  
Credit cards
               
Balance at beginning of period
 
$
288
 
$
872
 
$
 
$
1,160
  $ 414     $ 823     $     $ 1,237  
Provision for credit losses
               
Remeasurement
(1)
 
(81
)
 
168
 
239
 
326
    (99     181       197       279  
Newly originated or purchased financial assets
 
32
 
 
 
32
    40                   40  
Derecognition of financial assets and maturities
 
(13
)
 
(11
)
 
 
(24
)
    (13     (16           (29
Changes in models and methodologies
 
(2
)
 
(7
)
 
 
(9
)
                       
Transfer to (from):
               
Stage 1
 
88
 
(88
)
 
 
    78       (78            
Stage 2
 
(27
)
 
27
 
 
    (34     34              
Stage 3
 
 
(88
)
 
88
 
          (70     70        
Gross write-offs
 
 
 
(373
)
 
(373
)
                (316     (316
Recoveries
 
 
 
42
 
42
                43       43  
Foreign exchange and other movements
 
10
 
17
 
4
 
31
    (5     (23     6       (22
Balance at end of period
 
$
295
 
$
890
 
$
 
$
1,185
  $ 381     $ 851     $     $ 1,232  
Total retail loans
               
Balance at beginning of period
 
$
997
 
$
2,424
 
$
1,266
 
$
4,687
  $  1,326     $  2,247     $  1,162     $  4,735  
Provision for credit losses
               
Remeasurement
(1)
 
(301
)
 
483
 
718
 
900
    (350     438       637       725  
Newly originated or purchased financial assets
 
145
 
 
 
145
    144                   144  
Derecognition of financial assets and maturities
 
(38
)
 
(58
)
 
 
(96
)
    (38     (67           (105
Changes in models and methodologies
 
(11
)
 
(18
)
 
17
 
(12
)
                       
Transfer to (from):
               
Stage 1
 
291
 
(277
)
 
 
(14
)
 
 
    300       (284     (16      
Stage 2
 
(95
)
 
 
167
 
(72
)
 
    (103     165       (62      
Stage 3
 
(2
)
 
(237
)
 
239
 
    (3     (217     220        
Gross write-offs
 
 
 
(955
)
 
(955
)
 
                (827     (827
Recoveries
 
 
 
123
 
123
                109       109  
Foreign exchange and other movements
 
23
 
40
 
36
 
99
    (20     (45     (67     (132
Balance at end of period
 
$
1,009
 
$
2,524
 
$
1,358
 
$
4,891
  $ 1,256     $ 2,237     $ 1,156     $ 4,649  
Non-retail
loans:
               
Business and government
               
Balance at beginning of period
 
$
739
 
$
508
 
$
788
 
$
2,035
  $ 635     $ 403     $ 748     $ 1,786  
Provision for credit losses
               
Remeasurement
(1)
 
(11
)
 
67
 
179
 
235
    (40     92       162       214  
Newly originated or purchased financial assets
 
358
 
 
 
358
    212                   212  
Derecognition of financial assets and maturities
 
(315
)
 
(27
)
 
(8
)
 
(350
)
    (196     (34     (2     (232
Changes in models and methodologies
 
 
 
 
                       
Transfer to (from):
               
Stage 1
 
25
 
(25
)
 
 
    44       (44            
Stage 2
 
(22
)
 
23
 
(1
)
 
    (31     32       (1      
Stage 3
 
(1
)
 
(5
)
 
6
 
          (4     4        
Gross write-offs  
 
 
(140
)
 
(140
)
                (112     (112
Recoveries
 
 
 
18
 
18
                26       26  
Foreign exchange and other movements
 
17
 
10
 
(10
)
 
17
    (10     (6     (43     (59
Balance at end of period including
off-balance
sheet exposures
 
$
790
 
$
551
 
$
832
 
$
2,173
  $ 614     $ 439     $ 782     $ 1,835  
Less: Allowance for credit losses on
off-balance
sheet exposures
(2)
 
(176
)
 
(31
)
 
 
(207
)
    (102     (20     (34     (156
Balance at end of period
(2)
 
$
614
 
$
520
 
$
832
 
$
1,966
  $ 512     $ 419     $ 748     $ 1,679  
  (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 First Quarter Report 2025   
67

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
  (d)
Carrying value of exposures by risk rating
 
Residential
mortgages
As at January 31, 2025
As at October 31, 2024
Category of PD grades

($ millions)
Stage 1
Stage 2
Stage 3
(1)
Total
Stage 1
Stage 2
Stage 3
(1)
Total
Very low
 
$
212,730
 
$
2,590
 
$
 
$
215,320
  $ 211,165     $ 3,262     $     $ 214,427  
Low
 
83,365
 
2,808
 
 
86,173
    78,344       3,625             81,969  
Medium
 
22,202
 
1,940
 
 
24,142
    19,205       2,072             21,277  
High
 
2,669
 
5,526
 
 
8,195
    2,561       5,280             7,841  
Very high
 
48
 
3,024
 
 
3,072
    13       2,814             2,827  
Loans not graded
(2)
 
18,605
 
721
 
 
19,326
    18,614       1,614             20,228  
Default
 
 
 
2,563
 
2,563
                2,372       2,372  
Total
 
$
339,619
 
$
16,609
 
$
2,563
 
$
358,791
  $  329,902     $  18,667     $ 2,372     $  350,941  
Allowance for credit losses
 
160
 
409
 
711
 
1,280
    165       398       645       1,208  
Carrying value
 
$
339,459
 
$
16,200
 
$
1,852
 
$
357,511
  $ 329,737     $ 18,269     $ 1,727     $ 349,733  
  (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 January 31, 2025
As at October 31, 2024
Category of PD grades
($ millions)
Stage 1
Stage 2
Stage 3
(1)
Total
Stage 1
Stage 2
Stage 3
(1)
Total
Very low
 
$
31,216
 
$
 
$
 
$
31,216
  $ 30,865     $     $     $ 30,865  
Low
 
21,210
 
17
 
 
21,227
    20,686       12             20,698  
Medium
 
13,149
 
42
 
 
13,191
    13,053       38             13,091  
High
 
10,534
 
4,885
 
 
15,419
    10,535       4,843             15,378  
Very high
 
73
 
2,878
 
 
2,951
    76       2,743             2,819  
Loans not graded
(2)
 
19,623
 
1,839
 
 
21,462
    20,482       1,929             22,411  
Default
 
 
 
1,169
 
1,169
                1,117       1,117  
Total
 
$
95,805
 
$
9,661
 
$
1,169
 
$
106,635
  $   95,697     $   9,565     $ 1,117     $  106,379  
Allowance for credit losses
 
554
 
1,225
 
647
 
2,426
    544       1,154       621       2,319  
Carrying value
 
$
95,251
 
$
8,436
 
$
522
 
$
104,209
  $ 95,153     $ 8,411     $ 496     $ 104,060  
  (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 January 31, 2025
As at October 31, 2024
Category of PD grades
($ millions)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Very low
 
$
2,480
 
$
 
$
 
$
2,480
  $ 2,382     $ 3     $     $ 2,385  
Low
 
3,058
 
5
 
 
3,063
    2,872       25             2,897  
Medium
 
4,786
 
17
 
 
4,803
    4,631       55             4,686  
High
 
3,067
 
1,804
 
 
4,871
    3,069       1,880             4,949  
Very high
 
18
 
1,189
 
 
1,207
    16       1,028             1,044  
Loans not graded
(1)
 
664
 
460
 
 
1,124
    895       518             1,413  
Default
 
 
 
 
                       
Total
 
$
14,073
 
$
3,475
 
$
 
$
17,548
  $ 13,865     $ 3,509     $     $ 17,374  
Allowance for credit losses
 
295
 
890
 
 
1,185
    288       872             1,160  
Carrying value
 
$
13,778
 
$
2,585
 
$
 
$
16,363
  $  13,577     $  2,637     $     $  16,214  
  (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 January 31, 2025
As at October 31, 2024
Category of PD grades
($ millions)
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Very low
 
$
118,419
 
$
1
 
$
 
$
118,420
  $ 115,396     $ 2     $     $ 115,398  
Low
 
18,583
 
14
 
 
18,597
    17,947       26             17,973  
Medium
 
8,285
 
12
 
 
8,297
    8,128       22             8,150  
High
 
3,597
 
763
 
 
4,360
    3,490       505             3,995  
Very high
 
13
 
590
 
 
603
    10       305             315  
Loans not graded
(1)
 
12,721
 
2,674
 
 
15,395
    12,634       2,749             15,383  
Default
 
 
 
 
                       
Carrying value
 
$
161,618
 
$
4,054
 
$
 
$
165,672
  $  157,605     $   3,609     $     $  161,214  
  (1)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
68
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Total retail loans
As at January 31, 2025
As at October 31, 2024
Category of PD grades
($ millions)
Stage 1
Stage 2
Stage 3
(1)
Total
Stage 1
Stage 2
Stage 3
(1)
Total
Very low
 
$
364,845
 
$
2,591
 
$
 
$
367,436
  $ 359,808     $ 3,267     $     $ 363,075  
Low
 
126,216
 
2,844
 
 
129,060
    119,849       3,688             123,537  
Medium
 
48,422
 
2,011
 
 
50,433
    45,017       2,187             47,204  
High
 
19,867
 
12,978
 
 
32,845
    19,655       12,508             32,163  
Very high
 
152
 
7,681
 
 
7,833
    115       6,890             7,005  
Loans not graded
(2)
 
51,613
 
5,694
 
 
57,307
    52,625       6,810             59,435  
Default
 
 
 
3,732
 
3,732
                3,489       3,489  
Total
 
$
611,115
 
$
33,799
 
$
3,732
 
$
648,646
  $ 597,069     $ 35,350     $ 3,489     $ 635,908  
Allowance for credit losses
 
1,009
 
2,524
 
1,358
 
4,891
    997       2,424       1,266       4,687  
Carrying value
 
$
610,106
 
$
31,275
 
$
2,374
 
$
643,755
  $  596,072     $  32,926     $ 2,223     $  631,221  
  (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 January 31, 2025
As at October 31, 2024
Grade
($ millions)
Stage 1
Stage 2
Stage 3
(1)
Total
Stage 1
Stage 2
Stage 3
(1)
Total
Investment grade
 
$
144,593
 
$
2,180
 
$
 
$
146,773
  $ 146,999     $ 1,829     $     $ 148,828  
Non-investment
grade
 
123,310
 
9,527
 
 
132,837
    124,749       8,800             133,549  
Watch list
 
9
 
4,986
 
 
4,995
    10       4,819             4,829  
Loans not graded
(2)
 
2,222
 
29
 
 
2,251
    2,190       25             2,215  
Default
 
 
 
3,332
 
3,332
                3,250       3,250  
Total
 
$
270,134
 
$
16,722
 
$
3,332
 
$
290,188
  $ 273,948     $ 15,473     $ 3,250     $ 292,671  
Allowance for credit losses
 
614
 
520
 
832
 
1,966
    586       475       788       1,849  
Carrying value
 
$
269,520
 
$
16,202
 
$
2,500
 
$
288,222
  $  273,362     $  14,998     $ 2,462     $  290,822  
  (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 January 31, 2025
As at October 31, 2024
Grade
($ millions)
Stage 1
Stage 2
Stage 3
(1)
Total
Stage 1
Stage 2
Stage 3
(1)
Total
Investment grade
 
$
248,127
 
$
1,295
 
$
 
$
249,422
  $ 243,635     $ 1,124     $     $ 244,759  
Non-investment
grade
 
59,029
 
2,880
 
 
61,909
    59,572       2,894             62,466  
Watch list
 
 
993
 
 
993
          1,142             1,142  
Loans not graded
(2)
 
3,974
 
 
 
3,974
    3,921                   3,921  
Default
 
 
 
34
 
34
                32       32  
Total
 
$
311,130
 
$
5,168
 
$
34
 
$
316,332
  $ 307,128     $ 5,160     $ 32     $ 312,320  
Allowance for credit losses
 
176
 
31
 
 
207
    153       33             186  
Carrying value
 
$
310,954
 
$
5,137
 
$
34
 
$
316,125
  $  306,975     $  5,127     $ 32     $  312,134  
  (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 January 31, 2025
As at October 31, 2024
Grade
($ millions)
Stage 1
Stage 2
Stage 3
(1)
Total
Stage 1
Stage 2
Stage 3
(1)
Total
Investment grade
 
$
392,720
 
$
3,475
 
$
 
$
396,195
  $ 390,634     $ 2,953     $     $ 393,587  
Non-investment
grade
 
182,339
 
12,407
 
 
194,746
    184,321       11,694             196,015  
Watch list
 
9
 
5,979
 
 
5,988
    10       5,961             5,971  
Loans not graded
(2)
 
6,196
 
29
 
 
6,225
    6,111       25             6,136  
Default
 
 
 
3,366
 
3,366
                3,282       3,282  
Total
 
$
581,264
 
$
21,890
 
$
3,366
 
$
606,520
  $ 581,076     $ 20,633     $ 3,282     $ 604,991  
Allowance for credit losses
 
790
 
551
 
832
 
2,173
    739       508       788       2,035  
Carrying value
 
$
580,474
 
$
21,339
 
$
2,534
 
$
604,347
  $  580,337     $  20,125     $ 2,494     $  602,956  
  (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.
 
 Scotiabank First Quarter Report 2025   
69

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
  (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 because they are either less than 90 days past due or fully secured and collection efforts are reasonably expected to result in repayment or restoring it to a current status in accordance with the Bank’s policy. 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 January 31, 2025
As at October 31, 2024
($ millions)
31-60

days
61-90

days
91 days
and greater
(2)
Total
31-60

days
61-90

days
91 days
and greater
(2)
Total
Residential mortgages
 
$
1,505
 
$
715
 
$
 
$
2,220
  $ 1,418     $ 718     $     $ 2,136  
Personal loans
 
661
 
360
 
 
1,021
    647       343             990  
Credit cards
 
256
 
187
 
416
 
859
    242       172       398       812  
Business and government
 
150
 
54
 
 
204
    192       48             240  
Total
 
$
2,572
 
$
1,316
 
$
416
 
$
4,304
  $  2,499     $  1,281     $  398     $  4,178  
(1)
Loans past due 30 days or less 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)
January 31
2025
October 31
2024
Unpaid principal balance
(1)
  
$
248
   $ 243  
Credit related fair value adjustments
  
(29
)
 
     (29
Carrying value
  
219
     214  
Stage 3 allowance
  
(1
)
     (1
Carrying value net of related allowance
  
$
218
   $     213  
  (1)
Represents principal amount owed net of write-offs.
 
8.
Derecognition of financial assets
Securitization of residential mortgage loans
The Bank securitizes fully insured residential mortgage loans, Bank originated and others, through the creation of mortgage-backed securities (MBS) under the National Housing Act (NHA) MBS program, sponsored by Canada Mortgage and Housing Corporation (CMHC). MBS created under the program are sold to Canada Housing Trust (the Trust), a government sponsored entity under the Canada Mortgage Bond (CMB) program. The Trust issues securities to third-party investors.
The majority of mortgages sold under the above programs do not meet the derecognition requirements, where the Bank retains the
pre-payment
and interest rate risks associated with the mortgages, which represent substantially all the risks and rewards associated with the transferred assets.
The transferred mortgages continue to be recognized on the Consolidated Statement of Financial Position as residential mortgage loans. Cash proceeds from the transfer are treated as secured borrowings and included in Deposits – Business and government on the Consolidated Statement of Financial Position.
The following table provides the carrying amount of transferred assets that do not qualify for derecognition and the associated liabilities:
 
 As at
($ millions)
January 31
2025
(1)
October 31
2024
(1)
Assets
Carrying value of residential mortgage loans
  
$
10,202
   $ 11,190  
Other related assets
(2)
  
6,747
     7,202  
Liabilities
     
Carrying value of associated liabilities
  
$
16,807
   $  17,923  
  (1)
The fair value of the transferred assets is $16,772 (October 31, 2024 – $18,092) and the fair value of the associated liabilities is $16,769 (October 31, 2024 – $17,692) for a net position of $3 (October 31, 2024 – $400).
  (2)
These include cash held in trust and trust permitted investment assets, including repurchase style transactions of mortgage-backed securities, acquired as part of the principal reinvestment account that the Bank is required to maintain in order to participate in the programs.
Securitization of credit card and auto loans
The Bank securitizes a portion of its unsecured credit card and auto loan receivables through consolidated structured entities. These receivables continue to be recognized on the Consolidated Statement of Financial Position as personal loans and credit card loans. During the quarter, $
2,990 
million (October 31, 2024 – 
nil
) of the Bank’s Canadian
auto loan receivables were securitized through Securitized Term Auto Receivables Trust 2025-A (START 2025-A), a Bank-sponsored consolidated structured entity. As of January 31, 2025, USD $200 million (CAD $291 million) (October 31, 2024 – nil) START 2025-A subordinated notes that were issued to third party investors were outstanding and included in deposits – business and government on the Consolidated Statement of Financial Position. 
Securities sold under repurchase agreements and securities lent
The Bank enters into transactions, such as repurchase agreements and securities lending agreements, where the Bank transfers assets under agreements to repurchase them on a future date and retains all the substantial risks and rewards associated with the assets. The transferred securities remain on the Consolidated Statement of Financial Position.
 
70
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The following table provides the carrying amount of the transferred assets and the associated liabilities:

  As at
($ millions)
January 31
2025
(1)
October 31
2024
(1)
Carrying value of securities associated with:
Repurchase agreements
(2)
  
$
163,805
   $ 174,334  
Securities lending agreements
  
71,189
     58,477  
Total
  
234,994
     232,811  
Carrying value of associated liabilities
(3)
  
$
182,259
   $  190,449  
  (1)
The fair value of transferred assets is $234,994 (October 31, 2024 – $232,811) and the fair value of the associated liabilities is $182,259 (October 31, 2024 – $190,449) for a net position of $52,735 (October 31, 2024 – $42,362).
  (2)
Does not include over-collateralization of assets pledged.
  (3)
Liabilities for securities lending arrangements only include amounts related to cash collateral received. In most cases, securities are received as collateral.
Other off-balance sheet arrangements
The Bank uses a capital vehicle to transfer credit exposure to security holders of the vehicle. While credit exposures are transferred, the related assets are not derecognized from the balance sheet. During the quarter, USD $490 million of guarantee-linked notes (October 31, 2024 – nil) were issued from this vehicle and included in deposits – business and government on the Consolidated Statement of Financial Position.
 
9.
Investments in associates
The Bank had significant investments in the following associates:
 
                              As at  
                                     
January 31
2025
     October 31
2024
 
($ millions)
   Country of
incorporation
     Nature of
business
     Ownership
percentage
     Date of financial
statements
(1)
    
Carrying
value
     Carrying
value
 
KeyCorp
(2)
     United States        Banking        14.92      December 31, 2024     
$
4,065
   $  
Bank of Xi’an Co. Ltd.
(3)(4)
     China        Banking        18.11      December 31, 2024     
698
     658  
Maduro & Curiel’s Bank N.V.
(5)
     Curacao        Banking        48.10      December 31, 2024     
558
      527  
  (1)
Represents the date of the most recent financial statements. Where available, financial statements prepared by the associates’ management or other published information is used to estimate the change in the Bank’s interest since the most recent financial statements.
  (2)
On December 27, 2024, the Bank completed the acquisition of an additional 10% ownership interest, bringing the total ownership interest in KeyCorp to 14.92% (refer to Note 20 for further details). The Bank has significant influence over KeyCorp through a combination of its ownership interest and board representation. Based on the quoted price on the New York Stock Exchange, the Bank’s Investment in KeyCorp was $4,257 as at January 31, 2025
.
(3)
Based on the quoted price on the Shanghai Stock Exchange, the Bank’s Investment in Bank of Xi’an Co. Ltd. was $567 (October 31, 2024 – $570). The market value of the investment has remained below the carrying amount. The Bank performed an impairment test as at January 31, 2025 using a value in use (VIU) discounted cash flow model. The Bank concluded that there is no impairment as at January 31, 2025 (October 31, 2024 – $343).
(4)
The Bank has significant influence over the Bank of Xi’an Co. Ltd. through a combination of its ownership interest and board representation.
  (
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 January 31, 2025, these reserves amounted to $77
 
(October 31, 2024 – $74).

10.
Deposits
 
As at
January 31, 2025
October 31
2024
Payable on demand
(1)
Payable
after
notice
(2)
($ millions)
Interest-
bearing
Non-interest-

bearing
Payable on a
fixed date
(3)
Total
Total
Personal
 
$
5,950
 
$
10,647
 
$
149,312
 
$
137,889
 
$
303,798
  $ 298,821  
Business and government
 
186,964
 
32,692
 
61,448
 
336,770
 
617,874
    600,114  
Financial institutions
 
9,705
 
1,458
 
2,198
 
31,016
 
44,377
    44,914  
 
$
202,619
 
$
44,797
 
$
212,958
(4)
 
 
$
505,675
 
$
966,049
  $ 943,849  
Recorded in:
           
Canada
 
$
 142,823
 
$
 24,198
 
$
 174,263
 
$
 350,443
 
$
 691,727
  $  686,817  
United States
 
48,204
 
53
 
2,231
 
48,608
 
99,096
    90,442  
United Kingdom
 
 
 
180
 
30,906
 
31,086
    27,091  
Mexico
 
154
 
6,936
 
12,588
 
17,875
 
37,553
    36,751  
Peru
 
6,167
 
51
 
5,823
 
6,950
 
18,991
    17,710  
Chile
 
1,418
 
5,254
 
146
 
17,058
 
23,876
    23,232  
Colombia
 
27
 
567
 
3,631
 
4,909
 
9,134
    8,102  
Other International
 
3,826
 
7,738
 
14,096
 
28,926
 
54,586
    53,704  
Total
(5)
 
$
202,619
 
$
44,797
 
$
212,958
 
$
505,675
 
$
966,049
  $ 943,849  
  (1)
Deposits payable on demand include all deposits for which the Bank does not have the right to notice of withdrawal, generally chequing accounts.
  (2)
Deposits payable after notice include all deposits for which the Bank requires 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)
Includes $122
 
(October 31, 2024 – $124) of
non-interest-bearing
deposits.
  (5)
Deposits denominated in U.S. dollars amount to $309,983 (October 31, 2024 – $295,316), deposits denominated in Chilean pesos amount to $20,198 (October 31, 2024 – $19,271), deposits denominated in Mexican pesos amount to $34,709 (October 31, 2024 – $34,416) and deposits denominated in other foreign currencies amount to $115,267 (October 31, 2024 – $109,683).
 
 Scotiabank First Quarter Report 2025 
71


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
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 January 31, 2025
  
$
64,683
  
$
39,867
  
$
61,186
  
$
107,596
  
$
19,024
  
$
292,356
As at October 31, 2024
   $  64,521      $  37,062      $  59,273      $  115,757      $  18,820      $  295,433  
  (1)
The majority of foreign term deposits are in excess of $100,000.
 
11.
Capital and financing transactions
Common shares
 
     For the three months ended  
    
January 31, 2025
    January 31, 2024  
($ millions)
 
Number of shares
   
Amount
    Number of shares     Amount  
Outstanding at beginning of period
 
1,244,435,686
 
$
 22,054
    1,214,044,420     $ 20,109  
Issued in relation to share-based payments, net
 
1,092,275
 
82
    58,042       4  
Issued in relation to the Shareholder Dividend and Share Purchase Plan
(1)
 
 
    8,024,950       486  
Outstanding at end of period
 
1,245,527,961
 
$
22,136
    1,222,127,412     $  20,599  
  (1)
Effective November 1, 2024, and until such time as the Bank elects otherwise, the Bank has suspended the discount to the Average Market Price (as defined in the Plan) for dividend reinvestments and stock dividends under the Plan and has discontinued issuances of common shares from treasury under the Plan. Additionally, effective November 1, 2024, and until such time as the Bank elects otherwise, purchases of common shares under the Plan will be made in the secondary market in accordance with the provisions of the Plan.
Preferred shares and other equity instruments
Issuance
On January 31, 2025, the Bank issued USD$1,000 million of 7.350% Limited Recourse Capital Notes Series 6 (NVCC) (LRCN Series 6) due April 27, 2085, which form part of the Bank’s Additional Tier 1 Capital. Non-deferrable interest is payable quarterly at a fixed rate of 7.350% per annum until April 27, 2030; and thereafter, the non-deferrable interest will reset every fifth year until April 27, 208
0
, at a rate equal to the 5-year U.S Treasury Rate plus 2.903%. In connection with the issuance of LRCN Series 6, the Bank issued USD$1,000 million of 7.350% Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (the Series 6 AT1 Notes) to Scotiabank LRCN Trust, a consolidated entity, to be held as trust assets. As the Series 6 AT1 Notes are eliminated on consolidation, they do not currently form part of the Bank’s Additional Tier 1 Capital.
Upon the occurrence of a recourse event, the LRCN Series 6 noteholders’ sole recourse will be limited to their proportionate share of the assets held in the Scotiabank LRCN Trust. A recourse event occurs if (a) there is non-payment in cash by the Bank of the principal amount, together with any accrued and unpaid interest, on the maturity date, (b) there is non-payment in cash of interest which is not cured within 5 business days, (c) there is non-payment in cash of the redemption price in connection with the redemption of LRCN Series 6, (d) an event of default occurs (bankruptcy, insolvency, or liquidation of the Bank), or (e) there is an NVCC Trigger Event.
Subject to regulatory consent and approval, the LRCN Series 6 are redeemable, in whole or in part, on April 27, 2030 and each interest payment date thereafter.
The LRCN Series 6 and Series 6 AT1 Notes are the Bank’s direct unsecured obligations, ranking subordinate to the Bank’s Subordinated debentures and ranking equally with the Bank’s existing NVCC subordinated additional Tier 1 capital securities.
The LRCN Series 6 and the Series 6 AT1 Notes include NVCC provisions necessary for them to qualify as Tier 1 regulatory capital under Basel III. NVCC provisions require the conversion of the Series 6 AT1 Notes into a variable number of common shares if OSFI announces that the Bank has ceased, or is about to cease, to be viable, or if the federal or a provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent thereof without which the Bank would have been determined by OSFI to be non-viable. Upon an NVCC Trigger Event, LRCN Series 6 will cease to be outstanding following delivery to the noteholders of their proportionate share of the trust assets comprised of common shares of the Bank received by the Scotiabank LRCN Trust upon automatic conversion of the Series 6 AT1 Notes.
The LRCN Series 6 are compound instruments with both equity and liability features. On the date of issuance, the Bank has assigned an insignificant value to the liability component of LRCN Series 6 and, as a result, the full proceeds received have been presented as equity.
 
72
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

12.
Capital management
The Bank’s regulatory capital, total loss absorbing capacity and leverage measures were as follows:
 

As at
($ millions)
January 31
2025
October 31
2024
Capital
(1)
Common Equity Tier 1 capital
  
$
60,294
   $ 60,631  
Net Tier 1 capital
  
70,592
     69,499  
Total regulatory capital
  
78,622
     77,708  
Total loss absorbing capacity (TLAC)
(2)
  
135,010
     137,752  
Risk-weighted assets/exposures used in calculation of capital ratios
     
Risk-weighted assets
(1)(3)
  
$
468,124
   $ 463,992  
Leverage exposures
(4)
  
1,586,812
      1,563,140  
Regulatory ratios
(1)
     
Common Equity Tier 1 capital ratio
  
12.9
     13.1
Tier 1 capital ratio
  
15.1
     15.0
Total capital ratio
  
16.8
     16.7
Total loss absorbing capacity ratio
(2)
  
28.8
     29.7
Leverage ratio
(4)
  
4.4
     4.4
Total loss absorbing capacity leverage ratio
(2)
  
8.5
%
     8.8
  (1)
The regulatory capital ratios are 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)
As at January 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 (as at October 31, 2024, the Bank did
 not
have a regulatory capital floor add-on to risk-weighted assets 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 substantially exceeded the OSFI minimum regulatory capital and TLAC ratios as at January 31, 2025, including the Domestic Stability Buffer requirement. In addition, the Bank substantially exceeded OSFI minimum leverage and TLAC leverage ratios as at January 31, 2025.
 
13.
Share-based payments
In Q1 2025, the Bank granted 1,586,630 options with an exercise price of $79.13 per option and a weighted average fair value of $8.26
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 the remaining
50
% at the end of the fourth year.
The Bank recorded an increase to equity – other reserves of $8 million for the three months ended January 31, 2025 (January 31, 2024 – $10 million), as a result of equity-classified share-based payment expense.

14.
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)
January 31
2025
January 31
2024
January 31
2025
January 31
2024
Defined benefit service cost
  
$
83
   $ 52     
$
6
   $ 5  
Interest on net defined benefit (asset) liability
  
(3
)
 
     (8   
16
     17  
Other
  
3
     3     
     3  
Defined benefit expense
  
$
83
   $ 47     
$
22
   $ 25  
Defined contribution expense
  
$
49
   $ 46     
$
   $  
Actuarial gains (losses) on employee benefit plans in other comprehensive income
(2)
  
$
 273
   $  (472 )   
$
 (13
)
 
   $  (58 )
 
  (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.
 
15.
Operating segments
Scotiabank is a diversified financial services institution that provides a wide range of financial products and services to retail, commercial and corporate customers around the world. The Bank’s businesses are grouped into four business lines: Canadian Banking, International Banking, Global Wealth Management and Global Banking and Markets. Other smaller business segments are included in the Other segment. The results of these business segments are based upon the internal financial reporting systems of the Bank. The accounting policies used in these segments are generally consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note 3 of the Bank’s audited consolidated financial statements in the 2024 Annual Report. Notable accounting measurement differences are:
 
tax normalization adjustments related to the
gross-up
of income from associated corporations. This adjustment normalizes the effective tax rate in the divisions to better present the contribution of the associated companies to the divisional results.
 
the grossing up of
tax-exempt
net interest income and
non-interest
income to an equivalent
before-tax
basis for those affected segments. This change in measurement enables comparison of net interest income and
non-interest
income arising from taxable and
tax-exempt
sources.
 
 Scotiabank First Quarter Report 2025   
73

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Effective the first quarter of 2025, the Bank made voluntary changes to its allocation methodology impacting business segment presentation. The new methodology includes updates related to the Bank’s funds transfer pricing, head office expense allocations, and allocations between business segments. Prior period results for each segment have been revised to conform with the current period’s methodology. Further details on the changes are as follows:
 
1.
Funds transfer pricing methodology was updated, primarily related to the allocation of substantially all liquidity costs to the business lines, reflecting the Bank’s strategic objective to maintain higher liquidity ratios.
 
2.
Periodically, the Bank updates its allocation methodologies. This includes a comprehensive update to the allocation of head office expenses across countries within International Banking, updates to the allocation of clients and associated revenue, expenses, and balances between International Banking, Global Banking and Markets, and Global Wealth Management to align with the strategy, as well as updates to the allocation of head office expenses and taxes from the Other segment to the business segments.
 
3.
To be consistent with the reporting of Scotiabank’s recent minority investment in KeyCorp, the Bank has also made changes to the reporting of certain minority investments in International Banking (Bank of Xi’an) and Global Wealth Management (Bank of Beijing Scotia Asset Management) which will now be reported in the Other segment.
 
For the three months ended January 31, 2025
($ millions)
Canadian
Banking
(1)
International
Banking
(1)
Global
Wealth
Management
(1)
Global
Banking and
Markets
(1)
Other
(2)
Total
Net interest income
(3)
 
$
  2,647
  
$
  2,169
  
$
232
  
$
319
  
$
(194
)
 
$
5,173
Non-interest
income
(4)(5)
 
765
  
861
  
1,347
  
1,275
  
(49
)
 
4,199
Total revenues
 
3,412
  
3,030
  
1,579
  
1,594
  
(243
)
 
9,372
Provision for credit losses
 
538
  
602
  
4
  
18
  
 
1,162
Depreciation and amortization
 
136
  
130
  
47
  
64
  
26
 
403
Other
non-interest
expenses
 
1,475
  
1,423
  
975
  
827
  
 1,388
(
6
)
 
 
6,088
Provision for income taxes
 
350
  
189
  
144
  
168
  
(125
)
 
726
Net income
 
$
913
  
$
686
  
$
409
  
$
517
  
$
(1,532
)
 
 
$
993
Net income attributable to
non-controlling
interests in subsidiaries
 
$
  
$
35
  
$
2
  
$
  
$
(191
 
$
(154
Net income attributable to equity holders of the Bank
 
$
913
  
$
651
  
$
407
  
$
517
  
$
(1,341
)
 
$
1,147
Average assets
($ billions)
 
$
460
  
$
229
  
$
37
  
$
511
  
$
224
 
$
1,461
Average liabilities
($ billions)
 
$
386
  
$
174
  
$
43
  
$
511
  
$
262
 
$
  1,376
  (1)
Business line revenues and provision for income taxes are reported on a taxable equivalent basis, with the offset in the Other segment.
  (2)
Includes all other smaller operating segments and corporate adjustments, such as the elimination of the
tax-exempt
income
gross-up
reported in net interest income and
non-interest
income and provision for income taxes of $0 to arrive at the amounts reported in the Consolidated Statement of Income.
  (3)
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure.
  (4)
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.
  (5)
Includes income (on a taxable equivalent basis) from associated corporations for
 
Canadian Banking – $24,
 
International Banking – $
35
, and Other – $
54
.
  (6)
Includes the impairment loss related to the announced sale of the banking operations in Colombia, Costa Rica and Panama.
 

For the three months ended October 31, 2024
(1)
($ millions)
Canadian
Banking
(2)
International
Banking
(2)
Global
Wealth
Management
(2)
Global
Banking and
Markets
(2)
Other
(3)
Total
Net interest income
(4)
$
2,635
$
2,147
$
207
$
280
$
(346
)
$
4,923
Non-interest
income
(5)(6)
684
712
  1,259
992
(44
)
3,603
Total revenues
3,319
2,859
1,466
  1,272
(390
)
8,526
Provision for credit losses
450
556
5
19
1,030
Depreciation and amortization
(7)
133
141
45
66
116
501
Other
non-interest
expenses
1,445
1,350
904
741
355
4,795
Provision for income taxes
357
168
130
99
(243
)
511
Net income
$
934
$
644
$
382
$
347
$
  (618
)
$
  1,689
Net income attributable to
non-controlling
interests in subsidiaries
$
$
44
$
2
$
$
1
$
47
Net income attributable to equity holders of the Bank
$
934
$
600
$
380
$
347
$
(619
)
$
1,642
Average assets
($ billions)
$
457
$
224
$
36
$
486
$
216
$
1,419
Average liabilities
($ billions)
$
385
$
171
$
41
$
478
$
260
$
1,335
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology.
(2)
Business line revenues and provision for income taxes are reported on a taxable equivalent basis, with the offset in the Other segment.
(3)
Includes all other smaller operating segments and corporate adjustments, such as the elimination of the
tax-exempt
income
gross-up
reported in net interest income and
non-interest
income and provision for income taxes of $2 to arrive at the amounts reported in the Consolidated Statement of Income.
  (4)
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure.
  (5)
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.
  (6)
Includes net income (on a taxable equivalent basis) from investments in associated corporations for Canadian Banking – $(2); International Banking – $36
,
 and Other – $7.
(7)
Includes impairment charge of software intangible assets of $97 in the Other segment.
 
74
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
     For the three months ended January 31, 2024
(1)
 
($ millions)
  Canadian
Banking
(2)
    International
Banking
(2)
    
Global
Wealth
Management
(2)
     Global
Banking and
Markets
(2)
     Other
(3)
    Total  
Net interest income
(4)
  $     2,491     $     2,240      $ 185      $ 270      $   (413 )   $ 4,773  
Non-interest
income
(5)(6)
    734       834        1,139        1,023        (70 )         3,660  
Total revenues
    3,225       3,074            1,324            1,293        (483 )     8,433  
Provision for credit losses
    378       574        5        5              962  
Depreciation and amortization
    147       143        47        62        22       421  
Other
non-interest
expenses
    1,352       1,439        827        719        (19 )     4,318  
Provision for income taxes
    375       183        112        119        (256 )     533  
Net income
  $ 973     $ 735      $ 333      $ 388      $ (230 )   $ 2,199  
Net income attributable to
non-controlling
interests in subsidiaries
  $     $ 22      $ 3      $      $     $ 25  
Net income attributable to equity holders of the Bank
  $ 973     $ 713      $ 330      $ 388      $ (230 )   $ 2,174  
Average assets
($ billions)
  $ 445     $ 235      $ 35      $ 505      $ 203     $ 1,423  
Average liabilities
($ billions)
  $ 393     $ 183      $ 41      $ 476      $ 251     $ 1,344  
(1)
Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology.
(2)
Business line revenues and provision for income taxes are reported on a taxable equivalent basis, with the offset in the Other segment.
(3)
Includes all other smaller operating segments and corporate adjustments, such as the elimination of the
tax-exempt
income
gross-up
reported in net interest income and
non-interest
income and provision for income taxes of $43 to arrive at the amounts reported in the Consolidated Statement of Income.
  (4)
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure.
  (5)
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.
  (6)
Includes income (on a taxable equivalent basis) from associated corporations for International Banking – $34, and Other – $12.
 
16.
Interest income and expense
 
For the three months ended
January 31, 2025
October 31, 2024
January 31, 2024
($ millions)
Interest
income
Interest
expense
Interest
income
Interest
expense
Interest
income
Interest
expense
Measured at amortized cost
(1)
 
$
13,135
 
$
9,746
  $ 13,449     $ 10,348     $ 13,539     $ 10,614  
Measured at FVOCI
(1)
 
1,442
 
    1,518             1,359        
 
14,577
 
9,746
    14,967       10,348       14,898        10,614  
Other
 
403
(2)
 
 
61
(3)
 
    358
(2)
 
    54
(3)
 
    541
(2)
 
    52
(3)
 
Total
 
$
14,980
 
$
9,807
  $  15,325     $  10,402     $  15,439     $ 10,666  
  (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 January 31, 2025 – $32 (October 31, 2024 – $30; January 31, 2024 – $30) and insurance finance expense for the three months ended January 31, 2025 – $8 (October 31, 2024 – $8; January 31, 2024 – $7).
 
17.
Earnings per share
 
For the three months ended
($ millions)
January 31
2025
October 31
2024
January 31
2024
Basic earnings per common share
Net income attributable to common shareholders
  
$
1,025
   $  1,521      $  2,066  
Weighted average number of common shares outstanding
(millions)
  
1,245
     1,238        1,214  
Basic earnings per common share
(1)
(in dollars)
  
$
0.82
   $ 1.23      $ 1.70  
Diluted earnings per common share
        
Net income attributable to common shareholders
  
$
1,025
   $ 1,521      $ 2,066  
Dilutive impact of share-based payment options and others
(2)
  
(196
)
     (3 )      (15 )
Net income attributable to common shareholders (diluted)
  
$
829
   $ 1,518      $ 2,051  
Weighted average number of common shares outstanding
(millions)
  
1,245
     1,238        1,214  
Dilutive impact of share-based payment options and others
(2)
(millions)
  
5
     5        7  
Weighted average number of diluted common shares outstanding
(millions)
  
1,250
     1,243        1,221  
Diluted earnings per common share
(1)
(in dollars)
  
$
     0.66
   $ 1.22      $ 1.68  
  (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.
 
 Scotiabank First Quarter Report 2025   
75

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
18.
Financial instruments
(a) Risk management
The Bank’s principal business activities result in a balance sheet that consists primarily of financial instruments. In addition, the Bank uses derivative financial instruments for both trading and hedging purposes. The principal financial risks that arise from transacting financial instruments include credit risk, liquidity risk and market risk. The Bank’s framework to monitor, evaluate and manage these risks is consistent with that in place as at October 31, 2024.
(i) 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 or based on the counterparty type for
non-retail
exposures and product type for retail exposures.
 
Exposure at default
(1)
As at
January 31, 2025
October 31
2024
($ millions)
IRB
Standardized
Total
Total
By exposure
sub-type
Non-retail
Drawn
(2)(3)
  
$
465,056
  
$
68,707
  
$
533,763
   $ 535,326  
Undrawn commitments
  
89,009
  
5,479
  
94,488
     99,011  
Other exposures
(4)
  
135,971
  
18,363
  
154,334
     131,677  
Total
non-retail
  
$
690,036
  
$
92,549
  
$
782,585
   $ 766,014  
Retail
(5)
           
Drawn
  
$
302,945
  
$
121,094
  
$
424,039
   $ 417,760  
Undrawn commitments
  
111,833
  
9,808
  
121,641
     121,609  
Other exposures
  
  
64
  
64
     62  
Total retail
  
$
414,778
  
$
130,966
  
$
545,744
   $ 539,431  
Total
  
$
 1,104,814
  
$
 223,515
  
$
 1,328,329
   $  1,305,445  
  (1)
After credit risk mitigation and excludes equity securities, centralized counterparties, and other assets.
  (2)
Non-retail
drawn exposures include government guaranteed and privately insured mortgages and retail loans.
  (3)
Non-retail
drawn includes loans, bankers’ acceptances, deposits with financial institutions and FVOCI debt securities.
  (4)
Includes
off-balance
sheet lending instruments such as letters of credit, letters of guarantee, securitizations,
over-the-counter
derivatives and repo-style transactions net of related collateral.
  (5)
Retail includes residential mortgages, credit cards, lines of credit, other personal loans and small business treated as other regulatory retail.
Credit quality of
non-retail
exposures
The Bank’s
non-retail
portfolio is well diversified by industry. A significant portion of the authorized corporate and commercial lending portfolio was internally assessed at a grade that would generally equate to an investment grade rating by external rating agencies. There has not been a significant change in concentrations of credit risk since October 31, 2024.
Credit quality of retail exposures
The Bank’s retail portfolios consist of a number of relatively small loans to a large number of borrowers. The portfolios are distributed across Canada and a wide range of countries. As such, the portfolios inherently have a high degree of diversification. In addition, as of January 31, 2025, 23% (October 31, 2024 – 24%) of the Canadian residential mortgage portfolio is insured. The average
loan-to-value
ratio of the uninsured portion of the Canadian residential mortgage portfolio is 52% (October 31, 2024 – 51%).
Retail standardized portfolio
The retail standardized portfolio of $131 billion as at January 31, 2025 (October 31, 2024 – $127 billion) was comprised of residential mortgages, personal loans, credit cards and lines of credit to individuals, mainly in Latin America and the Caribbean. Of the total retail standardized exposures, $66 billion (October 31, 2024 – $64 billion) was represented by mortgages and loans secured by residential real estate, mostly with a
loan-to-value
ratio of below 80%.
(ii) Liquidity risk
Liquidity risk is the risk that the Bank is unable to meet its financial obligations in a timely manner at reasonable prices. The Bank’s liquidity risk is subject to extensive risk management controls and is managed within the framework of policies and limits approved by the Board. The Board receives reports on risk exposures and performance against approved limits. The Asset/Liability Committee (ALCO) provides senior management oversight of liquidity risk.

76
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The key elements of the Bank’s liquidity risk management framework include:
 
   
liquidity risk measurement and management limits, including limits on maximum net cash outflow by currency over specified short-term horizons;
 
   
prudent diversification of its wholesale funding activities by using a number of different funding programs to access the global financial markets and manage its maturity profile, as appropriate;
 
   
large holdings of liquid assets to support its operations, which can generally be sold or pledged to meet the Bank’s obligations;
 
   
liquidity stress testing, including Bank-specific, global-systemic, and combination systemic/specific scenarios; and
 
   
liquidity contingency planning.
The Bank’s foreign operations have liquidity management frameworks that are similar to the Bank’s framework. Local deposits are managed from a liquidity risk perspective based on the local management frameworks and regulatory requirements.
(iii) Market risk
Market risk arises from changes in market prices and rates (including interest rates, credit spreads, equity prices, foreign exchange rates and commodity prices), the correlations among them, and their levels of volatility.
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 customers’ preferences (e.g. mortgage prepayment rates).
Non-trading
foreign currency risk
Foreign currency risk is the risk of loss due to changes in spot and forward rates.
As at January 31, 2025, 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 (October 31, 2024 – $45 million; January 31, 2024 – $61 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 January 31, 2025, would increase (decrease) the unrealized foreign currency translation losses in the accumulated other comprehensive income section of shareholders’ equity by approximately $363 million (October 31, 2024 – $324 million; January 31, 2024 – $345 million), net of hedging.
Non-trading
equity risk
Equity risk is the risk of loss due to adverse movements in equity prices. The Bank is exposed to equity risk through its investment equity portfolios. The fair value of investment equity securities is shown in Note
6
.
Trading portfolio risk management
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:
 

For the three months ended
As at
January 31, 2025
January 31
October 31
January 31
($ millions)
Average
High
Low
2025
2024
2024
Credit spread plus interest rate
  
$
17.4
  
$
22.2
  
$
10.4
     
$
14.3
   $ 12.5      $ 19.3  
Credit spread
(1)
  
8.0
  
11.1
  
6.6
     
8.6
     7.3        9.6  
Interest rate
  
21.8
  
28.5
  
14.5
     
17.2
     17.5        7.8  
Equities
  
5.7
  
9.6
  
4.2
     
4.5
     5.4        4.8  
Foreign exchange
  
2.6
  
5.9
  
1.0
     
1.3
     2.9        5.2  
Commodities
  
2.8
  
3.5
  
2.3
     
3.1
     2.8        3.4  
Debt specific
(1)
  
n/a
  
n/a
  
n/a
           
n/a
     3.6        4.0  
Diversification effect
  
(11.4
)
 
  
n/a
  
n/a
  
  
(9.3
)
 
      (15.0       (18.2
Total VaR
  
$
17.1
  
$
21.6
  
$
10.6
  
  
$
13.9
   $ 12.1      $ 18.5  
(1)
Effective November 1, 2024, credit spread VaR also captures issuer-specific credit spread volatility which was previously included in debt specific VaR.
(b) 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.
 
 Scotiabank First Quarter Report 2025 
77

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
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)
January 31
2025
October 31
2024
January 31
2024
January 31
2025
October 31
2024
January 31
2024
January 31
2025
October 31
2024
January 31
2024
Liabilities
Senior note liabilities
(3)
 
$
39,594
  $ 36,341     $ 32,074    
$
486
  $ 159     $ (4,254  
$
4,626
  $ 4,140     $ 4,401  
  (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 January 31, 2025
  
$
44,220
  
$
39,594
  
$
4,626
  
$
(264
)
  
$
(1,177
)
As at October 31, 2024
   $ 40,481      $ 36,341      $ 4,140      $ (46 )    $    (913 )
As at January 31, 2024
   $  36,475      $  32,074      $  4,401      $  (411    $ (520
  (1)
The cumulative change in fair value is measured from the instruments’ date of initial recognition.
(c) 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 8 of the Bank’s audited consolidated financial statements in the 2024 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  
January 31, 2025
October 31, 2024
($ millions)
Total fair
value
Total
carrying
value
Total fair
value
Total
carrying
value
Assets:
Cash and deposits with financial institutions
  
$
70,198
  
$
70,198
   $ 63,860      $ 63,860  
Trading assets
  
136,708
  
136,708
      129,727         129,727  
Securities purchased under resale agreements and securities borrowed
  
195,258
  
195,258
     200,543        200,543  
Derivative financial instruments
  
48,035
  
48,035
     44,379        44,379  
Investment securities – FVOCI and FVTPL
  
124,525
  
124,525
     123,420        123,420  
Investment securities – amortized cost
  
27,653
  
28,494
     28,422        29,412  
Loans
  
764,977
  
766,305
     757,825        760,829  
Customers’ liability under acceptances
  
207
  
207
     148        148  
Other financial assets
  
27,460
  
27,460
     22,467        22,467  
Liabilities:
           
Deposits
  
964,081
  
966,049
     941,290        943,849  
Financial instruments designated at fair value through profit or loss
  
39,594
  
39,594
     36,341        36,341  
Acceptances
  
210
  
210
     149        149  
Obligations related to securities sold short
  
34,855
  
34,855
     35,042        35,042  
Derivative financial instruments
  
59,847
  
59,847
     51,260        51,260  
Obligations related to securities sold under repurchase agreements and securities lent
  
182,259
  
182,259
     190,449        190,449  
Subordinated debentures
  
8,022
  
8,042
     7,814        7,833  
Other financial liabilities
  
52,102
  
52,537
     53,342        53,387  
 
78
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
(d) 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
over-the-counter
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.
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.
The following table outlines the fair value hierarchy and instruments carried at fair value on a recurring basis.
 
 As at
January 31, 2025
October 31, 2024
($ 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)
 
$
 
$
3,687
 
$
 
$
3,687
  $     $ 2,540     $     $ 2,540  
Trading assets
               
Loans
 
 
8,048
 
 
8,048
          7,649             7,649  
Canadian federal government and government guaranteed debt
 
11,241
 
2,767
 
 
14,008
    11,229       3,742             14,971  
Canadian provincial and municipal debt
 
7,029
 
3,270
 
 
10,299
    6,228       2,185             8,413  
U.S. treasury and other U.S. agencies’ debt
 
10,826
 
 
 
10,826
    15,050                   15,050  
Other foreign governments’ debt
 
131
 
10,496
 
 
10,627
    422       9,932             10,354  
Corporate and other debt
 
4,152
 
7,934
 
 
12,086
    4,940       6,990       4       11,934  
Equity securities
 
68,088
 
75
 
10
 
68,173
    59,081       88       21       59,190  
Other
 
 
2,641
 
 
2,641
          2,166             2,166  
 
$
101,467
 
$
35,231
 
$
10
 
$
136,708
  $ 96,950     $ 32,752     $ 25     $ 129,727  
Investment securities
(2)
               
Canadian federal government and government guaranteed debt
 
$
13,774
 
$
7,456
 
$
 
$
21,230
  $ 12,739     $ 8,801     $     $ 21,540  
Canadian provincial and municipal debt
 
10,989
 
8,239
 
 
19,228
    12,823       4,702             17,525  
U.S. treasury and other U.S. agencies’ debt
 
41,079
 
7,222
 
 
48,301
    39,999       6,377             46,376  
Other foreign governments’ debt
 
1,310
 
28,408
 
 
29,718
    3,940       25,346             29,286  
Corporate and other debt
 
135
 
3,513
 
34
 
3,682
    133       3,359       35       3,527  
Equity securities
 
79
 
309
 
1,978
 
2,366
    2,983       317       1,866       5,166  
 
$
67,366
 
$
55,147
 
$
2,012
 
$
124,525
  $  72,617     $  48,902     $  1,901     $  123,420  
Derivative financial instruments
               
Interest rate contracts
 
$
 
$
12,212
 
$
 
$
12,212
  $     $ 11,584     $     $ 11,584  
Foreign exchange and gold contracts
 
 
29,262
 
 
29,262
          26,004             26,004  
Equity contracts
 
118
 
4,101
 
58
 
4,277
    150       4,313       44       4,507  
Credit contracts
 
 
174
 
1
 
175
          180       2       182  
Commodity contracts
 
 
2,103
 
6
 
2,109
          2,095       7       2,102  
 
$
118
 
$
47,852
 
$
65
 
$
48,035
  $ 150     $ 44,176     $ 53     $ 44,379  
Liabilities:
               
Deposits
(3)
 
$
 
$
178
 
$
 
$
178
  $     $ 193     $     $ 193  
Financial liabilities designated at fair value through profit or loss
 
 
39,594
 
 
39,594
          36,341             36,341  
Obligations related to securities sold short
 
29,021
 
5,834
 
 
34,855
    30,721       4,319       2       35,042  
Derivative financial instruments
               
Interest rate contracts
 
 
18,887
 
23
 
18,910
          17,895       13       17,908  
Foreign exchange and gold contracts
 
 
31,870
 
 
31,870
          25,900             25,900  
Equity contracts
 
230
 
5,400
 
12
 
5,642
    139       4,687       19       4,845  
Credit contracts
 
 
28
 
1
 
29
          46       1       47  
Commodity contracts
 
 
3,387
 
9
 
3,396
          2,550       10       2,560  
 
$
230
 
$
59,572
 
$
45
 
$
59,847
  $ 139     $ 51,078     $ 43     $ 51,260  
  (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 $28,494 (October 31, 2024 – $29,412).
  (3)
These amounts represent embedded derivatives bifurcated from structured note liabilities measured at amortized cost.
 
 Scotiabank First Quarter Report 2025   
79

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
Level 3 instrument fair value changes
Financial instruments categorized as Level 3 as at January 31, 2025, in the fair value hierarchy comprised of corporate bonds, equity securities and derivatives.
The following table summarizes the changes in Level 3 instruments carried at fair value for the three months ended January 31, 2025.
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.
 

As at January 31, 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/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
Corporate and other debt
$
4
$
$
$
$
$
(4
$
$
Equity securities
21
1
1
(13
10
1
25
1
1
(13
(4
10
1
Investment securities
Corporate and other debt
35
(1
34
(1
Equity securities
1,866
52
5
71
(8
(8
1,978
51
1,901
51
5
71
(8
(8
2,012
50
Derivative financial instruments – assets
Equity contracts
44
11
4
(1
58
11
(
3
)
 
Credit contracts
2
(1
1
(1
Commodity contracts
7
(1
6
(1
Derivative financial instruments – liabilities
Interest rate contracts
(13
(10
(23
(10
)
(
4
)
 
Equity contracts
(19
3
4
(12
3
(
3
)
 
Credit contracts
(1
(1
Commodity contracts
(10
1
(9
1
10
3
4
3
20
3
Obligations related to securities sold short
(2
2
Total
$
 1,934
$
 55
$
5
$
 76
$
 (21
$
 (7
$
 2,042
$
 54
(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
changes on other instruments included in trading revenues in the Consolidated Statement of Income, since these instruments act as an economic hedge to certain derivative assets and liabilities.
(4)
Certain unrealized losses on interest rate derivative contracts are largely offset by mark-to-market changes on embedded derivatives on certain deposit liabilities in the Consolidated Statement of Income.
The following tables summarize the changes in Level 3 instruments carried at fair value for the three months ended October 31, 2024.
 
As at October 31, 2024
($ millions)
Fair value,
beginning
of the
quarter
Gains/
(losses)
recorded
in income
(1)
Gains/
(losses)
recorded
in OCI
Purchases/
Issuances
Sales/
Settlements
Transfers
into/
out of
Level 3
Fair value,
end of the
quarter
Trading assets
   $ 48      $      $      $ 3      $ (6 )    $  (20 )    $ 25  
Investment securities
      1,822            13         1         72         (40 )      33         1,901  
Derivative financial instruments
     35        1               (2 )      (8 )      (16 )      10  
Obligations related to securities sold short
                                        (2      (2
  (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.
 
80
 Scotiabank First Quarter Report 2025 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
During the three months ended January 31, 2025:
 
   
Trading assets of $1,004 million, investment securities of $788 million and obligations related to securities sold short of $392 million were transferred out of Level 2 into Level 1.
 
   
Trading assets of $1,519 million, investment securities of $6,393 million and obligations related to securities sold short of $1,366 million were transferred out of Level 1 into Level 2.
During the three months ended October 31, 2024:
 
   
Trading assets of $1,873 million, investment securities of $4,558 million and obligations related to securities sold short of $447 million were transferred out of Level 2 into Level 1.
 
   
Trading assets of $1,503 million, investment securities of $3,135 million and obligations related to securities sold short of $296 million were transferred out of Level 1 into Level 2.
There were no significant transfers into and out of Level 3 during the three months ended January 31, 2025 and October 31, 2024.
Level 3 sensitivity
The Bank applies judgement in determining unobservable inputs used to calculate the fair value of Level 3 instruments.
Refer to Note 8 of the Bank’s audited consolidated financial statements for the year ended October 31, 2024 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.
 
19.
Corporate income taxes
Tax assessments
The Bank received reassessments totaling $1,634 million (October 31, 2024 – $1,634 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 2011-2019 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 and 2019 taxation years totaling $3 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
2014-2019
taxation years totaling $637 million (October 31, 2024 – $637 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 2014-2018 taxation years and a Notice of Objection in respect of its 2019 taxation year assessment.
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.
Canadian federal tax measures
On August 12, 2024, the Department of Finance released draft legislation on the proposed increase to the capital gains inclusion rate from 50% to 66.7
% for gains or losses realized after June 24, 2024. On January 31, 2025, the federal government announced that it would defer the implementation date to January 1, 2026.
Global Minimum Tax
The Organisation for Economic
Co-operation
and Development (OECD) published Pillar Two model rules in December 2021 as part of its efforts toward international tax reform. The rules aim to have large multinational enterprises, with consolidated revenues in excess of
750 million, pay a minimum effective tax of
15
%
. These rules apply to the Bank effective November 1, 2024, and have been enacted or substantively enacted in certain jurisdictions in which the Bank operates, including Canada, whose Global Minimum Tax (GMT) Act
was
enacted in June 2024.
The IASB previously issued amendments to IAS 12 Income Taxes for a temporary mandatory exception from the recognition and disclosure of deferred taxes related to the implementation of Pillar Two GMT rules, which the Bank has applied.
For the three months ended January 31, 2025, the impact of the GMT on the Bank’s effective tax rate was approximately 1%,
and was primarily related to its operations in certain Caribbean jurisdictions and Ireland. 
 
20.
Acquisitions and divestitures
Acquisitions
Acquisition completed impacting the current period
KeyCorp
On August 12, 2024, the Bank announced an agreement to acquire an approximate 14.9%
pro-forma
ownership interest in KeyCorp for approximately U.S. $2.8 billion through an
all-cash
purchase of newly issued voting common shares, at a fixed price of U.S.$17.17 per share.
 
 Scotiabank First Quarter Report 2025   
81

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The acquisition was completed in two stages – an initial investment of
4.9
% (Initial Investment) on August 30, 2024, and an additional investment of approximately
10
% (Additional Investment) this quarter. The Bank completed the Additional Investment of approximately 115 million shares in KeyCorp for cash consideration of approximately U.S. $
2.0
 billion on December 27, 2024. This increased the Bank’s ownership interest from 4.9% to 14.92%, with total common share ownership of approximately 163 million shares. Following completion of the Additional Investment, the Bank designated two individuals to serve on KeyCorp’s Board of Directors.
Effective December 27, 2024, the combined
14.92
%
investment is accounted for as an investment in associate as the Bank has significant influence over KeyCorp as defined under IFRS, given its board representation and ownership interest. The Initial Investment of
4.9%
previously accounted for at fair value through other comprehensive income was derecognized and included in the cost base of the investment in associate. The difference between the fixed transaction price and the quoted share price of KeyCorp on the date of Additional Investment (U.S.$17.20) was recognized as a gain in non-interest income – other this quarter, with a corresponding increase in the carrying value of the investment in associate. The carrying amount of the investment in associate upon closing was U.S.
$
2.8
 
billion (CAD $4.1
billion). For the three months ended January 31, 2025, the contribution to the Bank’s profit and loss from KeyCorp, net of funding costs, was $28 million after-tax, and
$40
million
($35
million after-tax) was recorded in net income from investments in associated corporations representing the Bank’s approximate one-month share of KeyCorp’s financial results under IFRS. 
Upon completion of the Additional Investment, the total impact to the Bank’s CET1 ratio from both stages of the transaction was a decrease of approximately 51 basis points.
Divestitures
Divestitures announced that are expected to close in a future period
Sale of banking operations in Colombia, Costa Rica and Panama
On January 6, 2025, the Bank entered into an agreement with Davivienda to sell Scotiabank’s banking operations in Colombia, Costa Rica and Panama in exchange for an approximately 20% ownership stake in the newly combined entity of Davivienda. The Bank’s ownership will consist of 14.99% voting common shares and the remainder in non-voting preferred shares. At the closing date, the Bank will have the right to designate individuals to serve on the Board of Directors of Davivienda’s combined operations commensurate with its ownership stake.
The transaction is expected to be completed in approximately 12 months from the signing date, subject to regulatory approvals in all jurisdictions and customary closing conditions.
The Bank’s operations that are part of this transaction have met the criteria for classification
as
held for sale in accordance with IFRS 5 and as at January 31, 2025, include total assets of $23 billion, consisting primarily of loans ($17 billion), investment securities ($2.4 billion) and cash and deposits ($2.1 billion
)
 
and
total liabilities of $22 billion consist
ing
primarily of deposits ($17.6 billion) and other liabilities ($3.3 billion). The Bank recorded an impairment loss on the announcement date of $1,362 million, representing the write-down of goodwill ($589 million), intangibles ($151 million), property and equipment ($290
million) and the remaining in other assets. The impairment loss was recorded in non-interest expenses – other in the consolidated statement of income and in the Other operating segment. The impact to the Bank’s CET1 capital ratio was a decrease of approximately 12 basis points this quarter.
At each future reporting period, any changes in carrying value of the net assets being sold and the fair value of the shares to be received, will be recognized in profit and loss. In addition, upon closing, the net cumulative foreign currency translation reserve at that date, related to these operations will be recorded in the consolidated statement of income. As at January 31, 2025, the net cumulative foreign currency translation losses were
$132 million.
Upon closing, the Bank’s investment in Davivienda will be accounted for as an investment in associate, as the Bank will have significant influence over Davivienda in accordance with IFRS, given its board representation and ownership interest.
CrediScotia Financiera
On May 6, 2024, the Bank entered into an agreement to sell CrediScotia Financiera, a wholly-owned consumer finance subsidiary in Peru, to Banco Santander. The transaction is expected to close in Q2 2025.
In Q3 2024, the Bank recorded an impairment loss of
$143 
million in non-interest income – other and a credit of
$7 
million in non-interest expenses – salaries and employee benefits (collectively
$90 
million after-tax), of which the majority related to goodwill. The loss was recorded in the Other operating segment.
 
82
 Scotiabank First Quarter Report 2025 


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.
Dividend Dates for 2025
Record and payment dates for common and preferred shares, subject to approval by the Board of Directors.
 
Record Date    Payment Date
January 7, 2025    January 29, 2025
April 1, 2025    April 28, 2025
July 2, 2025    July 29, 2025
October 7, 2025    October 29, 2025
Annual Meeting
The Annual Meeting for fiscal year 2024 will be held on April 8, 2025 beginning at 9:30 a.m. (Atlantic) in Halifax, Nova Scotia, Canada. Please visit our website at https://www.scotiabank.com/annualmeeting for updates concerning the meeting.
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 February 25, 2025, 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
416-340-2217,
or toll-free at
1-800-806-5484
using ID 2232412# (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.
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 February 25, 2025 to March 25, 2025, by calling
905-694-9451
or
1-800-408-3053
(North America toll-free) and entering the access code 2653589#.
 
 
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
100 University Avenue, 8th Floor
Toronto, Ontario, Canada M5J 2Y1
Telephone:
1-877-982-8767
E-mail: service@computershare.com
 
 Scotiabank First Quarter Report 2025   
 
83
 

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
Canton, MA, USA 02021
Mailing Address:
PO Box 43078, Providence, RI, USA 02940-3078
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.
 
 
  
 
The Bank of Nova Scotia is a chartered bank under the Bank Act
(Canada) and is a public company incorporated in Canada.