• Net Income: Record net income in 2024 with a quarterly net income of $426 million.
• Revenue Growth: Revenue up 6% year over year.
• Adjusted Diluted EPS: $6.47 for fiscal 2024.
• Return on Equity (ROE): 11.3% for fiscal 2024.
• Return on Tangible Common Equity: 13.7% for fiscal 2024.
• Tier 1 Capital Ratio: 13.1%.
• Provision for Credit Losses: $4.1 billion in 2024, up $629 million year over year.
• Canadian Banking Earnings: $4.3 billion, up 7% year over year.
• International Banking Earnings: $2.7 billion, up 10% year over year.
• Global Wealth Management Earnings: $1.6 billion, up 10% year over year.
• Global Banking and Markets Earnings: $1.7 billion, down 5% year over year.
• Assets Under Management: Grew to over $370 billion, up 18% year over year.
• Net Interest Income: $4.9 billion, up 6% year over year.
• Non-Interest Income: $3.6 billion, up 11% year over year.
• Operating Leverage: Positive 2.3% for fiscal 2024.
• Expense Growth: 4% year over year.
• Net Interest Margin: Grew 1 basis point quarter over quarter.
• Deposits Growth: Up 2% year over year.
• Loan Growth: Down 2% year over year.

• Warning! GuruFocus has detected 7 Warning Signs with BNS.

Release Date: December 03, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bank of Nova Scotia (NYSE:BNS) reported a solid Tier 1 capital ratio of 13.1%, indicating a strong balance sheet.
• The global wealth management business delivered record annual earnings of $1.6 billion in 2024, with a return on equity expansion to 15.7%.
• Canadian banking saw a 7% revenue-led earnings growth, driven by deposit growth and margin expansion.
• International banking achieved a 7% year-over-year earnings growth, with a significant reduction in capital deployed to the region.
• The bank's focus on primary client growth resulted in an increase of 280,000 primary clients across retail markets.

Negative Points

• Net income was impacted by a $430 million after-tax adjusting item, including a $379 million impairment charge related to the write-down of investments.
• The provision for credit losses increased by $629 million year-over-year, driven by higher impaired PCLs.
• International banking earnings are expected to be lower in 2025 due to weak American currencies and slow growth economies.
• The bank's global banking and markets segment reported a 5% decline in earnings, impacted by the elimination of the Canadian dividend received tax deduction.
• The Canadian residential mortgage book saw an uptick in impairments, attributed to interest rate pressures.

Q & A Highlights

Q: Can you provide your comfort level regarding the 5% to 7% earnings growth target for 2025, and do you expect ROE to exceed 13% by the end of the year? A: We have high confidence in achieving 5% to 7% earnings growth in 2025, driven by strong PTPP growth across all businesses. Key factors include the PCL outlook, which is expected to improve modestly in the latter half of the year, and the rate environment, which favors us in a declining rate scenario. The addition of KeyCorp, expected in the first quarter, will also contribute to growth. While we won't specify an ROE target, we are focused on capital and cost discipline to drive higher ROE, aiming for 14% plus in our five-year plan.

Q: Could you elaborate on the outlook for the international business, considering the decline in loan balances and the impact of the US election? A: We are deliberately reallocating capital to improve returns, which has led to a reduction in RWA by $9 billion. The economic environment in Mexico, Chile, and Peru is expected to slow in 2025, but we are adapting by focusing on productivity and regionalization efforts. We are driving primacy across all segments, enhancing transaction banking in GBM, and optimizing commercial and retail banking models to achieve scale and efficiency.

Q: Can you explain the RWA growth this quarter and its impact on capital for 2025? A: The RWA growth was primarily due to book quality changes and recalibration. We expect organic growth to drive RWA in 2025, with potential migration as part of normal business operations. We are comfortable operating with a capital ratio slightly above 0.5%, focusing on deploying capital for quality growth and superior returns.

Q: What is causing the uptick in impairments in the Canadian residential mortgage book, and how do you see this evolving with upcoming fixed mortgage renewals? A: The uptick in impairments is primarily due to higher interest rates and some unemployment impact. However, we are seeing early signs of improvement as interest rates start to decline. The uptick was driven by about 250 customers in Toronto and Vancouver. We are optimistic about fixed rate mortgage renewals, with customers showing improved deposit balances, indicating resilience.

Q: What are your expectations for dividend growth and capital return to shareholders in 2025? A: As earnings growth resumes in the 5% to 7% range, we expect to see modest improvements in the dividend. While we are not yet ready for share repurchases, it is a topic for discussion as we progress through 2025 and beyond, especially after closing the KeyCorp acquisition.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.