Investor Presentation - March 2020 - Scotiabank Global Site
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Investor Presentation March 2020
Caution Regarding Forward-Looking Statements
From time to time, our public communications often include oral or written forward- changes to accounting standards, rules and interpretations on these estimates; global
looking statements. Statements of this type are included in this document, and may be capital markets activity; the Bank’s ability to attract, develop and retain key executives;
included in other filings with Canadian securities regulators or the U.S. Securities and the evolution of various types of fraud or other criminal behaviour to which the Bank is
Exchange Commission, or in other communications. In addition, representatives of the exposed; disruptions in or attacks (including cyber-attacks) on the Bank’s information
Bank may include forward-looking statements orally to analysts, investors, the media technology, internet, network access, or other voice or data communications systems
and others. All such statements are made pursuant to the “safe harbor” provisions of or services; increased competition in the geographic and in business areas in which we
the U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadian operate, including through internet and mobile banking and non-traditional
securities legislation. Forward-looking statements may include, but are not limited to, competitors; exposure related to significant litigation and regulatory matters; the
statements made in this document, the Management’s Discussion and Analysis in the occurrence of natural and unnatural catastrophic events and claims resulting from such
Bank’s 2019 Annual Report under the headings “Outlook” and in other statements events; and the Bank’s anticipation of and success in managing the risks implied by the
regarding the Bank’s objectives, strategies to achieve those objectives, the regulatory foregoing. A substantial amount of the Bank’s business involves making loans or
environment in which the Bank operates, anticipated financial results, and the outlook otherwise committing resources to specific companies, industries or countries.
for the Bank’s businesses and for the Canadian, U.S. and global economies. Such Unforeseen events affecting such borrowers, industries or countries could have a
statements are typically identified by words or phrases such as “believe,” “expect,” material adverse effect on the Bank’s financial results, businesses, financial condition or
“foresee,” “forecast,” “anticipate,” “intend,” “estimate,” “plan,” “goal,” “project,” and liquidity. These and other factors may cause the Bank’s actual performance to differ
similar expressions of future or conditional verbs, such as “will,” “may,” “should,” materially from that contemplated by forward-looking statements. The Bank cautions
“would” and “could.” that the preceding list is not exhaustive of all possible risk factors and other factors
By their very nature, forward-looking statements require us to make assumptions and could also adversely affect the Bank’s results, for more information, please see the “Risk
are subject to inherent risks and uncertainties, which give rise to the possibility that our Management” section of the Bank’s 2019 Annual Report, as may be updated by
predictions, forecasts, projections, expectations or conclusions will not prove to be quarterly reports.
accurate, that our assumptions may not be correct and that our financial performance Material economic assumptions underlying the forward-looking statements contained
objectives, vision and strategic goals will not be achieved. in this document are set out in the 2019 Annual Report under the headings “Outlook”,
We caution readers not to place undue reliance on these statements as a number of as updated by quarterly reports. The “Outlook” sections are based on the Bank’s views
risk factors, many of which are beyond our control and effects of which can be difficult and the actual outcome is uncertain. Readers should consider the above-noted factors
to predict, could cause our actual results to differ materially from the expectations, when reviewing these sections. When relying on forward-looking statements to make
targets, estimates or intentions expressed in such forward-looking statements. decisions with respect to the Bank and its securities, investors and others should
The future outcomes that relate to forward-looking statements may be influenced by carefully consider the preceding factors, other uncertainties and potential events. Any
many factors, including but not limited to: general economic and market conditions in forward-looking statements contained in this document represent the views of
the countries in which we operate; changes in currency and interest rates; increased management only as of the date hereof and are presented for the purpose of assisting
funding costs and market volatility due to market illiquidity and competition for the Bank’s shareholders and analysts in understanding the Bank’s financial position,
funding; the failure of third parties to comply with their obligations to the Bank and its objectives and priorities, and anticipated financial performance as at and for the
affiliates; changes in monetary, fiscal, or economic policy and tax legislation and periods ended on the dates presented, and may not be appropriate for other purposes.
interpretation; changes in laws and regulations or in supervisory expectations or Except as required by law, the Bank does not undertake to update any forward-looking
requirements, including capital, interest rate and liquidity requirements and guidance, statements, whether written or oral, that may be made from time to time by or on its
and the effect of such changes on funding costs; changes to our credit ratings; behalf.
operational and infrastructure risks; reputational risks; the accuracy and completeness Additional information relating to the Bank, including the Bank’s Annual Information
of information the Bank receives on customers and counterparties; the timely Form, can be located on the SEDAR website at www.sedar.com and on the EDGAR
development and introduction of new products and services; our ability to execute our section of the SEC’s website at www.sec.gov.
strategic plans, including the successful completion of acquisitions and dispositions,
including obtaining regulatory approvals; critical accounting estimates and the effect of
2
TABLE OF CONTENTS
Scotiabank Overview 4
• Leading Bank in the Americas 5
• Economic Outlook in Core Markets 6
• Well-Diversified Business with Strong Returns 7
• Business Lines 8
• Why Invest in Scotiabank? 9
• Focused on Higher Return Markets 10
• Increasing Banking Penetration 11
• Repositioning is Substantially Complete 12
• Acquisition & Divestiture Activity 13
• Medium-Term Financial Objectives 14
• Q1 2020 Financial Performance 15
• Earnings and Dividend Growth 16
• Strong Capital Generation 17
• Technology Strategy 18
• Fintech 19
• Growth in Digital Banking 20
• Environmental, Social & Governance (ESG) 21
Business Line Overview: Canadian Banking 23
Business Line Overview: International Banking 31
Business Line Overview: Global Wealth Management 42
Business Line Overview: Global Banking and Markets 46
Risk Overview 50
• Risk Snapshot 51
• Risk Density 52
• Historical PCL Ratios on Impaired Loans 53
• Canadian Retail: Loans and Provisions 54
• International Retail: Loans and Provisions 55
• Energy Exposure 56
Treasury and Funding 57
• Funding Strategy 58
• Wholesale Funding 59
• Deposit Overview 60
• Wholesale Funding Utilization 61
• Liquidity Metrics 62
Appendix 1: Core Markets: Economic Profiles 63
Appendix 2: Canadian Housing Market 69
Appendix 3: Bail-in and TLAC 78
Appendix 4: Covered Bonds 82
Appendix 5: Additional Information 86
Contact Information 88
3• Leading bank in the Americas with
competitive scale in high return markets
• Repositioning of business substantially
complete
Scotiabank
Overview • Greater geographic focus, increased scale in
core markets, and improved business mix
• Strong credit quality. Stable credit metrics.
• Positioned for higher capital ratios, ongoing
buybacks, and sustainable long-term earnings
growth
4Leading Bank in the Americas1
Core markets: Canada, US, Mexico, Peru, Chile and Colombia
7th largest bank by assets1 in the Americas
Q1 Change
Full-Service, Scotiabank2 2020 Y/Y
Canada Universal Bank
Revenue $7,989MM +5%
(AAA)
Canada Net Income $2,344MM +2%
#3 Bank Mexico
Peru
Return on Equity 13.9% +20 bps
Chile Operating Leverage +1.3% n.a.
United States Colombia Productivity Ratio 53.4% (70 bps)
(AA+) Caribbean
Top 15 FBO Uruguay Total Assets $1.2T +12%
Colombia Ranking by Market Share3
(BBB-) Wholesale
#6 Bank Operations Canada #3
Mexico USA USMCA USA Top 15 FBO
(BBB+) UK Mexico #5
#5 Bank Singapore
Australia PAC Peru #3
Ireland Chile #3
Hong Kong SAR Colombia #6
Peru China
(BBB+) Brazil
#3 Bank Chile South Korea Earnings by Other
(A+) Malaysia Market2,4 C&CA
#3 Bank India 7%
Japan
6%
PAC 23%
55% Canada
9%
1 Ranking by asset as at February 24, 2020, Bloomberg; 2 Adjusted for acquisition and divestiture-related amounts, impact of
additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and impairment charge on software asset; 3 Ranking Americas (~95%) U.S.A
based on market share in loans as of December 2019 for PACs (incl. M&A), as of October 2019 in Canada for publically traded
banks; 4 Adjusted net income attributable to equity holders of the Bank for the 3 months ended January 31, 2020
5Economic Outlook in Core Markets
Real GDP Growth Forecast (2019 – 2021)
Real GDP (Annual % Change)
2010–18
Country 2019f 2020f 2021f
Average
Canada 2.2 1.6 1.5 2.0
U.S. 2.3 2.3 1.7 1.8
Mexico 3.0 0.0 1.0 1.8
Peru 4.8 2.3 3.0 3.5
Chile 3.5 1.0 1.4 3.0
Colombia 3.8 3.2 3.6 3.6
Pacific Alliance Average 3.8 1.6 2.3 3.0
Source: Scotiabank Economics. Forecasts as of January 13, 2020
6Well-Diversified Business with Strong Returns
Earnings by Business Line1,2,3 Earnings by Market1,2
Wealth
Europe, Asia,
Management
Brazil, Australia
13% Global
Caribbean and
Central America
Other
Wealth Colombia 7%
Management C&CA*
1% 6%
13%
Canadian Personal & Chile
Banking Commercial 5%
Wholesale Global P&C Banking
Q1 2020 Q1 2020
67%
Banking
Banking and 40% Peru
Markets EARNINGS MIX 9% EARNINGS MIX
20% 20%
$2.3B3 Per $2.3B3
Canada
55%
Mexico
8%
International U.S.
Banking P&C 9%
27%
21.9%
12.7% 13.7% 14.0% 13.9%
Canadian International Global Wealth Global Banking All Bank
Banking Banking Management and Markets
1 Net
income attributable to equity holdersor for the 3 months ended January 31, 2020; 2 Adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and
impairment charge on software asset; 3 Excluding Other segment 7Business Lines
Activity Personal & Commercial Banking Wealth Management Capital Markets
Canadian International Global Wealth Global Banking
Business Line Banking Banking Management and Markets
Products • Mortgages • Mortgages • Asset Management • Corporate Banking
• Auto Loans • Auto Loans • Private Banking • Advisory
• Commercial • Commercial • Private Investment • Equities
Loans Loans Counsel • Fixed Income
• Personal Loans • Personal Loans • Brokerage • Foreign Exchange
• Credit Cards • Credit Cards • Trust • Commodities
NIAEH1 ($MM) $908 $615 $318 $451
% All-Bank1 40% 27% 13% 20%
% Target 35-40% 25-30% ~15% 15-20%
Productivity
45.4% 52.9% 62.4% 51.5%
Ratio1
ROE1 21.9% 12.7% 13.7% 14.0%
Employees2 18,538 55,190 7,214 2,426
1 Adjusted figures for the 3 months ended January 31, 2020
2 As at January 31, 2020 8Why Invest in Scotiabank?
Leading bank in the • Six core markets: Canada, US, Mexico, Chile, Peru and Colombia
• ~95% of earnings from the Americas
Americas
• ~85% of earnings from six core markets
• Unique Americas footprint provides diversified exposure to higher
growth, high ROE banking markets
Diversified exposure to high
• 225 million people in the Pacific Alliance countries comprise the 6th
quality growth markets largest economy in the world
• Competitive scale and increasing market share in core markets
Increasing scale and market • Competitive advantages in technology, risk management, and funding
share in core markets versus competitors
• Increased scale in Wealth Management and P&C businesses via M&A
• ~80% of earnings from stable P&C banking and wealth businesses
Improved earnings quality, • Simplified footprint lowers operational risk and regulatory costs
lower risk profile • Strong Canadian risk management culture with strong capabilities in AML
and cybersecurity
Strengthening competitive • High levels of technology investment supports digital banking strategy to
increase digital sales and adoption
advantages in technology
• Named “Bank of the Year” in Canada (2019)
and talent
9Focused on Higher Return Markets
Banking: Average ROE by Market
(Latest Reporting Period)
25.0%
20.0% 19.1%
15.3%
15.0%
12.1%
11.0%
10.0%
6.7%
5.0%
0.0%
Pacific Alliance Canada US Asia Europe
78% of all-bank
earnings
Return on equity in latest reporting period for the leading bank by market share for loans in each country.
Canada and US figures are average for five largest and 10 largest market share banks in each country, respectively
Sources: Bloomberg LLP, Company Financial Reports.
10Increasing Banking Penetration
150
Mature Markets
Growth Markets U.S.
Banking Penetration (%)1
U.K. Canada
Spain Scotia P&C
100 Markets
Czech
Republic Scotia Americas
Brazil Chile
Wholesale Markets
Colombia C&CA
Other Markets
50 PAC
PAC4
Bubble size
Peru represents
Mexico nominal GDP
Cambodia
0
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000
GDP per Capita (US$)2
1 Source: World Bank Open Data 2018. Banking Penetration is defined as account ownership at a financial institution or with a mobile-money-service provider (% of population ages 15+)
2 Source: World Bank Open Data 2018. GDP per capita is nominal gross domestic product divided by mid year population
11Repositioning is Substantially Complete
Simplifying the Bank Improving Earnings Quality De-Risking the Bank
● Exited 22 non-core (higher ● ~85% of earnings from six core ● Improving credit quality
risk, low growth) countries markets (Canada, the US and metrics and generating
since 2014 Pacific Alliance) higher mix of earnings
from investment grade
● Sold 10 non-core (non- countries
● Targeting higher earnings
customer facing, low return)
contribution from stable P&C ● Exits from sub-investment
businesses since 2014
Banking and Wealth grade, low growth
● ~95% of earnings Management businesses jurisdictions
generated from America’s
footprint ● Targeting 70% from P&C ● Gross impaired loans ratio
Banking, 15% from Global decreased from 110 bps in
Wealth Management, and 15% 2017 to 77 bps in 2020
from Global Banking and
Markets
12Acquisition & Divestiture Activity (2018-2020)
Increasing Scale in Core P&C Markets and Wealth Management
Citi Colombia Cencosud Peru
Caribbean
(Leeward Islands)
Banco Dominicano Pension & Benefits
del Progreso Administration 1%
2% Wealth
5% Management
6% 48% 10%
El Salvador
9%
MD Financial
ACQUISITIONS: 35% DIVESTITURES:
$7.5B Per $5.8B
Thanachart
Bank
BBVA Chile
Puerto Thailand
39%
Rico &
USVI 56%
24%
Jarislowsky
Fraser
International 13%
P&C
52% 13Medium-Term Financial Objectives
All-Bank Latest Performance
Metrics
Objectives1 (Q1/20)2
EPS Growth 7%+ +5%
ROE 14%+ 13.9%
Operating
Positive +1.3%
Leverage
Capital Strong Levels 11.4%
1 3-5 year targets from 2020 Investor Day
2 Adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and impairment charge on software asset
14Q1 2020 Financial Performance
Strong revenue growth and positive operating leverage
$MM, except EPS Q1/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS
Reported
• Adjusted EPS growth up 5%2
Net Income $2,326 +4% +1%
Pre-Tax, Pre Provision Profit $3,723 +8% +2%
• Adjusted Net Income up 2%2
Diluted EPS $1.84 +8% +6% o Excluding divestitures net income grew by 8%2
Revenue $8,141 +7% +2% o Pre-tax, pre-provision profit (PTPP) up 7%2
Expenses $4,418 +6% +2% • Adjusted Revenue up 5%2
Productivity Ratio 54.3% (60 bps) +20 bps o Net interest income up 3%
Core Banking Margin 2.45% - + 5bps o Non-interest income up 8%2
PCL Ratio1 61 bps +14 bps +11 bps
• Adjusted Expense growth of 4%2
PCL Ratio on Impaired Loans1 55 bps +8 bps +6 bps
• Adjusted Operating leverage of +1.3%2
Adjusted2
Net Income $2,344 +2% (2%)
Pre-Tax, Pre Provision Profit $3,724 +7% (1%)
Diluted EPS $1.83 +5% +1% ADJUSTED NET INCOME3 BY BUSINESS SEGMENT ($MM)
Revenue $7,989 +5% - +5%
Expenses $4,265 +4% +2% Y/Y -17%
Y/Y4
Productivity Ratio 53.4% (70 bps) +70 bps +35%
+11%
PCL Ratio1 51 bps +4 bps +1 bp Y/Y Y/Y
PCL Ratio on Impaired Loans1 53 bps +6 bps +4 bps 865 908 743 615 451
286 318 335
CB IB GWM GBM
Q1/19 Q1/20
1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures
2 Adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and impairment charge on software asset
3 After non-controlling interest
4 Y/Y growth rate is on a constant dollars basis
15Earnings and Dividend Growth
Strong track record of stable and predictable earnings and growing dividends
Earnings per share (C$)1,2 Total shareholder return3
Scotiabank Big 5 Peers (ex. Scotiabank)
+8%
CAGR $7.14 12.6%
11.1% 11.6% 11.9%
9.4%
8.2%
$3.31
$1.83
09 10 11 12 13 14 15 16 17 18 19 Q1
20 5 Year 10 Year 20 Year
Dividend per share (C$)
$3.49
+6%
CAGR
$1.96
$0.90
09 10 11 12 13 14 15 16 17 18 19 Q1
20
1Reflects adoption of IFRS in Fiscal 2011. 2 Excludes notable items for years prior to 2016. For 2016 onwards, results adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs,
Derivative Valuation Adjustment, and impairment charge on software asset. 3 As of January 31, 2020
16Strong Capital Generation
Clear path to higher capital ratio
CET1 Ratio
+49 bps 11.4%
+26 bps -19 bps
11.1%
-6 bps -6 bps -18 bps
+4 bps
Q4/19 Earnings Less RWA Growth Share Buybacks Pension Regulatory Other Non-core Q1/20
Reported Dividends (ex. FX) (Net of Issuances) Changes (net) Divestitures Reported
Internal Generation
Strong Capital Levels
14.6% 14.7% 14.8% 14.2% 14.6%
2.1% 2.2% 2.5% 2.0% 2.1%
1.4% 1.4% 1.1% 1.1% 1.1%
11.1% 11.1% 11.2% 11.1% 11.4%
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
CET1 Tier 1 Tier 2
17Technology Strategy
$
● Build a strong and ● Cloud-first strategy ● Rebalance core ● Maintain consistent
scalable platform for automation and technology spending investment in
foundation speed towards modernization technology
Technology Investment Technology Investment
Growth Rate (YoY Change) ~11% of revenue ($3.6B)
● Common systems
21%
Moderating to ● Software re-use, best practice-sharing
12% 14% steady-state growth
rate ● Consistent software design
11%
9%
● Customer-focused micro-services
7%
● Analytics on real-time data
● Strong cyber-security foundation
2014 2015 2016 2017 2018 2019 18Fintech
Partnerships Focus Areas Proof of Concepts1
• Credit adjudication
• Accessibility
• Natural language
processing
• Personal financial
management
• Customer experience
and self-service
• Machine-learning
modelling
• Data collaboration
• Cybersecurity
1 Selected proof of concepts with fintech partners
19Growth in Digital Banking
Steady progress against 2018 Investor Day digital targets
Digital Retail Sales1 Digital Adoption2 In-Branch Financial Transactions3
+19% +15% -12%
30 39 41 26
28 23
33 20
22 29
26 16
15 14
11
2016 2017 2018 2019 Q1/20 2016 2017 2018 2019 Q1/20 2016 2017 2018 2019 Q1/20
Goal Goal Goal
>50% >70%Environmental, Social & Governance (ESG)
Scotiabank’s Climate Commitments include:
Mobilize $100 billion by 2025
to reduce the impacts of climate change.
Memberships, Associations and Partnerships
21Environmental, Social & Governance (ESG)
Highlights from 2019
• Committed to mobilize $100 billion by 2025 to • Nearly $100 million invested globally in • Top 1% of global financial institutions for
reduce the impacts of climate change communities where we operate as part of our Corporate Governance in Dow Jones
global philanthropy program Sustainability Index
• Issued USD$500 million Green Bond. Proceeds
fund assets under the Scotiabank Green Bond • $3 billion in funding committed over the first • 38% of our directors are female. We first
Framework, including renewable energy, clean three years of The Scotiabank Women InitiativeTM established a Board diversity policy in 2013
transportation and green buildings to advance women-led businesses in Canada
• Appointed third independent Chairman in 2019.
• Achieved 17% greenhouse gas (GHG) reduction • Signed the UN Women’s Empowerment Separate CEO and Chairman roles since 2004
from a 2016 baseline, achieving our 10% target Principles and UN LGBTI Codes for Business
two years early; set new target of 25% by 2025 Conduct • Dedicated significant Board time to
cybersecurity, anti-money laundering, conduct
• Internal price on carbon of $15/tonne invested in • $250 million committed over 10 years to help and culture issues, keeping the Bank safe
GHG reduction initiatives; increased to employees adapt to the digital economy
$30/tonne for 2020; to $60/tonne by 2022
• Lead bank in Canada in the Finance Against
• Implemented a Climate Change Risk Slavery and Trafficking initiative, the Financial
Assessment tool in corporate & commercial Access Project, to open accounts for survivors of
lending to assess clients’ physical & transition modern slavery
climate risks
22Business
Line Canadian Banking
Overview
23Canadian Banking
Top 3 bank in personal & commercial banking in Canada
• Canadian Banking provides a full suite of financial advice and banking solutions, supported by an excellent customer
experience, to Retail, Small Business, Commercial Banking customers. Canadian Banking also provides an alternative self-
directed banking solution to over 2 million Tangerine Bank customers.
Retail Residential
Mortgages 62% MEDIUM-TERM FINANCIAL OBJECTIVES
76%
Target2
AVERAGE
REVENUE MIX1 LOAN MIX1 NIAT Growth3 5%+
$2.7B $351B
2% Productivity RatioCanadian Banking
Financial Performance
$MM Q1/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS
Reported • Adjusted Net Income up 5%3
Net Income1 $852 (1%) (5%) o Solid volume growth and higher fee income
Pre-Tax, Pre Provision Profit $1,474 +6% +1% offsetting margin pressure
Revenue $2,707 +5% +1% o Stable PCL ratio
Expenses $1,233 +4% +1% • Revenue up 5%
PCLs $321 +39% +30% o Net interest income up 4%
Productivity Ratio 45.6% (30 bps) +20 bps o Non-interest income up 7%
Net Interest Margin 2.36% (3 bps) (5 bps) • Loan growth of 6%
PCL Ratio2 0.36% +8 bps +8 bps o Residential mortgages up 5%; credit cards up 5%
PCL Ratio Impaired Loans2 0.30% +2 bps +1 bp
o Business loans up 12%
Adjusted3
• Deposit growth of 5%
Net Income1 $908 +5% +1%
o Personal up 5%; Non-Personal up 6%
Pre-Tax, Pre Provision Profit $1,479 +5% +1%
Expenses $1,228 +4% +1% • NIM down 3 bps
PCLs $250 +8% +1% • Positive operating leverage of +0.9%3
Productivity Ratio 45.4% (30 bps) +20 bps • Improved productivity ratio
PCL Ratio2 0.28% - - 1,3
ADJUSTED NET INCOME ($MM) AND NIM (%)
PCL Ratio Impaired Loans2 0.29% +1 bp - 2.44%
2.39% 2.40% 2.41%
2.36%
865 823 914 902 908
1 Attributable to equity holders of the Bank
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures
3 Adjusted for Acquisition-related costs and impact of additional pessimistic scenario
25Canadian Banking: Financial Performance
High quality retail loan portfolio: ~93% secured
• High quality residential mortgage portfolio
80%
o 37% insured; remaining 63% uninsured has a LTV of 54%1 Real Estate
Secured Lending
• Market leader in auto loans
o $39.1 billion retail auto loan portfolio with 7 OEM relationships (3 exclusive)
o Prime Auto and Leases (~91%)
o Stable lending tenor with contractual terms for new originations averaging 78
months (6.5 years) with projected effective terms of 54 months (4.5 years) DOMESTIC RETAIL
• Growth opportunity in credit cards LOAN BOOK2
o $7.7 billion credit card portfolio represents ~3% of domestic retail loan book $302.6B
and 1.2% of the Bank’s total loan book
o Organic growth strategy focused on payments and deepening customer
relationships
o Upside potential from existing customers: over 80% of growth is from existing
customers (penetration rate mid-30s and trending up versus peers in the low-
40s)
o Strong risk management culture with specialized credit card teams, customer 4% 13%
analytics and collections focus Unsecured
Automotive
3%
Credit Cards
1 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data
2 Spot Balance as of January 31, 2020
26Canadian Banking: Residential Mortgages
High quality, diversified portfolio
• Residential mortgage portfolio of $230 billion: 37% insured; LTV 54% on the uninsured book1
o Mortgage business model is “originate to hold”
o New originations2 in Q1/20 had average LTV of 64.4%
o Majority is freehold properties; condominiums represent approximately 13.9% of the portfolio
• Three distinct distribution channels: all adjudicated under the same standards
o 1. Broker (~61%); 2. Branch (~19%); and 3. Mobile Salesforce (~20%)
o Our recently launched Scotiabank eHOME digital mortgage solution is emerging as our 4th distribution channel. Since the
launch of eHOME, we have processed more than 2,800 mortgage applications. Most recently, we launched the ability for
Canadians to get pre-approved online with a credit decision and a pre-approval letter in just minutes – another first for the
industry. Over 1,200 preapproval applications have already been processed. We have also partnered with the Canadian Real
Estate Association (CREA) to enable customers to search for a home directly within eHOME, making the entire home-buying
journey digital
CANADIAN MORTGAGE PORTFOLIO: $230B (SPOT BALANCES AS AT Q1/20, $B) 37%
Freehold - $198B Condos - $32B
Insured
$119.4
$14.8
Total
Portfolio:
$230 billion
$104.6 $43.0
$11.0 $30.7
$3.7
$16.4
$32.0 $27.0 $1.9 $11.1 $9.4
$0.2
63%
$14.5 $10.8 $8.7 $0.7
Ontario BC & Territories Alberta Quebec Atlantic Provinces Manitoba & Uninsured
% of Saskatchewan
portfolio 51.9% 18.7% 13.4% 7.1% 4.8% 4.1%
1 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data
2 New originations defined as newly originated uninsured residential mortgages and have equity lines of credit, which include mortgages for purchases
27
refinances with a request for additional funds and transfer from other financial institutionsCanadian Residential Mortgages – LTVs*
Credit fundamentals remain strong
NEW ORIGINATIONS UNINSURED LTV* DISTRIBUTION
Q1/19 Q4/19 Q1/20
Canada
Total Originations ($B) 9.3 13.3 11.2
GVA
Uninsured LTV 64% 65% 64%
63%
GTA GTA
63% Total Originations ($B) 3.2 4.2 3.7
BC &
Territories Uninsured LTV 63% 64% 63%
64% GVA
Atlantic
Prairies 67% Provinces Total Originations ($B) 1.0 1.6 1.4
ON QC
64% 67% 66% Uninsured LTV 59% 64% 63%
*Average LTV ratios for our uninsured residential mortgages originated during the quarter
FICO® DISTRIBUTION – CANADIAN UNINSURED PORTFOLIO2
59%
Average FICO® Score
Canada 790
GTA 792
GVA 796
• Only 788
FICO is a registered trademark of Fair Isaac Corporation
2 FICO ® distribution for Canadian uninsured portfolio based on score ranges at origination
3 Percentage is based on Total Mortgages
*Above figures include Wealth Management
28Tangerine
Canada’s leading digital Bank
Medium
Term 15%+ 6%+ 10%+
Earnings CAGR Deposits CAGR Assets CAGR
Objectives
No.1 A+® Award No.1
Credit Card
Recent Mid-Sized Bank By Fundgrade
Accolades
Ranked No. 1 in Client Awarded for performance of Ranked highest in Credit
Satisfaction by J.D. Power for Balanced Income Portfolio in Card Satisfaction by J.D.
the 8th year in a row 2019 Power
Client Experience Product Innovation Strategic Partnerships
Our Maintain industry-leading Broadening asset and payments Leverage partnerships with
Approach position in customer experience portfolios to double earnings and Raptors, MLSE, and Cineplex to
through best-in-class meet evolving client needs drive client growth and
onboarding and innovation satisfaction
29Automotive Finance
Canada’s leader in automotive finance
• Provide personal and commercial dealer financing solutions, in partnership with seven leading global
automotive manufacturers in Canada
• Portfolio grew 5%1 year-over-year
o Personal up 6%, Commercial up 1%
Exclusive Relationships
Commercial
13% MAZDA VOLVO JAGUAR/LAND ROVER
Near-Prime
AVERAGE
Retail
8% ASSET MIX
Semi-Exclusive Relationships*
$44.8B1 79%
100% Secured
HYUNDAI CHRYSLER GM TESLA
Prime Retail
* 1 to 2 other financial institutions comprise Semi-Exclusive relationships
Market Share
Prime Retail Market Share2 Near-Prime Retail Market Share3 Commercial Floorplan Market Share4
24% 28%
37%
63%
76% 72%
1 For the three months ended January 31, 2020; 2 CBA data as of July 2019, includes RBC, CIBC, Canadian Western Bank, National Bank, TD, Scotiabank, Laurentian Bank; 3 DealerTrack Portal data, includes all Near-Prime Retail
providers on DealerTrack Portal, data for January 2020 originations; 4 Includes BMO, CIBC, RBC, Scotiabank, TD, HSBC, Canadian Western Bank, Laurentian Bank, data as of June 2019 30Business
Line International Banking
Overview
31International Banking
Leading P&C bank focused on high quality growth markets in Latin America and the Caribbean
• International Banking operates primarily in Latin America and the Caribbean with a full range of personal and
commercial financial services. Core markets are the Pacific Alliance countries of Mexico, Peru, Chile and Colombia
Asia Business
2% 52% Loans MEDIUM-TERM FINANCIAL OBJECTIVES
24% REVENUE1 Credit
LOAN MIX1 Target2
C&CA $3.0B 74%
Cards
7%
$151B
Latin NIAT Growth3 9%+
America 15%
Personal 26%
25%
28% Peru Loans Residential
Mexico Productivity RatioInternational Banking
Financial Performance
$MM1 Q1/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS1
Reported
• Adjusted Net Income ex. divestitures down 4%2,5
Net Income2 $518 (29%) (23%)
o Tax benefits in Mexico last year
Pre-Tax, Pre Provision Profit $1,321 (10%) (11%)
• Revenues ex. divestitures up 4%
Revenue $2,985 (2%) (5%)
Expenses $1,664 +6% -
o Margin compression in Mexico and Chile
PCLs $580 +30% +17% o Gain from foreclosed asset sale last year
Productivity Ratio 55.7% +360 bps +270 bps o Strong loan growth - Pacific Alliance up 10%
Net Interest Margin3 4.51% (3 bps) - • NIM down 3 bps3
5
PCL Ratio4 1.57% +28 bps +22 bps • Adjusted Expenses ex. divestitures up 5%
PCL Ratio Impaired Loans4 1.45% +21 bps +18 bps o Impact of acquisitions in Peru and Dominican
Adjusted5 Republic
Net Income2 $615 (17%) (15%) • Adjusted Operating leverage of -0.8%5 ex.
Net Income – Ex Divested divestitures
$560 (4%) (1%)
Ops.2
2,5 3
Pre-Tax, Pre Provision Profit $1,404 (7%) (10%) ADJUSTED NET INCOME ($MM) AND NIM (%)
4.54% 4.62% 4.51% 4.51% 4.51%
Expenses $1,581 +3% (1%)
PCLs $503 +12% +2% 743 723 762 725 615
Productivity Ratio 52.9% +200 bps +250 bps 159 156 141 154
55
PCL Ratio4 1.36% +7 bps +1 bp
584 567 621 571
PCL Ratio Impaired Loans4 1.37% +13 bps +10 bps 560
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
1 Y/Y and Q/Q growth rates (%) are on a constant dollars basis, while metrics and change in bps are on a reported basis
2 Attributable to equity holders of the Bank
3 Net Interest Margin is on a reported basis
Ex. Divested Ops Divested Ops
4 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures
5 Adjusted for Acquisition and Divestiture-related amounts and impact of additional pessimistic scenario
33The Bank of the Pacific Alliance (PAC)
Only universal bank with full presence in all Pacific Alliance countries
Well-established bank with 30+ years of experience in the region
Competitive scale in each market
8 million1 Retail and ~30,000 Corporate & Commercial customers
>100 multi-national corporate customers within the Pacific Alliance
1 10 million customers in PAC including affiliates
34PAC Fundamentals Driving Growth
Strong Sound Macro Favourable
Governance Environment Demographics
● Democratic countries ● Diversified economies ● 225 million people with
with open economies with strong GDP median age of 30 years
growth
● Independent central ● Strong domestic
banks with inflation ● Resilience to economic consumption
targets and political cycles
● Much lower banking
● Free trade agreements ● Investment Grade- penetration compared to
and free-floating rated Canada
currencies
● Low Debt/GDP ratios ● Among the fastest
● Business-friendly with lower fiscal growing smartphone
environments deficits compared to markets in the world
G7
● Considerable growth in
● Increasing adoption of middle class
banking services
35Resilience of the Pacific Alliance
Average Annual +2.9% +3.0% +3.1%
+2.7%
GDP Growth +1.8% +2.3%
+1.6%
Notable
Events
(by country) Low Oil Election & Election Social
Election No events
Prices Odebrecht & Trade Dispute Unrest
Approximate GDP -2.2%1 -2.6%2 -1.5%3 -1.5%4 -1.8%5
Impact on country
+13%
CAGR
$2.8 $3.2
International
Banking $2.1 $2.4
$1.7 $1.9
Earnings
(C$B)
2014 2015 2016 2017 2018 2019F 2020F
NOTE: Pacific Alliance GDP growth calculated based on mean average of the four PAC countries
1 2013 GDP growth rate vs. 2014 – 2017 average; 2 2014 vs. 2015 – 2017 average; 3 2016 vs. 2017; 4 2016 vs. 2017 – 2019 average; 5 Estimated impact in 2020F due to social unrest;
Source: Past GDP data from IMF; forecast from Scotiabank Economics
36Scotiabank in Mexico
Including all Business Segments
Footprint Customers Employees Branches1 Market Position by Loans4
23.0%
~3.5 ~12,900 ~592
million
14.1%
Balance and Loan Market Average 13.2% 12.1%
Market Position Average Loans
Share4 Deposits
7.7% 7.4%
7.7% $33 $26 4.6%
billion billion 3.4%
2.0%
Financial
Total NIAT2, 5 ROE3 Productivity3
Performance
$574 18.8% 54.1% BBVA Banorte Santander Banamex Scotiabank HSBC Inbursa Bajio Regio
million
NIAT5 Productivity Ratio Operating Leverage
+20% 63.0
CAGR % 7.5%
6.9%
666
579
465 1.5%
337 58.6% -0.9%
55.4%
55.0%
2016 2017 2018 2019
All figures in CAD$
Constant currency
2016 2017 2018 2019 2016 2017 2018 2019
2019
1 Includes bank and wealth branches; does not include 177 Credito Familiar branches
2 Adjusted; for the LTM ended January 31, 2020 not adjusted for currency
3 Adjusted; for the LTM ended January 31, 2020
4 Source: CNBV as of December 2019
5 After NCI on an adjusted basis 37Scotiabank in Peru
Including all Business Segments
Footprint Customers1 Employees1 Branches1 Market Position by Loans4
31.5%
4.0 12,000 314
million
19.5% 18.1%
Balance and Loan Market Average
Market Position Average Loans 12.0%
Share4 Deposits
18.1% $22 $19
billion billion
Financial
Total NIAT2,5 ROE 3 Productivity3
Performance Scotia
BCP BBVA Interbank
$795 24.5% 36.0%
million
NIAT5 Productivity Ratio Operating Leverage
+12%
CAGR 40.0%
810 7.9%
39.3% 6.8%
688
572 604
37.5% 5.0%
1.8%
2016 2017 2018 2019 35.2%
All figures in CAD$
Constant currency
2016 2017 2018 2019 2016 2017 2018 2019
1 Including subsidiaries
2 Adjusted; for the LTM ended January 31, 2020 not adjusted for currency
3 Adjusted; for the LTM ended January 31, 2020
4 Market share as of December 2019. Scotiabank includes SBP, CSF and Caja CAT
5 After NCI on an adjusted basis 38Scotiabank in Chile
Including all Business Segments
Footprint Customers1 Employees Branches1
Market Position by Loans4
18.3 17.1
>3 ~9,000 162
million 14.4 14.1 13.7
Balance and Loan Market Average
Average Loans 10
Market Position Share4 Deposits
14.4% $44 $23
billion billion
Financial
Total NIAT2,5 ROE 3 Productivity3
Performance
$507 8.6% 43.2% Santander Chile Scotiabank Estado BCI Itaú
million
NIAT5 Productivity Ratio Operating Leverage
+28% 53.6%
CAGR
13.3%
718
515 49.5% 8.5%
339 381
4.3%
44.7% 43.4%
-2.3%
2016 2017 2018 2019
All figures in CAD$
Constant currency
2016 2017 2018 2019 2016 2017 2018 2019
1 Includes affiliates & consumer microfinance
2 Adjusted; for the LTM ended January 31, 2020 not adjusted for currency
3 Adjusted; for the LTM ended January 31, 2020
4 Market share as of December 2019. Local view, exclude offshore loans. Source: CMF
5 NIAT Before NCI 39Scotiabank in Colombia
Including all Business Segments
Footprint Customers Employees Branches1
Market Position by Loans4
26.0%
3.1 ~9,000 188
million
Balance and 16.0%
Loan Market Average
Market Position Average Loans 12.2%
Share4 Deposits 10.4%
5.9% 5.9%
5.9% $12 $10 4.3%
billion billion
Financial
Total NIAT2,6 ROE 3 Productivity3
Performance
Bancolombia Davivienda Bogotá5 BBVA Occidente5 Scotiabank Corpbanca
$121 8.1% 56.7% Colpatria
million
NIAT6 Productivity Ratio Operating Leverage
+53%
CAGR 54.5%
139 52.6% 53.4%
50.3%
73 85 1.6%
38
-1.8% -2.4%
-6.4%
2016 2017 2018 2019
All figures in CAD$
Constant currency
1 As of November 2019 2016 2017 2018 2019 2016 2017 2018 2019
2 Adjusted; for the LTM ended January 31, 2020 not adjusted for currency
3 Adjusted; for the LTM ended January 31, 2020
4 Market share as of November 2019
5 Members of AVAL Group: Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas. AVAL is 2nd in market share in terms of Loans (25%) and 1st in Deposits (27%)
6 After NCI on an adjusted basis 40Other Regions
Leading Caribbean & Central American franchise
Caribbean & Central America Asia
• Leading bank serving retail, commercial, and Thailand: 6% interest in TMB Bank
corporate customers
• Reduced investment in Thailand in
• Major markets include the Dominican Republic, Q1/20 resulting ~6% minority interest
Jamaica, Trinidad & Tobago, Costa Rica, in TMB Bank
Panama and The Bahamas
• Sharpened geographic footprint by exiting China: ~18% interest in Bank of Xi’an
higher risk, low growth jurisdictions including
Haiti, El Salvador, Puerto Rico, US Virgin Islands • CAD $855MM carrying value as of
and 7 of the Leeward Islands January 31, 2020
Dominican Republic: #4 bank • CAD $496MM of net income for
twelve months ended October 31,
• Acquired Banco Dominicano del Progreso 2019
in 2019
41Business Global Wealth
Line
Overview Management
42Global Wealth Management
Profitable, High Growth, Strong Momentum
• Global Wealth Management is focused on delivering comprehensive wealth management advice and
solutions to clients across Scotiabank’s footprint
Customers1 Employees1 Countries1
MEDIUM-TERM FINANCIAL OBJECTIVES
2.5 7,200 14 Target3
million
Assets Under Administration1 Assets Under Management1 Earnings Growth 8%+
$497 $298
billion billion Productivity RatioGlobal Wealth Management
Financial Performance
$MM, except AUM/AUA Q1/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS
Reported • Adjusted Net Income up 11%2
Net Income1 $306 +12% +2% • Revenue up 5%
Pre-Tax, Pre Provision Profit $420 +12% +4%
o Up 7% excluding impact of divestitures
Revenue $1,157 +5% +1%
o Strong AUA/AUM growth
Expenses $737 +2% (1%)
PCLs $1 (50%) N/A o Solid brokerage revenue growth
Productivity Ratio 63.7% (210 bps) (110 bps) • Adjusted Expenses up 2%2
AUM ($B) $298 +6% (1%) o Volume related expense growth
AUA($B) $497 +7% -
• Positive adjusted operating leverage of 3%2
Adjusted2
Net Income1 $318 +11% +1% • Improved industry leading productivity ratio2
Pre-Tax, Pre Provision Profit $435 +11% +3% • Strong AUM growth of 6% and AUA growth of 7%
Expenses $722 +2% - o Market appreciation
PCLs - N/A N/A
o Positive net sales in Mutual Funds
Productivity Ratio 62.4% (180 bps) (70 bps)
1,2 2
ADJUSTED NET INCOME ($MM) AND ROE (%)
12.3% 13.5% 13.5% 13.6% 13.7%
286 303 313 314 318
1 Attributable to equity holders of the Bank
2 Adjusted for Acquisition-related costs and impact of additional pessimistic scenario Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
44Global Wealth Management:
Profitable, High Growth, Strong Momentum
1st 2nd 3rd 4th 5th 6th
Private Investment Counsel
Private Banking
Advisory
Trust
Canada
Full Service Brokerage
Discount Brokerage
Retail Mutual Funds
Asset Management
Institutional Funds
International
Mexico AUM Blackrock
BANCO
Chile AUM SECURITY
Peru AUM Credifondo Continental Interfondos Fondos Sura
Sources: IFIC, Strategic Insight Reports
45Business
Line Global Banking
Overview and Markets
46Global Banking and Markets
Second-largest Canadian wholesale banking and capital markets business
• Full-service wholesale bank the Americas, with operations in 21 countries, serving clients across Canada, the United
States, Latin America, Europe and Asia-Pacific
MEDIUM-TERM FINANCIAL OBJECTIVES
Asia Canada
Global Business Target2
6% Equities Banking
44% 52%
Europe
10% 16% REVENUE BY
GEOGRAPHIC NIAT Growth ~5%
REVENUE1 BUSINESS LINE1
$1.3B $1.3B
Productivity Ratio ~50%
40% 32%
US FICC Operating Leverage Positive
STRATEGIC OUTLOOK
• Client Focus: Increase our relevance to our corporate clients and drive alignment of resources with the most significant revenue
opportunities, to capture more of the non-lending wallet
• Strengthen our capital markets offering: Enhance distribution and product capabilities and deepen institutional relationships
• Build on our presence in the Americas: Enhance our franchise in Canada, continue to pursue targeted, phased growth in the U.S., create a
top-tier local and cross-border Pacific Alliance business, and leverage Europe and Asia for distribution of our Americas product in support
of our corporate clients
1 For the 3 months ended January 31, 2020; 2 3-5 year target from 2020 Investor Day 47Global Banking and Markets
Financial Performance
$MM Q1/20 Y/Y Q/Q YEAR-OVER-YEAR HIGHLIGHTS
Reported • Adjusted Net Income up 35% Y/Y3
Net Income1 $372 +11% (8%) o Strong growth in trading-related revenue
Pre-Tax, Pre Provision Profit $513 +19% (5%) • Adjusted Revenue up 18%3
Revenue $1,167 +9% - o Adjusted Non-interest income up 34%3
Expenses $654 +1% +4% • Loans grew 6%
PCLs $24 N/A +500% • Deposits up a strong 21%
Productivity Ratio 56.0% (400 bps) +200 bps
• Expenses up 1%
PCL Ratio2 0.09% +16 bps +7 bps
o Higher performance-related compensation
PCL Ratio Impaired Loans2 0.14% +15 bps +9 bps
Adjusted3 • Improved adjusted productivity ratio by 850 bps3
Net Income1 $451 +35% +11% • Positive adjusted operating leverage of 17%3
Pre-Tax, Pre Provision Profit $615 +43% +14% • Adjusted PCL ratio2,3 of 7 bps
Revenue $1,269 +18% +8%
PCLs $18 N/A +350%
1,3 3
Productivity Ratio 51.5% (850 bps) (250 bps) ADJUSTED NET INCOME ($MM) AND ROE (%)
PCL Ratio2 0.07% +14 bps +5 bps
15.2% 13.8% 14.0%
11.5% 12.8%
451
420
335 374 405
1 Attributable to equity holders of the Bank
2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
3 Adjusting for the derivative valuation adjustment and impact of additional pessimistic scenario
48Scotiabank in the U.S.
• Wholesale bank in the US: Corporate & Investment Banking, Capital Markets, Cash Management and
Trade Finance
• Top 15 foreign bank organization (FBO) in the US
Clients1 Employees1 Offices1
>4,000 ~700 5
Revenue1 Average Loans1 Average Deposits1
$1,896 $43 $57
million billion billion
Total NIAT1 ROE1 Productivity1
$777 18.7% 46.2%
million
• Client focus is on S&P 500, investment grade corporates
• Current sectors of strength include: Power & Utilities and Energy. Focus areas for growth include Real
Estate, Technology, and Healthcare
1 As presented in the 2020 Investor Day; figures for fiscal 2019 49Risk
Overview
50Risk Snapshot
RWA Breakdown1 Credit Exposure by Country2,3 Credit Exposure by Sector1,2
Canada
Chile Real Estate and Construction 5.7%
Credit Risk 64% U.S.
Financial Services 5.5%
2% 2% Wholesale and Retail 4.4%
4% C&CA
11% $421B 87% Operational Risk
5%
$611B1 Other International
Other 3.0%
5% Energy 2.7%
Mexico
Market Risk 5% Technology and Media 2.5%
7% 8% Peru
Automotive 2.2%
Colombia
Agriculture 2.2%
Personal & Commercial Lending Utilities 2.1%
Transportation 1.5%
Canadian Banking1,2 International Banking1,2 Food and Beverage 1.4%
Mining 1.1%
Health Care 1.0%
66% Secured
Secured Sovereign 0.9%
7%
$312B $70B Hospitality and Leisure 0.7%
93%
Unsecured Forest Products 0.5%
Unsecured
34% Metals 0.5%
Chemicals 0.4%
1 As at January 31, 2020
2% of total loans and acceptances
3 As at October 31, 2019 51Risk Density
• Risk density has declined over the past 5 years
• Major acquisitions have been successfully integrated with no adverse impact on risk density
Credit RWA Density
(Credit Risk-Weighted Assets/Credit Exposure at Default)
40%
38%
35.82% 35.56%
36% 35.13%
34% 33.65%
34.78%
33.31%
32%
30%
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
52Historical PCL Ratios on Impaired Loans
Credit fundamentals remain strong; PCLs on impaired loans in line with long-term average
1
ALL BANK: HISTORICAL PCL RATIO ON IMPAIRED LOANS
2.00% 2002: Included $454
2009: Higher PCLs driven
million related to the
by economic conditions,
Bank’s exposure to
event distributed across
Argentina
business lines. Higher
1.50% general allowance and Average: 45 bps
sectoral allowance
(automotive related)
1.00%
0.50%
0.00%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q120
PCL Ratio on Impaired Loans Historical Average - PCL Ratio on Impaired Loans (45 bps)
1
CANADIAN BANKING: HISTORICAL PCL RATIO ON IMPAIRED LOANS
2.00%
1.50%
1.00% Average: 26 bps
0.50%
0.00%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Q120
PCL Ratio on Impaired Loans Historical Average - PCL Ratio on Impaired Loans (26 bps)
1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures
53Canadian Retail: Loans and Provisions 1
MORTGAGES PERSONAL LOANS2
95 91
80 85 84
88 78 81 90
2 21 69
1 1 1 1 00
1
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
LINES OF CREDIT3 CREDIT CARDS
96 458
81 86 80 402 381 385
72 349
415
75 70 73 70 73 339 379 377
241
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
PCL as a % of avg. net loans (bps) PCLs on Impaired Loans as a % of avg. net loans (bps)
Loan Balances Q1/20 Mortgages Personal Loans2 Lines of Credit3 Credit Cards Total
Spot ($B) $230 $41 $34 $8 $3124
% Secured 100% 99% 61% 3% 93%5
1 Includes Wealth Management. PCL excludes impact of additional pessimistic scenario
2 95% are automotive loans
3 Includes Home Equity Lines of Credit and Unsecured Lines of Credit
4 Includes Tangerine balances of $6 billion
5 80% secured by real estate; 13% secured by automotive 54International Retail: Loans and Provisions
MEXICO PERU
246 251 517 545
233 231 208 473 471
402
163 228
218 203 491 470
199 424
364 372
2 1 2
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
CARIBBEAN &
CENTRAL AMERICA CHILE COLOMBIA
191 554 549 531
170 187 178 160 471 439
155 159 155
157 141
165 170 175 485
156 148 150 154 455 420 406
138 138 120 377
1 2 2 2
Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
PCL as a % of avg. net loans (bps) PCLs on Impaired Loans as a % of avg. net loans (bps)
Loan Balances
Mexico Peru Chile Colombia C&CA Total3
Q1/20
Spot ($B) $14 $10 $24 $7 $14 $70
1 Adjusted for acquisition-related costs, including Day 1 PCL impact on acquired performing loans
2 PCL excludes impact of additional pessimistic scenario
3 Total includes other smaller portfolios 55Energy Exposure1
High quality energy portfolio, reduced exposure to 2.7% of total loans from 3.6% in Q1/16
Loans and % of Total % of Total Loans and
% Investment
Acceptances Energy Acceptances
Grade
Outstanding ($B) Exposure Outstanding
Total Exploration and Production 6.9 41% 1.1% 53%
Canadian E&P 3.4 20% 0.6% 74%
U.S. E&P 0.9 6% 0.2% 34%4
Midstream 5.8 34% 0.9% 58%
Services 1.5 9% 0.2% 17%
Downstream 2.6 16% 0.4% 72%
Total Energy Exposure2 16.8 100% 2.7% 54%
Canada C&CA
(57%) 6.9 (34%)
• Energy portfolio represents 2.7% of loans and 0.4 Europe
acceptances outstanding, down from 3.6% in Q1 2016. (44%)
Energy 0.7
Exposure by
• 54% is rated Investment Grade (IG)
Geography2
Watchlist3 reduced to 3.9% of total Energy outstandings Latin
•
from a high of 13.6% as of Q4/16 Asia 1.0 $16.8B 3.3 America
(95%) (%IG) (44%)
3.2 1.3
1 As of January 31, 2020 U.S. Mexico
(50%) (59%)
2 May not add due to rounding
3 Includes Impaired accounts
4 Reduction in IG from previous quarter a function of a material repayment on an IG account
56Treasury
and
Funding
57Funding Strategy
Flexible, well-balanced and diversified funding sources
Funding Programs1
Funding Strategy
US Debt & Equity Shelf
(senior / subordinated debt, preferred and common shares)
• Build customer deposits in all of our key Limit – USD 40 billion
markets Global Registered Covered Bond Program
(uninsured Canadian mortgages)
Limit – CAD 38 billion
• Continue to reduce wholesale funding (WSF)
while focusing on TLAC eligible debt EMTN Shelf
Limit – USD 20 billion
• Achieve appropriate balance between CAD Debt & Equity Shelf
efficiency and stability of funding including (senior / subordinated debt, preferred and common shares)
Limit – CAD 15 billion
maintaining pricing relative to peers
START ABS program (indirect auto loans)
Limit – CAD 15 billion
• Diversify funding by type, currency, program,
tenor and markets Australian MTN program
Limit – AUD 8 billion
• Centralized funding strategy and associated Singapore MTN program
risk management Limit – USD 7.5 billion
Halifax ABS shelf (unsecured lines of credit)
Limit – CAD 7 billion
Principal at Risk (PAR) Note shelf
Limit – CAD 6 billion
Trillium ABS shelf (credit cards)
Limit – CAD 5 billion
USD Bank CP Program
1In addition to the programs listed, there are also CD programs in the following currencies: Yankee/USD, EUR, GBP, Limit – USD 35 billion
AUD, HKD 58Wholesale Funding
Wholesale funding diversity by instrument and maturity1,6,7
7% MATURITY TABLE (EX-SUB DEBT)
24%
Bail-inable Notes (CANADIAN DOLLAR EQUIVALENT, $B)
Senior Notes
2%
Asset-Backed
$26
$4
$25
Asset-Backed Securities $21
Commercial Paper3 $21
2% 10%
$4
$3 $3
$11
$1
$271B Covered Bonds
$1
$14
9%
Mortgage $18 $17
$6
$9
$1 $18
Securitization4
$13
42% 3%
$9 $8
Bearer Deposit Notes,
Commercial Paper &
Short-Term Certificate
1%
Deposits from Banks2
Subordinated
Debt5
< 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years >
of Deposits
Senior Debt ABS Covered Bonds
1 Excludes repo transactions and bankers acceptances, which are disclosed in the contractual maturities table in the MD&A of the Interim Consolidated Financial Statements. Amounts are based on remaining term to maturity.
2 Only includes commercial bank deposits raised by Group Treasury.
3 Excludes asset-backed commercial paper (ABCP) issued by certain ABCP conduits that are not consolidated for financial reporting purposes.
4 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.
5 Although subordinated debentures are a component of regulatory capital, they are included in this table in accordance with EDTF recommended disclosures.
6 As per Wholesale Funding Sources Table in MD&A, as of Q1/20.
7 May not add to 100% due to rounding.
59Deposit Overview
Stable trend in personal & business and government deposits
PERSONAL DEPOSITS PERSONAL DEPOSITS
(SPOT, CANADIAN DOLLAR EQUIVALENT, $B)
$222 $223 $224 • Important for both relationship purposes
$225 $225 and regulatory value
$211
$215 • Good momentum with 4.0% CAGR over
$201
$199 $198 the last 3 years
$202 $204
$200 3Y CAGR – 4.0%
Q1/17
Q3/17
Q1/18
Q3/18
Q1/19
Q3/19
Q2/17
Q2/18
Q2/19
Q1/20
Q4/17
Q4/18
Q4/19
BUSINESS & GOVERNMENT DEPOSITS1
(SPOT, CANADIAN DOLLAR EQUIVALENT, $B)
BUSINESS & GOVERNMENT
$221
$227 • Gaining share of deposits through
$197 $223
leveraging of relationships
$172 $179 $211
$170
$156 $197 • 13.3% CAGR over the last 3 years
$169 $174
$168
3Y CAGR – 13.3%
• Focusing on operational, regulatory
friendly deposits
Q1/17
Q3/17
Q1/18
Q3/18
Q1/19
Q3/19
Q2/17
Q2/18
Q2/19
Q1/20
Q4/17
Q4/18
Q4/19
1 Calculated as Bus& Gov’t deposits less wholesale funding as per Wholesale Funding Sources table in the MD&A, adjusted for Sub Debt
60Wholesale Funding Utilization
Managing reliance on wholesale funding and growing deposits
WHOLESALE FUNDING / TOTAL ASSETS REDUCED RELIANCE ON
WHOLESALE FUNDING
• Operating in line with peers
o Reduced reliance on wholesale funding
24.5% 24.6%
23.9% 23.5% o Sustained focus on deposits as an alternate to wholesale
funding
Q1/17
Q3/17
Q1/18
Q3/18
Q1/19
Q3/19
Q2/17
Q2/18
Q2/19
Q1/20
Q4/17
Q4/18
MONEY MARKET WHOLESALE FUNDING / Q4/19 FOCUS ON TERM FUNDING
TOTAL WHOLESALE FUNDING
• Prudently using money market funding to
44.7% absorb short term funding requirements
o Primarily driven by increases in certificate of deposits,
39.9% commercial paper and bearer notes
38.7% 38.4%
Q1/17
Q3/17
Q1/18
Q3/18
Q1/19
Q3/19
Q2/17
Q2/18
Q2/19
Q1/20
Q4/17
Q4/18
Q4/19
61Liquidity Metrics
Well funded Bank with strong liquidity
• Liquidity Coverage Ratio (LCR)
o Stable and sound management of liquidity
o Net Stable Funding Ratio (NSFR) disclosure to commence Q1/20
128% 127% 128% 127%
125% 125% 124% 125% 125%
123%
Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
• High Quality Liquid Assets (HQLA)
o Efficiently managing LCR and optimizing HQLA
$165 $168
$158 $158 $160
$140 $144
$132 $138
$127
Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20
62Appendix 1 Core Markets: Economic Profiles
Canadian Economy
Diverse sources of growth with a strong balance sheet
19.5% 12.5% REAL GDP GROWTH
Finance, Insurance, Health & Education
& Real Estate 3
10.3%
ANNUAL % CHANGE
15.8% Wholesale &
2
Other Retail Trade
CANADIAN GDP
BY INDUSTRY
4.5% (Nov 2019) 10.0% 1
Transportation Manufacturing
& Warehousing
6.1% 7.3% 0
Mining and Oil
Professional, & Gas Extraction U.S. Canada Eurozone U.K. Japan
Scientific,
2010–2018 2019e–2021f
& Technical
Services 6.8% 7.2% Sources: Scotiabank Economics, Haver Analytics, Statistics Canada.
Public Administration Construction Forecasts as of January 13, 2020.
GENERAL GOVERNMENT NET FINANCIAL LIABILITIES GOVERNMENT FINANCIAL DEFICITS
2
1
1.0
0
% OF GDP
(0.7)
% OF GDP
-1 (1.6) (1.5)
(2.2)
125.7 -2 (2.4) (2.5)
122.5
-3
80.9 88.0
78.2
66.6 -4
29.0 -5 (5.5)
22.8
-6
Canada Germany OECD France U.K. U.S. Italy Japan Germany Canada OECD* UK Japan France Italy US
* Arithmetic mean of all OECD financial deficits as a % of GDP.
Sources: Scotiabank Economics, OECD (2020 estimates). As of February 2020. Sources: Scotiabank Economics, IMF (2020 estimates).
As of February 2020. 64You can also read
