RBC (RY) Scotiabank’s 27th Annual Financials Summit summary

Financial performance and capital deployment

• Achieved ROE above 18%, surpassing previous targets, driven by revenue and cost efficiency, with further upside expected from AI-related cost savings and capital management.

• Maintains a 13.5% CET1 ratio to buffer against economic and trade uncertainties, with plans to enhance ROE as conditions stabilize.

• Continues share buybacks at a 2% level, balancing intrinsic value and book value per share growth, while prioritizing organic growth and selective tuck-in acquisitions.

• Focus remains on AI-driven business transformation rather than large-scale M&A, aiming for higher shareholder returns.

Credit outlook and risk management

• Credit losses have been concentrated in supply chain, logistics, and transportation sectors due to a goods recession, with some challenges in real estate and a specific European utility.

• Maintains higher reserves and CET1 ratio due to ongoing tariff and geopolitical risks, but sees improvement in commercial and U.S. credit portfolios.

• Commercial clients are conservative, paying down debt and managing costs amid trade tensions, with sector-specific impacts depending on tariff developments.

Segment performance and growth strategies

• Strong volume growth across consumer, commercial, and corporate banking, with over CAD 80 billion in lending growth and significant new client acquisitions.

• Cross-sell strategy is highly effective, especially in consumer and commercial banking, with bundled products and rapid onboarding cycles.

• Elevated expenses reflect investment in customer acquisition, expected to yield long-term gains through proven cross-sell cycles.

• Real estate-secured lending growth remains subdued, but efficiency improvements via AI are expected to drive profitability.