The Bank of Nova Scotia (BNS) Q3 2024 earnings summary

Executive summary

• Q3 2024 adjusted net income was $2,191M, down 1% year-over-year, with diluted adjusted EPS of $1.63; reported net income was $1,912M, down 13% year-over-year, and reported EPS was $1.41.

• Canadian Banking, International Banking, and Global Wealth Management posted year-over-year adjusted earnings growth, while Global Banking and Markets declined.

• Announced a strategic investment in KeyCorp (~14.9% equity), expected to be EPS and ROE accretive, expanding U.S. presence and diversifying earnings.

• Maintained a strong balance sheet with CET1 ratio at 13.3%, up from 12.7% year-over-year.

• Achieved positive operating leverage and disciplined capital deployment despite a challenging macroeconomic environment.

Financial highlights

• Total revenue for Q3 2024 was $8,364M (reported, up 4% year-over-year) and $8,507M (adjusted, up 5%).

• Net interest income rose 6% year-over-year to $4,862M; net interest margin was 2.14%, up 4 bps.

• Non-interest expenses increased 9% year-over-year (reported) and 5% (adjusted), mainly due to higher personnel, technology, and legal costs.

• Provision for credit losses was $1,052M, up $233M year-over-year; PCL ratio rose to 55 bps.

• Return on equity was 9.8% (adjusted 11.3%), both down from the prior year.

Outlook and guidance

• Management expects the KeyCorp investment to be EPS accretive in the first full year post-closing, with an earnings pick-up of ~$300-350M.

• Modest NIM improvement is expected in Q4 and further expansion in 2025 as rate cuts are realized; economic growth in core markets projected to be modest.

• Policy rates in Canada and the U.S. anticipated to trend lower, benefiting earnings in 2025.

• International Banking NIM expected to remain stable; loan loss ratios to stay at current levels into Q4.

• Forward-looking statements highlight risks from macroeconomic, regulatory, and market conditions.