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 adjusted EPS of $1.63; reported net income was $1,912M, down 13% year-over-year, and diluted 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.

• Revenue acceleration was led by Canadian Banking and Global Wealth, with a strategic shift from volume to value.

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

• Maintained a strong balance sheet with improved CET1 capital, ACL coverage, and liquidity metrics.

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.

• Non-interest expenses were $4,949M, up 9% year-over-year (adjusted up 5%), mainly due to higher personnel and technology costs.

• Provision for credit losses increased to $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.

• Loan-to-deposit ratio improved to 107% from 114% year-over-year.

Outlook and guidance

• Management expects the KeyCorp investment to be EPS and ROE 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 outlook for core markets projects modest GDP growth in Canada and the U.S. for 2024 and 2025.

• International Banking credit conditions expected to stabilize as monetary easing continues.

• Management highlights risks from macroeconomic, regulatory, and market conditions.