The Bank of Nova Scotia

My name is John McCartney. I'm Head of Investor Relations here at Scotiabank. Presenting to you this morning are Scott Thompson, Scotiabank's President and CEO, Raj Viswanathan, our Chief Financial Officer, and Phil Thomas, our Chief Risk Officer. Following our comments, we'll be glad to take your questions. Also present to take questions are the following Scotiabank executives. Dan Rees from Canadian Banking, Glenn Gowland from Global Wealth Management, Francisco Aristegueta from International Banking, and Jake Lawrence from Global Banking and Markets. Before we start, and on behalf of those speaking today, I will refer you to slide two of our presentation, which contains Scotiabank's caution regarding forward-looking statements. With that, I will now turn the call over to Scott.

Thank you, John, and good morning, everyone. We appreciate you joining us today. The Bank reported Q3 adjusted earnings of $2.2 billion, or $1.73 per share, up 2% sequentially. Pre-tax, pre-provision earnings of $3.5 billion were up 5% compared to the prior quarter. The bank's Q3 results reflect both the resilient performance of our retail and commercial businesses and modest improvement in our market-sensitive capital markets and wealth businesses. Although the operating environment has stabilized following the Q2 market dislocation, deposit migration to term products and central bank rate increases continue to increase our funding costs. Importantly, we strengthened our capital, liquidity, and deposit metrics as we prepare the bank for our next phase of profitable, sustainable growth. We continue to build capital this quarter, resulting in a common equity Tier 1 capital ratio of 12.7%. Our liquidity coverage ratio was a strong 133% at quarter end, up from 122% in the prior year. Deposits once again outpaced loan growth in the period, from a sustained focus on deposit growth initiatives across our businesses, improving our loan-to-deposit ratio. Year-over-year deposits increased by 9% or approximately $55 billion. On a sequential basis, deposits grew in our Canadian banking and international banking franchises. Lending volumes in the quarter reflect a more cautious environment from both a household confidence and business investment perspective as seen in activity levels across our various segments and geographies. The impact of these macroeconomic realities, coupled with a more selective and deliberate approach to new originations, has resulted in a moderation of our loan growth. Expense growth was flat to last quarter and will be a priority as we strive to achieve our medium-term objective of delivering positive operating leverage. Disciplined expense management has always been a core competency of our bank. The higher for longer interest rate environment that has played out across our operating geographies has already and will continue to impact consumer health. Through our advanced data and analytics, we are closely monitoring customer behavior and have observed a very rational and responsible shift in spending as households manage through this period of reduced discretionary income. In our core international banking markets, where the interest rate tightening cycle has led most other global economies, we are seeing the impact of recessionary conditions, which are reflected in our elevated provisions. With the Chilean economy, for example, now in a recession, its central bank cut rates with a 100 basis point policy rate decrease in late July and additional rate cuts are expected in the near term. Overall, we remain confident that the investment grade bias to our corporate and commercial portfolios coupled with our conservative underwriting standards, has the bank very well positioned to manage through this phase of the rate cycle. We continue to build performing allowances and improve our ACL coverage as the longer-term macroeconomic outlook continues to be uncertain. From a business line performance perspective, I was particularly encouraged by our revenue-led pre-tax, pre-provision growth in each of Canadian banking and international banking, both up year over year and quarter over quarter. GBM and Wealth both showed positive trends as market volatility stabilized. In our Canadian banking business, as expected, profitability was impacted by higher provisions. However, we saw healthy net interest margin expansion supported by another quarter of double-digit deposit growth. Our Seen Plus loyalty program reached 14 million members in the quarter and has been a strong contributor to new primary client relationships and deeper product penetration with existing customers. Just this month, home hardware was added to the ScenePlus program, providing members the opportunity to earn and redeem ScenePlus points at one of Canada's largest home improvement retailers. The ScenePlus program was an important driver of the strong growth this quarter in Canadian banking deposits and clients who use this as their primary bank for day-to-day payments through credit cards. Our Tangerine franchise is performing well from a deposit gathering and profitability perspective and is increasingly focused on deepening client relationships through card and wealth management cross-sell. Importantly, over 80% of our Tangerine deposit flows in Q3 originated from digitally engaged, multi-product clients, and once again, the business delivered double-digit revenue and earnings growth on a year-over-year basis. International banking delivered solid performance against a challenging economic backdrop with strong revenue growth and good expense control. Earnings were impacted by higher provisions and a normalizing tax rate. Our Mexico business continues to show great momentum, delivering 16% pre-tax, pre-provision growth year over year and a return on equity of 25%. We are well positioned to strategically support both local and multinational clients in Mexico, as a wave of supply chain-related foreign direct investment drives outsized industrial activity and economic growth. Global wealth management earnings grew 4% from the prior quarter. Strong relative investment performance and continued momentum in our international wealth business tempered the impact of a negative industry investment fund flows. Global banking and markets delivered solid results on stronger capital market activity in conjunction with moderating loan growth as the business continues efforts to optimize capital allocation with a focus on return metrics. Inclusive of continued strong results in GBM LATAM, GBM delivered earnings of $748 million, up 31% year-over-year and 11% sequentially, driven largely by growth in our fee and client underwriting and advisory business. In summary, results across our businesses reflect the bank's ability to generate solid earnings through a period of economic uncertainty and transition. Our results also reflect early actions in support of the priority initiatives I have previously outlined. Primary client growth, purposeful capital allocation, and excellence in operating efficiency. Growing client primacy is critical to delivering on our strategy, which means bringing the entire bank to our clients to earn core relationships. In each of our business lines, we are evaluating our approach to relationship building and our opportunity for relationship deepening. We will look to prioritize markets where we have scale opportunity and target client segments where we have the product capability and connectivity to be a lead financial services provider. Allocating capital to the businesses where we have the highest return through a disciplined approach will result in profitable growth for the bank. Operational excellence will entail continuing to digitize and streamline the way we do business to create efficiency across our bank. We want to make it easier to do business with us through continued digitization, simplified internal processes, and enhanced client interactions. We are committed to ongoing productivity initiatives and a collaborative culture that positions us to win for our shareholders, colleagues, and communities. In closing, I would like to welcome Jackie Allard, who joins us next week as our Deputy Head, Global Wealth Management, and will assume leadership of that business early next year. Jackie will work closely through a transition period with Glenn Gowland, who has done a fantastic job building our wealth business to scale in recent years. I look forward to having Glenn work closely with me on strategic initiatives across the organization in his new role as a Vice Chair of the Bank. And finally, I wanted to acknowledge the devastating wildfires in the Northwest Territories and my home province of British Columbia. I want all our employees and clients to know that we're thinking of them and here to support. We have made a donation to the Canadian Red Cross, the United Way Northwest Territories, and the Kelowna Firefighters to support relief and recovery efforts, and we are raising additional funds through our branches across Canada. We remain focused on the safety of our employees and ensuring we're here to support our clients during this difficult time. With that, I'll turn the call over to Raj for a more detailed review of our financials.

Thank you, Scott, and good morning, everyone. All my comments that follow will be on an adjusted basis for the usual acquisition-related costs. I'll begin with a review of the performance for the quarter on Flight 5. The bank reported quarterly adjusted earnings of $2.2 billion and diluted EPS of $1.73, and return on equity was 12.2%. All bank pre-tax-free provision profit decreased 2% year-over-year, but increased 5% quarter-over-quarter. Year-over-year, the decline was driven mainly by higher funding costs, which is recorded in the other segment, and lower wealth management results driven by challenging market conditions. Net interest income was $4.6 billion, down 2% year-over-year, as loan growth and the positive impact of foreign currency translation were offset by lower margins. The net interest margin declined 12 basis points year over year and three basis points quarter over quarter, mostly from higher funding costs due to central bank rate increases. Recall, given the increased probability for rates to remain higher for longer, last quarter we modified our interest rate positioning while remaining positioned to benefit meaningfully from declining interest rates. For the second quarter in a row, deposit growth outpaced loan growth, resulting in a loan-to-deposit ratio of 114% and improvement of approximately 140 basis points quarter over quarter. Non-interest income was $3.5 billion, up 12% year over year, mainly due to higher banking revenues, trading-related revenues in fixed income and equities, underwriting and advisory fees, and wealth management revenues. The PCL ratio was 42 basis points this quarter, of which four basis points was performing PCLs. Phil will cover PCL in more detail later. Quarter over quarter expenses were flat, or down 1%, excluding the unfavorable impact of foreign currency translation, driven by lower share and performance-based compensation and employee benefits, partly offset by the three additional days in the quarter. Expenses increased 9% year-over-year, or 5% excluding the unfavorable impact of foreign currency translation, reflecting growth in staffing-related costs, technology costs, amortization, and advertising and business development. The productivity ratio was 56.1% this quarter, an improvement of 140 basis points quarter-over-quarter as revenue growth outpaced expenses. Year-to-date operating leverage was negative 7.4%. Defective tax rate was 18.4% this quarter compared to 18.9% a year ago, driven by higher income in lower tax rate jurisdictions and higher tax exempt income in the quarter, partly offset by lower inflationary adjustments in international banking. Turning to slide six. This slide provides an evolution of the common equity Tier 1 ratio with a quarter, as well as the quarter's changes in risk-weighted assets. The banks reported a common equity Tier 1 ratio of 12.7%, an increase of approximately 40 basis points. Net internal capital generation was strong at 37 basis points, including a lower risk-weighted asset number. Under the dividend reinvestment plan, the bank issued 7 million shares that contributed 11 basis points. Risk-weighted assets were $439.8 billion during the quarter, a decrease of approximately $11.3 billion from the previous quarter. Lower business loan growth, a reduction in the capital flow add-on of approximately $7 billion, and the benefits from the inaugural synthetic risk transfer transaction reduced the risk-weighted asset during the quarter. The bank's capital ratios are expected to continue to grow in Q4. In addition, the bank's Liquidity Coverage Ratio, or LCR, improved 200 basis points quarter-over-quarter to 133% this quarter and was significantly up from 122% last year. Turning now to the business line results beginning on slide seven. Canadian banking reported earnings of $1.1 billion a decrease of 13% year-over-year due to higher provision for credit losses and non-interest expenses. Pre-tax pre-provision profit grew 2% year-over-year as revenue growth of 3% was partly offset by expense growth of 5%. Pre-tax pre-provision profit increased a strong 5% quarter-over-quarter. Net interest income increased 4% year-over-year as deposits grew a strong 11% and earning assets grew a modest 3%. Quarter-over-quarter margin expanded by five basis points due primarily to higher deposit margins. Average loans and acceptances grew 3% year-over-year. We saw continued growth in our higher-yielding portfolios as business loans grew 13%, personal loans grew 4%, and credit cards increased 17%. This was offset by a decline of 1% in residential mortgage balances. Average loan balance was in line with last quarter, as the decline in mortgage balances was offset by growth in business, personal, and credit cards. We continue to see strong deposit growth, with average deposits again up 11% year-over-year and 2% quarter-to-quarter. Year-over-year, personal deposits grew 13%, primarily in term products, and non-personal deposits increased 6%. The loan-to-deposit ratio has improved to 129% from 139% last year in this segment. Non-interest income was down 1% year-over-year, driven by lower cards revenue and reduced income from associated corporations. Expenses increased 5% year-over-year primarily due to higher personal costs from increased client-facing staff and inflationary adjustments. Quarter over quarter expenses were down a modest 1%. The PCL ratio was 27 basis points, an increase of 7 basis points quarter over quarter. Turning now to global wealth management on slide 8. Earnings of $373 million declined 3% year over year, primarily due to Canadian wealth being down 7%. International wealth earnings grew a strong 26% year over year. Earnings grew 4% quarter-over-quarter in spite of difficult market conditions. Revenue grew 2% year-over-year and 3% quarter-over-quarter due primarily to higher mutual fund and brokerage revenues. Expenses were up 6% year-over-year from expansion of revenue-generating sales force and 3% quarter-over-quarter driven by higher volumes. Assets under management increased 4% year-over-year to $331 billion as market appreciation was partly offset by net redemptions. Assets under administration increased 9% over the same period to $631 billion from both market appreciation and higher net sales. While investment funds in Canada remain in net redemptions, Scotia Global Asset Management investment results continue to perform well against their benchmarks, and the bank maintained its number two ranking in investment funds in Canada. International wealth generated earnings of $60 million, driven by higher net interest income and business volume growth. International wealth management, AUA, grew 21% year-over-year to $130 billion. Turning to slide nine, global banking and markets generated earnings of $434 million, up 15% year-over-year. Revenues grew 17% year-over-year, outpacing expense growth of 16%. Capital markets revenue was up 41% year-over-year as FICC grew 52% and global equities grew 28%. Business banking revenues grew 2% and the loans grew 13% year-over-year. Net interest income was down 17% year-over-year as a result of lower corporate lending and deposit margins. and lower loan fees. Non-interest income grew $259 million, or 35% year-over-year, primarily due to higher underwriting and advisory fees and growth in trading-related revenue in fixed income and equities. Expenses were up a modest 1% quarter or quarter, mainly from higher performance-based compensation and salaries. On a year-over basis, Expenses were up 16% due mainly to higher personal costs and technology investments, both related to business growth. The provision for credit losses was a recovery of $6 million, driven by Stage 3 recoveries. The U.S. business generated earnings of $217 million this quarter. GVM Latin America, which is reported as part of international banking, had another strong quarter, reporting earnings of $314 million this quarter. up 64% year-over-year driven by Mexico, Chile, and Brazil. Moving to slide 10 for the review of international banking. My comments that follow are on an adjusted and constant dollar basis. The segment reported net income of $635 million, down 8% year-over-year. However, pre-tax pre-provision profit grew a strong 11%. The Pacific Alliance was up 10%, with strong growth in Mexico of 16% and 19% growth in Caribbean and Central America. Revenue was up 8% year-over-year, driven by good loan growth, higher net interest margin, and strong capital markets and corporate banking revenues in Mexico and Chile. Year-over-year loan growth moderated at 5%. Mortgages were up 10%, Personal loans and credit cards grew 3% and business banking was up 3%. Deposits grew a strong 8% year-over-year and 1% quarter-over-quarter, reducing the loan-to-deposit ratio to approximately 400 basis points year-over-year. Net interest margin expanded 15 basis points year-over-year. The margin was down two basis points quarter-over-quarter, mostly from lower inflation benefits in Chile and Uruguay. The provision for credit losses was 118 basis points, or 516 million, up 15 basis points from last quarter. On a quarter-over-quarter basis, expenses were down 1% due to lower salaries and employee benefits. On a year-over-year basis, non-interest expenses were up 5%, driven mainly by the inflationary impacts on personnel costs. The tax rate of 22.9% for the quarter increased from 20.7% in the prior quarter due to lower inflationary adjustments in Chile and Mexico. Turning to slide 11, the other segment reported an adjusted net loss attributable to equity holders of $299 million, an improvement of $24 million compared to the prior quarter. Quarter over quarter, higher funding costs, mainly driven by continued rate increases, were more than offset by higher income from liquid assets and lower expenses. I'll now turn the call over to Phil to discuss risk.