The Bank of Nova Scotia

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Good morning, and welcome to Scotiabank's 2025 first quarter results presentation. My name is John McCartney, and I'm Head of Investor Relations here at Scotiabank. Presenting to you this morning are Scott Thompson, Scotiabank's President and Chief Executive Officer, 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, Aris Bogdanaris from Canadian Banking, Jackie Allard from Global Wealth Management, Machen 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. 2025 is off to a strong start. We are seeing encouraging signs in this quarter's results that our enterprise strategy is having the desired impact on our financial performance. We delivered adjusted earnings in the quarter of $2.2 billion, or $1.76 per share, reflecting strengthening revenue-led client franchise growth, coupled with the favorable impact of easing funding costs from lower rates. I am particularly pleased with the 15% year-over-year growth in non-interest revenue. Our relationship-based businesses, including our advisory business in global banking and markets, and our advice channels in wealth, coupled with our wealth management product sales throughout our domestic reach-out channels, we're all strong contributors to the acceleration of growth. Our provisions for credit losses this quarter remain elevated, reflecting the toll on our clients of higher interest rates and inflation over the past few years, in addition to the heightened current geopolitical uncertainty and its potential impact on economic growth. Our balance sheet metrics remain strong, The work we have done over the past two years in managing our capital, strengthening the balance sheet, and responsibly building allowances have set a solid foundation, enabling us to manage through this period of volatility and continue to fund our strategic growth objectives in 2025 and beyond. Since the end of 2022, we have improved our capital ratio by approximately 140 basis points, built approximately $1.6 billion in additional allowances for credit losses, and significantly improved our liquidity ratios. We added almost 350 million to our allowances this quarter. We are a much stronger bank today, aware of current heightened risks and prepared to respond to more tangible trade developments. We remain focused on driving forward our very clear and sound strategic agenda. To recap our key focus areas, First, we continue to focus on allocating incremental capital and resources to our priority markets. This quarter, we closed our investment in Key Corp, which is an example of our active capital deployment strategy into the US market. This investment is immediately accretive to our earnings growth and return on equity metrics. We also announced the sale of our banking operations in Columbia, Costa Rica, and Panama to Dave Vienda for an approximate 20% ownership stake in the newly combined entity. We expect the transaction to be capital neutral and our earnings pickup to be well ahead of what our Scotiabank franchise would have earned standalone. Second, we continue to focus on our North Star, earning client primacy and growing core deposits. Our overall bank funding profile continues to strengthen with strong year-over-year deposit growth of 4%, with positive contributions from each of our business lines that outpaced loan growth and reduced our loan-to-deposit ratio to 105%. Value over volume remains an enterprise-wide priority. We continue to see an acceleration of multi-product clients in Canadian retail as we enhance our client acquisition strategies through initiatives like MortgagePlus and ScenePlus. Penetration of the 15 million ScenePlus members across Canada continues to grow. 25% of ScenePlus members now have a Scotiabank payment product of 50 basis points in the quarter. An impressive 89% of our new mortgage originations in Canada in Q1 came through our MortgagePlus packaged offerings. In Canadian retail, on a cumulative basis since our strategy launch, we have now added 200,000 new primary clients. Although primary client growth has decelerated due to the notable immigration slowdown, we continue to see good momentum in the number of clients we consider primary, which reached 30% of total clients in the quarter. Buying depth in Canadian retail continues to trend above target, with clients holding three or more products increasing sequentially to approximately 47%, up 30 basis points. And we're also successfully growing primary clients in international retail. We have now welcomed 113,000 new primary clients to Scotiabank, since our strategy launch and are seeing positive trends in overall clients considered primary and revenue per international banking retail client. Third, we continue to demonstrate operational excellence and return discipline. We delivered again on positive operating leverage while investing in frontline product specialists in retail, increasing the sales force in wealth, and additional sectoral coverage professionals in GBM in our drive to deliver best-in-class solutions to our clients. We delivered an 11.8% return on equity Q1, representing solid sequential progress, but we know the opportunity exists in each of our business lines and geographic markets to drive stronger ROE performance. We have the scale and strategies in place to do so. Finally, we have updated our approach to business segment presentation to be consistent with management's evaluation of the financial performance of the segments. The changes will support better decision-making around pricing and capital allocation to help the bank achieve its financial and strategic medium-term objectives. Turning to a few key performance metrics and strategic highlights from each of our business lines. Starting with the markets facing businesses. Global wealth management continued its positive momentum, delivering $414 million in earnings as we continue to invest in the growth of our advice channels and broaden the distribution breadth of our differentiated asset management franchise. Favorable markets, strong trading revenues, and a return to positive net fund sales drove fee-earning assets to record levels as we exceeded $730 billion of assets under administration led by our Scotia McLeod, Retail Asset Management and Private Investment Council businesses. Growth in investment fund sales across our branch, wholesale and Scotia financial planning channels remain our leading strategic priority in this business. Strong fund sales in the quarter were up 50% over last year and we expect strong net sales to accelerate through the year. We are tracking ahead of our targets year-to-date in terms of new clients, financial plans delivered, and client retention. New financial plans delivered in Q1 were up 10% year-over-year, and average revenue per account is up 13% year-to-date. We are performing well on referrals between our wealth and retail business, with more work needed to meet referral targets between wealth and commercial banking. Referral volume between our wealth and retail businesses was $2.5 billion in the quarter, an increase of 16% over last year. We continue to invest in technology to make it easier for our advisors to do business with their clients and in frontline staff to deliver total wealth solutions to our wealth and retail clients of the bank. Global banking and markets had a very strong start to the year, up 33% year-over-year in Q1, with particular strength across our capital markets businesses as clients reacted and repositioned their portfolios in response to evolving macro and geopolitical developments. Capital markets businesses contributed 54% of the GBM revenue this quarter, as our origination and advisory businesses delivered one of the strongest quarters on record. Average deposits were up 3% and return on equity improved 350 basis points year-over-year while demonstrating capital discipline. Our underwriting and advisory practice also had an impressive start to the year, up 61% year-over-year and 33% sequentially, and our pipeline remains strong looking into the year, subject to continued constructive market tone and supportive financing conditions. Our global banking and markets team continues to exceed targets on lead relationship client growth, while deliberately reducing our absolute exposure to lending-only client relationships. We are seeing good progress in competitive positioning across our footprint. In Canada, our debt capital markets and equity capital markets teams delivered number one and number two lead table ranks, respectively. Our US debt capital markets team ranked an outstanding 11th in the period, And on the M&A side, we were the number one advisor by deal value in the LATAM markets in which we operate. Canadian banking had solid revenue growth driven by asset margin expansion and well-diversified fee income growth. However, results this quarter do reflect the impact of higher credit provisions because of portfolio migration and a more cautious consumer outlook. Our commercial banking business delivered growth through capital discipline, while our expanded cash management capabilities drove deposit growth. The commercial business continues to show a very attractive funding profile, generating deposit growth of over $10 billion year over year, while assets grew a modest $3 billion. Commercial is an increasingly important source of cross-sell fee revenue to both our GBM and global wealth businesses. Retail deposit growth was up 4% year-over-year as we continue to focus on day-to-day and savings accounts. In addition, investment fund and insurance product sales, which are our key priority to drive higher non-interest revenue, saw double-digit growth. Capitalizing on our SIEM Plus and Mortgage Plus opportunities will be required to deliver on our client growth objectives. Tangerine continues to increase primary clients, aligned to our goal of deepening relationships through everyday banking. This quarter, digital active clients reached an all-time high of 1.4 million. We have a new leadership team in place at Tangerine who will be intently focused on relationship depth and client acquisition. Primary client growth, improved productivity, business mix diversification with a focus on fee businesses, coupled with the normalization of the credit environment, will be the drivers of future earnings growth from our domestic banking franchise. International banking delivered solid results based on diversified revenue growth by segment and geography, coupled with strong expense discipline. Our GBM business in this segment had a strong rebound in activity levels and profitability, delivering $330 million in earnings with lower capital deployed. We continue to reposition our retail business while strengthening our commercial business. Specifically, in commercial this quarter, we saw primary client expansion, with deposits growing 9% year-over-year, drive an improvement in customer revenue by 8%. Our productivity ratio improved to 51% this quarter, a result of 4% revenue growth and disciplined 1% expense growth year-over-year. The productivity ratio is expected to continue to improve as the benefits of our move towards a regional model take effect. We are well on pace to achieve our medium-term run-right savings commitment of $800 million. At an all-bank level, we are encouraged by our strong results this quarter. Excluding the impact of any potential tariffs, we are on track to deliver 2025 earnings growth toward the higher end of our 5% to 7% range prior to the key corp earnings pickup. Our balance sheet strength provides us flexibility in the near term to successfully manage through the various economic and trade scenarios that may evolve. We remain mindful of the impacts of possible economic disruption and growth pause could have on businesses across the country. We're taking a conservative and proactive approach to ensuring we successfully navigate what could be a volatile period with the long-term interests of all stakeholders in mind. The capital discipline now in place across our business has us well positioned to fund our organic growth agenda while resuming dividend growth and capital return to shareholders over time. Looking ahead, we are in a period of heightened geopolitical uncertainty and a less certain economic outlook as new government administrations in two of our priority markets, the United States and Mexico, look to define new policy and trade relationships for the next few years. This is an important moment for Canada, an opportunity to reflect on the trade and productivity challenges that, if addressed, can serve as a catalyst to redefine our national economic agenda. The Bank continues to see the potential for an integrated North American economy to further drive competitiveness and collective prosperity. I remain confident that Canada can come out of this period of transition with a much clearer strategic direction and an economic agenda that is squarely focused on raising our competitiveness. Lower taxes, less regulation, a clear focus on measures to boost investment, energy policies that significantly increase export opportunities for Canadian oil and gas, and a sharp reduction in the time it takes to develop other natural resource projects should be key objectives. And I believe the banking industry will play an important role in supporting a much more deliberate national economic plan. In summary, I am pleased with the progress we have made in executing against our strategy, and I'm encouraged by our results in this first quarter of fiscal 2025. I would like to thank our entire team of Scotiabankers across our footprint who are focused on supporting our clients with advice as they navigate the challenges of the current environment. As we stay focused on disciplined capital allocation, growing client primacy, improving productivity while maintaining a strong balance sheet, I remain confident in the path ahead as we continue to execute on our strategy. I will now turn it to Raj for a more detailed financial review of the quarter.