The Bank of Nova Scotia

Good morning.

Welcome to Scotiabank's 2025 Q2 results call. My name is Manny Gramin. I am head of investor relations here at Scotiabank. Presenting to you this morning are Scott Thompson, Scotiabank's president and chief executive officer, Raj Viswagathan, our chief financial officer, and Phil Thomas, our chief risk officer. Following their 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, Francisco Aristegueta from International Banking, and Travis 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, Manny, and good morning, everyone. In what remains a period of global economic uncertainty, we continue to execute on our strategy, focusing on areas we can control, including strengthening our balance sheet, investing in our business while delivering positive operating leverage, and capitalizing on revenue opportunities as they emerge. We delivered adjusted earnings in the quarter of $2.1 billion, or $1.52 per share. This included a significant performing build in Canada, reflecting a conservative estimate of the potential impact of the evolving macroeconomic backdrop driven by tariffs. This quarter, we continued to invest in our Canadian banking franchise as we execute on our strategy to grow our primary client base and deepen client relationships. We demonstrated strong expense discipline in international banking, grew our wealth earnings, and delivered strong results in our global banking and markets franchise led by impressive growth in fee income. Underpinning all of this is our continued commitment to strong balance sheet metrics, which positions us well to support clients through this period of uncertainty. Our steady one ratio was 13.2% of 30 basis points quarter over quarter and our liquidity metrics remain strong. We built almost 200 million of allowances this quarter for a cumulative build of 1.8 billion since the end of 2022. While we have not seen a meaningful deterioration in credit, our base case forward looking indicators have worsened. The outlook continues to evolve and we are operating in a unique environment. Against this dynamic scenario, an overlay of expert credit judgment contributed to our provision approach this quarter. Our strong balance sheet allows us to remain focused on driving forward our key strategic objectives, delivering growth and shareholder value over the long term. Moving to a brief review of our strategic priorities. First is a continued focus on disciplined capital allocation. We announced a return to growth of our quarterly dividends, increasing our quarterly dividend by $0.04 to $1.10 per share. This morning, we also announced the launch of a share buyback program for 20 million shares. This demonstrates our confidence in the trajectory of internal capital generation and strength of our capital ratio. We expect to use the NCIB as one of the tools in our toolkit to allow us optionality to return capital to our shareholders if our valuation remains depressed. Second, we remain focused on our North Star, earning client primacy and growing core deposits. The bank continues to improve its loan-to-deposit ratio to 104%, the 10th consecutive quarter of improvement. Clients are cautious in this environment, and we are seeing this in their deposit behavior, with deposits up year-over-year across most business lines. Since we launched our strategy, we have added approximately 392,000 new retail primary clients across the bank. Although primary client growth has decelerated in Canada due to the immigration slowdown, we are focused on converting near primary clients and are seeing improved client retention rates compared to the prior period. International banking continues to execute on its segmentation strategy, and we expect to see primacy accelerate once this is fully deployed. Our primary clients contribute more than five times the revenue of non-primary clients, and we are seeing continued growth in primacy across our priority segments. Our focus on primacy means we are having more conversations with clients, particularly when it matters most. In Canadian retail, our advisors are making 20% more calls to clients compared to the prior quarter. Our Canadian wealth business delivered over 4,000 financial plans year-to-date, and we continue to build out our team of retail specialist advisors up 8% this year. In addition, our small business banking team added 17,000 clients in Q2 alone, contributing to a robust net client acquisition rate of 5% year-to-date, well above the market. Third, we continue to demonstrate operational excellence and return discipline. We delivered positive operating leverage for the fifth straight quarter while continuing to invest in our businesses to drive longer-term, sustainable growth and improving client experience. We continue to invest in AI to drive productivity. For example, in Canada, over 70% of commercial client emails received by our business service center are now processed by AI to create structured case files, delivering faster service and at a lower cost. While year-to-date ROE was down slightly compared to the prior period, this was driven by the significant Q2 performing allowance build. We remain steadfast in our focus to achieve 14% plus ROE over the medium term. We feel good about the momentum we have heading into the second half of the year and are confident that we'll be able to grow EPS by 5% to 7% in fiscal 2025. Now, I will briefly turn to highlights from our business lines. Global wealth management continued its positive momentum, delivering $405 million of earnings, which is up 17% year-over-year, with strength across all of our businesses. Our global asset management business continues to expand its offerings by adding new private asset solutions. Our expanding active ETF product suite is resonating with clients as we are seeing strong asset growth in these solutions despite market volatility. Our Canadian wealth business saw strong growth in fee-based assets driven by sales momentum in our advisory channels, while market volatility drove higher trading volumes, particularly in iTrade. Our private bank continues to innovate, and this year we launched our signature banking offering tailored to a wider segment of high net worth clients with a service-focused banking solution. We are delivering on our commitment to provide holistic solutions to clients with closed referrals between our Canadian wealth, retail, and commercial businesses at $6.7 billion year-to-date, up 6% year-over-year. We are seeing continued momentum on our retail advice strategy in partnership with Canadian banking, with year-to-date net inflows up $1.6 billion compared to the prior year. Global banking and markets delivered earnings of $413 million as we continue to generate better results with less capital. In Canada, we maintained the number one lead table ranking in debt capital markets. Capital markets activity was strong in the first two months, slowing down in April as the tariff uncertainty escalated. Our M&A business generated near record revenue this quarter, Fees for the first half of fiscal 2025 already exceed the full year of 2024. Despite observing a slowdown in announced M&A due to the market uncertainty, our pipeline remains strong and we are ready to capitalize when activity resumes. We remain focused on our balance sheet velocity and continue to deliberately grow our capabilities in strategic products such as mortgage capital markets, leveraged finance, and structured credit. Canadian banking continues to diversify its business mix while executing on its primacy strategy. Canadian banking deposits were up 5% year-over-year, and our retail business continues to see strong retention of maturing term deposits driven by the device-led strategy. We continue to deliver enhancements to our Scotia Smart Investor solution, which helps clients plan and manage their savings and retirement targets. We are also making it easier for clients to bank how and where they want by continuing to grow our virtual advice for clients. While mortgage growth is slowing, our Mortgage Plus solution, a major driver of client primacy, accounted for 88% of our originations this quarter, and mortgage renewal retention rates remain high. We are also seeing traction in our card strategy, with almost 26% of the 15 million ScenePlus members now holding a payment product. ScenePlus members are seeing the value of the loyalty program as key metrics such as active users, points issuances, and redemptions grew year over year. This engagement should contribute to client acquisition as rewards are amplified for ScenePlus members who hold Scotiabank payment solutions. In partnership with private banking, Canadian Banking also launched a new premium credit card tailored to high net worth clients, combining the value of ScenePlus with exclusive benefits for cardholders. Moving to international banking, earnings were $681 million, driven by another quarter of strong expense discipline and lower impaired loan loss provisions. Return on equity improved both year-over-year and quarter-over-quarter as earnings grew while capital attributed was lower. Our productivity ratio improved to 51% and we remain on track to achieve our medium-term run rate savings commitment of $800 million with significant components for our regionalization strategy complete by the end of the fiscal year. We continue to execute on our retail segmentation strategy with leadership roles for the regional structure largely in place. Looking ahead, we expect to roll out a tailored value proposition for priority segments by the end of the fiscal year across our core markets. In commercial, our segmentation efforts are complete. Clients have been partnered with relationship managers best suited to their needs, and we are starting to see the benefits. We are also driving an improved client experience and have deployed an enhanced onboarding solution across our key markets, allowing us to onboard clients in one-third of the time. In international banking GBM, earnings were up 8% year-over-year, driven by capital markets as the bank capitalized on strong market activity. Looking ahead, with the Canadian election now behind us, I am optimistic the country has entered a period of relative political stability and can now focus on a growth-first agenda. This will require Canada to tackle its underlying productivity issues, address the obstacles that stand in the way of big infrastructure projects, and realize the country's potential as a natural resources powerhouse. It also includes creating the conditions for strong and mutually beneficial economic growth across Canada, the United States, and Mexico. We intend to work with stakeholders across the country to execute on the growth agenda as the country focuses on supporting its producers, manufacturers, builders, and innovators in creating jobs, building affordable homes, producing what the world needs, and getting those goods to global markets. In summary, while weaker consumer and business confidence is impacting near-term loan growth and capital markets activity, the future looks bright for Canada, and our team remains focused on executing on our strategic priorities. We remain committed to building deeper, more advice-driven client relationships and positioning ourselves to capitalize on growth opportunities that drive shareholder returns. I will now turn it to Raj for a more detailed financial review of the quarter.