Scotiabank Bank Earnings Reports

Scotiabank’s net income has had its ups and downs, especially in the past few years. In its best quarters, Scotiabank brought in net income of around $2.7 billion - these peak earnings came during strong periods in 2022. However, there have also been tougher times, like in 2020, when net income dropped to about $1.3 billion during the pandemic, and more recently, in late 2023 and 2024, with a dip in reported net income.

Net interest income, like Canada’s other big banks, has been Scotiabank’s primary revenue driver, consistently accounting for about 55% to 60% of total revenue. This income stream, which comes from the difference between what the bank earns on loans and what it pays on deposits, has shown strong growth over the period, increasing by 39.9% from Q1 2016 to Q4 2024, starting at $3.5 billion in early 2016 and reaching $4.9 billion by late 2024.

Non-interest income, which includes fees, trading revenue, and other service charges, has represented around 40% to 45% of total revenue. This revenue stream has grown more modestly than net interest income, showing a 26.6% increase from Q1 2016 to Q4 2024. Starting at $2.8 billion in Q1 2016, it has fluctuated over the years and settled at $3.6 billion by Q4 2024. The bank saw peaks in non-interest income during 2019-2020, when it occasionally exceeded $3.7 billion per quarter, but has since moderated to a more stable level.

Total revenue has seen healthy growth of 34.0% over the same period, rising from $6.4 billion in Q1 2016 to $8.5 billion by Q4 2024.

Scotiabank's total assets have increased by 53.5% from Q1 2016 to Q4 2024, going from $919.6 billion to $1.412 trillion. Notable milestones in Scotiabank’s asset growth include crossing the $1 trillion mark in late 2018 and later surpassing $1.3 trillion in 2022. It reached its peak at $1.412 trillion in Q4 2024. Recent years have shown a more moderate pace of asset growth, with total assets stabilizing around the $1.4 trillion mark.

Note: Scotiabank adopted IFRS 17 effective Q1 2024, with restated numbers shown up to November 1, 2022. Results prior to Q4 2022 are based on IFRS 4.

Provision for Credit Losses (PCL) represents a bank's forward-looking estimate of potential credit losses. PCL peaked dramatically during the pandemic at $2,181 million in Q3 2020, reflecting the significant uncertainty at that time. Since then, PCL levels have normalized but remain elevated, averaging around $1,000 million in recent quarters.

Allowance for Credit Losses (ACL) is the bank's cumulative reserve for potential future credit losses. The ACL, shown using the right axis in the graph above, peaked at $7,820 million in Q4 2020, reflecting the build-up of reserves during the pandemic uncertainty. While it has since declined from those peak levels, it remains elevated at around $6,700-6,900 million in recent quarters. The ACL ratio has averaged 0.908% of gross loans over the period of Q1 2016 to Q4 2024.

Net Write-offs show the actual credit losses that Scotiabank has experienced. The peak occurred in Q2 2021 at $1,141 million during the aftermath of the pandemic. More recently, write-offs have been trending upward, showing a 41.7% increase in the latest year from Q4 2023 to Q4 2024, reaching levels around $900-965 million in recent quarters. This increase suggests some deterioration in credit quality.

The recent trends in these metrics point to:

• Rising net write-offs indicate actual credit deterioration
• Increasing PCL levels suggest expectations of continued challenges
• Growing ACL balances reflect the bank's conservative stance in maintaining strong loss reserves

The increases remain within manageable levels, given Scotiabank’s size and capital strength.

Over the 2016-2024 period, Scotiabank's gross loans have expanded by 59.6% from $481 billion to $767 billion. There was a brief contraction in 2020, followed by rapid recovery, with significant growth from 2021 to 2023. The loan portfolio reached its peak at $770 billion in Q2 2023 before moderating in recent quarters.

Residential mortgages represent the largest portion of Scotiabank’s loan portfolio, at 46%, and have shown growth of 25.6% over the period from Q3 2020 to Q4 2024, increasing from $278 billion to $351 billion. Scotiabank’s residential mortgage portfolio peaked at around $354 billion in early 2023 but has since moderated.

Business and government loans are the second-largest segment, accounting for 38% of the loan portfolio. This category grew from $233 billion in Q3 2020 to $293 billion in Q4 2024. Growth has been particularly strong since 2022, though it has stabilized around the $290-293 billion range in recent quarters.

Personal loans, excluding credit cards, make up 14% of the portfolio and have shown more modest growth, increasing from $95 billion in Q1 2016 to $106 billion in Q4 2024. Credit cards represent the smallest portion at 2% of the portfolio and have grown from $15.4 billion in Q3 2020 to $17.6 billion in Q4 2024. Credit card balances initially declined during the pandemic but have since recovered and surpassed pre-pandemic levels.

Scotiabank's deposit base has grown significantly from 2016 to 2024, with total deposits growing by 49.6% from $631 billion in Q1 2016 to $944 billion in Q4 2024. The geographic distribution of deposits reveals Canadian deposits as the strongest performer, with growth of 63.7% over the period to now, they represent 73% of total deposits. This expansion from $419 billion to $687 billion demonstrates the bank's powerful domestic operations, with recent quarters showing stability around $680-690 billion.

US deposits have shown the most modest growth at 6.2%, currently representing 10% of total deposits. This segment has experienced significant fluctuations, ranging from $49 billion to over $100 billion, before stabilizing around $90 billion in recent quarters.

Other international deposits have achieved solid growth of 31.9% and now represent 18% of total deposits. This segment has grown from $126 billion to $167 billion, showing more stability than US deposits but less growth than Canadian operations. The international deposit base reached a peak of $183 billion in Q3 2023 before moderating to current levels, demonstrating the bank's ability to maintain a significant international presence while focusing on core markets.