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Earnings Material +

Scotiabank reports second quarter results

Scotiabank’s Earnings Soar as Canadian Banking Revival Accelerates, Paving Way for Early ROE Target

By The Northwire Desk — AI Analysis May 27, 2026 · 05:30 BNS · 111.0 BANK OF NOVA SCOTIA (THE)
Executive Summary
  • Scotiabank reported Q2 2026 adjusted net income of C$2,652 million, up 28% year‑over‑year, with adjusted diluted EPS of C$2.02 (vs C$1.52).
  • Adjusted Return on Equity (ROE) climbed to 13.2% from 10.4% a year earlier.
  • Canadian Banking earnings surged 53% to C$935 million, lifted by higher revenues and a lower provision for credit losses.
  • International Banking earned C$736 million (+3%); Global Wealth Management earned C$476 million (+19%); Global Banking and Markets earned C$457 million (+11%).
  • Provision for credit losses ratio improved to 66 bps, and CET1 capital ratio remained robust at 13.3%.
  • The Bank declared a quarterly dividend of C$1.14 per share, a 4% increase, payable July 29, 2026.
Material Impact
  • The Q2 results substantially exceeded year‑ago levels, with the standout being Canadian Banking’s 53% earnings jump. This far surpasses management’s guidance of double‑digit segment growth and indicates the retail turnaround is gathering pace faster than anticipated.
  • Adjusted ROE of 13.2% brings the Bank within striking distance of its medium‑term 14%+ target. The Q1 2026 transcript had already hinted at reaching that target by 2027, but the Q2 acceleration makes early attainment likely – a genuine catalyst for rerating.
  • The dividend increase, while modest, signals confidence in the earnings trajectory and capital strength, and complements the active NCIB buyback programme.
  • The previous quarter (Q1 2026) also beat expectations, but the Q2 print demonstrates that the momentum is not a one‑off, enhancing credibility of the growth story.
  • The stock had already rallied to $111 ahead of the report, so some optimism may have been priced in. Nevertheless, the magnitude of the Canadian Banking beat and the associated ROE upgrade are likely to be taken as material positive news by the market.
  • Given the strength of the miss/beat absent analyst consensus, the combination of broad‑based revenue growth, expanding margins, and a clearer path to target makes this a Material Positive development.
BNS · Price
Company Overview
  • Scotiabank (The Bank of Nova Scotia) is one of Canada’s major chartered banks, operating through four segments: Canadian Banking, International Banking (Latin America, Caribbean), Global Wealth Management, and Global Banking & Markets.
  • Rather than a single “project,” the company’s strategic focus is a repositioning of its footprint – exiting non‑core markets (Colombia, Costa Rica, Panama) via the Davivienda deal while concentrating on higher‑return markets such as Mexico, and deepening its U.S. ties via the KeyCorp stake.
  • The bank’s transformation aims to lift Canadian Banking ROE to ~24% by 2028 and deliver a sustainable 14%+ Group ROE. The Scene+ loyalty programme and AI‑enabled client tools are key levers to improve engagement and efficiency.
Read the original news release →

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