Scotiabank reports third quarter results

TORONTO, Aug. 25, 2026 /CNW/ — The Bank of Nova Scotia (“Scotiabank”) (TSX: BNS) (NYSE: BNS) reported third quarter net income of $2,953 million compared to $2,527 million in the same period last year. Diluted earnings per share (EPS) were $2.27, compared to $1.84 in the same period a year ago.

Adjusted net income⁽¹⁾ for the third quarter was $2,973 million and adjusted diluted EPS⁽¹⁾ was $2.28, up from $1.88 last year. Adjusted return on equity⁽¹⁾ was 14.2% compared to 12.4% a year ago.

“Q3 was a record quarter for the Bank, as all business lines reported strong results and we exceeded our medium-term objectives in the period,” said Scott Thomson, President and CEO of Scotiabank. “In particular, we exceeded our 14% return on equity target this quarter, highlighting the improvements that we have made across the bank to increase margins and fee income. I am proud of our team of Scotiabankers for their many contributions this quarter, and for their continued focus on execution to deliver on our strategy.”

Canadian Banking generated earnings of $1,071 million, up 12% from the prior year, reflecting record revenue supported by a fifth consecutive quarter of margin expansion and strong fee income growth, combined with disciplined expense management, partly offset by higher provision for credit losses. The business delivered its fourth consecutive quarter of positive operating leverage and ROE improved to 19.4%.

International Banking generated earnings of $766 million, up 8% year-over-year, driven by margin expansion and improved credit quality, with positive operating leverage.

Global Wealth Management delivered a record quarter as earnings reached $518 million, up 23% year-over-year, driven by strong revenue growth from higher mutual fund fees, brokerage revenues, and net interest income. The business also continued to generate strong retail mutual fund sales through our branches, while assets under management⁽²⁾ increased 16% year-over-year to $474 billion.

Global Banking and Markets reported record earnings of $647 million, up 37% year-over-year. Results were driven by strong revenue performance in our capital markets business and record underwriting and advisory fees.

The Bank reported a Common Equity Tier 1 (CET1) capital ratio⁽³⁾ of 13.1% while repurchasing 8.6 million shares in the quarter. For the year to date we have returned $6.3 billion of capital to shareholders through a combination of buybacks and dividends. 

Financial Highlights

Business Segment Review

Canadian Banking

Q3 2026 vs Q3 2025
Net income attributable to equity holders was $1,071 million compared to $958 million, an increase of $113 million or 12%. The increase was driven primarily by higher revenues, partly offset by higher non-interest expenses and provision for credit losses.

Q3 2026 vs Q2 2026
Net income attributable to equity holders was $1,071 million compared to $935 million, an increase of $136 million or 14%. The increase was driven primarily by higher revenues and lower provision for credit losses, partly offset by higher non-interest expenses. The increase was also due to the impact of three more days in the quarter.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
Net income attributable to equity holders was $2,966 million compared to $2,484 million, an increase of $482 million or 19%. The increase was driven primarily by higher revenues and lower provision for credit losses on performing loans, partly offset by higher non-interest expenses.

International Banking

Q3 2026 vs Q3 2025
Net income attributable to equity holders was $725 million compared to $670 million, an increase of $55 million or 8%. The increase was driven primarily by the positive impact of foreign currency translation, lower non-interest expenses, lower provision for credit losses and lower income taxes. This was partly offset by lower revenues.

Q3 2026 vs Q2 2026
Net income attributable to equity holders was $725 million compared to $701 million, an increase of $24 million or 3%. The increase was driven primarily by higher net interest income, lower provision for credit losses and the positive impact of foreign currency translation. This was partly offset by higher non-interest expenses and higher income taxes.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
Net income attributable to equity holders was $2,143 million compared to $1,997 million, an increase of $146 million or 7%. The increase was driven primarily by lower non-interest expenses, lower provision for credit losses and the positive impact of foreign currency translation. This was partly offset by lower revenues and higher income taxes.

Financial Performance on a Constant Dollar Basis

The discussion below on the results of operations is on a constant dollar basis. Under the constant dollar basis, prior period amounts are recalculated using current period average foreign currency rates, which is a non-GAAP financial measure (refer to Non-GAAP Measures starting on page 5). The Bank believes that constant dollar is useful for readers in assessing ongoing business performance without the impact of foreign currency translation and is used by management to assess the performance of the business segment. Ratios are on a reported basis.

Q3 2026 vs Q3 2025
Net income attributable to equity holders was $725 million compared to $733 million, a decrease of $8 million or 1%. The decrease was driven primarily by lower revenues. This was partly offset by lower non-interest expenses, lower provision for credit losses and lower income taxes.

Q3 2026 vs Q2 2026
Net income attributable to equity holders was $725 million compared to $718 million, an increase of $7 million or 1%. The increase was driven primarily by lower provision for credit losses and higher net-interest income. This was partly offset by higher non-interest expenses, higher income taxes and lower non-interest income.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
Net income attributable to equity holders was $2,143 million compared to $2,101 million, an increase of $42 million or 2%. The increase was driven primarily by lower non-interest expenses and lower provision for credit losses. This was partly offset by lower revenues.

Global Wealth Management

Q3 2026 vs Q3 2025
Net income attributable to equity holders was $515 million compared to $417 million, an increase of $98 million or 23%. The increase was driven primarily by higher mutual fund fees, brokerage revenues and net interest income across the Canadian wealth business. This was partly offset by higher volume-related non-interest expenses.

Q3 2026 vs Q2 2026
Net income attributable to equity holders was $515 million compared to $474 million, an increase of $41 million or 9%. The increase was driven primarily by higher mutual fund fees, brokerage revenues and the impact of three more days in the quarter, partly offset by higher non-interest expenses.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
Net income attributable to equity holders was $1,470 million compared to $1,223 million, an increase of $247 million or 20%. The increase was driven primarily by higher mutual fund fees, brokerage revenues, and net interest income, partly offset by higher volume-related non-interest expenses.

Global Banking and Markets

Q3 2026 vs Q3 2025
Net income attributable to equity holders was $647 million compared to $473 million, an increase of $174 million or 37%. The increase was driven primarily by higher revenues. This was partly offset by higher non-interest expenses, higher income tax expense and higher provision for credit losses.

Q3 2026 vs Q2 2026
Net income attributable to equity holders was $647 million compared to $457 million, an increase of $190 million or 41%. The increase was driven primarily by higher revenues. This was partly offset by higher non-interest expenses, higher provision for credit losses and higher income tax expense.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
Net income attributable to equity holders was $1,649 million compared to $1,403 million, an increase of $246 million or 18%. The increase was driven primarily by higher revenues. This was partly offset by higher non-interest expenses, higher provision for credit losses and higher income tax expense.

Other

Q3 2026 vs Q3 2025
Net loss attributable to equity holders was $50 million compared to a loss of $71 million, an improvement of $21 million. Adjusted net loss attributable to equity holders was $42 million compared to a loss of $56 million, an improvement of $14 million. The lower loss was driven primarily by higher net interest income, partly offset by higher non-interest expenses.

Q3 2026 vs Q2 2026
Net loss attributable to equity holders was $50 million compared to income of $28 million, a decrease of $78 million. Adjusted net loss attributable to equity holders was $42 million compared to income of $35 million, a decrease of $77 million. The decrease was driven primarily by lower non-interest income, due mainly to lower investment gains.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
Net loss attributable to equity holders was $438 million compared to a loss of $1,537 million. Included in current year non-interest income is a loss of $423 million recognized upon the completion of the sale of the banking operations in Colombia, Costa Rica and Panama. Included in prior year non-interest expenses is an impairment loss of $1,365 million related to the announced sale of these operations. Adjusted net loss attributable to equity holders was $48 million compared to a loss of $313 million. The improvement was driven primarily by higher net interest income due to lower funding costs and higher non-interest income mainly due to higher investment gains, partly offset by higher non-interest expenses.

Credit risk

Provision for credit losses

Q3 2026 vs Q3 2025
The provision for credit losses was $1,079 million compared to $1,041 million, an increase of $38 million. The provision for credit losses ratio increased by one basis point to 56 basis points.

The provision for credit losses on performing loans was $61 million compared to $66 million, a decrease of $5 million. The provision this quarter was due primarily to the impact of the unfavourable macroeconomic outlook impacting the corporate and commercial portfolio, and portfolio growth in the Canadian and International Banking portfolios.

The provision for credit losses on impaired loans was $1,018 million compared to $975 million, an increase of $43 million. The provision for credit losses ratio on impaired loans was 52 basis points, an increase of one basis point. The increase was due primarily to higher provisions in corporate and Canadian retail portfolios.

Q3 2026 vs Q2 2026
The provision for credit losses was $1,079 million compared to $1,217 million, a decrease of $138 million. The provision for credit losses ratio decreased by 10 basis points to 56 basis points.

The provision for credit losses on performing loans was $61 million compared to $88 million, a decrease of $27 million. The provision this quarter was due primarily to the impact of the unfavourable macroeconomic outlook impacting the corporate and commercial portfolio, as well as portfolio growth in the Canadian Banking and International Banking portfolios.

The provision for credit losses on impaired loans was $1,018 million compared to $1,129 million, a decrease of $111 million. The provision for credit losses ratio on impaired loans was 52 basis points, a decrease of nine basis points. The decrease was due primarily to lower provisions in the Canadian retail and International corporate portfolios.

Year-to-date Q3 2026 vs Year-to-date Q3 2025
The provision for credit losses was $3,472 million compared to $3,601 million, a decrease of $129 million. The provision for credit losses ratio decreased by two basis points to 61 basis points.

Provision for credit losses on performing loans was $222 million compared to $510 million, a decrease of $288 million. The provision this period was driven by credit migration in the Canadian and International portfolios, as well as retail portfolio growth. This was partly offset by a more favourable macroeconomic outlook impacting the International commercial portfolio. The prior period reflected the impact of the uncertainty related to U.S. tariffs, mainly impacting Canadian Banking.

The provision for credit losses on impaired loans was $3,250 million compared to $3,091 million, an increase of $159 million. The provision for credit losses ratio on impaired loans was 57 basis points, an increase of three basis points. The increase in provision this year was due to higher formations in the Canadian Banking and corporate portfolios.

Allowance for credit losses

The total allowance for credit losses as at July 31, 2026 was $7,551 million compared to $7,344 million in the prior quarter. The allowance for credit losses ratio was 97 basis points, an increase of one basis point. The allowance for credit losses for loans was $7,329 million compared to $7,150 million in the prior quarter, an increase of $179 million. The impact of foreign currency translation increased the allowance by $117 million.

The allowance for credit losses on performing loans was higher at $4,831 million compared to $4,742 million last quarter. The allowance for performing loans ratio was 65 basis points, an increase of one basis point. The increase was due primarily to the unfavourable macroeconomic outlook impacting the corporate and commercial portfolios, as well as portfolio growth in the Canadian and International Banking portfolios. The impact of foreign currency translation increased the allowance by $60 million.

The allowance for credit losses on impaired loans was higher at $2,498 million compared to $2,408 million last quarter. The allowance for impaired loans ratio was 32 basis points, unchanged from prior quarter. The increase was due primarily to higher provisions in the corporate and International retail portfolio, as well as the impact of foreign currency translation of $57 million.

Impaired loans

Gross impaired loans as at July 31, 2026 were $7,801 million compared to $7,608 million last quarter. The increase was due primarily to the impact of foreign currency translation and new formations in the Canadian Banking and International retail portfolios. The gross impaired loan ratio increased one basis point to 100 basis points.

Net impaired loans in Canadian Banking were $1,950 million, an increase of $90 million from last quarter, due primarily to higher formations and lower allowances in retail. Net impaired loans in International Banking were $3,093 million, an increase of $14 million from the prior quarter, due primarily to retail formations, partly offset by higher commercial allowances. Net impaired loans in Global Banking and Markets were $183 million, a decrease of $4 million from the prior quarter. Net impaired loans in Global Wealth Management were $77 million, an increase of $3 million from the prior quarter. Net impaired loans as a percentage of loans and acceptances were 0.68%, remaining unchanged from the prior quarter.

Capital Ratios

The Bank’s CET1 capital ratio⁽¹⁾ was 13.1% as at July 31, 2026, down 20 basis points from the prior quarter. This decrease reflects RWA increases from business growth and the recall of a synthetic risk transfer securitization, coupled with share repurchases, partly offset by the favourable impact of earnings less dividends.

The Bank’s Tier 1 capital⁽¹⁾ and Total capital ratios⁽¹⁾ were 15.1% and 16.9% respectively, as at July 31, 2026, a decrease of 30 basis points and 10 basis points respectively from the prior quarter.

The Leverage ratio⁽¹⁾ was 4.3% as at July 31, 2026, unchanged from the prior quarter, primarily as higher leverage exposure was offset by higher capital.

As at July 31, 2026, the CET1, Tier 1, Total capital, and Leverage ratios were well above OSFI’s minimum capital ratios. The TLAC⁽¹⁾ and TLAC Leverage ratios⁽¹⁾ were 28.6% and 8.2% respectively, well above OSFI’s minimum requirements.

Non-GAAP Measures 

The Bank uses a number of financial measures and ratios to assess its performance, as well as the performance of its operating segments. Some of these financial measures and ratios are presented on a non-GAAP basis and are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), are not defined by GAAP, do not have standardized meanings and therefore might not be comparable to similar financial measures and ratios disclosed by other issuers. The Bank believes that non-GAAP measures and ratios are useful as they provide readers with a better understanding of how management assesses performance. These non-GAAP measures and ratios are used throughout this report and defined below.

Adjusted results and diluted earnings per share

The following tables present a reconciliation of GAAP reported financial results to non-GAAP adjusted financial results. Management considers both reported and adjusted results and measures useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non-interest expenses, income taxes and non-controlling interests. Presenting results on both a reported basis and adjusted basis allows readers to assess the impact of certain items on results for the periods presented, and to better assess results and trends excluding those items that may not be reflective of ongoing business performance.

Reconciliation of reported and adjusted results

The Bank’s quarterly financial results were adjusted for the following items. These amounts were recorded in the Other operating segment, unless otherwise noted.

a)       Divestitures and wind-down of operations

In Q1 2026, the Bank recognized a loss of $434 million ($377 million after-tax) upon the completion of the sale of its banking operations in Colombia, Costa Rica and Panama. The loss primarily represents the release of cumulative foreign currency translation losses, inclusive of hedges. In the prior fiscal year, the Bank recognized a total impairment loss of $1,422 million in non-interest expense and a credit of $45 million in non-interest income (collectively $1,342 million after-tax), of which $1,362 million ($1,355 million after-tax) was recognized in Q1 2025, as the operations that were a part of this transaction were designated as held for sale. The changes subsequent to Q1 2025 represented changes in the carrying value of net assets being sold and fair value of shares received less costs to sell, as well as changes in foreign currency. For further details, please refer to Note 19 of the condensed interim consolidated financial statements in the Q3 2026 Quarterly Report to Shareholders.

In Q2 2025, the Bank completed the sale of CrediScotia Financiera S.A. (CrediScotia), a wholly-owned consumer finance subsidiary in Peru, to Banco Santander S.A. (Espana). The Bank recognized an additional loss of $9 million in non-interest income – other upon closing.

b)       Amortization of acquisition-related intangible assets

These costs relate to the amortization of intangible assets recognized upon the acquisition of businesses, excluding software. The costs are recorded in non-interest expenses – depreciation and amortization for the Canadian Banking, International Banking and Global Wealth Management operating segments, and non-interest income – net income from investments in associated corporations for the Other operating segment. 

In addition to the above, the following adjustment also impacted the earnings per share calculation in Q3 2025.

c)       Foreign currency loss on redemption of Subordinated Additional Tier 1 Capital Note

In Q3 2025, the Bank redeemed all outstanding U.S. $1,250 million 4.900% Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (AT1 Note). The redemption resulted in a foreign currency loss of $22 million, which was recognized in retained earnings. The loss was deducted from net income attributable to common shareholders for the purposes of calculating basic and diluted earnings per share (EPS).

Reconciliation of reported and adjusted diluted earnings per share

Reconciliation of reported and adjusted results by business line