Bank Of Nova Scotia

Record profitability & ROE delivered early (beat expectations) - Q3 was a record quarter with diluted EPS of $2.28 (+21% YoY) and all-bank positive operating leverage for the 10th straight quarter. - ROE: 14.2%, +170 bps YoY, and management says they hit/beat their 14%+ ROE target sooner than projected (not viewed as a “ceiling”). - Revenue strength: +16% YoY total driven by net interest income +12% YoY (NIM +18 bps YoY); non-interest income +21% YoY. - Expenses: +14% YoY, largely due to performance-based comp, share-based comp, and technology spend (tech $1.5B, +16% YoY), but productivity improved (productivity ratio 52.5%, +90 bps YoY).

Capital returns & CET1: shareholder-friendly, but with ongoing capital deployment - CET1 ended at 13.1% after deploying 23 bps to organic growth and repurchasing 8.6M shares (about 20 bps of capital usage). - Over the past 12 months, $8.3B returned to shareholders via buybacks and dividends. - Strategy reiterated: organic growth first, then buybacks, then small “tuck-in” acquisitions. - Near-term capital constraint risk (but expected manageable): - RWA rose ($493B, +$11B QoQ excluding FX) including recall of a synthetic risk transfer. - Q4 impact: migration of certain portfolios from Standardized to AIRB expected to reduce CET1 by ~15 bps, but management expects to stay around ~13% CET1 next quarter.

Canadian Banking strong momentum (mix shift + deposits) - Canadian Banking ROE improved +160 bps sequentially to 19.4%. - Earnings $1.1B (+12% YoY); pretax pre-provision +11% YoY, partially offset by higher credit loss provisions. - Loans: +3% YoY (mortgages +4%; commercial & small business +3%). - Credit quality improving: PCL ratio down 8 bps sequentially to 42 bps; mortgage delinquency remains a watch-out but portfolio resilience emphasized. - Mix & fees: NII up +7% YoY, non-interest income +11% YoY (mutual funds distribution, credit cards, insurance). Margin expansion continued (5th consecutive quarter). - Deposits: retail day-to-day & savings +1% YoY; term deposits down -2% YoY (a minor negative but not described as threatening). - Management opportunity path to 20%+ ROE (investor Q&A): growth in mid-market client additions (~700 mid-market clients, +85% YoY) and business banking scaling (ROE ~25% in that sub-book).