Bank Of Nova Scotia

Solid quarterly performance + capital return (good/surprising) - Adjusted earnings: $2.7B / $2.02 EPS; ROE: 13.2%. - Pretax pre-provision earnings: +16% YoY (driven by revenue growth + expense management). - Dividends: Board announced a quarterly dividend increase of $0.04/share. - Buybacks: 6.4M shares repurchased in the quarter (≈ 13 bps capital usage); CET1 at 13.3% *even after* buyback.

Business momentum + mix shifting (good) - Pretax pre-provision by segment: - Canadian Banking: +13% YoY; 4th straight quarter of margin expansion; fee income strength (wealth/credit cards/insurance). - International Banking: +12% YoY; revenue +7% YoY, positive operating leverage 3.2% YTD; Mexico especially strong (revenue +8%, earnings +25%). - Global Wealth Management: net sales $4.7B, 4x Q2’25, 7th consecutive quarter of positive flows; ROE 17.9% (+210 bps YoY). - Global Banking & Markets: revenues +9% YoY, capital markets +25% YoY. - Deposits strategy working: retaining >90% of retail GIC maturities despite industry GIC contraction; savings/day-to-day deposits up 3% YoY in Canadian Banking. - Opportunity/tactical deposit initiative: launch of Scotia High Interest Savings Account (relationship-based tiered rates) to grow sticky deposits.

Credit quality: allowances rising; impaired PCL guidance updated (mixed, important) - Provision for credit losses (All Bank): $1.2B / 66 bps (+5 bps QoQ). - Allowance for credit losses: $7.3B / 96 bps (+2 bps QoQ). - Key drivers of elevated impairment in Q2: mainly a single corporate account in International Banking (≈ 7 bps of impaired PCLs) plus some Canadian forward-looking effects. - Updated outlook/forecast (watch closely): - Impaired PCLs expected in the mid-50 bps range for the remainder of 2026, but the moderation is expected to be more gradual than previously anticipated. - Management explicitly said full-year impairment is higher than earlier expectations, driven by macro evolution since December (energy costs, trade uncertainty, inflation).