Scotiabank reported fourth-quarter earnings of $2.2-billion, or $1.65 per share, on Monday.Chris Wattie/Reuters
Bank of Nova Scotia BNS-T posted a jump in profit in fourth-quarter results as activity in capital markets surged, heading into a year when the lender expects growth to accelerate as it continues its strategic turnaround plan.
Even after booking restructuring charges aimed at cutting costs in some of its businesses, Scotiabank’s net income jumped 31 per cent to $2.2-billion, or $1.65 per share, in the quarter ending Oct. 31 compared with the year-ago period. Higher trading activity bolstered its capital markets unit, driven by growth in its business in the United States.
“Improved revenue growth, coupled with positive operating leverage, should help us deliver double-digit annual [earnings per share] growth in fiscal 2026 despite what remains an uncertain operating environment,” Scotiabank chief executive officer Scott Thomson said during a conference call with analysts.
The bank’s adjusted return on equity – an industry metric that measures profitability – improved to 12.5 per cent, edging closer to Scotiabank’s target of 14 per cent. Mr. Thomson believes the bank will hit that goal earlier than expected.
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In 2023, Scotiabank launched a turnaround plan aimed at shifting resources from Latin America to North America, where it believes it has greater opportunities to expand its businesses.
As mortgages continue to renew at higher rates and the bank adds to its deposit base, chief financial officer Raj Viswanathan said the Canadian banking division will be a key driver in growing the lender’s profits next year.
Profit from capital markets jumped 50 per cent to $519-million on stronger activity in the U.S. This fiscal year marked the best performance for Scotiabank’s underwriting advisory services, with fees climbing 35 per cent.
The U.S. division made up 50 per cent of this year’s capital markets profit, and Scotiabank plans to continue to build the business in the coming year.
Scotiabank is the first major bank to release earnings for the three months ended Oct. 31. Royal Bank of Canada RY-T and National Bank of Canada NA-T will report results on Wednesday. Toronto-Dominion Bank TD-T, Bank of Montreal BMO-T, and Canadian Imperial Bank of Commerce CM-T will wrap up earnings week on Thursday.
Scotiabank said, with adjustments to exclude certain items, it earned $1.93 per share, beating the $1.84 per share analysts expected, according to data from S&P Capital IQ.
Scotiabank booked $373-million in restructuring charges and severance provisions, largely linked to work force reductions, as the bank streamlined its Canadian banking business, and reduced its Asian capital markets operations.
In October, The Globe and Mail reported that Scotiabank was laying off staff across its Canadian banking unit. In an internal memo, the lender said the unit’s new operating model is aimed at accelerating the bank’s targets in acquiring primary clients, which are customers that have a daily chequing account as well as another payment or investment product.
Mr. Thomson said he does not anticipate further restructuring charges.
“While these types of decisions are always difficult, they are nevertheless necessary as we work to boost the value of the Canadian bank,” Mr. Thomson said. “The actions simplify and streamline our organizational setup, which will free up capacity to further invest in technology and revenue generating sales staff to propel future revenue growth.”