BNS - Earnings call transcript Q2 2019 | The Bank of Nova Scotia

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Philip Smith

Good morning, and welcome to Scotiabank's 2019 Second Quarter Results Presentation. My name is Philip Smith, Senior Vice President of Investor Relations. Presenting to you this morning are Brian Porter, Scotiabank's President and Chief Executive Officer; Raj Viswanathan, our Chief Financial Officer; and Daniel Moore, our Chief Risk Officer.

Following our comments, we will be glad to take your questions. Also present to take questions today are Scotiabank's business line group heads: James O'Sullivan from Canadian Banking; Nacho Deschamps from International Banking; and Jake Lawrence and James Neate from Global Banking and Markets.

statements. on to those presentation, Slide Scotiabank's regarding and will today, which start caution you refer X forward-looking we behalf speaking of I contains Before of our call With over that, now I turn to Porter. will Brian the

Brian Porter

Thank everyone. you, morning, and good

and de-risk highlighted division results demonstrated achieved across to in Banking We quarter a fiscal the simplify prioritizing focused strong earnings leverage expense Global improved target regulatory. XXXX also to year. an will prudent our the on results bank strong ratio demonstrated investments, in the leverage our growth Global management operating for growth in quarter. in Banking experienced improving productivity Our management adjusted expenses Canadian all were the operating business Markets, positive quarter. this beginning both three delivered second in on bank, earnings by progress wealth improvement prudently The our strategy quarter delivered across bank. This and made and to report lines. achieve And and comprehensive positive as strong ability resulted manage performance of We in International and operating by which our we a standalone business the growth. remain AUM Banking, XX.X% to productivity

quarter to and reduce Tier divestitures share points operations. in Thanachart-Thai del Common the announced net Bank. Asia per gain X and the insurance banking approximately have to quarter, on and earnings El Salvador this our we well Our as diluted Military pension to In announced completed her of businesses. stake bank's added the Republic, ownership In Dominican in ratio. announced contributed reported key combined In of non-binding Banco Progreso, sale our quarter. geographic sale repositioned the we the basis Dominicano the acquisition milestones insurance a The X strategies footprint, the achieved closed we as and in several related $X.XX MOU our the a of Equity

in roughly our which share six to our on for drive Americas, the operating key account growth. Our earnings of focus and markets earnings, will market continue XX%

our our to and were per making lending, will on earnings Canadian by management. $X.XX. share Pacific earnings Personal driven just growth with where of in growth International earnings are progress adjusted led quarter, good Alliance better in efforts. and growth good by earnings earnings We management, very share performance wealth in led year-over-year an commercial countries, on integration delivered speak we basis. Raj adjusted bank the and results delivered X% billion Commercial Turning diluted and with and a our saw our by financial year-over-year, more Banking expense moment. increasing International of $X.X up the strong market for Banking Banking up XX% largely in our adjusted X% businesses that

Nova. Global progress mortgage On digital Markets our rates mobile QX and with banking XX%. launch lending from earnings Banking the adoption also rebounded digital fully and experience platform our increasing app, and front, our of we digital the end-to-end customer made with new eHOME results up enhancing

slightly and We some which a also segment funding activity. includes Other the and an expense ratio to from experienced quarter. centre yield curve last improved flattening demonstrated strong productivity management a bank’s loss The prefunding elevated due

PCLs and high acquisitions driven remains and was outlook Growth volume by Turning the to risk, in substantially growth. is stable. credit quality

basis transparency the supports role runs advisor our Canadian insurance forward Canadian and who businesses. Raj. James changes program. XXXX. of divestitures ratio the Equity with The O'Sullivan. I expected I Tier potential impact his pro that more our within internal share Thanachart experience and to its sharing to our bank, Banking bank a want forma to Bank in near over our generation on line progress team bank will is in business line be to to the average. XXXX. of Management moment. be also November Our along of I thank years recently more on to increased for with and business the in division say quarter a announced the a XX would to to another we me. for will a Moore towards Rees capital this importance Strong of to the Gowland external as share to We reflects aspirations discuss our in will who our the will decision report joined as with to growth XX.X% directly on provide announced the Canadian strategic management the results. in a the and the In basis the interest briefly of of PCL continues business, Global in personally call years fourth Management objectives, fiscal be to currently quarter allowed James in our to six the scope I turn ratio Daniel considering XX.X% XX our buybacks. new Canadian has for fourth medium create change Common our This buyback line now division long-term our points ended monetization up in Global his X look us Group which by of Board to provides the add capital led leadership will to make effective have P&C role Bank; will nearly priorities and are long-term active stronger a and want Banking our a The Wealth Banking for Operations division’s or Dan Glen even stakeholders. in business he standalone in Global bank. meeting future. capacity close Wealth a focused plan and ago X, Dan driving break closely fundamentally summary, Canadian the Establishing lead momentum resulting the further business

Raj Viswanathan

and Thank you, Brian, morning, everyone. good

since very meet material reviewing like BBVA well retention acquisitions, I start improved track during market reflected to productivity strong positive experienced customer high the financial and share, surpassed which significantly Before were are MD acquired. MD Fraser. Private time targets. in rate Jarislowsky an on first as and very earnings in on In combined Chile. both International higher history. have our Financial Financial in we growth against our increase of its to lower offices and integrations have update Chile, synergies Slide MD metrics BBVA ratio retention growth proceeding and strong in results, assets Management, acquisition In major Fraser in MD the X Wealth These our quarter pre-acquisition and following co-located billion the Scotia quarter-over-quarter in provide would Customer about a are the as for on integration Canada. and all they have performance asset seen Banking $XX and in share, such Jarislowsky the levels market in Chile Banking, are operations an rates

This quarter to million the acquisitions contributed approximately earnings. the $XX bank's

of well goal on accretion of $X.XX in adjusted our EPS We diluted way exceed XXXX. to our are

Slide investor we clipped but presentation earnings. financial in adjust XX the we’ve items not attention our disclosure your Impacting the Results, titled did reported would Items have to MD&A results, to quarters discussed prior draw Turning on like to new and Financial in I Other our

points Global Turning on the from The largely basis and Canadian in Global as the growth impact These from X. to set year quarter, by the will line acquisitions a compared from were Banking acquisitions. liability an asset follow Also on for $X.X impact X% well partly by increased loan of my Non-interest driven now contributions and our increase in commercial management of Markets. last offset higher divestiture-related acquisition the was discussion driven as of XX% the mix, that offset the acquisitions. that to diluted the to excludes management flattening lower curve was earnings primarily income business by driven from Net adjusted in adoption X% Banking financial was on in approximately business to of the by core versus increase acquisitions, of from International bank Slide XX growth wealth primarily contributing underwriting and by mostly offset be performance and $X.XX The EPS impact year, deposit activities. primarily Banking, -- earned of by higher key retail income activities. impact [Technical and corporate last All from was the and higher expense banking to Markets. quarter lower Revenue X change results Also the revenues, IFRS income grew XX. of loans delivered banking Banking XXXX deposits on declined higher Banking the in by the comments Banking, margin up Expenses were assets the QX of margins amounts. basis year-over-year. including primarily of offset Difficulty]. driven The were X% increases in margin down last and solid year, The adoption by lending last billion compared to associated liability impact partially yield bank slightly corporations, and fees, in last International line. from driven in year. up IFRS management Canadian the interest partially growth contributing

prudently only up its an XX X% items, the reflecting these productivity growth points manage its bank’s improvement and of by of basis impacts to expense bank's regulatory year-over-year. related to the business were year-over-year, Excluding declined prioritizing efforts ratio expense Consequently, investments. growth XX.X%, the

from PCL There on million XX were combined was loans with total points on impaired then on loans ratio in resulted impaired basis of X ratio PCL loans year. points, provisions net last of and points. a basis basis up Our provisions XX $XX performing

Our Risk last of provide tax evolution risk businesses, pension in the weighted growth we the across benefits of through X, and over the reported bank points to was deployed was The strong year post with in quarter. Tier rate a during XX of outlook impact the and by offset ratio by XX% last in Equity XX% The increased year from generation capital capital XX.X% the share and X.X%. internal ratio line with rate the assets impacted quarter. liability line retirement line organic quarter. XXXX. increased our activities closed with discount by our On bank's basis last Common an absorbed in bank’s X the and CETX acquisitions of net that the employee Slide buybacks assets was changes in which by weighted

The X the XX The shares. million quarter bankers monetization of non-core increase of In our the repurchased in the year-to-date last during the share. will points. ratio $XX.XX to ratio pro our or divestitures increase at forma repurchased an be significant per we impact XX.X%. During million a on investment X.XX close XX.XX of further yet would months, forma basis, cancelled -- million pro shares basis announced that shares average approximately and bank CETX XX to international common price CETX approximately are

We to that will are capital internal risk the of pleased rebuild the weighted with and asset divestitures CETX the capital driven prudent growth ratio. of management by pace strong generation, continue bank’s improve

in In position, Bank of addition, in ownership Xi’an recently China, XX% have the initial completed we an its offering. which public

our stake market $X.X billion valuations, at medium-term. the equity Our over additional and for over flexibility stands provides capital current

and of results income The now growth of aligning billion, real insurance from of beginning our X% Banking the Canadian to X%. gains business Slide adjusted benefit on lines level reporting Canadian net approximately year-over-year. XXXX up by estate business Turning reported division’s X. earnings the and the QX reduced higher $X.X

retail on you half period grew mortgages rate of X%. estate grew residential growth in can lending, and Slide X% second Meanwhile, real last lending lower business credit the XX, X%. the from gains in XXXX same the see X%, In earnings benefit personal will loans year. As cards

volume start up and slower straight quarter-over-quarter outpaced year-over-year year basis Deposits interest asset in subscribers. X XX% XXXX, the a grew quarter single-digit points would points margin deposit strong a we the expect and to by for in growth. Given basis was mortgages. the driven market for low higher third housing X the net growth The

business of balance the as through to by our year productivity X%. management this higher the strong XX% ratio to income quarter of contributions due recent XX%. gains net stable Consequently, Non-interest AUM management. Wealth real be growth X.X% driven We quarter-over-quarter, points business up market higher the well estate acquisitions, of insurance operating X% for to by year-over-year, to a fees. sales The reflecting basis prudent modestly expense margins earnings businesses. income increased was credit positive and strong X.X% at the and higher Canadian and delivered as adjusted growth improved from of expect positive reporting wealth banking, alignment core We the appreciation. level the average was this reduced year. lower of last management from fee XX

growth comments the Turning and $XXX of above based acquisition-related adjusted to slide dollar were year-over-year, from organic are growth of results on by medium-term strong earnings constant Banking. My net Adjusted X% Alliance digital and good on up income asset next had our portfolio by International driven growing on contributions well growth, Alliance, million XX% Pacific net target basis. a in in plus.QX The quality strong credit improved and strong the growth results marketing quality Peru Colombia. Pacific performance reflected asset XX% very income growth of in driven leverage, sales. Chile, double-digit strong positive

and at net and interest with corporate up interest year-over-year, in acquisitions year-over-year. the income basis at leverage. Prudent corporations. than up more businesses. associated the was operations than from positive More XXth volume region was XX% by line XX% year-over-year, banking Operating marking credit operating remaining the XX% by income grew from markets of our growing growth and growth both contributed increased ratio impact income driven expense the by business Revenue strong very acquisitions, growth with points increased in GBM by was X% also were to the productivity in XX% fees Net of was quarters growth capital XXX Non-interest Chile with banking of Alliance inflation. quarter driven and positive and Our contributions growth Latin higher and quarter, strong, straight non-interest expense including our management card driven income improving Pacific by growth the which XX%. Colombia. three for loan leverage in America

by XX% with activities. operating units Other Markets. revenues income impacted assets lower asset a divestitures and management gain Moving our were recoveries the results million were to liability the X% points incorporates negatively and higher higher primarily XX% management partially market loan Net activities conditions. lower revenues The while productivity was the and now better year-over-year. and in was QX holdings non-interest earnings. X% include on down and increase net from certain Banking impacted $XXX lower year-over-year up impact driven year-over-year year, was by of Slide growth on lower the Global last income XX, line regulatory investments, corporate basis Net to performance-related of XX.X%. and yield XX, loss Corporate expenses from of asset net trading adjustments. Overall strong. also strong due credit I strong curve. and to pipelines lending turn results last up by revenues stable The Other improved were deposit versus and modest underwriting group US down Canada. Lending of income a to margins technology reflecting reported due year-over-year X% up lower was compared The corporate from higher strong mainly year. by ratio fees. income in treasury, and were improved grew last to and smaller Expenses and growth and Non-interest the quarter-over-quarter liquid M&A which the margins net quality returns and offset segment remained credit will while remained the liability quarter compensation. segment high XXX The to the flattening Slide that fixed

quarter. this instruments the Some requirements quarter pre-funding TLAC of meet the to TLAC results XXXX late also eligible impacted last done

discuss our who yield now high Given review it current financial This the expect Daniel compression continued risk management. quality my will I’ll shape portfolio. results. of we over turn completes margin curve, of the asset to our on liquid

Daniel Moore

I’ll Raj. Slide XX. you, turn to Thank

stable. provision our improving XX XX stable Banking points. historical rates year in of improving points Banking and evidenced Canadian loss ratio ratios our our GIL XX nine our and by It write-offs our and Moreover basis in in of stable International in retail. our Banking Global with by Our delinquency of tiered Markets. ratios is loan evidenced credit and performance credit in is is quarters PCL high underlying line our average retail covers and international and This of Canadian rates remains quality is our basis

and one-third from X% million quarter was year-over-year. X On adjustments follow all-bank growth million the due forward-look acquisitions up of changes acquisitions, basis was exclude other year-over-year XX% were comments to last another due up balance third $XXX Our by XXX an of were to total items. and PCLs of volume My to Day Roughly the relating IFRS will increase America that required in due amount. our to Latin PCLs X. by as was indicators impacted and in this

on generally we In customers collection proactive on in portfolio and however, importantly, retail impaired A remain and More and analytics year-over-year. quarter-over-quarter efforts. stable focused PCL loans was B using our ratio the

well Our non-retail stable modest perform formations. very portfolio to PCLs and with to declining continued levels of

Given economic downturn positioned for our our portfolio ready. closures oversight, our continuous are well growth we while and remaining diversifications

we Our the of regard. curve to risk philosophy is management and ahead certainly in provision conservatively this believe we're

Slide Turning XX. now to

You are driven loss On see in lines. our our ratio But the macroeconomic favorable offset by Canadian last my impact trend improving across of line led as largely the generally basis PCL partially businesses. impaired can quarter by PCL continued ratios total credit our inputs, rates in Banking three by increase loan for as loss each recent volume was The quality. in business less with all well of forward-looking growth.

primarily and compared last versus $X.X the other credit metrics net compared ratio year increase on reversal acquisitions due impaired a and Slide million at were international growth of the Net of business, ago. in formations the loan with Lower versus impaired international lower Looking billion year-over-year. XX% P&C net driven loans in offset The underlying largely commercial. to gross retail gross year and from formations last down Canadian Global increased growth. primarily most to down markets flat portfolio lower prior due X% partly were a now linked by portfolio quarter-over-quarter last our were quarter organic increases to formations Therefore XX, $X.X but billion modestly by quarter to Banking acquisitions. to remained $XXX up quarter

write-off net our benefits and a business see to our recent to impact in digital Turning investments of model quality we confident analytics again, continue and small Brian models our with to benefits some over diversified credit now processes, of Banking in summary it stable, we the remained ratio, in International our the In remain from and stable our back metrics. the evidenced adjudication credit for collections turn to by remarks. support our And our call underlying closing acquisitions. portfolio. as in generally I'll of

Brian Porter

Daniel. you, Thank

continued As year the to second XXXX, the expect we integration positive the be second the quarter Raj. of growth half to of acquisitions, capital we along turn this from strong for to lastly, of than reasons: and management continued in And with Global and comments on first financial from stronger focus our improvements; look back and better Canadian a I'll Thirdly, our which International Markets; from ratios bank my Banking the concludes prioritization call number That half in Secondly, performance in optionality. efforts; strong recent contributions Fourthly, our benefits Further expense the and performance Banking half productivity Banking; provides

Raj Viswanathan

your question Thanks, on limit first question be phone queue the please? call. to pleased We'll the rejoin have the and participate the opportunity now to allow the in Operator, to yourself questions. to everyone Brian. then can we one Please take

Operator

CIBC from go comes first Robert Please Markets. Capital question of Our Sedran ahead.

Robert Sedran

that loan and global the Yes, Daniel, I or very are I slide crisis, if that long-term the the which we're take shows arguably I comfortably on wanted back financial and of is there. events, the is that migrate -- suggest come Argentina losses average to out is given I impaired quarter guess the unusual average? mix, evolution just about mean and does that higher, coming do points growth And feel like where loan geographic to from? to just longer you going it basis XX continue this term the on given to

Daniel Moore

bank thanks International Banking take over was that is than -- increased And a risk. we're different very think as bank for we've for it going question. credit the I The the Well average, long-term exposure. Rob, to

customers, are And very making loan we bank, underwriting the we're the originating at very originating sure discipline maintains work that on retail. A, right to conservative in source discipline. focused B impaired our on focused that of So ratio

optimistic forward-looking here PCLs. cautiously a from compared have would the outlook regarding we So to

Robert Sedran

should suggest shifting revenue. of I higher higher that higher should didn't getting you're revenue just attached the commensurate mean it? mix. come mix. the that right that The like structurally loan to rate wasn't that revenue about think to and It some there in the structurally Is that rising, be the different with way with to losses seems shifting geographic loss loan

Daniel Moore

think by significantly way I it, about in it book. improved think that's right is the but the credit to quality offset the

Operator

Cormark. comes question next Grauman from of Our Meny

Meny Grauman

And hearing good market morning. that the know quite we channel, XXX QX, A Hi, share published that broker in data that look market at think data if broker about is about this share have. we've -- I question you channel your it's so that latest the competition significantly. in I the increasing points basis

where what channel forward? wondering perspective from what just going and your you do the outlook I'm in -- going So the share is your see broker

Brian Porter

Yes, Meny. well, thanks

in preference the as think strong amongst consistently to that one consumer be And number some to that channel, be compared particularly others channel for channel, there a we or my continues broker that would I millennials. two. number on observation are

that very, that are have that mind we direct committed the force. sales we channel very So also a bearing remains to in

have well as branch the most Scotia recently both have channel as We we Tangerine. also and eHOME

So to lots one Canadians committed of channels it. because love but that's we're

Meny Grauman

tougher that peers what's and some from getting there the competition non-bank is follow-up, to just of from And perspective? competition them driving your

Brian Porter

and there's that of in been that market. I’d it's know But say, B-XX. tougher getting the four, it's over tougher -- a it’s -- yes. frankly, always participants six quarters, lot But say maybe don't been I'd since I Yes,

-- a say channel. I nothing But than quarter. and is last markedly say nothing quarter this it mean -- competitive So different

Operator

from Capital. go ahead. comes of Eight Steve Theriault question next Our Please

Steve Theriault

to QX on elevated leverage capital much. very levels We line but and expenses A negative. still get of year, question saw Thanks operating markets. the back last revenue

in XXX, it'll it getting to the continue much terms how is track of of it here, sounds to you much costs, to and is of the contributing regulatory guess base quarter? how very is those some maybe of you like expect markets, or higher cited to on get think it and expense rate back a closer XXX also versus back know capital alleviate that range higher higher as I comments on sort costs as to the that about range I XXX a this revenues you question, So technology run expenses? about around

Raj Viswanathan

talk then it’s side to I Steve, Jake Raj maybe the expenses will revenue and it. can talk about of the

increased which can could were have XXX GBM quoted in As looking modest because to always in had performance-based you have also shows this guess giving the happens double-digit QX, as compensation to close And probably it you and will higher our productivity manage of think some as to have we by in that’s I see if it of significantly for revenue cost compared run XXX also with I number positive won't and be expenses also as up continue we informed relating by XXX the the that going is investments whole million X% know you we in can across look anywhere XXX as elevated operating businesses so it to more importantly quarter is and that’s of lower if be two want that think across whole. is expense seasonality to million prioritizing think for at specific look a it’s between than generate probably our I Without and being bank's bank the be the the on it going Jake QX spending it big bank the But that because regulatory we we rate contributed million to expenses a quarterly XXX happens more base. we QX I growth with the a forward our of rate that. and the the you a to -- the be revenues? a million part to we growth as had it made, bank quarters. to that all have a so forward expenses part we we you talk is GBM happened the to the a productivity will ratio, improvements ratio run leverage it’s GBM three next growth

Jake Lawrence

Yes.

quarter deposit that stability to conditions as see get we're comfortable getting our growth we’re to going the hands up and that Just expense we're encouraged people, revenue business regulatory I important double-digits, revenue side, we're going XX%, with some line growth loan are going to operate growth When more of reasonable in think be in look the on the the up also business one market in to with also just as another underlying some help investing point forward that’s this and the revenue on moving assuming our we James our I drive we forward. the so at the class, expenses and Raj fundamentals noted.

Operator

TD Mendonca Our go next Mario Securities. ahead. question comes from of Please

Mario Mendonca

you helpful impaired loans I’m a the loans ratio, increase Page for presentation, sequential to just personal PCLs is get me Dan there were at specifically. if What here I the take few in be numbers to of that understanding. your XX and an getting

imagine or and seasonality anything we're I to particular mostly in looking drive you would that’s Now auto something sequential point that like that us increase? increase, would the

Daniel Moore

Yes, there’s strategy as around this impaired be of particular those had particular we that in learn wouldn’t in and loan the well test one-offs, numbers, future. some recurring that we in the as seasonality in A bit to

Mario Mendonca

what said by mean do you one-offs, that? on you Can that, you elaborate

Daniel Moore

improving line as looking to our through and through risk and across continue different that our unsecured don’t as originating we ways by of line have rate we're with curve, see look seek loan our this you that the improving various we rate through But numbers, quarter improving segments going that strategies we adjustments talked driven we delinquency largely about , GIL So if improve through non-recurring formation we with one have return forward. at large that personal rate. all a you in risk improving

Mario Mendonca

a Canada, not basis that’s number that but credit it’s in we're in huge seeing Canadian unusual Is in that here? over same cards same thing again XXX cards, the points cards the for credit

Daniel Moore

Yes.

interest is Mario, about disproportionately. complexities X IFRS the the we look in as towards bowl unsecured come cards So into forward-looking the lines indicators that our these to talking of

So has as at that our we end at for quarter, the strategy decline the we of quarters, Canadian and in we for those to indicators and was impaired and metrics I lines, look we'll advanced the to origination declining, a exercise forward-looking bank. been de-risking reserve where the Mario point conservatively the across look continue see anticipate I for losses number if economy at to PCL future cards, as card disproportionately and that take is against look we the core strategies, strategies, out number more time through underlying loan declining collection analytics, a this

So declining the quarters that bank. across now for has six been

Mario Mendonca

seeing to on sort affect just your Maybe we're this retail on point this, page of in strategy comment So sequential domestic lending. James, want on final maybe change now this you doesn't that?

James O’Sullivan

FLI. Yes, all. this the at by this was no, spent and of time not driven I lot on a of we’ve bulk mean,

country. And top know, So two in determined that this you solidly identified Mario, are to time, of be. a cards we over bank where areas three we've as one in we're a as not

in an continues cards emphasis the with and focus to So A customers, growth are be we given B where on cycle. a

Daniel Moore

time. And I more hit could James if one that on

the X% and is ratio declining through current Canadian I in ratios portfolio. Banking. are line Canadian item think as all the we as that the X%, But PCL PCL said as Mario that Banking, have PCL declining I to ratio feeds through grown items, flat -- look to our line top-line in year-over-year you'll see that we for through almost

delinquency on cards down very our continue year-over-year. So perform XX% to trends well

Mario Mendonca

Is then. question you as quick for you any to regulatory Mexico on highlight or anticipate? either anything, it there has restrictions relates anything Okay, from fees a anything in Nacho perspective want been or going that rates a there to or change have on

Nacho Deschamps

grew has the continue the No, with It X%. retail the We changes, material see it’s Mario, X% we reasonable there us. and for by actually Congress a and proposal Q-over-Q, loans performing the have Mexico banks no no well -- grew financial system top-line grew loans to been negotiated very for was on revenues proposal. fee or wholesale X.X%, impact

population, to lending and relatively So at GDP XX% it's Mexico, have see we levels. a lower low a and remember banking with forecast even million XXX we penetration

to continue business bolting we retail the Mexico expect and So growing, market.

Operator

Capital ahead. question of next Young Please Doug Markets. from go Our Desjardins comes

Doug Young

Hi.

the on expecting that, this the revenue quarter. this expense the gather more in I that forward. to I question should you is be line with your comments growth guess looks be favorable believe mix and we going in growth expenses, do is, that I mean, Just trend And is sustainable? from

then And fiscal a So think to plan detail remove to little just million program, SCT want more in XXX on your that? I 'XX. was the get

mix where more wondering Just still is And for think put assume pegged just maybe of you you I than that's that? then what are Thanks. 'XX. I XX% with guess that you target the Brian, on, kind fiscal achievable. in

Raj Viswanathan

thanks the with the Okay, the on cover I'll as the SCT. can I'll your rate. question start Doug. SCT and as well I start mix expenses last on if see

about was is the add. It is the the we’ve XXXX. bank into since can around our and cost mostly help been has take redeployed effort XX% we the revenue the pace successful all I to and About business been that structural business. assist bank structural enhancing primarily side. can functions effort program very the in $X SCT productivity initiatives which how to of back the past, data as the has in on focused over the has as digital looking the a effort at teams banking, that the the analytics, management, including bank complete all control business The on successful concerted the we growth enterprise risk call, initiatives know, lines bank been it's of had et part across the were are billion cetera. talked across strengthening revenue as The if cost savings now the lines AML, of you improving As well see

ratio that should that balance which answer low-single-digit question. for Banking to the space, on our the with run operating see probably that I you've XXXX. improvements be well. we of close expect you say the expense X% in operating if positive we at now as normalized contribute a redeployment GBM revenue operating operating program getting the so we growth, leverage guided this leverage to productivity should committed years. had rate, the the would to delivering happened bank. XX% the expect rate, have But leverage by So seen, expect for year, can rate to a general positive levels, bulk Based The for quarter, positive has that, the that gets delivered generating leverage, Both year-over-year, whole business would positive completely we the the and year, the We're expectation your to to the expect as in leverage that on has be we revenue say generate profitable expect is operating technology to finish be it closer SCT the across run once our for to operating end for leverage. of our Canadian pretty of we we as year. International strong it target they on be third we’d in and would as more Banking in not But growth, bank

Doug Young

that's operating positive the leverage. year full And for

Raj Viswanathan

That's correct Doug.

Operator

question Gabriel next from ahead. Please Bank go National Our of Financial. comes Dechaine

Gabriel Dechaine

quarter. comments out persist. organic of Just and the helpful is peel for persist of behind away in the your to what figure interim? -- you what that questions. to drag side, on a on the and could trying couple had and which sections looking were that? your here carry other you in one if the corporate what's like can at should you yield into negative be then is One quick And growth I'm Asia business, the said just international big looks on curve underlying And wondering outlook is there the do trying a there's it about item it I'm to I anything the the

Raj Viswanathan

relating I and on the negative corporate International as Gabe address well. Okay, segment to Banking will numbers start Asia

that be visibility. accounted is we equity biggest the contribution to get an It hold. tends XX% PCL As ratio We is some that expensed, is a because to around investment. to higher to the have, move have equity us we far far as pickup we it Thanachart Bank figuring it or too quarter-over-quarter, goes, down lumpy, out don't and it's tends it

notice if was with of a up you high $XXX million. consistent picked QX quarter, This kind number we back too. This you is go

be years numbers tends floods the a pick in $XX equity it by point, to relating lot million, is, if up they that, trying to make in $XX The those of level remember, had is Before the you of that I'm million. you'll volatility see they a of happened couple in based to that A Thailand. Thailand. that had provisions on operations back, driven

than was be could impacted by it this rate Thai the normal And quarter run pick-up, greater So a to that. certainly our investment. was attached which

Gabriel Dechaine

the I Okay, is main part international, of if have it while you one I are so at the two of disclosures down shows on Mexico, editions look Is I Mexico know that that. issue? year-over-year, your the stage

Raj Viswanathan

question, million $XXX segment losses in in realized segment exclude I we it it Mexico bit your of $XX corporate X% half but corporate has also of benefits like and that on depends to the grown on Nacho which between was to past, is and contributes away a role we was year-over-year indicated I the of Mexico the but moves Gabe, gains. segment think had benefits. prior the investment the our have mentioned how million well securities that Part the if corporate in the tax the in stage tend we’ve growth had the in negative issue other has which tax gone years as

was the quarter by million curve as you primarily slightly a elevated yield mentioned. $XXX at driven This

slope ratio We HQLA gradually too for the we and dissimilar term to of be low through but quality as bonds curve high liquid if gets are purposes the that impact more might we that but T-bills, are Other tend have LCR normalized yield expect these QX to purposes, assets the know to not use as QX US you maintained a which as I can will to they and improve Government yielding expect level, an liquidity it assets be a Canada better segment.

Gabriel Dechaine

yield there an is doesn’t to causes anywhere you is that impact If the liquidity, anything there normalize, can reduce just curve else? do that

Raj Viswanathan

and No, be say portfolio, securities higher I these some will of fixed they would, mature the wouldn’t some rate hold at to as usually improve in spread. tend the that which should that securities liquidity rates reset we

Operator

Our Please next of comes Capital ahead. go Darko from question RBC Markets. Mihelic

Darko Mihelic

is bank that I seasonality of I I want go losses, around discussion a bit little provisioning bit make sure I this, commentary just in to loans and just to the auto that back to there just auto understand wanted Was on that’s sure the little a for credit was portfolio make information sort the you auto to area to that comment or I only want are element forward-looking the there impacted. that an an highlight was it delinquency? just the actual because of understand as actually purely of also

Daniel Moore

lines particularly cards. retail autos, of of portfolio generally and we very material There the a delves lines, unsecured includes in material this which to the been Darko, of very, some HELOCs is -- the in don't well. auto but credit change perform our element in think the So addressed context as continues forward-looking retail all into the There’s -- a question, that was course what slow the uptick see we of portfolio. we

the material any you underlying not So that there to element there. to core there’s through but some is look if delinquency change

Darko Mihelic

recoveries what respect sort or it on risk or it an a with then going you initiative, your on ongoing to discussion of Is your so you're you new And side ongoing on. just improvement mentioned the way this credit and the risk? improved is through manage analytics, --

Daniel Moore

doing more business and this and create We're the bank. And life those primarily this through continue of seeing improved that. to partnership will data, overall practices, improve initiatives So eight flight us and to And we now we some up bank around velocity B this the traction. line see has stand in you'll strategies, that cycle to overall Darko. the with focus through on the really through strategies to origination undertaking life cycle continue strategies quarters impact better been segmentation collections across portfolio. of de-risking the six get line we as its with elements seeing management, to as access analytics from we're been all have we're the really on in start about improved numbers credit and through the something And start for the A, capabilities retail credit and

Darko Mihelic

the side, discussion Okay. XX% growth due of acquisitions. international and question And last was expense the just apologize, to on but sneak if I one can that I the was

similar modeling have For number acquisitions? the for a impact do you the revenue purposes, of my

Raj Viswanathan

Yes, perspective some I'll to Darko, you give it's Raj. try on that.

our comes the wealth from our think would of that acquisitions. billion I from we growth, Banking acquisitions, the almost about includes And growth see XX% $X International side which I revenue across business. say,

income. So you it was primarily a international interest gives net much how business, the from contributed of in good understanding

Operator

Please Chan Our next Genuity. Scott of from Canaccord ahead. go question comes

Scott Chan

growth Just the last up international and XX%, way. XX% Pacific that to loan is was sticking other going maybe similar Total Alliance better to quarter. was

As you an quarter kind like can you of year-to-date? perhaps organic provide acquisitions, out exclude or growth rate this strip or

Nacho Deschamps

this leverage we operating in most the and as XXX is acquisition points the where exclude And a have retail growth revenue if quarter. acquisition, double-digit And trend. driving basis Chile, retail you excluding and growth, positive and in in impact, loan And or materially double-digit the Even growth this XX%. is impacting commercial. very this in is Alliance we're seeing both Sure, growth Pacific is commercial. positive

Scott Chan

X.X helpful. up guidance plus bps. line quarter? to of sneaking within just that more side, provided guidance one bps with margin the XX of Maybe international Is on X was anything there change Nacho quarter-over-quarter last prior and it kind you That's minus in your

Nacho Deschamps

this and remain points see is that due to basis bps. and of mix, around we our plus, minus margin XX level plus, bps will basically No, stables XX business minus XXX and we

Operator

Please Movahedi next Our sir. Markets. comes go of question from BMO Capital ahead, Sohrab

Sohrab Movahedi

that’s XX below byproduct months? again to Just you're next or you XX a Is think expense and wanted is now that. over ratio scale international and the it the of Nacho international just sustainable trifle XX% to to improved the this as has how maybe stay around steadily building kind Nacho. with with revenue

Nacho Deschamps

is points we also improving countries, has very to the not this both say, focused focused by Sohrab, capture XXX operating solid driving the part International productivity the in bank would And XX I very on revenue improvements. as quarters efficiency which our only but and opportunity on the revenue we’re is at leverage index, Alliance cost savings our growth Pacific a that this and especially which plan is of last deposit that some driven and Banking to have been performance. positive has in year-over-year. business been And international growth improvement the our consistent basis this for our loan

Sohrab Movahedi

earnings on the you a operations. mean, question But maybe have Brian in domestic greater about think on when it you for Is stand international. contribution helped acquisitions back, based the and the to just Investor in bank the And medium-term? Brian, Banking I growth, is of much is the international, slowing. come obviously the growth over overall banking guess domestic as from than I targets, there International Day how can larger, any limitation even

Brian Porter

very International a into scale you important. very as delivered thank positive question, Sohrab. proud these can see see our the good of and this for We shareholders. for outlook you. Bank benefits a it's of markets Nacho answered XXXX. is has the what year And just of critically We're the in And Look, balance

US sometimes Mexico. one. that, is But and XXX is from a Bloomberg in they're the some you is to the a million screen. comes Mexico middle There's the growing lots economy these there's last of the I country make of yourself I’d The class people, then Nacho other to and countries, pull about point was after as and point is said, consuming. have driver a huge And for been it week how of biggest news doing, Mexico when away

with up time-to-time. outlook mix from can't or GDP you that forecast So

that you're seeing political level. about noise year-over-year, which were rhetoric what's numbers going and in despite X% all Mexican and our on the up a So

schedule. Colombia So performance there that operational stronger country, going year, a basis well. both much as great Chile exceedingly this see is integration ahead an is of out financial or and a on integration better improved and we our performance of performing

Alliance So, our are deliver countries we'll very and shareholders. the for well performing to continue Pacific

Raj Viswanathan

made and We solid for a quarter employees team, customer And to our management want everyone call on you, the has work. businesses The I for of good superior strengthening delivered behalf our second hard today. bank in results. thank offering of towards our Well, their participating thank progress experience. all

Investor the deliver XXXX, I look remain remind speaking hope we everyone We and our October Day with forward expect consistent about great on in in a and stronger investors summer. a performance. want XXth to ahead we our half that join growth. we have closing, bank. you late In of learn achieving Looking second can and focused We Banking to to XXth an be against long-term August to us International also to on strategy more Santiago, will hosting Chile. differentiated delivering

The Bank of Nova Scotia (BNS) 28 May 192019 Q2 Earnings call transcript