Investor Presentation - Scotiabank€¦ · EARNINGS MIX $2.2B 18.4% 14.9% 11.5% 13.7% Canadian Banking International Banking Global Banking and Markets All Bank ... Peru Creates #2

Investor Presentation First Quarter 2019

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements may include, but are not limited to, statements made in this document, the Management’s Discussion and Analysis in the Bank’s 2018 Annual Report under the headings “Outlook” and in other statements regarding the Bank’s objectives, strategies to achieve those objectives, the regulatory environment in which the Bank operates, anticipated financial results (including those in the area of risk management), and the outlook for the Bank’s businesses and for the Canadian, U.S. and global economies. Such statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intent,” “estimate,” “plan,” “may increase,” “may fluctuate,” and similar expressions of future or conditional verbs, such as “will,” “may,” “should,” “would” and “could.”

By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. Do not unduly rely on forward-looking statements, as a number of important factors, many of which are beyond the Bank’s control and the effects of which can be difficult to predict, could cause actual results to differ materially from the estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: the economic and financial conditions in Canada and globally; fluctuations in interest rates and currency values; liquidity and funding; significant market volatility and interruptions; the failure of third parties to comply with their obligations to the Bank and its affiliates; changes in monetary policy; legislative and regulatory developments in Canada and elsewhere, including changes to, and interpretations of tax laws and risk-based capital guidelines and reporting instructions and liquidity regulatory guidance; changes to the Bank’s credit ratings; operational (including technology) and infrastructure risks; reputational risks; the risk that the Bank’s risk management models may not take into account all relevant factors; the accuracy and completeness of information the Bank receives on customers and counterparties; the timely development and introduction of new products and services; the Bank’s ability to expand existing distribution channels and to develop and realize revenues from new distribution channels; the Bank’s ability to complete and integrate acquisitions and its other growth strategies; critical accounting estimates and the effects of changes in accounting policies and methods used by the Bank as described in the Bank’s annual financial statements (See “Controls and Accounting Policies – Critical accounting estimates” in the Bank’s 2018 Annual Report) and updated by quarterly reports; global capital markets activity; the Bank’s ability to attract and retain key executives; reliance on third parties to provide components of the

Bank’s business infrastructure; unexpected changes in consumer spending and saving habits; technological developments; fraud by internal or external parties, including the use of new technologies in unprecedented ways to defraud the Bank or its customers; increasing cyber security risks which may include theft of assets, unauthorized access to sensitive information or operational disruption; anti-money laundering; consolidation in the financial services sector in Canada and globally; competition, both from new entrants and established competitors; judicial and regulatory proceedings; natural disasters, including, but not limited to, earthquakes and hurricanes, and disruptions to public infrastructure, such as transportation, communication, power or water supply; the possible impact of international conflicts and other developments, including terrorist activities and war; the effects of disease or illness on local, national or international economies; and the Bank’s anticipation of and success in managing the risks implied by the foregoing. A substantial amount of the Bank’s business involves making loans or otherwise committing resources to specific companies, industries or countries. Unforeseen events affecting such borrowers, industries or countries could have a material adverse effect on the Bank’s financial results, businesses, financial condition or liquidity. These and other factors may cause the Bank’s actual performance to differ materially from that contemplated by forward-looking statements. For more information, see the “Risk Management” section of the Bank’s 2018 Annual Report.

Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2018 Annual Report under the headings “Outlook”, as updated by quarterly reports. The “Outlook” sections are based on the Bank’s views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing these sections. The preceding list of factors is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank’s results. When relying on forward-looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding factors, other uncertainties and potential events. The forward-looking statements contained in this document are presented for the purpose of assisting the holders of the Bank’s securities and financial analysts in understanding the Bank’s financial position and results of operations as at and for the periods ended on the dates presented, as well as the Bank’s financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf.

Additional information relating to the Bank, including the Bank’s Annual Information Form, can be located on the SEDAR website at www.sedar.com and on the EDGAR section of the SEC’s website at www.sec.gov.

TABLE OF CONTENTS

Scotiabank Overview 4

• Canada’s International Bank 5

• Well-Diversified and Profitable Business 6

• Medium-Term Financial Objectives 7

• Why Invest in Scotiabank? 8

• Increasing Scale, Improving Focus 9

• Track Record of Earnings and Dividend Growth 10

• Strong Capital Generation and Position 11

• Progress in Digital Banking 12

• Sustainable Business 13

Appendix 1: Business Line and Financial Overview 14

• Q1 2019 Financial Performance 15

• Canadian Banking 16

• International Banking 23

• Global Banking and Markets 26

• Credit Performance by Business Lines 28

• Wholesale Funding Composition 29

Appendix 2: Key Market Profiles 30

Appendix 3: Canadian Housing Market 38

Appendix 4: Additional Information 45

Contact Information 47

Scotiabank Overview

50%

8%

26%

9% 7%

Canada’s International Bank Top 10 Bank in the Americas1,2

5 LEADING BANK IN THE AMERICAS

Full-Service

Canada • Mexico

Peru • Chile

Colombia • Caribbean

Uruguay

Wholesale Operations

USA • UK • Hong Kong

Singapore • Australia

Ireland • China • Brazil

South Korea • Malaysia

India • Japan

Earnings by Geography3,6,7

Scotiabank3

FY

Q1 2019

Change

Y/Y

Revenue $7.6B +7%

Net Income4 $2.3B +4%

Return on Equity 13.7% (260bps)

Operating Leverage4 (4.3%) n.a.

Productivity Ratio 54.1% 220bps4

Total Assets $1.0T 12.0%

Ranking by Market Share5

Canada #3

USMCA USA Top 10 Foreign Bank

Mexico #6

Peru #3 Chile #3

Colombia #5

Americas 7th largest bank by assets1

10th largest bank by market capitalization1

Europe

Asia

1 Source: Bloomberg 2/24/19; 2 By assets and market capitalization; 3 Figures adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions; 4 Exclude employee benefits re-measurement credit of $203MM pre-tax, $150MM after-tax in Q1/18; 5 Ranking based on market share in loans as of December 2018 for PACs, as of November 2018 in Canada for publically traded banks; 6 For the three months ended January 31, 2019; 7 Excluding Corporate adjustments

Canada

U.S.A

PAC

Other

C&CA

PAC

Americas (>90%)

2018 Bank of the Year

Latin America and the

Caribbean by LatinFinance

#4

in PAC

Canada

50%

U.S.

8%

Mexico

8%

Peru

10%

Chile

6%

Colombia

2%

C&CA*

9%

Other

7%

6

Well-Diversified and Profitable Business

GREATER SCALE, GREATER FOCUS

Earnings by Business1,2,3 Earnings by Geography1,2,3

1 For the three months ended January 31, 2019; 2 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions 3 Excluding Corporate adjustments

Diversified by business and by geography, creating stability and lowering risk

Canadian

Banking

49%

EARNINGS MIX

$2.2B

Canadian Banking

P&C

39%

International

Banking

36%

Global Banking and

Markets

15%

Canadian Wealth

Management

10%

EARNINGS MIX

$2.2B

18.4% 14.9%

11.5% 13.7%

Canadian Banking International Banking Global Banking andMarkets

All Bank

* Caribbean and Central America

7

Medium-Term Financial Objectives1

METRICS OBJECTIVES Q1/19 RESULTS2

(Y/Y Change)

ALL BANK

EPS Growth3 7%+ -

ROE 14%+ 13.7%

Operating Leverage3 Positive (4.3%)

Capital Strong Levels 11.1%

Dividend Payout Ratio 40%-50% 48.5%

BUSINESS LINE

CANADIAN BANKING

Net Income Growth 7%+ (2%)

Productivity Ratio <49% 50.0%

INTERNATIONAL BANKING

Net Income Growth4 9%+ +18%


13-5 year objectives. 2Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions; 3 Exclude employee benefits re-measurement credit of $203MM pre-tax, $150MM after-tax in Q1/18; 4 On a constant dollar basis

Why Invest in Scotiabank?

8

Canada’s international bank

and a top 10 bank in the

Americas

Diversified exposure to high

quality growth markets

Increasing scale and market

share in key markets

• Leading bank in the Pacific Alliance growth markets of Mexico, Peru, Chile and Colombia – a region of 230 million people with an under-banked market and a median age of 29

• Earnings momentum in personal & commercial, wealth, and wholesale businesses

• Gaining market share in key markets of Canada and the Pacific Alliance countries

• Top 3 bank in Canada, Chile and Peru

• Increasing scale in Wealth and Pacific Alliance with $7B of strategic acquisitions in 2018

• Unique footprint that provides sustainable and growing earnings and dividends

• Strong balance sheet, capital and liquidity ratios

• Attractive dividend yield and long-term shareholder returns

• Approximately 80% of earnings from core personal and commercial banking businesses

• Exited over 20 non-core countries and businesses since 2014

• Strong Canadian risk management culture – building stronger capabilities for AML, cyber and reputational risk

Improving quality of earnings

while reducing risk profile

• Leading levels of technology investment supports digital banking strategy. Increasing digital sales adoption with clear targets

• Well positioned in the Pacific Alliance to leverage technology, risk management and funding versus local and global competitors

• Named to Top 25 ”World’s Best Workplaces” (2018)

Enhancing competitive

advantage in technology

and talent

Canada Increases wealth management assets to $230B.

Adds 110,000 potential primary customers.

Chile Doubles market share. Creates 3rd largest bank.

Peru Creates #2 bank in credit cards.

Colombia Creates market leader in credit cards.

Dominican

Republic Doubles customer base. Creates 4th largest bank.

9

Increasing Scale, Improving Focus1 Gaining scale in key markets to drive earnings growth, improve earnings quality and reduce risk

INCREASING SCALE, IMPROVING FOCUS

Gaining Market Share (Total Loans)

Reducing Risk Profile Improving Earnings Quality

Increasing Scale with Strategic Acquisitions (2017-2019)

Increased wealth AUM by 37% to $282B in 2018.

Targeting earnings contribution to All-Bank earnings

from

12% to 15% • Reduced wholesale funding (% of assets) from 29.6% to 23.9%

• Reduced asset exposure in Asia by 21%

Canada

Mexico

Chile

Peru

Colombia

2013 2019

54 countries 36

countries

Between 2013 and 2019, exited

18 countries with either low

returns, small scale or higher

operational risk:

Turkey • Russia • Haiti • Egypt

Taiwan • UAE • plus 12 others

Exited 6 non-core businesses

2013

2018

0 2 4 6 8 10 12 14 16 18 20

1 5-year period 2013-2018

8.6%

14.4%

12.0% 11.8%

16.7%

11.1%

5 Year 10 Years 20 Years

$1.92

$3.28

08 09 10 11 12 13 14 15 16 17 18

Strong Track Record of Earnings and Dividend Growth

1 Reflects adoption of IFRS in Fiscal 2011 2 Excludes notable items for years prior to 2016. For 2016 onwards, results adjusted for acquisition-related costs including Day 1 PCL impact on acquired performing loans, integration and amortization costs related to current acquisitions and amortization of intangibles related to current and past acquisitions. 3 As of January 31, 2019

Stable and predictable earnings with steady increases in dividends

10

Earnings per share (C$)1,2

$3.05

$7.11

08 09 10 11 12 13 14 15 16 17 18

Dividend per share (C$)

+9%

CAGR

+6%

CAGR

Total shareholder return3

Scotiabank Big 5 peers (ex. Scotiabank)

INCREASING SCALE, IMPROVING FOCUS

11

CET1 Ratio

Strong Capital Levels

11.2% 12.0% 11.4% 11.1% 11.1%

1.5% 1.5%

1.4% 1.4% 1.4%

1.9% 1.8%

1.7% 1.8% 2.1%

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

CET1 Tier 1 Tier 2

14.3% 14.6% 14.6% 15.3%

Strong Capital Generation and Position Capital levels are well above minimum regulatory requirements. CET1 >11%.

14.5%

11.1% +28 bps -12 bps -9 bps -3 bps 11.1% +10 bps

11.2%

Q4/18 Internal CapitalGeneration

RWA Impact(ex. FX)

Pensions Shareissuance /(buybacks)

(net)

OtherIncluding FX

Q1/19 Net Impact ofAnnounced

Acquisitions &Divestitures

Q1/19 Pro-Forma

-4 bps

12

Progress in Digital Banking Steady and continual increase in digital banking

Digital Retail Sales1

Goal

>50%

Digital Adoption2

Goal

>70%

In-Branch Financial Transactions3

Goal

<10%

11

15

22 25

F2016 F2018 F2017 Q1/19

+14%

26 29

33 33

F2017 F2016 F2018 Q1/19

+7%

26 23

20 18

F2017 F2016 F2018 Q1/19

-8%

1 Canada: F2017 22%, F2018 26%, Q1/19 28% PACs: F2017 13%, F2018 19%, Q1/19 24% 2 Canada: F2017 36%, F2018 38%, Q1/19 39% PACs: F2017 20%, F2018 26%, Q1/19 27% 3 Canada: F2017 17%, F2018 15%, Q1/19 13% PACs: F2017 29%, F2018 24%, Q1/19 22%

• Strong progress made

in all five key markets

across various product

suites including

deposits, personal

loans, insurance, etc.

• Adoption grew

400bps against

Q1/18; stable

compared to year

end

• In-branch

transactions

continued to decline

at a steady pace

13

RECOGNITION,

MEMBERSHIPS &

ASSOCIATIONS

Our Priorities

Our Achievements

We have

the resources

We have

financial expertise

We have

the reach

98,000+ employees

25 Million+ customers

around the globe

>$1 Trillion in assets

Trust Climate Change Economic Inclusion Young People

38% of Board Directors are women

Placed in top 1% of Dow Jones Sustainability Index for corporate governance

practices compared to global finance institutions

Scotia Global Asset Management became a

signatory to the UN Principles for Responsible

Investment

Provided $8.5 Billion in financing to the renewable

energy sector

Internal Carbon Price set at

$15/tonne CO2 reinvested in energy efficiency initiatives

34% women in leadership positions (VP+) globally in 2018

Joint Lead Manager on $1 Billion World Bank Sustainable Development

Bond to support women and youth

Launched Scotiabank Women Initiative to help advance women-led businesses

in Canada through access to capital, mentorship by senior business leaders

and education

900,000+ Canadian students

participated in Talk With Our Kids About

Money day in 2018

$80 Million in donations globally in 2018 to support the

communities we operate in; 70%

directed at youth

Our Ability

Sustainable Business

Business Line and

Financial Overview

Appendix 1:

15

Q1 2019 Financial Performance Strong revenue and balance sheet growth

$MM, except EPS Q1/19 Y/Y Q/Q

Reported

Net Income $2,247 (4%) (1%)

Diluted EPS $1.71 (8%) -

Revenue $7,604 +7% +2%

Expenses $4,171 +19% +3%

Productivity Ratio 54.9% +550bps +30bps

Core Banking Margin 2.45% (1bp) (2bps)

PCL Ratio1 47bps +5bps +8bps

PCL Ratio on Impaired Loans1 47bps +4bps +5bps

Adjusted2

Net Income $2,291 (3%) (2%)

Diluted EPS $1.75 (6%) (1%)

Expenses $4,110 +18% +4%


YEAR-OVER-YEAR HIGHLIGHTS

• Adjusted Net Income down 3%2

• Excluding pension revaluation benefit,

diluted EPS was in-line with last year

• Revenue up 7%

o Mostly relating to acquisitions

o Net interest income up 9%

o Non-interest income up 6%

• Expenses up 18%2

o Acquisitions and the prior year’s benefits re-

measurement contributed to approximately two-

thirds of the expense growth

o Remaining growth due to technology, regulatory

initiatives, share-based payments, other business

growth expenses

• PCL ratio1 on impaired loans up 4 bps

1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 2 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions

DIVIDENDS PER COMMON SHARE

0.79 0.82 0.82 0.85 0.85

+0.03 +0.03 +0.02

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

Announced Dividend Increase

56%

26%

18%

61%

21% 16%

2%

• Improved productivity towards our <49% productivity ratio target (<45% ex Wealth) by 2020 supported by higher revenue growth and mid-dingle digit expense growth.

• Integration of our recent acquisitions in Wealth: MD Financial Management ($49B AUM) and Jarislowsky Fraser ($40B AUM)

• Leverage data analytics for prudent growth in higher margin credit card and small business banking

• Increase core deposits; increase primary customers towards our 1 million new primary customer goal

• Canadian Banking provides a full suite of financial advice and banking solutions, supported by an excellent customer experience, to Retail, Small Business, Commercial Banking, and Wealth Management customers

16

Canadian Banking Top 3 bank in personal & commercial banking, wealth and insurance in Canada

STRATEGIC OUTLOOK

REVENUE MIX1

Retail

Wealth

Commercial

Personal

Loan Business and

Government Loans

AVERAGE LOAN MIX1

$3.4B $342B

Residential

Mortgages

1 For the three months ended January 31, 2019; 2 3-5 year target; 3 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, amortization of intangibles related to current

and past acquisitions and the Day 1 PCL impact on acquired performing loans in Q3/18; 4 Reflects adoption of new accounting standard, IFRS 15; 5Attributable to equity holders of the Bank

Credit Cards

MEDIUM-TERM FINANCIAL OBJECTIVES

Target2 Q1/191,3,4

Net Income Growth5 7%+ (2%)


CB ex Wealth <45% 45.7%

Wealth <65% 63.4%

New Primary Customers +1MM +210,000

2.41% 2.43% 2.46% 2.45% 2.44%

17

Canadian Banking Financial Performance Strong deposit growth and higher NIM

1,107 1,022 1,141 1,146 1,089

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

ADJUSTED NET INCOME1,3 ($MM) AND NIM (%)

• Adjusted Net Income down 2%3

o Lower real estate gains and prior year Interac gain

reduced net income by 4%

o Higher PCLs related to one commercial account

o Includes the impact of acquisitions

o Asset and deposit growth, margin expansion

• Revenue up 3%

o Includes impact of acquisitions

o Net interest income up 5%

• Loan growth of 4%

o Business loans up 10%

o Residential mortgages up 3%; credit cards up 7%

• Deposit growth of 9%

o Personal up 7%; Non-Personal up 12%

• NIM up 3 bps

o Primarily driven by the impact of prior rate increases

• Expenses up 7%3


o Investments in technology and regulatory initiatives

• PCL ratio2 up 2 bps to 27 bps

FINANCIAL PERFORMANCE AND METRICS ($MM)1

YEAR-OVER-YEAR HIGHLIGHTS

1 Attributable to equity holders of the Bank 2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 3 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions

Q1/19 Y/Y Q/Q

Reported

Revenue $3,415 +3% (1%)

Expenses $1,730 +8% (1%)

PCLs $233 +11% +18%

Net Income $1,073 (3%) (4%)

Productivity Ratio 50.6% +200bps (10bps)

Net Interest Margin 2.44% +3bps (1bp)

PCL Ratio2 0.27% +2bps +4bps

PCL Ratio on Impaired Loans2 0.27% - +5bps

Adjusted3

Expenses $1,709 +7% -

Net Income $1,089 (2%) (5%)


18

Canadian Banking: Retail Exposures High quality retail loan portfolio: ~93% secured

1 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data.

DOMESTIC RETAIL LOAN

BOOK

79%

3% Credit Cards

5% Unsecured

13% Automotive

Real Estate

Secured Lending

$287.4B

• Residential mortgage portfolio is high quality

o 42% insured, and the remaining 58% uninsured has a LTV of 55%1

• Market leader in auto loans

o $37 billion auto loan portfolio with 7 OEM relationships (3 exclusive)

o Prime Auto and Leases (~91%)

o Lending tenor has been relatively stable with contractual terms for new originations averaging 78 months with projected effective terms of 55 months

• Growth opportunity in credit cards

o $7.4 billion credit card portfolio represents ~3% of domestic retail loan book and 1.3% of the Bank’s total loan book

o Organic growth strategy focused on payments and deepening customer relationships

o Upside potential from existing customers: ~80% of growth is from existing customers (penetration rate mid-30s and trending up versus peers in the low-40s)

o Strong risk management culture with specialized credit card teams, customer analytics and collections focus

$96.6

$29.8 $27.2 $14.2 $11.1 $8.8

$12.6

$9.5 $3.6

Ontario BC & Territories Alberta Quebec Atlantic Provinces Manitoba &Saskatchewan

19

Canadian Banking: Residential Mortgages High quality, diversified portfolio

1 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data

2 New originations defined as newly originated uninsured residential mortgages and have equity lines of credit, which include mortgages for purchases refinances with a request for additional funds and transfer from other financial institutions

CANADIAN MORTGAGE PORTFOLIO: $216B (SPOT BALANCES AS AT Q1/19, $B)

% of

portfolio 50.5% 18.1% 14.3% 7.4% 5.3% 4.4%

$1.8 $0.2

$0.7

Freehold - $188B Condos - $28B $109.2

$39.2 $30.8

$16.0 $11.3 $9.5

42%

58% Uninsured

Total

Portfolio:

$216 billion

Insured

• Residential mortgage portfolio of $216 billion: 42% insured; LTV 55% on the uninsured book1

o Mortgage business model is “originate to hold”

o New originations2 had average LTV of 64% in Q1/19

o Majority is freehold properties; condominiums represent approximately 13% of the portfolio

• Three distinct distribution channels: All adjudicated under the same standards

o 1. Broker (~59%); 2. Branch (~20%); and 3. Mobile Salesforce (~21%)

20

Canadian Banking: Residential Mortgages (continued) High quality portfolio, lower originations in Vancouver and Toronto

Q1/18 Q4/18 Q1/19 Growth/Change

Y/Y

Canada Total Originations ($B) 10.3 10.5 9.3 -10%

Uninsured LTV 64% 63% 64% -

GTA Total Originations ($B) 3.4 3.2 3.2 -6%

Uninsured LTV 63% 62% 63% -

GVA Total Originations ($B) 1.5 1.1 1 -33%

Uninsured LTV 62% 59% 59% -3%

*Average LTV ratios for our uninsured residential mortgages originated during the quarter

4% 12% 12%

16%

56%

< 635 636 - 706 707 - 747 748 - 788 > 788

Average FICO® Score

Canada 787

GTA 789

GVA 791

FICO is a registered trademark of Fair Isaac Corporation 1 FICO ® distribution for Canadian uninsured portfolio based on score ranges at origination

• <0.70% of uninsured portfolio has a

FICO® score of <620 and an LTV >65%

• Canadian uninsured mortgage portfolio

is $124 billion as at Q1/2019

GTA

63%

ON

64%

QC

66%

Prairies 67%

GVA

59%

BC &

Territories

61%

Atlantic

Provinces

68%

NEW ORIGINATIONS UNINSURED LTV* DISTRIBUTION

FICO® DISTRIBUTION – CANADIAN UNINSURED PORTFOLIO1

• Provide personal and commercial dealer financing solutions, in partnership with seven leading global automotive manufacturers in Canada

• Portfolio grew 2%1 year-over-year

o Personal up 4%, Commercial down 7%

21

Automotive Finance Canada’s leader in automotive finance

1 For the three months ended January 31, 2019; 2 Data as at Oct 2018; 3 CBA data, includes BMO, CIBC, HSBC, National Bank, RBC, Scotiabank, TD; 4 DealerTrack Portal data, includes all Near-Prime Retail providers on DealerTrack Portal; 5

Includes BMO, CIBC, RBC, Scotiabank, TD, HSBC, Canadian Western Bank, Laurentian Bank 6 based on IFRS 9; 7 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures

37%

63%

Market Share2

29%

71%

29%

71%

Prime Retail Market Share3 Near-Prime Retail Market Share4 Commercial Floorplan Market Share5

Exclusive Relationships

Semi-Exclusive Relationships*

* 1 to 2 other financial institutions comprise Semi-Exclusive relationships

MAZDA VOLVO JAGUAR LANDROVER

HYUNDAI CHRYSLER TESLA GM 80%

8%

12%

AVERAGE ASSET MIX

$42.1B1

100% Secured

Commercial

Near-Prime Retail

Prime Retail

STRATEGIC FOCUS:

Simplicity

22

Tangerine Canada’s #1 Digital Bank

• Simple, market-leading products that appeal to value-

conscious and tech-savvy Canadians

• Seamless digital client experience

• Highly competitive rates, simple products

• Velocity

• Enhanced self-service options, adding speed & agility

• Nimble, modern platform supporting rapid development cycles

• Low cost, scalable business model

Rapid Deployments:

Agile best practices enable

quick & efficient new product &

feature delivery.

Incubator:

Identify, explore, and pilot new

technologies and solutions to

meet evolving Client needs.

Scalable:

Nimble, low cost systems

provide a holistic client view.

Third-Party Recognition:

J.D. Power Customer Satisfaction

seven years in a row, Finovate “Best

in Class” for digital experiences.

Modern Platform Speed & Agility Client-Driven Innovation Unique ‘Orange’ Culture Award Winning Approach

Team Tangerine:

Our unique culture and

lean team are an essential

part of how we deliver.

Partnerships

• Accelerating momentum through the Toronto Raptors

• Deepening client relationships by introducing SCENE Loyalty

• Strong partnership with Scotiabank

• 2.3 million customers

• Industry-leading customer

service (NPS)

• <7-minute account sign-up

• 97% digital transactions

• 96% digital onboarding

• 90% digital sales

• International Banking operates primarily in Latin America, the Caribbean and Central America with a full range of personal and commercial financial services, as well as wealth products and solutions

23

International Banking Leading diversified personal and commercial franchise in high quality growth markets

STRATEGIC OUTLOOK

MEDIUM-TERM FINANCIAL OBJECTIVES

71% 25%

4%

REVENUE1

$3.3B

Asia

C&CA Latin America

24% Mexico

25% Peru

26% Chile 18%

Colombia

7% Other Latin

America

51%

27%

16%

6% LOAN MIX1

$149B Credit

Cards

Personal

Loans Residential

Mortgages

Business

Loans

• Integration of acquisitions in Chile and Colombia. Close announced acquisitions in Peru and Dominican Republic

• Closing of dispositions of non-core operations in smaller Caribbean markets, Dominican Republic and El Salvador

• Margins (NIM ~450 bps) and credit quality are expected to remain stable with the level in Q1/19

• Maintain positive operating leverage

Target2 Q1/193,4

Net Income Growth5 9%+ 18%


Operating Leverage Positive +4.2%

1 For the 3 months ended January 31, 2019; 2 3-5 year target; 3 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions; 4 Y/Y growth rates (%) are on a constant $ basis; 5Attributable to equity holders of the Bank

24

International Banking Financial Performance Strong performance across the Pacific Alliance

4.66% 4.74% 4.70% 4.52% 4.52%

Q1/19 Y/Y Q/Q

Reported

Revenue $3,331 +22% +6%

Expenses $1,742 +20% +1%

PCLs $470 +37% +14%

Net Income $782 +16% +10%

Productivity Ratio 52.3% (100bps) (260bps)

Net Interest Margin 4.52% (14bps) -

PCL Ratio3 1.28% +2bps +23bps

PCL Ratio on Impaired Loans3 1.23% (2bps) +3bps

Adjusted5

Expenses $1,702 +18% +2%

Net Income $805 +18% +8%

Productivity Ratio 51.1% (180bps) (190bps)

675 683 715 746

805

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

YEAR-OVER-YEAR HIGHLIGHTS2

• Adjusted Net Income up 18%5

o Includes impact from alignment of reporting period in

Peru which contributed 6%

o Strong asset and deposit growth across the Pacific

Alliance

• Revenues up 22%


o Pacific Alliance up 31% includes impact of acquisitions

• Loans up 29%

o Pacific Alliance up 44% includes impact of Chile and

Colombia acquisitions

• NIM down 14 bps

o Driven by the business mix impact of acquisitions (BBVA

Chile)

• Expenses up 18%5


o Business volume growth and inflation

o Productivity ratio improvement of 180bps5

• Positive operating leverage of 4.2%5

• PCLs ratio reflects stable credit quality 1 Attributable to equity holders of the Bank 2 Y/Y and Q/Q growth rates (%) are on a constant dollars basis, while metrics and change in bps are on a reported basis 3 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 4 Net Interest Margin is on a reported basis 5 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions

ADJUSTED NET INCOME1,5

($MM) AND NIM5 (%)

FINANCIAL PERFORMANCE AND METRICS ($MM)1, 2

25

Scotiabank in the Pacific Alliance Countries Well positioned for long-term growth in large, growing market

Highlights of Pacific Alliance countries (PACs)

Population1,2 • 230 million. 6.2x Canada’s population. Superior growth versus other EM3 and G7 countries; median age4 of 29

Government

Presidential Elections • No elections scheduled until 2021

Financial Stability • All sovereign credit ratings in IG category with central banks’ policy targeting inflation since 1999

Economy

GDP1 • 9th largest economy in the world

Exports5 • 64% of exports related to manufacturing

Trade Partners5 • US, China and Canada are the PACs’ largest trading partners, representing 72% of exports

Business Environment

HDI Score Rank6 • Rank “High” or “Very High” (United Nations, 2017)

Banking Penetration1 • Under-banked with average banking penetration at ~50% compared to over 90% in Canada and the U.S.

Foreign Direct Investment1 • FDI averaging 3.2% of GDP compared to 1.7% in Canada and the U.S.

Mexico Peru Chile Colombia

PACs

(Total/Average)

Scotiabank Market Share7 7.1% 17.7% 14.0% 6.2% 11.5%

Market Share Ranking7 6th 3rd 3rd 5th 4th

Strengths Auto and mortgages P&C and Mortgages P&C and Mortgages Credit Cards, Personal Broad P&C platform

Average Total Loans8(C$B) $28 $21 $46 $12 $106

Revenue9(C$B) $0.6 $0.6 $0.6 $0.4 $2.2

Net Income after NCI9,10(C$MM) $182 $212 $135 $39 $567

ROE9,10 25% 28% 9% 10% 16%

# of Employees11,12 13,214 11,080 9,257 9,689 43,240

1 Source: World Bank 2017 2 Population growth: World Bank DataBank 2017-2022 3 EM countries include: Argentina, Brazil, China, Greece, India, Indonesia, Poland, South Africa, Turkey, and Russia 4 Source: The World Factbook, CIA 2017

5 Source: United Nation Conference on Trade and Development (UNCTAD) 2017; Organization for Economic Co- operation and Development (OECD) 2016 6 Human Development Index. Source: United Nations Development Programme (UNDP) 2017. For more information,

please refer to: http://hdr.undp.org/sites/default/files/2018_human_development_statistical_update.pdf 7 Ranking based on publicly traded banks by total loans market share as of December 2018

8 Average loan balances over Q1/19 9 For the quarter ended January 31, 2019 10 Earnings adjusted for acquisition –related costs including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions 11 Employees are reported on a full-time equivalent basis 12 As of January 31, 2019

42%

42%

10%

6%

GEOGRAPHIC REVENUE1

$1.1B

• Full-service wholesale bank in Canada, the United States and Latin America. Offers a range of products and services in select markets in Europe, Asia and Australia.

26

Global Banking and Markets Second-largest Canadian wholesale banking and capital markets business serving global clients

STRATEGIC OUTLOOK

Europe

Canada

US

Asia 34%

24%

18%

14%

10%

TRADING RELATED

REVENUE (TEB)1,2

$479MM

Commodities

Interest Rate

& Credit

Foreign

Exchange

Equities

60%

24%

16% REVENUE

BY BUSINESS LINE1

$1.1B

Business Banking

FICC

Global Equities

• Up-tiering lending relationships, expanding our Investment Banking capabilities in key markets, increasing our investment in the Pacific Alliance to become a leader in local and cross-border banking and capital markets

• Continued strong growth in deposits, improved corporate lending and investment banking results to absorb required regulatory and technology investments

1For the 3 months ended January 31, 2019; 2 All-Bank trading-related revenue

Other

27

Global Banking and Markets Financial Performance Market volatility negatively impacted results

454 447

441

416

416

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

335

FINANCIAL PERFORMANCE AND METRICS1 ($MM) YEAR-OVER-YEAR HIGHLIGHTS

• Reported Net Income down 26%

• Revenue down 10%

o Non-interest revenue down by 12% due to lower fixed income trading, partly offset by higher equity trading and fee income

• NIM down 23 bps

o Mainly driven by lower lending margins and loan origination fees

• Loans up 15%

o Strong corporate growth across Canada and the U.S.

• Expenses up 13%

o Higher regulatory and technology investments

• PCL ratio2 improved by 3 bps to (7 bps)

o Improving credit quality in oil and gas portfolio

1 Attributable to equity holders of the Bank 2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures

NET INCOME1 AND ROE

Q1/19 Y/Y Q/Q

Revenue $1,075 (10%) -

Expenses $645 +13% +17%

PCLs ($16) N/A N/A

Net Income $335 (26%) (20%)


Net Interest Margin 1.80% (23bps) +8bps

PCL Ratio2 (0.07%) (3bps) +2bps

PCL Ratio on Impaired Loans2 (0.01%) - +6bps

16.2% 16.9% 15.6% 15.3%

11.5%

28

Credit Performance by Business Lines Stable underlying credit

Q1/18 Q2/18 Q3/18 Q4/18 Q1/19

(As a % of

Average Net Loans &

Acceptance)

PCLs on

Impaired

Loans

Total

PCLs

PCLs on

Impaired

Loans

Total

PCLs

PCLs on

Impaired Loans

Total

PCLs

(adj)

PCLs on

Impaired Loans

Total

PCLs

PCLs on

Impaired Loans

Total

PCLs

Canadian Banking

Retail 0.29 0.28 0.28 0.28 0.25 0.24 0.25 0.25 0.28 0.28

Commercial 0.11 0.08 0.09 0.09 (0.04) 0.06 0.06 0.15 0.21 0.23

Total 0.27 0.25 0.25 0.25 0.21 0.21 0.22 0.23 0.27 0.27

International Banking

Retail 2.28 2.39 2.26 2.16 2.36 2.253 2.38 2.21 2.33 2.36

Commercial 0.28 0.201 0.55 0.341 0.38 0.311, 3 0.07 (0.06) 0.19 0.26

Total 1.252 1.261, 2 1.382 1.221, 2 1.33 1.234 1.20 1.05 1.23 1.28

Global Banking and Markets (0.01) (0.04) 0.02 (0.05) (0.06) (0.05) (0.07) (0.09) (0.01) (0.07)

All Bank 0.43 0.42 0.46 0.42 0.41 0.40 0.42 0.39 0.47 0.47

1 Excludes provision for credit losses on debt securities and deposit with banks 2 Not comparable to prior periods, which were net of acquisition benefits 3 On an adjusted basis; adjusted for Day 1 PCLs from acquisitions

29

Wholesale Funding Wholesale funding diversity by instrument and maturity1,6,7

$247B

1 Excludes repo transactions and bankers acceptances, which are disclosed in the contractual maturities table in the MD&A of the Interim Consolidated Financial Statements. Amounts are based on remaining term to maturity. 2 Only includes commercial bank deposits raised by Group Treasury. 3 Excludes asset-backed commercial paper (ABCP) issued by certain ABCP conduits that are not consolidated for financial reporting purposes. 4 Represents residential mortgages funded through Canadian Federal Government agency sponsored programs. Funding accessed through such programs does not impact the funding capacity of the Bank in its own name. 5 Although subordinated debentures are a component of regulatory capital, they are included in this table in accordance with EDTF recommended disclosures. 6 As per Wholesale Funding Sources Table in MD&A, as of Q1/19. 7 May not add to 100% due to rounding.

34%

9% Mortgage

Securitization4

Bearer Deposit Notes, Commercial Paper &

Short-Term Certificate of Deposits

3%

Asset-Backed Commercial Paper3

34% Senior Notes

12% Covered Bonds

4% Subordinated Debt5

$21

$17

$12

$15

$5

$15

$1

$1

$1

$4

$4

$11 $3

$6

$2

< 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years >

MATURITY TABLE (EX-SUB DEBT)

(CANADIAN DOLLAR EQUIVALENT, $B)

Senior Debt ABS Covered Bonds

$26

$23 $24

$19

$11

$17 $3

1% Bail-inable Notes

2% Asset-Backed

Securities

1% Deposits from Banks2

Key Market Profiles

Appendix 2:

31

Economic Outlook in Key Markets Growth in Pacific Alliance expected to remain above that of Canada and the U.S.

2018 AND 2019 REAL GDP GROWTH FORECAST (%)

Source: Scotiabank Economics. Forecasts as of February 7, 2019.

Real GDP (Annual % Change)

Country 2000–17 avg. 2018e 2019f 2020f

Mexico 2.2 2.0 1.4 1.3

Peru 5.0 3.6 4.0 4.0

Chile 3.9 4.2 3.2 3.2

Colombia 3.9 2.6 3.4 3.8

PACs simple avg. 3.8 3.1 3.0 3.1

2000–17 avg. 2018e 2019f 2020f

Canada 2.1 2.0 1.8 2.0

U.S. 2.0 2.9 2.4 1.7

32

Focused on the Pacific Alliance Attractive growth opportunity for Scotiabank

• Pacific Alliance

o Portfolio of high quality growth markets for Scotiabank

o 230 million people with median age of 29

o Largest trading partner is the United States (64% of exports)

o Largest sector is manufacturing (64% of exports)

o Trade bloc with free trade agreements to liberalize commerce and improve integration

o Supports trade flows with Asia in order to compete with Brazil and Argentina which participate in Mercosur

o Accounts for 36% of Latin America’s GDP, comparable to Brazil

o Canada has bilateral free-trade agreements with all four Pacific Alliance countries and it has initiated an application for Associate Membership in the Alliance

• Pacific Alliance is an Attractive Long-Term Opportunity

o Region is the 6th largest goods exporter in the world

o Trade bloc with governments supporting growth/significant infrastructure spending

o Solid GDP growth rates relative to peers

o Considerable room to increase banking penetration (avg. domestic credit around 2/3 of GDP)

o Fast-growing middle-class with increasing financial demands

o Favourable demographics for banking needs

o Relatively stable legal, tax, and regulatory infrastructure in place

o Central bankers have earned credibility and banking system is well-capitalized

33

Mexican Economy Diverse economy with a strong balance sheet

Top 5 Trading Partners

MEXICAN GDP BY INDUSTRY

(Q3 2018)

6.5%

5.8% 15.9%

6.3%

7.0% 3.8%

1.9%

16.2%

17.5%

15.9%

Finance, Insurance, & Real Estate

Health & Education

Wholesale & Retail Trade

Manufacturing

Mining and Oil & Gas Extraction

Construction

Public

Administration

Professional, Scientific,

& Technical Services

Transportation & Warehousing

Other

3.1% Natural

Resources

• The Mexican economy reflects a solid mix of commodities, goods production, and services

• Trade remains dominated by the U.S., but Mexico’s diversification agenda is underpinned by 13 free-trade agreements with 47 countries that account for 40% of global GDP

• Despite NAFTA-related uncertainty, investment rebounded in 2018 and trade has returned to making a positive contribution to economy-wide growth

United

States

59%

Others

21% Germany 3%

Japan 3%

Canada

4%

China

10% -3

-2

-1

0

1

2

3

4

5

16 17 18

OtherNet ExportsInventoriesGFCFGovernmentConsumptionReal GDP

Contributions to Mexican GDP Growth

y/y % change

Sources: Scotiabank Economics, Haver Analytics.

34

Chilean Economy Advanced economy with wide-ranging trade links

CHILEAN GDP BY INDUSTRY

(SEP 2018) 1.9%

9.7% 15.1%

6.2%

4.6% 19.3%

8.5%

8.7% 10.2%

12.5%


Wholesale & Retail Trade

Manufacturing

Mining and Oil &

Gas Extraction

Construction

Public Administration

Housing &

Personal Services

Transportation & Warehousing

Restaurants & Hotels

Other

3.4% Natural Resources


United

States

16%

Others

40%

Brazil

7% Japan

6%

South Korea

4%

China

27%

• Chile’s mix of economic activities reflects its status as an advanced market economy

• Chile’s diversified trading relationships are supported by 21 free-trade agreements with 59 countries that account for 70% of global GDP

• Investment has been a strong contributor to growth in Chile over the past year, which should underpin future productivity gains

-6

-4

-2

0

2

4

6

8

16 17 18

Net ExportsInventoriesInvestmentGovernmentConsumptionReal GDP

Contributions to Chilean GDP Growth

y/y % change


35

Peruvian Economy Resilient economic fundamentals

PERUVIAN GDP BY

INDUSTRY (Q3 2018)

9.6%

14.6% 31.5%

20.7%

5.8%


Transportation, Information & Commerce

Construction

Mining & Energy Other

12.7% Manufacturing

5.1% Natural

Resources


United

States

18%

Others

44%

Brazil

5% Spain

4%

South

Korea 3%

China

26%

• Peru’s important resource sectors are increasingly balanced by stronger service-sector activity and solid economic fundamentals

• Peru has 16 free-trade agreements with 49 countries that account for 66% of global GDP

• Investment is making a consistently strong contribution to GDP, which should make higher growth rates more sustainable in the future

-6

-4

-2

0

2

4

6

8

16 17 18

Net ExportsInventoriesGFCFGovernmentConsumptionReal GDP

Contributions to Peruvian GDP Growth

y/y % change


36

Colombian Economy Gaining momentum

COLOMBIAN GDP BY

INDUSTRY (Q3 2018)

6.2%

16.9% 13.6%

6.9%

14.9%

7.0% 2.8%

9.1% 12.0%

8.2%


Wholesale, Retail Trade, Accommodation & Food

Services

Manufacturing

Construction

Mining and Oil & Gas Extraction

Public Administration

Professional,

Scientific,

& Technical

Services

Information & Communication

Natural Resources

Other

2.4% Arts &

Entertainment


Germany

3%

United

States

29% Others

44%

Brazil

4%

Mexico

6%

China

14%

• Services account for a rising share of Colombian GDP compared with traditional strengths in extractive industries

• Colombia continues to build on its 10 free-trade agreements with 42 countries that account for 38% of global GDP

• Rising consumption, supported by public spending, reflects an expanding middle class as growth gains momentum and converges toward the economy’s underlying potential

-3

-2

-1

0

1

2

3

4

5

16 17 18

OtherNet ExportsGFCFGovernmentConsumptionReal GDP

Contributions to Colombian GDP Growth

y/y % change


37

Other Regions Leading Caribbean & Central American franchise. Reducing portfolio investments in Asia.

• Caribbean & Central America

o Operations in 16 countries contributing ~ CAD$0.7B in earnings in 2018

o Well-established, diversified franchise that serves retail, commercial and corporate customers

o Actively managing footprint to ensure scale in larger growth markets and reduce risk profile:

o Announced acquisition in Dominican Republic in August 2018 which doubles customer base and creates 4th largest bank

o Announced sale of operations in 9 smaller countries in Caribbean in November 2018

o Announced sale of pension and insurance operations in the Dominican Republic in December 2018

o Announced sale of banking and insurance operations in El Salvador in February 2019

o Recognized by Global Finance Magazine as:

o “Best Bank Award 2017” in the Bahamas, Barbados, Costa Rica, Turks & Caicos and U.S. Virgin Islands;

o “World’s Best Consumer Digital Bank 2017” in 24 countries across Latin America and the Caribbean; and

o “Best in Mobile Banking” in the Caribbean region

• Asia

o Thailand: 49% interest in Thanachart Bank (2007)

o Announced non-binding MOU in February 2019 to merge with Thai Military Bank and materially reduce interest

o CAD$3.0B carrying value as of October 31, 2018

o CAD$590MM of net income for twelve months ended October 31, 2018

o China: 19.9% interest in Bank of Xi’an (2009)

o CAD$772MM carrying value as of October 31, 2018

o CAD$456MM of net income for twelve months ended October 31, 2018

Canadian Housing Market

Appendix 3:

Canadian Housing Market Higher interest rates and new regulations driving soft landing

• Significant moderation in price growth since 2017 (top right chart)..

o The composite national MLS Home Price Index rose 0.8% Y/Y, with gains concentrated in lower-cost apartments and townhomes. Average price fell 5.5% Y/Y

o Three of Canada’s five largest cities experienced year-over-year price declines (Vancouver, Calgary, Edmonton)

• Resale volumes down 4% Y/Y (table below)

o The sales-to-new listings ratio rose to 56.7% in the month, a level consistent with balanced demand-supply conditions

• Greater Toronto Market: Average home price increased 2.7% from a year ago. Resale volumes have moderated and are below 10-year average (lower right chart)

• Greater Vancouver Market: Average home price fell 4.5% from a year ago —led by weakness in the single-family home segment—but home purchases climbed 1.2% Toronto & Vancouver Home Sales2

Price Growth by Dwelling Type2

1 Sales and listings figures reported in seasonally-adjusted m/m terms, while MLS HPI growth rates reported as non seasonally-adjusted y/y 2 Sources for charts and table: Scotiabank Economics, CREA

Canada2 Jan-19 Dec-18 Jan-19

m/m* m/m* y/y

Sales (% change) 3.6 -2.0 -4.0

New listings (% change) 1.0 -0.5 8.0

Average price (% change) -2.9 -1.4 -5.5

MLS HPI (% change)** -0.5 -0.3 0.8

Jan-19 Dec-18 Jan-18

Sales -to-new listing ratio (level)* 56.7 55.3 64.2

Months inventory (level)* 5.3 5.5 4.9

*Seasonally adjusted **Not seasonally adjusted

39

Canadian Housing Market

Higher interest rates and new regulations driving soft landing

Significant Moderation in Price Growth* (Aggregate Composite MLS® Home Price Index Y/Y Percentage Change)

1 Sources for charts and table: CREA; MLS® Home Price Index growth rates reported as non seasonally-adjusted y/y

Volume of Home Sales Near 10-Year Average*

Annual Price Change by Province* (Y/Y Percentage Change)

Per

cent

Per

cent

*Actual – not seasonally adjusted

*Actual – not seasonally adjusted *Actual – not seasonally adjusted

Canada’s Five Largest Metropolitan Areas* (MLS® Home Price Index Benchmark Price Y/Y Percentage Change)

*Actual – not seasonally adjusted

2.7

-4.52

6.32

-3.87 -2.88

Average -0.45

-6

-4

-2

0

2

4

6

8

GTA GVA Montreal Calgary Edmonton

Per

cent

40

Housing Policy Developments in Canada Consistent policy initiatives to maintain a balanced and sustainable market

2018

• Canada: OSFI imposes more stringent stress tests for uninsured mortgages, including a minimum qualifying rate at the greater of the five-year fixed posted rate or the contractual rate plus 200 bps, effective January 1, 2018

• Ontario: Elimination of rent control on new rental units first occupied on or before November 1, 2018

• British Columbia: Extension of the Property Transfer Tax on non-resident buyers. Investment of more than CAD 1.6 bn through FY2021 toward the goal of building 114,000 affordable housing units in the next 10 years

2017

• Ontario: 16 measures aimed to slow rate of house price appreciation

Key aspects include:

o 15% non-resident speculation tax

o Expanded rent control to all private rental units in Ontario

o Vacant home tax

o CAD 125 mn five-year program to encourage construction of new rental apartment buildings

2016

• Canada: Qualifying stress rate for all new mortgage insurance must be the greater of the contract mortgage rate or the Bank of Canada's conventional five-year fixed posted rate

• Low-ratio mortgage insurance eligibility requirements updated for lenders wishing to use portfolio insurance:

o Maximum amortization 25 years

o CAD$1MM max. purchase price

o Minimum credit score of 600

o Owner-occupied property

• Elimination of primary residence tax exemption for foreign buyers

• Min. down payment on insured increased from 5% to 10% (for homes $0.5-$1MM)

• British Columbia: 15% land transfer tax on non-resident purchases in Metro Vancouver introduced

2019

• British Columbia: Increase in speculation tax on foreign and domestic home owners who do not pay income tax in BC from 0.5% of a property’s assessed value to 2%; additional school tax levied on portion of a property’s value that exceeds CAD 3 mn.

41

42

Housing Market Differences vs U.S. Canada’s housing market features distinct practices and policies

Canada U.S.

Regulation and

Taxation

• Mortgage interest not tax deductible • Full recourse against borrowers in most provinces • Foreclosure on non-performing mortgages - no stay periods

Insurance

• Mandatory default insurance mortgages with LTV > 80% o CMHC backed by Government of Canada (AAA). Private insurers

are 90% government backed o Insurance available for homes up to CAD 1 mn o Premium is payable upfront o Covers full amount for life of mortgage

• Homebuyers must qualify for mortgage insurance at an interest rate that is the greater of their contract mortgage rate or the Bank of Canada's conventional five-year fixed posted rate

• Re-financing cap of 80% LTV on non-insured mortgages

Amortization

• Maximum 25-year amortization on mortgages with LTV > 80% • Maximum 30-year amortization on conventional mortgages • Down payment of > 20% required for non-owner

occupied properties

• Tax-deductible mortgage interest creates incentive to borrow and delay repayment

• Lenders have limited recourse in most states

• 90-day to 1-year stay period to foreclose on non-performing mortgages

• No regulatory LTV limit • Private insurers are not

government backed

Product

• Conservative product offerings, fixed or variable rate options • Much less reliance upon securitization and wholesale funding • Asset-backed securities not subjected to US-style off-balance sheet

leverage via special purpose vehicles

• Can include exotic products (e.g. adjustable rate mortgages, interest only)

Underwriting • Terms usually three or five years, renewable at maturity • Extensive documentation and strong standards

• 30-year term most common • Wide range of documentation

and underwriting requirements

43

Canadian Household Credit Public policy changes are moderating growth in household credit

• Total household credit grew at 3.1% in nominal terms in 2018 vs 2008 peak of 12.4% y/y

• Consumer loans excluding mortgages (i.e. cards, HELOCs, unsecured lines, auto loans, etc.) grew at 3.0% in 2018 vs > 5% in late-2017

• Mortgage credit grew at 3.1% in 2018 vs 2008 peak of 13%

HOUSEHOLD CREDIT GROWTH CONSUMER LOAN GROWTH RESIDENTIAL MORTGAGE GROWTH

0

2

4

6

8

10

12

14

16

18

20

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

%, 3-month moving average

y/y % change

Sources: Scotiabank Economics, Bank of Canada.

m/m % change,

SA

-5

0

5

10

15

20

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18


m/m % change, SA


y/y % change

0

2

4

6

8

10

12

14

16

18

20

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18


y/y % change


m/m % change,

SA

44

Household Debt: Canada vs. U.S. Canadian households’ balance sheets compare favourably to US

• Canadian debt-to-income ratio is now 2.2 percentage points below the U.S. peak in 2008

o Over the last 8 years, increases in the Canadian debt-to-income ratio have slowed vs 2002–10

o Calculated on the same terms, Canada’s debt-to-income is currently 167% vs 134% in the U.S.

• Canadian debt-to-assets ratio remains below U.S.

o U.S. households have incentive to pursue higher asset leverage in light of mortgage interest deductibility

o Debt is a stock concept, to be financed over one’s lifetime. Income is a flow concept measuring one single year’s earnings. Debt should be compared to lifetime or permanent income, or assets

• Ratio of total household debt-to-GDP remains lower in Canada than U.S.

o Calculated on a comparable basis, the ratio of household credit market debt is 98.6% in Canada vs 101.1% in the U.S.

Household Credit Market Debt to Disposable Income

Total Household Liabilities As % of Total Assets

Household Credit Market Debt to GDP

166.8

173.8

134.0

60

80

100

120

140

160

180

200

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

Adjusted Canadian*

Official Canadian

Official US

* Adjusted for US concepts and definitions. Sources: Scotiabank Economics, BEA, Federal Reserve Board, Statistics Canada.

household credit liabilities as % of disposable income

16.8

17.8

10

15

20

25

30

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

US

Canada

household debt as % of assets

Sources: Scotiabank Economics, Federal Reserve Board, Statistics Canada.

101.1

98.6

102.9

74.9

50

60

70

80

90

100

110

120

130

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

% of GDP

* Adjusted for US concepts and definitions. Sources: Scotiabank Economics, BEA, Federal Reserve Board, Statistics Canada.

Canada*

US with unincorporatedbusiness debt

Original US

Original Canada

Additional Information

Appendix 4:

46

Additional Information

• Toronto Stock Exchange (TSX: BNS)

• New York Stock Exchange (NYSE: BNS)

Moody's

Investors

Services

Standard &

Poor's Fitch Ratings

Dominion Bond

Rating Service

Ltd.

Legacy Senior Debt1 Aa2 A+ AA- AA

Senior Debt2 A2 A- AA- AA (low)

Subordinated Debt (NVCC) Baa1 BBB+ - A (low)

Short Term Deposits/Commercial Paper P-1 A-1 F1+ R-1 (high)

Covered Bond Program Aaa Not Rated AAA AAA

Outlook Stable Stable Stable Stable

Scotiabank Credit Ratings

• CUSIP: 064149107

• ISIN: CA0641491075

• FIGI: BBG000BXSXH3

• NAICS: 522110

Scotiabank Listings: Scotiabank Common Share Issue Information:

For further information, please contact: www.scotiabank.com/investorrelations

1 Includes: (a) Senior debt issued prior to September 23, 2018; and (b) Senior debt issued on or after September 23, 2018 which is excluded from the bank recapitalization "bail-in" regime 2 Subject to conversion under the bank recapitalization "bail-in" regime

47

Contact Information

Investor Relations

Philip Smith

Senior Vice President 416-863-2866

[email protected]

Lemar Persaud

Director 416-866-6124

[email protected]

Michael Lomas

Managing Director

Treasury Sales and Market Development

416-866-5734

[email protected]

For further information, please contact: www.scotiabank.com/investorrelations

Judy Lai

Director 416-775-0485

[email protected]

Steven Hung

Vice President 416-933-8774

[email protected]

Tiffany Sun

Manager 416-866-2870

[email protected]

Documents

Investor Presentation - Scotiabank€¦ · EARNINGS MIX $2.2B 18.4% 14.9% 11.5% 13.7% Canadian Banking International Banking Global Banking and Markets All Bank ... Peru Creates #2