Investor Presentation January 2020
2
Caution Regarding Forward-Looking Statements
From time to time, 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. In addition, representatives of the Bank may include forward-looking statements orally to analysts, investors, the media and others. 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 2019 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, 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,” “foresee,” “forecast,” “anticipate,” “intend,” “estimate,” “plan,” “goal,” “project,” and similar expressions of future or conditional verbs, such as “will,” “may,” “should,” “would” and “could.” By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct and that our financial performance objectives, vision and strategic goals will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors, many of which are beyond our control and effects of which can be difficult to predict, could cause our actual results to differ materially from the expectations, targets, estimates or intentions expressed in such forward looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including but not limited to: general economic and market conditions in the countries in which we operate; changes in currency and interest rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the failure of third parties to comply with their obligations to the Bank and its affiliates; changes in monetary, fiscal, or economic policy and tax legislation and interpretation; changes in laws and regulations or in supervisory expectations or requirements, including capital, interest rate and liquidity requirements and guidance, and the effect of such changes on funding costs; changes to our credit ratings; operational and infrastructure risks; reputational risks; the accuracy and completeness of information the Bank receives on customers and counterparties; the timely development and introduction of new products and services; our ability to execute our strategic plans, including the successful completion of acquisitions and dispositions, including obtaining regulatory approvals; critical accounting estimates and the effect of
changes to accounting standards, rules and interpretations on these estimates; global capital markets activity; the Bank’s ability to attract, develop and retain key executives; the evolution of various types of fraud or other criminal behaviour to which the Bank is exposed; disruptions in or attacks (including cyber-attacks) on the Bank's information technology, internet, network access, or other voice or data communications systems or services; increased competition in the geographic and in business areas in which we operate, including through internet and mobile banking and non-traditional competitors; exposure related to significant litigation and regulatory matters; the occurrence of natural and unnatural catastrophic events and claims resulting from such events; 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. The Bank cautions that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect the Bank’s results, for more information, please see the “Risk Management” section of the Bank’s 2019 Annual Report, as may be updated by quarterly reports. Material economic assumptions underlying the forward-looking statements contained in this document are set out in the 2019 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. 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. Any forward-looking statements contained in this document represent the views of management only as of the date hereof and are presented for the purpose of assisting the Bank's shareholders and analysts in understanding the Bank's financial position, objectives and priorities, and anticipated financial performance as at and for the periods ended on the dates presented, 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.
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TABLE OF CONTENTS Scotiabank Overview 4
• Leading Bank in the Americas 5 • Economic Outlook in Core Markets 6 • Well-Diversified Business with Strong Returns 7 • Why Invest in Scotiabank? 8 • Banking ROE by Market 9 • Medium-Term Financial Objectives 10 • Q4 2019 Financial Performance 11 • Fiscal 2019 Financial Performance 12 • Repositioning is Substantially Complete 13 • Acquisition & Divestiture Activity 14 • Earnings and Dividend Growth 15 • Strong Capital Generation 16 • Growth in Digital Banking 17 • Environmental, Social & Governance (ESG) 18
Business Line Overview: Canadian Banking 20 Business Line Overview: International Banking 31 Business Line Overview: Global Banking and Markets 43 Business Line Overview: Global Wealth Management 47 Risk Overview 51
• Risk Snapshot 52 • Credit Performance by Business Lines 53 • Historical PCL Ratios on Impaired Loans 54 • Canadian Retail: Loans and Provisions 55 • International Retail: Loans and Provisions 56 • Energy Exposure 57
Treasury and Funding 58 • Funding Strategy 59 • Wholesale Funding 60 • Deposit Overview 61 • Wholesale Funding Utilization 62 • Liquidity Metrics 63
Appendix 1: Key Market Profiles 64 Appendix 2: Canadian Housing Market 73 Appendix 3: Additional Information 76 Contact Information 79
4
Scotiabank Overview
• Leading bank in the Americas
• Greater geographic focus, increased scale in core markets, and improved business mix
• Positioned for higher capital ratios, active buybacks, and sustainable long-term earnings growth
• Repositioning of business substantially complete
• Strong credit quality. Stable credit metrics.
5
55%
9%
23%
5% 8%
Peru (BBB+)
#3 Bank
United States (AA+) Top 15 FBO
Canada (AAA) #3 Bank
Leading Bank in the Americas1 Core markets: Canada, US, Mexico, Colombia, Peru and Chile
Full-Service, Universal Bank Canada Mexico Peru Chile Colombia Caribbean Uruguay
Wholesale Operations USA UK Singapore Australia Ireland Hong Kong SAR China Brazil South Korea Malaysia India Japan
7th largest bank by assets1
2018 Bank of the Year Latin America and the
Caribbean by Latin Finance
1 Source: Bloomberg December 31, 2019; 2 By assets and market capitalization; 3 Adjusted for Acquisition and divestiture-related amounts, including Day 1 PCL on acquired performing loans, integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions and losses/(gains) on divestitures and related costs; 4 Exclude the pension revaluation benefit gain of $203MM pre-tax, $150MM after-tax in Q1/18; 5 Ranking based on market share in loans as of September 2019 for PACs (incl. M&A), as of July 2019 in Canada for publically traded banks; 6 Adjusted net income attributable to equity holders of the Bank for the twelve months ended October 31, 2019
Earnings by Market3,6
Scotiabank3 FY2019 Change
FY19/FY18
Revenue $31.2B +8% Net Income $9.4B +3% Return on Equity 13.9% -100 bps Operating Leverage4 -0.6% n.a. Productivity Ratio 52.7% +100 bps Total Assets $1.1T +9%
Ranking by Market Share5
Canada #3
USMCA USA Top 15 Foreign Bank
Mexico #6 Peru #3 Chile #3
Colombia #6
Canada
U.S.A
PAC
C&CA
PAC
Americas (~95%)
Other
Colombia (BBB-) #6 Bank
Chile (A+) #3 Bank
Mexico (BBB+)
#6 Bank
6
Economic Outlook in Core Markets Growth in Pacific Alliance > Canada and the U.S. in 2020/2021
2019 - 2021 Real GDP Growth Forecast (%)
Source: Scotiabank Economics. Forecasts as of January 13, 2020.
Real GDP (Annual % Change)
Country 2010–18 Average 2019f 2020f 2021f
Mexico 3.0 0.0 1.0 1.8
Peru 4.8 2.3 3.0 3.5
Chile 3.5 1.0 1.4 3.0
Colombia 3.8 3.2 3.6 3.6
PAC Average 3.8 1.6 2.3 3.0
Canada 2.2 1.6 1.5 2.0
U.S. 2.3 2.3 1.7 1.8
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19.0% 14.8% 13.3% 13.6% 13.9%
CanadianBanking
InternationalBanking
Global Bankingand Markets
Global WealthManagement
All Bank
Well-Diversified Business with Strong Returns
Canadian Banking
P&C 38%
International Banking P&C
32%
Global Banking &
Markets 17%
Global Wealth
Management 13%
Earnings by Business Line1,2,3 Earnings by Market1,2
1 Net income attributable to equity holdersor for the twelve months ended October 31, 2019; 2 Adjusted for Acquisition and divestiture-related amounts, including Day 1 PCL on acquired performing loans, integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions and losses/(gains) on divestitures and related costs; 3 Excluding Other segment
Caribbean and Central America
FY 2019 EARNINGS MIX
$9.2B3
FY 2019 EARNINGS MIX
$9.2B3 Per
Personal & Commercial Banking
70%
Wholesale Banking
17%
Wealth Management
13%
Canada
55%
U.S.
9%
Mexico
6%
Peru 9%
Chile 6%
Colombia 2%
C&CA 5%
Other 8%
Europe, Asia, Brazil, Australia
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Why Invest in Scotiabank?
Leading bank in the Americas
Diversified exposure to high quality growth markets
Increasing scale and market share in core markets
• Leading Canadian bank. Top 15 foreign bank in U.S. • Leading bank in the Pacific Alliance growth markets of Mexico, Peru,
Chile and Colombia
• Gaining scale and market share in six core markets of Canada, US, Mexico, Peru, Colombia and Chile
• Competitive advantages in technology, risk management, and funding versus local competitors
• Increasing scale in Wealth Management and P&C businesses
• Strong foundation in Canada. Unique footprint in Americas provides diversification with growth.
• Strong balance sheet, capital and liquidity ratios • Attractive return on equity and dividend growth
• > 80% of earnings from core P&C banking and wealth businesses; > 80% of earnings from 6 core markets
• Lowered operational risk with more focused footprint (announced or completed exit from 21 countries and 11 businesses since 2013)
• Strong Canadian risk management culture: strong capabilities in AML and cybersecurity
Improved earnings quality, lower risk profile
• High levels of technology investment supports digital banking strategy to increase digital sales and adoption
• Named to Top 25 ”World’s Best Workplaces” (2018)
Strengthening competitive advantages in technology and talent
9
Banking ROE by Market
Banking: Average ROE by Market (Latest Reporting Period)
Return on equity in latest reporting period for the leading bank by market share for loans in each country. Canada and US figures are average for five largest and 10 largest market share banks in each country, respectively
Sources: Bloomberg LLP, Company Financial Reports.
19.1%
Pacific Alliance
15.3%
Canada
12.1%
US
11.0%
Asia
6.7%
Europe
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
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Medium-Term Financial Objectives
Metrics Objectives 3-Year Performance (2016-2019)
All-Bank
EPS Growth 7%+ +6%1
ROE 14%+ 14.5%2
Operating Leverage Positive Positive1, 3
Capital Strong Levels 11.55%4
1 Reflects 3-year CAGR 2 Reflects 3-year simple average 3 Excluding the pension revaluation benefit gain in 2018 of $203 million pre-tax 4 As of October 31, 2019 and pro-forma the announced divestitures
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Q4 2019 Financial Performance Strong revenue growth and positive operating leverage
$MM, except EPS Q4/19 Y/Y Q/Q
Reported Net Income $2,308 +2% +16%
Pre-Tax, Pre Provision Profit $3,657 +8% +6%
Diluted EPS $1.73 +1% +15%
Revenue $7,968 +7% +4%
Expenses $4,311 +6% +2%
Productivity Ratio 54.1% (50 bps) (90 bps)
Core Banking Margin 2.40% (7 bps) (5 bps)
PCL Ratio1 50 bps +11 bps +2 bps
PCL Ratio on Impaired Loans1 49 bps +7 bps (3 bps)
Adjusted2
Net Income $2,400 +2% (2%)
Pre-Tax, Pre Provision Profit $3,765 +8% (2%)
Diluted EPS $1.82 +3% (3%)
Revenue $7,962 +7% -
Expenses $4,197 +6% +2%
Productivity Ratio 52.7% (50 bps) +100 bps
• Adjusted Net Income up 2%2
o Other items reduced net income growth by 2%3
o Pre-tax, pre-provision profit (PTPP) up 8%2
• Revenue up 7%2
o Net interest income up 3%
o Non-interest income up 12%2
• Expense growth of 6%2
• Operating leverage of +1.0%2
• Higher PCL ratio on impaired loans1. Y/Y increase driven by hurricane-related recoveries in Q4/18
YEAR-OVER-YEAR HIGHLIGHTS
ADJUSTED NET INCOME4, 5 BY BUSINESS SEGMENT ($MM)
1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 2 Adjusted for Acquisition and divestiture-related amounts, including integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions and losses on divestitures and related costs 3 See Slide 20 for Other Items Impacting Financial Results
4 Y/Y growth rate is on a constant dollars basis 5 After non-controlling interest
1,146 746
416
1,160 781
405
Canadian Banking International Banking Global Banking andMarkets
Q4/18 Q4/19
+1% Y/Y +4% Y/Y4 -3% Y/Y
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Fiscal 2019 Financial Performance Stronger second half performance to finish 2019
$MM, except EPS 2019 Y/Y
Reported Net Income $8,798 +1%
Pre-Tax, Pre Provision Profit $14,297 +4%
Diluted EPS $6.68 (2%)
Revenue $31,034 +8%
Expenses $16,737 +11%
Productivity Ratio 53.9% +160 bps
Core Banking Margin 2.44% (2 bps)
PCL Ratio1 51 bps +3 bps
PCL Ratio on Impaired Loans1 49 bps +6 bps
Adjusted2
Net Income $9,409 +3%
Pre-Tax, Pre Provision Profit $14,739 +6%
Diluted EPS $7.14 -
Revenue $31,161 +8%
Expenses $16,422 +10%
Productivity Ratio 52.7% +100 bps
PCL Ratio1, 2 49 bps +8 bps
• Adjusted Net Income up 3%2
o Other items reduced net income growth by 4%3
o Pre-tax, pre-provision profit (PTPP) up 6%2
• Revenue up 8%2
o Net interest income up 6%
o Non-interest income up 11%2
• Expense growth of 10%2, or 9%2, 4 excluding 2018 pension revaluation benefit gain
• Operating leverage of -2.1%2 or -0.6%2, 4
• Higher PCL ratio on impaired loans1
YEAR-OVER-YEAR HIGHLIGHTS
ADJUSTED NET INCOME2, 5 BY BUSINESS SEGMENT ($MM)
4,416 2,819 1,758
4,485 3,188
1,534
Canadian Banking International Banking Global Banking andMarkets
2018 2019
+2% Y/Y +13% Y/Y -13% Y/Y
1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 2 Adjusted for Acquisition and divestiture-related amounts, including Day 1 PCL on acquired performing loans, integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions and losses/(gains) on divestitures and related costs 3 See Slide 20 for Other Items Impacting Financial Results
4 Excluding the pension revaluation benefit gain in 2018 of $203 million pre-tax 5 After non-controlling interest
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Repositioning is Substantially Complete
Simplified the Bank ● 20 non-core (higher risk,
low growth) countries exited since 2014
● 10 non-core (non-customer facing, low return) businesses exited since 2014
● >90% of earnings generated from America’s footprint
Improved Earnings Quality ● >80% of earnings from six
core markets (Canada, the US and Pacific Alliance)
● Targeting higher earnings contribution from stable P&C Banking and Wealth Management businesses
● Targeting 65%-70% from P&C Banking, ~15% from Global Wealth Management
De-Risking the Bank ● Improving credit quality
metrics and generating higher mix of earnings from investment grade countries
● Exits from sub-investment grade, low growth jurisdictions
● Gross impaired loans ratio decreased from 110 bps in 2017 to 78 bps (pro forma) in 2019
14
Acquisition & Divestiture Activity 2015-2019
Acquisitions: $7.5B Divestitures/Exits: $9B
2015
2016
2017
2018
2019
Cencosud (Chile)
Citibank (Peru)
Turkey
Egypt
UAE
Vietnam
Taiwan
Haiti JPMorgan Chase Credit Card Portfolio
Citibank (Panama)
Citibank (Costa Rica)
France
Hollis Wealth
MD Financial, Jarislowsky Fraser
BBVA (Chile)
Citibank (Colombia)
CrediScotia (Jamaica)
Banco Progreso (Dominican Republic)
Cencosud (Peru)
7 Leeward Islands
Thailand
PR/USVI
El Salvador*
Pension & Insurance (Dominican Republic)
Insurance*(Trinidad & Tobago)
Pension (Colombia)
* Announced and pending.
2020 British Virgin Islands*
15
$1.96
$3.49
09 10 11 12 13 14 15 16 17 18 19
1 Reflects adoption of IFRS in Fiscal 2011. 2 Excludes notable items for years prior to 2016. For 2016 onwards, results adjusted for acquisition-related costs including Day 1 PCL impact on acquired performing loans, integration and amortization costs related to current acquisitions and amortization of intangibles related to current and past acquisitions. 3 As of October 31, 2019
Earnings per share (C$)1,2
$3.31
$7.14
09 10 11 12 13 14 15 16 17 18 19
Dividend per share (C$)
+8%
CAGR
+6%
CAGR
Total shareholder return3
6.4%
9.8% 12.0%
8.8%
11.9% 11.9%
5 Year 10 Year 20 Year
Scotiabank Big 5 Peers (ex. Scotiabank)
Earnings and Dividend Growth Strong track record of stable and predictable earnings and growing dividends
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CET1 Ratio
Strong Capital Levels
11.1% 11.1% 11.1% 11.2% 11.1%
1.4% 1.4% 1.4% 1.1% 1.1% 1.8% 2.1% 2.2% 2.5% 2.0%
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
CET1 Tier 1 Tier 2
14.6% 14.7% 14.2% 14.3% 14.8%
Internal Generation
Strong Capital Generation Clear path to higher capital ratio
-4 bps +3 bps 11.2% +25 bps -20 bps -8 bps -7 bps 11.1%
~50 bps
Q3/19 EarningsLess Dividends
RWA Impact(ex. FX)
Share Buybacks(Net of Issuances)
ForeignExchange
Translation
Non-coreDivestitures
Other (net) Q4/19 Reported Impact ofAnnouncedDivestitures
Q4/19Pro-Forma
~11.55%
17
Growth in Digital Banking Steady progress against digital targets
1 Canada: F2017 22%, F2018 26%, F2019 26% PACs: F2017 13%, F2018 19%, F2019 29% 2 Canada: F2017 36%, F2018 38%, F2019 42% PACs: F2017 20%, F2018 26%, F2019 35% 3 Canada: F2017 17%, F2018 15%, F2019 12% PACs: F2017 29%, F2018 24%, F2019 19%
• Sales grew 600 bps against Q4 of last year
• Strong progress made across key markets; key highlight includes Colombia improving >1,000 bps against Q4 of last year
• In-branch transactions decreased the most in 3 years; 400 bps against Q4 of last year
Digital Retail Sales1 Digital Adoption2 In-Branch Financial Transactions3
Goal >50%
Goal >70%
Goal <10%
11 15
22
28
F2017 F2016 F2019 F2018
+1,700 bps
26 29
33 39
F2017 F2016 F2018 F2019
+1,300 bps 26
23 20
16
F2017 F2016 F2018 F2019
-1,000 bps
• Announced our commitment to mobilize $100 billion by 2025 to reduce the impacts of climate change
• Issued inaugural USD 500 million Green Bond of which proceeds were used to fund assets under the Scotiabank Green Bond Framework. Includes the categories of renewable energy, clean transportation and green buildings
• Directed proceeds of internal fee on carbon into renewable energy & efficiency initiatives, and are on track to achieve a greenhouse gas reduction target of 10% by 2021 compared to 2016
• Launched our new, more efficient workspace model at our head office in Toronto, Canada, which has to date reduced greenhouse gas emissions by 741 tonnes and is expected to reduce paper use by 86%
• Invested nearly $100 million globally in communities where we operate as part of our global philanthropy program
• Committed $3 billion in funding over the first three years of The Scotiabank Women Initiative to advance women-led businesses in Canada
• Signed the UN Women’s Empowerment Principles and UN LGBTI Codes for Business Conduct
• Continued to deliver on our commitment of $250 million over 10 years to help employees adapt to the digital economy
• Served as the lead bank in Canada in the Finance Against Slavery and Trafficking initiative, the Financial Access project, to open accounts for survivors of modern slavery
• For the second consecutive year, ranked by the Dow Jones Sustainability Index as among the top 1% of global financial institutions for Corporate Governance
• 38% of our directors are female. We first established a Board diversity policy in 2013
• Appointed Mr. Aaron Regent as Chairman of the Board. Mr. Regent is Scotiabank’s third independent Chairman, as we have separated the CEO and Chairman roles since 2004
• Dedicated significant Board time to cybersecurity, anti-money laundering, conduct and culture issues, keeping the Bank safe
Environmental, Social & Governance (ESG) Highlights from 2019
19
Environmental, Social & Governance (ESG)
Scotiabank Climate Commitment to mobilize
$100 billion by 2025 to reduce the impacts of climate change. This is detailed in our External Position Statement.
Memberships, Associations and Partnerships
20
Business Line Overview
Canadian Banking
21
Canadian Banking Top 3 bank in personal & commercial banking, wealth and insurance in Canada
55%
27%
18%
60%
21% 17%
2%
• Improve Sustained Business Performance: Invest to grow our higher ROE businesses, including Business Banking, to deliver consistent and stable long-term earnings growth
• Instill a Winning team Culture: Engage employees through a RESULTS (Revenue, Earnings, Simplify, Urgency, Listen, Trust, Support) focused culture
• Superior Customer Experience: Develop deeper household relationships for our customers across Canada by providing differentiated focus and service to those who are most loyal and engaged
• Scale our unique partnerships and assets: Leverage our long-term partnerships and assets like MLSE, Scene and Wealth businesses to generate growth across our division
• 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. Canadian Banking also provides an alternative self-directed banking solution to over 2 million Tangerine Bank customers.
STRATEGIC OUTLOOK
REVENUE MIX1
Retail
Wealth Commercial
Personal Loans
Business and Government Loans
AVERAGE LOAN MIX1
$3.6B $358B
Residential Mortgages
1 For the three months ended October 31, 2019; 2 3-5 year target from 2020 Investor Day; 3 Adjusted Net income attributed to equity shareholders
Credit Cards
MEDIUM-TERM FINANCIAL OBJECTIVES
Target2
NIAT Growth3 5%+
Productivity Ratio <44%
Operating Leverage Positive
22
Canadian Banking Margin expansion, strong deposit growth, positive operating leverage
$MM, except EPS Q4/19 Y/Y Q/Q Reported
Net Income1 $1,143 +3% (1%) Pre-Tax, Pre Provision Profit $1,787 +5% (1%)
Revenue $3,566 +4% +1%
Expenses $1,779 +2% +3%
PCLs $247 +25% +3% Productivity Ratio 49.9% (80 bps) +110 bps
Net Interest Margin 2.47% +2 bps (2 bps) PCL Ratio2 0.27% +4 bps -
PCL Ratio Impaired Loans2 0.28% +6 bps (1 bp)
Adjusted3
Net Income1 $1,160 +1% (1%) Pre-Tax, Pre Provision Profit $1,811 +4% (1%)
Expenses $1,755 +3% +3% Productivity Ratio 49.2% (30 bps) +90 bps
YEAR-OVER-YEAR HIGHLIGHTS
1 Attributable to equity holders of the Bank 2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 3 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions
• Adjusted Net Income up 1%3
o Lower real estate gains reduced net income growth by 2%
o Margin expansion. Higher PCLs o Wealth Management earnings up 15%
• Revenue up 4% o Net interest income up 5% o Excluding M&A and IFRS 15, revenue was up 3%
• Loan growth of 5% o Residential mortgages up 5%; credit cards up 6%
o Business loans up 11% • Deposit growth of 9%
o Personal up 6%; Non-Personal up 16%
• NIM up 2 bps o Primarily driven by the impact of prior rate
increases • Expenses up 3%3
o Technology and regulatory initiatives
o Excluding M&A and IFRS15, expenses were up 2% • Quarterly operating leverage of +0.6%3 ; full-year
operating leverage flat3
• PCL ratio2 up 4 bps to 27 bps
2.45% 2.44% 2.46% 2.49% 2.47%
ADJUSTED NET INCOME1,3 ($MM) AND NIM (%)
1,160 1,146 1,089 1,062 1,174
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
23
Canadian Banking: Financial Performance High quality retail loan portfolio: ~92% secured
1 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data 2 Spot Balance as of October 31, 2019
DOMESTIC RETAIL LOAN BOOK2
79%
3% Credit Cards
5% Unsecured
13% Automotive
Real Estate Secured Lending
$300.8B
• High quality residential mortgage portfolio o 39% insured; remaining 61% uninsured has a LTV of 55%1
• Market leader in auto loans o $38.6 billion auto loan portfolio with 7 OEM relationships (3 exclusive)
o Prime Auto and Leases (~91%)
o Stable lending tenor with contractual terms for new originations averaging 78 months (6.5 years) with projected effective terms of 54 months (4.5 years)
• Growth opportunity in credit cards o $7.7 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: over 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
24
Canadian Banking: Residential Mortgages High quality, diversified portfolio
$102.4
$31.5 $27.1 $14.5 $10.9 $8.8
$14.2
$10.7 $3.7
Ontario BC & Territories Alberta Quebec Atlantic Provinces Manitoba &Saskatchewan
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: $227B (SPOT BALANCES AS AT Q4/19, $B)
% of portfolio 51.5% 18.6% 13.6% 7..2% 4.9% 4.2%
$1.9 $0.2 $0.7
Freehold - $195B Condos - $32B $116.6
$42.2 $30.8
$16.4 $11.1 $9.5
39%
61% Uninsured
Total Portfolio:
$227 billion
Insured
• Residential mortgage portfolio of $227 billion: 39% insured; LTV 55% on the uninsured book1 o Mortgage business model is “originate to hold”
o New originations2 in fiscal year 2019 had average LTV of 64.5%
o Majority is freehold properties; condominiums represent approximately 14.1% of the portfolio
• Three distinct distribution channels: all adjudicated under the same standards o 1. Broker (~62%); 2. Branch (~18%); and 3. Mobile Salesforce (~20%)
o Our recently launched Scotiabank eHOME digital mortgage solution is emerging as our 4th distribution channel. Most recently, we launched the ability for Canadians to get pre-approved online with a credit decision and a pre-approval letter in just minutes – another first for the industry. We have also partnered with the Canadian Real Estate Association (CREA) to enable customers to search for a home directly within eHOME, making the entire home-buying journey digital
25
FICO is a registered trademark of Fair Isaac Corporation 1 FICO ® distribution for Canadian uninsured portfolio based on score ranges at origination 2 Percentage is based on Total Mortgages
Canadian Residential Mortgages: LTVs Credit fundamentals remain strong
4% 11% 12% 15%
58%
< 635 636 - 706 707 - 747 748 - 788 > 788
Q4/18 Q3/19 Q4/19
Canada
Total Originations ($B) 10.5 14.0 13.3
Uninsured LTV 63% 64% 65%
GTA Total Originations ($B) 3.2 4.5 4.2
Uninsured LTV 62% 63% 64%
GVA Total Originations ($B) 1.1 1.6 1.6
Uninsured LTV 59% 61% 64%
Average FICO® Score Canada 788
GTA 790 GVA 794
• Only <0.77% of uninsured portfolio2 has a FICO® score of <620 and an LTV >65%
• Canadian uninsured mortgage portfolio is $139 billion as at Q4/2019
FICO® DISTRIBUTION – CANADIAN UNINSURED PORTFOLIO1
GTA 64%
ON 65%
QC 68%
Prairies 69%
GVA 64%
BC &
Territories 65%
Atlantic Provinces
67%
NEW ORIGINATIONS UNINSURED LTV* DISTRIBUTION
*Average LTV ratios for our uninsured residential mortgages originated during the quarter
26
Canadian Housing Market Return to equilibrium
Volume of Home Sales Near 10-Year Average*
*Seasonally adjusted *Actual – not seasonally adjusted
Canada’s Five Largest Metropolitan Areas*
*Actual – not seasonally adjusted
Significant Moderation in Price Growth*
0
5
10
15
20
25
Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18High-ratio mortgages Low-ratio mortgages Total mortgages
Decline in Share of High-Risk Mortgages
% Share of new mortgages with a loan-to-income ratio greater than 450%
Sources: Scotiabank Economics, Bank of Canada Financial System Review 2019.
Mortgage insurance
rules tightened
B-20 guideline
revised
20
25
30
35
40
45
50
07 08 09 10 11 12 13 14 15 16 17 18 19Sources: Scotiabank Economics, CREA.
Units, 000s
10-year monthly moving avg.
Monthly home sales
-10
-5
0
5
10
15
20
25
06 07 08 09 10 11 12 13 14 15 16 17 18 19Sources: Scotiabank Economics, CREA.
Aggregate Composite MLS Home Price Index Y/Y Percentage Change
-8
-6
-4
-2
0
2
4
6
8
10
GTA GVA Montreal Calgary EdmontonSources: Scotiabank Economics, CREA.
MLS Home Price Index Benchmark Price Y/Y Percentage Change
5.82
-6.44
7.61
-2.27 -2.44
Average0.46
27
Canadian Consumer Indebtedness
-5
0
5
10
15
20
25
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
25
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
• Policy changes have moderated the growth in household credit
• Consumer loans excluding mortgages (i.e. credit cards, HELOCs, unsecured LOC, auto loans, etc.) grew at an 3.1% annual rate in Q3/19 vs > 5% in late 2017
• Mortgage credit grew at 4.0% annually in Q3/19 vs 2008 peak of 13%
Household Credit Growth Consumer Loan Growth Residential Mortgage Growth
-5
0
5
10
15
20
25
00 02 04 06 08 10 12 14 16 18
%, 3-month moving average
m/m % change, SA
Sources: Scotiabank Economics, Bank of Canada.
y/y % change
28
Households are in Better Shape Than Reported
Sources: Statistics Canada, CBA, Scotiabank Economics
Household Net Worth vs Debt Default Rates Remain Low
0
100
200
300
400
500
600
700
800
900
1000
90 93 96 99 02 05 08 11 14 17
% of 4Q-moving-sum disposable Income
Household net worth as% of disposable income
Household debt todisposable income
0.1
0.2
0.3
0.4
0.5
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
04 06 08 10 12 14 16 18
%
Remain Low
%
Credit carddelinquency rate
(90+ days),LHS
Percent of mortgage arrears,
RHS
• Consumer balance sheets have improved faster than the growth rate in debt to disposable income
Canadian Consumer Indebtedness
29
Automotive Finance Canada’s leader in automotive finance
• Provide personal and commercial dealer financing solutions, in partnership with seven leading global automotive manufacturers in Canada
• Portfolio grew 4%1 year-over-year
o Personal up 5%, Commercial down 4%
1 For the three months ended October 31, 2019; 2 Data as at June 2019; 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, data for October 19 originations; 5 Includes BMO, CIBC, RBC, Scotiabank, TD, HSBC, Canadian Western Bank, Laurentian Bank, data as of March 2019
39%
61%
Market Share2
24%
76%
28%
72%
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/LAND ROVER
HYUNDAI CHRYSLER TESLA GM 79%
8%
13%
AVERAGE ASSET MIX
$44.6B1
100% Secured
Commercial
Near-Prime Retail
Prime Retail
30
Award Winning
Approach No. 1 in Client Satisfaction:
ranked highest among mid-sized banks for 8th
year in a row by J.D. Power.
Speed & Agility
Rapid Labs: Agile best practices
enable quick & efficient new product & feature
delivery.
Client Driven Innovation
Incubator: Identify, explore, and pilot
new technologies & solutions to meet evolving
Client needs.
Modern Platform
Onboarding in < 7 minutes: 96% digital onboarding;
Scalable model, platforms and systems enabling constant innovation.
Partnership Focus
Power of Partnership: Strong partnerships with MLSE as the Official Bank
of the Raptors, SCENE, Cineplex and Scotiabank.
| Canada’s #1 Digital Bank
Leading Edge Brand Experience
STRATEGIC FOCUS:
• Enhanced customer experience through digital moments • Best in class onboarding and security
• Focused on driving national brand awareness and new client acquisition as the Official Bank of the Raptors
• Deepening client relationships through introducing SCENE Loyalty program to Tangerine customers
• Focused product innovation to enhance client offering
• AI-driven approach to help Canadians achieve their financial goals
Customer Experience Leadership
Product Innovation
Strategic Partnerships
2.3 million
Clients
No.1 NPS
Industry Leading Client Experience
No.1 Credit Card
Ranked highest in Credit Card Satisfaction by J.D. Power
No.1 Mid-Sized Bank
Ranked No. 1 Mid-Sized Bank in Client Satisfaction by J.D. Power
31
Business Line Overview
International Banking
32
International Banking Leading P&C bank focused on high quality growth markets in Latin America and the Caribbean
• International Banking operates primarily in Latin America and the Caribbean with a full range of personal and commercial financial services. Core markets are the Pacific Alliance countries of Mexico, Peru, Chile and Colombia
STRATEGIC OUTLOOK
MEDIUM-TERM FINANCIAL OBJECTIVES
70% 24%
6%
REVENUE1
$3.4B
Asia
C&CA Latin America
25% Mexico
26% Peru
23% Chile 17%
Colombia
9% Other Latin
America
51%
27%
16%
6% LOAN MIX1
$153B Credit Cards
Personal Loans
Residential Mortgages
Business Loans
• Optimize Footprint: Continue executing with discipline announced acquisitions and divestitures to enhance the risk profile of our portfolio and improve quality of our earnings
• Lead in Customer Experience and Digital: Continue accelerating our digital transformation to amplify business impact and continue deploying digital solutions to other channels to optimize our distribution model
• Accelerate Growth Drivers: Leverage new strategic partnership to accelerate insurance growth, scale our Capital Markets business in the Pacific Alliance and build our Wealth business with focus in affluent customer segment
1 For the 3 months ended October 31, 2019; 2 3-5 year target from 2020 Investor Day; 3 Excluding divestitures impact
91% PAC
Target2
NIAT Growth3 9%+
Productivity Ratio <50%
Operating Leverage Positive
33
The Bank of the Pacific Alliance (PAC)
1 10 million customers in PAC including affiliates
Only universal bank with full presence in all Pacific Alliance countries
Well-established bank with 30+ years of experience in the region
8 million1 Retail and ~30,000 Corporate & Commercial customers >100 multi-national corporate customers within the Pacific Alliance
Pacific Alliance contributes ~80% of IB’s earnings
Competitive scale in each market
34
PAC Fundamentals Driving Growth
Strong Governance
Sound Macro Environment
Favourable Demographics
● Democratic countries with open economies
● Independent central banks with inflation targets
● Free trade agreements and free-floating currencies
● Business-friendly environments
● Diversified economies with strong GDP growth
● Resilience to economic and political cycles
● Investment Grade-rated
● Low Debt/GDP ratios with lower fiscal deficits compared to G7
● Increasing adoption of banking services
● 225 million people with median age of 30 years
● Strong domestic consumption
● Much lower banking penetration compared to Canada
● Among the fastest growing smartphone markets in the world
● Considerable growth in middle class
35
Resilience of the Pacific Alliance
+2.9% +3.0% +2.7% +3.1%
+2.3% +1.6%
2019F 2017 2014 2015 2016
+1.8%
2018 2020F
Social Unrest
Election & Trade Dispute
Notable Events (by country)
Average Annual GDP Growth
Election Low Oil Prices
Election & Odebrecht
International Banking Earnings
(C$B) $1.7 $1.9 $2.1 $2.4 $2.8 $3.2
No events
+13% CAGR
Approximate GDP Impact on country
-2.2%1 -1.5%4 -2.6%2 -1.5%3
NOTE: Pacific Alliance GDP growth calculated based on mean average of the four PAC countries 1 2013 GDP growth rate vs. 2014 – 2017 average; 2 2014 vs. 2015 – 2017 average; 3 2016 vs. 2017; 4 2016 vs. 2017 – 2019 average; 5 Estimated impact in 2020F due to social unrest; Source: Past GDP data from IMF; forecast from Scotiabank Economics
-1.8%5
36
Increasing Banking Penetration
Brazil Chile
Canada
MexicoPeru
Colombia
Spain
U.S.
U.K.
PAC4
Mature Markets
Bubble size represents nominal GDP
Growth Markets
Czech Republic
Cambodia
C&CA PAC
Scotia P&C Markets
Scotia Americas Wholesale Markets
Other Markets
1 Source: World Bank Open Data 2018. Banking Penetration is defined as account ownership at a financial institution or with a mobile-money-service provider (% of population ages 15+) 2 Source: World Bank Open Data 2018. GDP per capita is nominal gross domestic product divided by mid year population
$0 $10,000 $20,000 $70,000 $60,000 $50,000 $40,000 $30,000
GDP per Capita (US$)2
150
100
50
0
Bank
ing
Pene
trat
ion
(%)1
37
International Banking Positive operating leverage and strong balance sheet growth
$MM, except EPS1 Q4/19 Y/Y Q/Q Reported
Net Income2 $733 +1% (6%) Pre-Tax, Pre Provision Profit $1,579 +12% (3%)
Revenue $3,374 +10% 0% Expenses $1,795 +7% 3%
PCLs $502 +27% +8% Productivity Ratio 53.2% (170 bps) +130 bps
Net Interest Margin3 4.43% (9 bps) (2 bps) PCL Ratio4 1.34% +29 bps +10 bps
PCL Ratio Impaired Loans4 1.26% +6 bps (10 bps)
Adjusted5
Net Income2 $781 +4% (4%) Pre-Tax, Pre Provision Profit $1,662 +14% (1%)
Expenses $1,712 +6% +1% PCLs $502 +27% +8%
Productivity Ratio 50.7% (230 bps) +40 bps
YEAR-OVER-YEAR HIGHLIGHTS1
• Adjusted Net Income up 4%2,5 and Adjusted PTPP
up 14%5 on a constant currency basis
o Alignment of reporting period and the impact of closed divestitures reduced net income growth by 5%
o Strong growth across the Pacific Alliance, and strong positive operating leverage
o Lower tax benefits and last year’s credit recoveries in Puerto Rico and Latin America
• Revenues up 10%
o Good growth in Non interest income driven by higher investment gains and banking fees
• Loans up 8% o Pacific Alliance up 10%
• NIM down 9 bps o Primarily driven by margin compression in
Mexico and Chile o NIM down 2 bps Q/Q
• Expenses up 6%5 o Business volume growth and technology costs o Productivity ratio improvement of 230 bps5
• Quarterly operating leverage of +4.8%5, full-year operating leverage +4.3%5
• PCL ratio on impaired loans4 increased 6 bps
4.52% 4.52% 4.58% 4.45% 4.43%
746 805 787 815 781
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
ADJUSTED NET INCOME2,5 ($MM) AND NIM3 (%)
1 Y/Y and Q/Q growth rates (%) are on a constant dollars basis, while metrics and change in bps are on a reported basis 2 Attributable to equity holders of the Bank 3 Net Interest Margin is on a reported basis 4 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 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
38
337 465
666 579
Scotiabank in Mexico
All figures in CAD$
Constant currency 1 Includes bank and wealth branches; does not include 177 Credito Familiar branches 2 Adjusted; WY 2019 3 WY 2019 including goodwill 4 Source: CNBV as of November 2019 5 After NCI on an adjusted basis
22.9%
13.7% 13.2% 12.2%
7.7% 7.5% 4.8%
3.4% 2.0%
BBVA Banorte Santander Citi HSBC Scotiabank Inbursa Bajio Regio
2016 2017 2018
NIAT5
+20% CAGR
Footprint
Balance and Market Position
Financial Performance
~3.5 million
Customers Employees
~12,000
Branches1
~592
Average Loans Loan Market Share4
Average Deposits
7.5% $30 billion
$25 billion
ROE2 Total NIAT2, 5 Productivity2
$579 million
19.6% 55.4%
Productivity Ratio
2017 2018 2016 2019
63.0%
58.6%
55.0% 55.4%
2019
Market Position by Loans4
Operating Leverage
2017 2018 2016 2019
1.5%
7.5% 6.9%
-0.9%
2019
39
572 604 688
810
Scotiabank in Peru
All figures in CAD$
Constant currency 1 Including subsidiaries 2 Adjusted, WY 2019 3 WY 2019 including goodwill 4 Market share as of October 2019. Scotiabank includes SBP, CSF and Caja CAT 5 After NCI on an adjusted basis
Market Position by Loans4
NIAT5
+12% CAGR
31.7%
19.4% 18.1% 11.9%
BCP BBVA Interbank +79 -138 -18 +118
Scotia
Footprint
Balance and Market Position
Financial Performance
4.0 million
Customers1 Employees1
12,000
Branches1
314
Average Loans Loan Market Share4
Average Deposits
18.1% $21 billion
$19 billion
ROE2, 3 Total NIAT2 Productivity2
$810 million
25.6% 35.2%
Productivity Ratio
2017 2018 2016 2019
40.0% 39.3%
37.5%
35.2%
Operating Leverage
7.9%
1.8%
5.0%
6.8%
2017 2018 2016 2019
2016 2017 2018 2019
3-Year Change (bps)
40
339 381 515 718
Scotiabank in Chile
All figures in CAD$
Constant currency 1 Includes affiliates & consumer microfinance 2 WY 2019 3 WY 2019 ROE including goodwill. Local GAAP ROE 13.5% 4 Market share as of November 2019. Local view, exclude offshore loans. Source: CMF 5 NIAT Before NCI
NIAT5
+28% CAGR
Footprint
Balance and Market Position
Financial Performance
>3 million
Customers1 Employees
~9,000
Branches1
162
Average Loans Loan Market Share4
Average Deposits
14.1% $47 billion
$24 billion
ROE2, 3 Total NIAT2 Productivity2
$718 / $524 (Pre-NCI / Post-NCI)
million
8.7% 43.4%
Productivity Ratio
53.6%
49.5%
44.7% 43.4%
Market Position by Loans4
18.4 16.8
14.1 13.8 13.7
9.9
Santander Chile Estado BCI Itaú Scotiabank
Operating Leverage
2017 2018 2016 2019 2017 2018 2016 2019
-2.3%
8.5%
13.3%
4.3%
2016 2017 2018 2019
41
38 73 85
139
Scotiabank in Colombia
All figures in CAD$
Constant currency 1 As of November 2019 2 Adjusted; WY 2019 3 WY 2019 including goodwill 4 Market share as of October 2019
5 Members of AVAL Group: Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas. AVAL is 2nd in market share in terms of Loans (25%) and 1st in Deposits (27%) 6 After NCI on an adjusted basis
NIAT6
+53% CAGR
Footprint
Balance and Market Position
Financial Performance
Customers Employees
~9,000
Branches1
188
Average Loans Loan Market Share4
Average Deposits
6.0% $12 billion
$10 billion
ROE2, 3 Total NIAT2 Productivity2
$256 / $139 (Pre-NCI / Post-NCI)
million
9.0% 55%
Market Position by Loans4
3.1 million
26.0%
15.9% 12.1%
10.2% 6.0% 6.0%
4.4%
Bancolombia Scotiabank Colpatria
Davivienda Bogotá5 BBVA Occidente5 Corpbanca
Productivity Ratio
50.3% 52.6% 53.4%
54.5%
Operating Leverage
1.6%
-6.4%
-1.8% -2.4%
2017 2018 2016 2019 Q3 YTD
2017 2018 2016 2019
2016 2017 2018 2019
42
Other Regions Leading Caribbean & Central American franchise
Caribbean & Central America • Longstanding, diversified franchise serving retail, commercial, and corporate customers • Major markets include the Dominican Republic, Jamaica, Trinidad & Tobago, Costa Rica, Panama and The Bahamas • Sharpened geographic footprint by exiting higher risk, low growth jurisdictions including Haiti, El Salvador, Puerto Rico
and 7 of the Leeward Islands
Dominican Republic: #4 bank • Acquired Banco Dominicano del Progreso in 2019
Asia Thailand: 6% interest in TMB Bank
• Reduce investment in Thailand in Q1/20 resulting ~6% TMB Bank
China: 19.9% interest in Bank of Xi’an • CAD $815MM carrying value as of October 31, 2019 • CAD $496MM of net income for twelve months ended October 31, 2019
43
Business Line Overview
Global Banking & Markets
44
Global Banking and Markets Second-largest Canadian wholesale banking and capital markets business
43%
43%
9%
5%
GEOGRAPHIC REVENUE1
$1.2B
• Full-service wholesale bank the Americas, with operations in 21 countries, serving clients across Canada, the United States, Latin America, Europe and Asia-Pacific
STRATEGIC OUTLOOK
Europe
Canada
US
Asia
54%
29%
17% REVENUE BY BUSINESS LINE1
$1.2B
Business Banking
FICC
Global Equities
• Client Focus: Increase our relevance to our corporate clients and drive alignment of resources with the most significant revenue opportunities, to capture more of the non-lending wallet
• Strengthen our capital markets offering: Enhance distribution and product capabilities and deepen institutional relationships
• Build on our presence in the Americas: Enhance our franchise in Canada, continue to pursue targeted, phased growth in the U.S., create a top-tier local and cross-border Pacific Alliance business, and leverage Europe and Asia for distribution of our Americas product in support of our corporate clients
1 For the 3 months ended October 31, 2019; 2 3-5 year target from 2020 Investor Day
MEDIUM-TERM FINANCIAL OBJECTIVES
Target2
NIAT Growth ~5%
Productivity Ratio ~50%
Operating Leverage Positive
45
Global Banking and Markets Strong loan and deposit growth. Capital markets strength in Fixed Income.
$MM, except EPS Q4/19 Y/Y Q/Q
Reported Net Income1 $405 (3%) +8%
Pre-Tax, Pre Provision Profit $539 +4% +10%
Revenue $1,170 +9% +8%
Expenses $631 +14% +6%
PCLs $4 N/A N/A
Productivity Ratio 54.0% +250 bps (70 bps)
Net Interest Margin 1.59% (13 bps) (2 bps)
PCL Ratio2 0.02% +11 bps +3 bps
PCL Ratio Impaired Loans2 0.05% +12 bps +6 bps
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
• Net Income down 3% Y/Y
• Revenue up 9% o Non-interest income up 13%
• Loans up 13%
o Strong corporate loan growth across Canada and the U.S.
• Deposits up 23%
• Expenses up 14%
o Expenses up 6% Q/Q
o Compliance and technology investment for regulatory requirements and higher performance and share based compensation
• PCL ratio2 at 2 bps
416
335 420
374
405
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
NET INCOME1 AND ROE 15.3%
11.5% 15.2%
12.8% 13.8%
46
Scotiabank in the U.S.
• Client focus is S&P 500, investment grade corporates
• Current sectors of strength include Power & Utilities and Energy, and focus areas for growth include Real Estate, Technology, and Healthcare
• Wholesale presence in the US: corporate & investment banking, capital markets, cash management and trade finance
• Top 15 foreign bank (FBO) in the US
>4,000
Clients Employees
~700
Offices
5
Average Loans Revenue Average Deposits
$43 $57
ROE1 Total NIAT1 Productivity1
$777 18.7% 46.2%
$1,896 billion million billion
million
1 Fiscal 2019
47
Business Line Overview
Global Wealth Management
48
Global Wealth Management Profitable, High Growth, Strong Momentum
• Global Wealth Management is focused on delivering comprehensive wealth management advice and solutions to clients across Scotiabank’s footprint
1 Net income attributable to equity holders 2Figures adjusted for Acquisition and divestiture-related amounts, including Day 1 PCL on acquired performing loans, integration and amortization costs related to current acquisitions, amortization of intangibles related to current and past acquisitions and losses/(gains) on divestitures and related costs 3Excluding Other segment 43-5 year target from 2020 Investor Day
MEDIUM-TERM FINANCIAL OBJECTIVES
Competitive Advantages
Asset Management: Proprietary and 3rd Party Fund Distribution Advisory: Fully-integrated advice model, including Private Banking
2.5 million
Customers Employees
8,000
Countries
14
Assets Under Management Assets Under Administration
$497 $302
Productivity Ratio NIAT1,2,3 % of All Bank Earnings Operating Leverage
13.2% 63.1% Positive
billion billion
Target4
Earnings Growth 8%+
Productivity Ratio <65%
Operating Leverage Positive
49
286 286 303 313 314
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
Global Wealth Management Profitable, High Growth, Strong Momentum
$MM, except EPS Q4/19 Y/Y Q/Q
Reported Net Income1 $299 +16% (1%)
Pre-Tax, Pre Provision Profit $405 +13% (3%)
Revenue $1,149 +9% +1%
Expenses $744 +8% +3%
PCLs - N/A N/A
Productivity Ratio 64.8% (110 bps) +140 bps
Adjusted3
Net Income1 314 +10% -
Pre-Tax, Pre Provision Profit 424 +7% (1%)
Expenses 725 +11% +3%
Productivity Ratio 63.1% +90 bps +90 bps
YEAR-OVER-YEAR HIGHLIGHTS
1 Attributable to equity holders of the Bank 2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 3 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions
• Adjusted Net Income up 10%3
o Reflects full quarter of MD Financial results in 2019 (closed October 3, 2018)
o Strong net sales and market appreciation
• Revenue up 9%
o Driven by full quarter impact of acquisitions, higher mutual fund revenues and higher net interest income
• Expenses up 11%3
o Driven by full quarter impact of acquisitions
• Strong AUM / AUA growth
o Strong net sales of Retail Mutual Funds
o Market appreciation
ADJUSTED NET INCOME1,3 ($MM)
50
Global Wealth Management: Profitable, High Growth, Strong Momentum
Adv
isor
y A
sset
Man
agem
ent
Can
ada
Inte
rnat
iona
l
Full Service Brokerage
Institutional Funds
Retail Mutual Funds
Private Banking
Private Investment Counsel
Discount Brokerage
Trust
Mexico AUM
Chile AUM
1st 2nd 3rd 4th 5th 6th
Blackrock
BANCO SECURITY
Peru AUM Credifondo Continental Interfondos Fondos Sura
Sources: IFIC, Strategic Insight Reports
51
Risk Overview
52
93%
7% Secured
Unsecured
64%
8% 7% 5%
5% 5% 4% 2%
Canada
Chile
U.S.
C&CA
Other International
Mexico
Peru
Colombia
0.4%
0.5%
0.5%
0.7%
0.8%
1.0%
1.1%
1.4%
1.6%
1.8%
2.2%
2.2%
2.3%
2.6%
2.7%
4.6%
5.3%
5.6%
Chemicals
Metals
Forest Products
Hospitality and Leisure
Sovereign
Health Care
Mining
Food and Beverage
Transportation
Utilities
Agriculture
Technology and Media
Automotive
Other
Energy
Wholesale and Retail
Real Estate and Construction
Financial Services
Risk Snapshot
1 % of total loans and acceptances as at October 31, 2019 2 Retail loans as at October 31, 2019
RWA Breakdown Credit Exposure by Country1 Credit Exposure by Sector1
Canadian Banking Loans2 International Banking Loans2
87% 11%
2% Credit Risk
Operational Risk
Market Risk
67%
33%
Secured
Unsecured
$421B $611B1
$310B2 $74B2
53
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 (As a % of
Average Net Loans & Acceptances)
PCLs on Impaired
Loans
Total PCLs (adj.)
PCLs on Impaired
Loans
Total PCLs
PCLs on Impaired
Loans
Total PCLs
PCLs on Impaired
Loans
Total PCLs (adj.)
PCLs on Impaired
Loans
Total PCLs
Total Canadian Banking (%) 0.22 0.23 0.27 0.271 0.28 0.301 0.29 0.271 0.28 0.27 Total Canadian Banking ($MM) 188 198 229 233 233 252 256 240 255 247
Retail (%) 0.25 0.25 0.28 0.28 0.31 0.35 0.33 0.30 0.30 0.30 Retail ($MM) 181 179 201 202 220 245 242 218 226 227
Commercial (%) 0.06 0.15 0.21 0.231 0.09 0.061 0.10 0.161 0.20 0.14 Commercial ($MM) 7 19 28 31 13 7 14 22 29 20
Total International Banking (%) 1.20 1.051 1.23 1.281 1.29 1.301, 2 1.36 1.241 1.26 1.341 Total International Banking ($MM) 4662 4122 451 470 472 4773 522 476 477 502
Retail (%) 2.38 2.21 2.33 2.36 2.36 2.352 2.48 2.28 2.34 2.44 Retail ($MM) 412 384 416 421 421 4193 462 425 429 448
Commercial (%) 0.071 (0.06)1 0.19 0.261 0.27 0.301, 2 0.30 0.261 0.25 0.30 Commercial ($MM) 543 283 35 493 51 582, 3 60 513 48 543
Global Banking and Markets (%) (0.07) (0.09)1 (0.01) (0.07) (0.02) (0.02) (0.01) (0.01) 0.05 0.02 Global Banking and Markets $MM) (17) (20)3 (1) (16) (5) (6) (2) (4) 12 43
Other ($MM) - - - 1 - (1) - 1 - -3
All Bank (%) 0.42 0.391 0.47 0.471 0.49 0.511 0.52 0.481 0.49 0.501
All Bank ($MM) 637 590 679 688 700 722 776 713 744 753 1 Excludes provision for credit losses on debt securities and deposit with banks 2 On an adjusted basis; adjusted for Day 1 PCLs from acquisitions 3 Includes provision for credit losses on debt securities and deposit with banks of $nil in Canadian Banking (Q1/19: $2 million, Q2/19: -$1 million, Q3/19: -$1 million), -$3 million in International Banking (Q4/18: $41 million (impaired) and $40 million (total), Q1/19: $2 million, Q2/19: -$1 million, Q3/19: $1 million), -$1 million in Global Banking and Markets (Q4/18: $1 million) and $1 million in Other (Q1/19: -$1 million, Q2/19: $1 million)
Credit Performance by Business Lines
54
0.00%
0.50%
1.00%
1.50%
2.00%
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
PCL Ratio on Impaired Loans Historical Average - PCL Ratio on Impaired Loans (26 bps)
Historical PCL Ratios on Impaired Loans Credit fundamentals remain strong; PCLs on impaired loans in line with long-term average
1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures
ALL BANK: HISTORICAL PCL RATIO ON IMPAIRED LOANS1
CANADIAN BANKING: HISTORICAL PCL RATIO ON IMPAIRED LOANS1
Average: 26 bps
0.00%
0.50%
1.00%
1.50%
2.00%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
PCL Ratio on Impaired Loans Historical Average - PCL Ratio on Impaired Loans (44 bps)
2009: Higher PCLs driven by economic conditions, event distributed across business lines. Higher general allowance and sectoral allowance (automotive related)
Average: 44 bps
2002: Included $454 million related to the Bank’s exposure to Argentina
55
Canadian Retail: Loans and Provisions
1 95% are automotive loans 2 Includes Home Equity Lines of Credit and Unsecured Lines of Credit 3 Includes Tangerine balances of $6 billion 4 80% secured by real estate; 13% secured by automotive
MORTGAGES PERSONAL LOANS1
LINES OF CREDIT2 CREDIT CARDS
1 1 2 1 1 0 2 1 1 1
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
69 69 88 78 81
70 80
95 85 84
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
68 75 70
96
72 68 81 86
73 70
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
283
349 415
402
379 292
241
458
339
381
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
PCL as a % of avg. net loans (bps) PCLs on Impaired Loans as a % of avg. net loans (bps)
TOTAL RETAIL
25 28
31
33
30 25
28 35
30
30
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
Loan Balances Q4/19 Mortgages Personal Loans1 Lines of Credit2 Credit Cards Total
Spot ($B) $227 $41 $34 $8 $3103
% Secured 100% 99% 61% 3% 93%4
56
International Retail: Loans and Provisions
1 Adjusted for acquisition-related costs, including Day 1 PCL impact on acquired performing loans 2 Total includes other smaller portfolios
TOTAL RETAIL2 MEXICO
CHILE
PERU
206 199 218
208
163
216 233 231
203
246
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
Loan Balances Q4/19
Mexico Peru Chile Colombia C&CA Total2
Spot ($B) $13 $10 $25 $7 $18 $74
COLOMBIA
238
233
236 248
234 221
236
235 228
244
Q4/18 Q1/19 Q2/19 Q3/19 Q4/191
145
120 148 150 154
134
155 159 155 160
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
400
517
372
545 473
432
364
402 491
424
Q4/18 Q1/19 Q2/19 Q3/19 Q4/191
582 554 549 531 471
532 485 455
377 420
Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
PCL as a % of avg. net loans (bps) PCLs on Impaired Loans as a % of avg. net loans (bps)
CARIBBEAN & CENTRAL AMERICA
147
138 156 138 165
101
170 157 141
187
Q4/18 Q1/19 Q2/19 Q3/19 Q4/191
57
1.0
6.7
0.4 0.7
2.8
1.2 3.7
Energy Exposure1 High quality energy portfolio, reduced exposure to 2.7% of total loans from 3.1% in Q4/16
• Energy portfolio represents 2.7% of loans and acceptances outstanding, down from 3.1% in Q4/16
• 56% is rated Investment Grade (IG), up from 52% in Q4/16
• Watchlist3 reduced to 4.0% of total Energy outstandings from 13.6% as of Q4/16
1 As of October 31, 2019
2 May not add due to rounding 3 Includes Impaired accounts
4 RWA based on All Facility Types
Energy Exposure by Geography2
$16.6B (%IG)
Mexico (60%)
Canada (60%)
Latin America
(50%)
U.S. (44%)
Asia (95%)
Europe (43%)
C&CA (33%)
Loans and
Acceptances Outstanding ($B)
% of Total
Energy Exposure
% of Total Loans and Acceptances Outstanding
% Investment Grade
Total Exploration and Production 7.1 43% 1.2% 62%
Canadian E&P 3.6 21% 0.6% 76%
Western Canadian Select Exposure 1.3 8% 0.2% 93%
U.S. E&P 1.2 7% 0.2% 57%
Midstream 5.6 34% 0.9% 51%
Services 1.6 9% 0.3% 21%
Downstream 2.4 14% 0.4% 69%
Total Energy Exposure2 16.6 100% 2.7% 56%
58
Treasury and Funding
59
1 In addition to the programs listed, there are also CD programs in the following currencies: Yankee/USD, EUR, GBP, AUD, HKD
Funding Strategy Flexible, well-balanced and diversified funding sources
• Build customer deposits in all of our key markets
• Continue to reduce wholesale funding (WSF) while focusing on TLAC eligible debt
• Achieve appropriate balance between efficiency and stability of funding including maintaining pricing relative to peers
• Diversify funding by type, currency, program, tenor and markets
• Centralized funding strategy and associated risk management
Funding Strategy Funding Programs1
US Debt & Equity Shelf (senior / subordinated debt, preferred and common shares) Limit – USD 40 billion
Global Registered Covered Bond Program (uninsured Canadian mortgages) Limit – CAD 38 billion
CAD Debt & Equity Shelf (senior / subordinated debt, preferred and common shares) Limit – CAD 15 billion
EMTN Shelf Limit – USD 20 billion
START ABS program (indirect auto loans) Limit – CAD 15 billion
Australian MTN program Limit – AUD 8 billion
Singapore MTN program Limit – USD 7.5 billion
Halifax ABS shelf (unsecured lines of credit) Limit – CAD 7 billion
Principal at Risk (PAR) Note shelf Limit – CAD 6 billion
Trillium ABS shelf (credit cards) Limit – CAD 5 billion
USD Bank CP Program Limit – USD 35 billion
60
Wholesale Funding Wholesale funding diversity by instrument and maturity1,6,7
$249B
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 Q4/19. 7 May not add to 100% due to rounding.
38%
10% Mortgage
Securitization4
Bearer Deposit Notes, Commercial Paper &
Short-Term Certificate of Deposits
2% Asset-Backed
Commercial Paper3
27% Senior Notes
10% Covered Bonds
4% Subordinated
Debt5
$16 $15 $15
$10 $7
$15
$2
$4 $9
$4
$5
$2
$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
$22
$27
$19
$15
$9
$17 $3
4% Bail-inable Notes
3% Asset-Backed
Securities
2% Deposits from Banks2
61
$155
$156
$169
$172
$174
$170
$168 $179
$197
$197
$211 $221
$223
Q4/
16
Q1/
17
Q2/
17
Q3/
17
Q4/
17
Q1/
18
Q2/
18
Q3/
18
Q4/
18
Q1/
19
Q2/
19
Q3/
19
Q4/
19
Deposit Overview Stable trend in personal & business and government deposits
PERSONAL DEPOSITS (SPOT, CANADIAN DOLLAR EQUIVALENT, $B)
PERSONAL DEPOSITS
$199
$199
$202
$198
$200
$201
$204 $211
$215 $222
$225
$223
$225
Q4/
16
Q1/
17
Q2/
17
Q3/
17
Q4/
17
Q1/
18
Q2/
18
Q3/
18
Q4/
18
Q1/
19
Q2/
19
Q3/
19
Q4/
19
• Important for both relationship purposes and regulatory value
• Good momentum with 4.1% CAGR over the last 3 years
BUSINESS & GOVERNMENT DEPOSITS1
(SPOT, CANADIAN DOLLAR EQUIVALENT, $B)
1 Calculated as Bus& Gov’t deposits less Wholesale Funding, adjusted for Sub Debt
BUSINESS & GOVERNMENT • Gaining share of deposits through
leveraging of relationships
• 12.8% CAGR over the last 3 years
• Focusing on operational, regulatory friendly deposits
3Y CAGR – 4.1%
3Y CAGR – 12.8%
62
Wholesale Funding Utilization Managing reliance on wholesale funding and growing deposits
WHOLESALE FUNDING / TOTAL ASSETS REDUCED RELIANCE ON WHOLESALE FUNDING
• Operating in line with peers o Reduced reliance on wholesale funding o Sustained focus on deposits as an alternate to wholesale
funding
MONEY MARKET WHOLESALE FUNDING / TOTAL WHOLESALE FUNDING
FOCUS ON TERM FUNDING • Prudently using money market funding to
absorb short term funding requirements
37.7% 36.8% 36.0%
42.2%
Q4/
16
Q1/
17
Q2/
17
Q3/
17
Q4/
17
Q1/
18
Q2/
18
Q3/
18
Q4/
18
Q1/
19
Q2/
19
Q3/
19
Q4/
19
25.2%
23.8% 23.4% 22.9%
Q4/
16
Q1/
17
Q2/
17
Q3/
17
Q4/
17
Q1/
18
Q2/
18
Q3/
18
Q4/
18
Q1/
19
Q2/
19
Q3/
19
Q4/
19
63
Liquidity Metrics Well funded Bank with strong liquidity
• Liquidity Coverage Ratio (LCR) o Stable and sound management of liquidity o Net Stable Funding Ratio (NSFR) disclosure to commence Q1/20
125% 125%
128% 127%
125% 124%
128%
125% 123%
125%
Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
• High Quality Liquid Assets (HQLA) o Efficiently managing LCR and optimizing HQLA
$128 $127 $132 $140 $138 $144
$158 $158 $160 $165
Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19
Key Market Profiles
Appendix 1
65
Canadian Economy Diverse economy with a strong balance sheet
0
1
2
3
U.S. Canada Eurozone U.K. Japan
1.1
(0.8) (0.7) (1.4)
(2.0) (3.0) (3.3)
(5.6) -6
-5
-4
-3
-2
-1
0
1
2
Germany OECD* Canada U.K. Italy Japan France U.S.
AN
NU
AL
% C
HA
NG
E %
OF
GD
P
22.9 31.7
66.1 78.5 80.1 84.5
122.0 126.1
Canada Germany OECD France U.K. U.S. Italy Japan
Sources: Scotiabank Economics, Haver Analytics, Statistics Canada. Forecasts as of October 10, 2019.
GENERAL GOVERNMENT NET FINANCIAL LIABILITIES
% O
F G
DP
REAL GDP GROWTH
2000–2018 2019f–2021f
GOVERNMENT FINANCIAL DEFICITS
CANADIAN GDP BY INDUSTRY
(AUG 2019) 4.5%
12.4% 19.5%
7.6%
7.0% 6.7%
5.9%
15.6% 10.4%
10.3%
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
* Arithmetic mean of all OECD financial deficits as a % of GDP. Sources: Scotiabank Economics, IMF (2019 estimates). As of November 2019.
Sources: Scotiabank Economics, OECD (2019 estimates). As of November 2019.
66
Canada: Stable Economic Fundamentals Low unemployment rate reflects solid growth in Canadian economy
60
62
64
66
68
70
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
UNEMPLOYMENT RATE • Solid economic growth and a gradual rebound in non-energy exports
• Household spending remains buoyant, underpinned by relatively low and stable unemployment, as well as low borrowing costs
• Population and labour-force growth supported by increasing immigration
• Moderate inflation within Bank of Canada target band
HEADLINE INFLATION
02468
101214
90 92 94 96 98 00 02 04 06 08 10 12 15 17 19
%
U.S.
Canada – official
Sources: Scotiabank Economics, Statistics Canada, BLS. Data through October 2019.
-2
0
2
4
6
00 02 04 06 08 10 12 14 16 18
Sources: Scotiabank Economics, Statistics Canada, BLS. Data through October 2019 (Canada) and October 2019 (US).
LABOUR FORCE PARTICIPATION RATE
Sources: Scotiabank Economics, Statistics Canada, BLS. Data through October 2019.
U.S.
Canada Bank of Canada Target Inflation Band
y/y
% c
hang
e
%
U.S.
Canada
Canada – comparable
to U.S.
67
Population Growth: A Canadian Differentiator
Population Growth: A Canadian Differentiator
Sources: IMF, Scotiabank Economics
G7 Population Growth
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
08 09 10 11 12 13 14 15 16 17 18
Canada JapanUnited Kingdom United StatesEuro Area
p
annual % change
68
Housing Undersupplied, Prospects are Solid
Housing Undersupplied, Prospects Solid
Sources: Statistics Canada, Scotiabank Economics
Housing Supply Situation
0
40
80
120
160
200
240
10 11 12 13 14 15 16 17 18 19
Vancouver Toronto Calgary Montreal
completed & unabsorbed units per population aged 15 and over, index, 2010 = 100
69
Mexican Economy Diverse economy with a strong balance sheet
Top 5 Trading Partners
MEXICAN GDP BY INDUSTRY
(Q2 2019)
6.6%
16.0%
6.0%
6.7% 3.8%
1.9%
16.3% 17.7%
16.0%
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
3.2% 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
United States
59%
Others 20%
Germany 3% Japan 3%
Canada 4%
China 11%
5.8%
-5
-4
-3
-2
-1
0
1
2
3
4
5
16 17 18 19
Other*Net ExportsInventoriesInvestmentGovernmentConsumptionReal GDP
Contributions to Mexican GDP Growthy/y % change
*Statistical discrepancy, subject to revision.Sources: Scotiabank Economics, Haver Analytics.
70
Peruvian Economy Resilient economic fundamentals
PERUVIAN GDP BY INDUSTRY
(Q2 2019)
10.2%
14.1% 31.9%
20.8%
5.5% Finance, Insurance,
& Real Estate
Transportation, Information &
Commerce
Construction
Mining & Energy Other
12.3% Manufacturing
5.1% Natural
Resources
Top 5 Trading Partners
United States
18%
Others 43%
Brazil 5%
Spain 4%
South Korea 4%
China 27%
• 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 solid growth rates more sustainable in the future
-6
-4
-2
0
2
4
6
8
16 17 18 19
Net ExportsInventoriesInvestmentGovernmentConsumptionReal GDP
Contributions to Peruvian GDP Growthy/y % change
Sources: Scotiabank Economics, Haver Analytics.
71
Chilean Economy Advanced economy with wide-ranging trade links
CHILEAN GDP BY INDUSTRY (Sep 2019) 2.0%
9.3% 15.3%
6.3%
4.5% 19.4% 8.6%
8.6% 10.2%
12.4%
Finance, Insurance, & Real Estate Wholesale & Retail Trade
Manufacturing
Mining and Oil & Gas Extraction
Construction
Public Administration Housing & Personal
Services
Transportation & Warehousing
Restaurants & Hotels
Other
3.4% Natural Resources
Top 5 Trading Partners
United States
16%
Others 38%
Brazil 7%
Japan 6%
South Korea 4%
China 29%
• Chile’s mix of economic activities reflects its status as an advanced market economy
• Chile’s diversified trading relationships are supported by 23 free-trade agreements with 60 countries that account for 73% 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 19
Net ExportsInventoriesInvestmentGovernmentConsumptionReal GDP
Contributions to Chilean GDP Growthy/y % change
Sources: Scotiabank Economics, Haver Analytics.
72
Colombian Economy Gaining momentum
COLOMBIAN GDP BY
INDUSTRY (Q3 2019)
6.2%
17.6% 13.6%
6.6%
14.8% 6.9%
2.8%
9.1% 11.9%
8.1%
Finance, Insurance, & Real Estate
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
Top 5 Trading Partners
Ecuador 3%
United States
28% Others 42%
Brazil 5%
Mexico 6%
China 17%
• Services account for a rising share of Colombian GDP compared with traditional strengths in extractive industries
• Colombia continues to build on its 11 free-trade agreements with 46 countries that account for 41% 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
-6
-4
-2
0
2
4
6
8
16 17 18 19
Other*Net ExportsInvestmentGovernmentConsumptionReal GDP
Contributions to Colombian GDP Growth
y/y % change
*Statistical discrepancy, subject to revision.Sources: Scotiabank Economics, Haver Analytics.
Canadian Housing Market
Appendix 2
74
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
75
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 1 mn 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 CAD 0.5‒1.0 mn)
• 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
• Ontario: Measures to increase supply of available housing
Key aspects include:
o Greater authority over land use planning decisions for the province’s independent municipal dispute resolution body
o Reduced red tape on new residential developments
o Updated zoning regulations to facilitate building of affordable homes near transit
Additional Information
Appendix 3
77
Canada $3.5B Adds wealth management assets of $96B. Adds 110,000 potential primary customers. Expands wealth management offering.
Chile $2.9B Doubles market share. Creates 3rd largest bank. Further diversifies business.
Peru $0.2B Creates 2nd largest bank in credit cards. Further diversifies business.
Colombia $0.4B Creates market leader in credit cards.
Dominican Republic $0.4B Doubles customer base.
Creates 4th largest bank.
Increasing Scale via Strategic Acquisitions
Recent Acquisition Activity 2018-2019
78
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:
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
79
Contact Information
Investor Relations
Philip Smith Senior Vice President 416-863-2866
Lemar Persaud Director 416-866-6124
Funding
Mark Michalski Director, Strategy & Market Development,
Funding
416-866-6905
Judy Lai Director 416-775-0485
Steven Hung Vice President 416-933-8774
Christy Bunker SVP, CB Treasury, Term Funding
and Capital management
416-933-7974
Tiffany Sun Manager 416-866-2870