Bank of Nova Scotia exceeded analysts' expectations for its second-quarter earnings, fueled by stronger profits in its capital markets, wealth management, and Canadian banking divisions. The bank reported adjusted net income of $2.65 billion, a 28% increase year over year, with adjusted earnings per share of $2.02, surpassing the consensus estimate of approximately $1.93 per share.
Strong Performance Across Key Segments
Scotiabank's net income for the three months ending April 30 reached $2.6 billion, compared to $2.03 billion in the same period last year, resulting in net earnings per share of $2.00. Non-interest income, which includes fees and charges, totaled $4.3 billion for the quarter, up from $3.8 billion a year earlier and $4.06 billion in the previous quarter.
CEO Scott Thomson stated, "The bank remains on track to achieve its financial objectives for fiscal 2026. Our focus on evolving our business mix drove strong fee income and wealth management revenues, along with sequential Canadian commercial and small business loan growth."
Dividend Increase and Credit Provisions
Scotiabank raised its quarterly dividend by four cents to $1.14 per share, payable on July 29. The bank's provisions for credit losses (PCLs) stood at $1.2 billion for the quarter, lower than the $1.39 billion reported a year ago but higher than the $1.17 billion in the previous quarter. Impaired loans increased in both periods.
Canadian and Global Business Results
The Canadian banking business generated earnings of approximately $935 million, a 53% increase from last year. The bank noted growth in day-to-day and savings deposits, along with solid positive operating leverage. Global wealth management earnings rose 19% year over year to $476 million, while global banking and markets earnings increased 11% to $457 million.
Broader Economic Context
As one of Canada's Big Six banks, Scotiabank's results offer insights into the broader economy. This reporting period marks the first since the start of the war on Iran, which has boosted energy prices and dampened the economic outlook. Analysts had expected higher profits across the Big Six but also anticipated that ongoing uncertainty would keep credit loss provisions elevated. Previously, PCLs were expected to decline in the second half of 2026.
Scotiabank reported its results alongside Bank of Montreal and National Bank of Canada on Wednesday. Royal Bank of Canada, Toronto-Dominion Bank, and Canadian Imperial Bank of Commerce are scheduled to report on Thursday.
