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Scotiabank reports fourth quarter and 2022 results

Scotiabank's 2022 audited annual consolidated financial statements and accompanying Management's Discussion & Analysis (MD&A) are available at www.scotiabank.com along with the supplementary financial information and regulatory capital disclosure reports, which include fourth quarter financial information. All amounts are in Canadian dollars and are based on our audited annual consolidated financial statements and accompanying MD&A for the year ended October 31, 2022 and related notes prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise noted.

 

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



Fiscal 2022 Highlights on a Reported Basis
(versus Fiscal 2021)
 

Fourth Quarter 2022 Highlights on a Reported Basis
(versus Q4, 2021)

•  Net income of $10,174 million, compared to $9,955 million         

•  Net income of $2,093 million, compared to $2,559 million

•  Earnings per share (diluted) of $8.02, compared to $7.70

•  Earnings per share (diluted) of $1.63, compared to $1.97

•  Return on equity(1) of 14.8%, compared to 14.7%

•  Return on equity of 11.9%, compared to 14.8%



Fiscal 2022 Highlights on an Adjusted Basis(2)
(versus Fiscal 2021)

Fourth Quarter 2022 Highlights on an Adjusted Basis(2)
(versus Q4, 2021)

•  Net income of $10,749 million, compared to $10,169 million

•  Net income of $2,615 million, compared to $2,716 million

•  Earnings per share (diluted) of $8.50, compared to $7.87

•  Earnings per share (diluted) of $2.06, compared to $2.10

•  Return on equity of 15.6%, compared to 15.0%

•  Return on equity of 15.0%, compared to 15.6%



Fiscal 2022 Performance versus Medium-Term Objectives

The following table provides a summary of our 2022 performance against our medium-term financial objectives:



Medium-Term Objectives

Fiscal 2022 Results


Reported

Adjusted(2)

Diluted earnings per share growth of 7%+                                                       

4.2 %

8.0 %

Return on equity of 14%+

14.8 %

15.6 %

Achieve positive operating leverage

Negative 2.4%

Negative 1.1%

Maintain strong capital ratios

CET1 capital ratio(3) of 11.5%    

N/A




TORONTO, Nov. 29, 2022 /CNW/ - Scotiabank reported net income of $10,174 million for the fiscal year 2022, compared with net income of $9,955 million in 2021. Diluted earnings per share (EPS) were $8.02, compared to $7.70 in the previous year. Return on equity was 14.8%, compared to 14.7% in the previous year.

Scotiabank Logo (CNW Group/Scotiabank)
Scotiabank Logo (CNW Group/Scotiabank)

Reported net income for the fourth quarter ended October 31, 2022 was $2,093 million compared to $2,559 million in the same period last year. Diluted earnings per share were $1.63, compared to $1.97 in the same period a year ago.

This quarter's net income included adjusting items of $504 million after tax. These consisted of a $66 million restructuring charge relating to the realignment of certain Global Banking and Markets businesses in Asia and an on-going technology modernization, $98 million of committed support costs relating to the expansion of our Scene+ loyalty program and a $340 million loss resulting from the sale of investment in associates in Venezuela and Thailand, as well as the wind down of operations in India and Malaysia mainly currency related.

Adjusted net income(2) was $10,749 million, up from $10,169 million in the previous year, and adjusted EPS was $8.50 versus $7.87 in the previous year.

Adjusted net income(2) for the fourth quarter ended October 31, 2022 was $2,615 million and adjusted EPS was $2.06, compared to $2.10 last year. Adjusted return on equity was 15.0% compared to 15.6% a year ago.

"This year, the Bank remained focused on leading through sound advice and delivering value to our customers, including launching the enhanced Scene+ loyalty program, which has since grown by more than one million new members and was further expanded with the addition of Empire Company Limited to the partnership. Our commitment to our customers has resulted in a number of prestigious recognitions, including Bank of the Year for Canada for the third year in a row from The Banker, Investment Bank of the Year for the Americas from The Banker, and Best Bank in Canada from Euromoney," said Brian Porter, President and CEO of Scotiabank.

Despite the uncertain and volatile operating environment, each of the four business lines contributed strongly to our consolidated fiscal year performance reflecting the diversified earnings power of the Bank.

Canadian Banking generated adjusted earnings of $4,779 million in 2022, an increase of 15% compared to the prior year. The increase was due primarily to higher revenues driven by strong growth of 14% in residential mortgages and a 21% increase in business banking loans, as well as lower provision for credit losses. Non-interest income grew 6%.

Global Wealth Management reported adjusted earnings of $1,583 million in 2022. Challenging market conditions drove declines in assets under management, impacting fee income, partly offset by strong growth in the advisory business and continued prudent expense management.

Global Banking and Markets generated earnings of $1,911 million, reflecting solid business banking performance, including strong loan growth momentum, while capital markets faced challenging market conditions. Provision for credit losses rose this year due to lower reversals, and expenses grew to support continued business investment.

International Banking delivered a strong rebound in adjusted earnings in 2022. Adjusted earnings of $2,446 million represented a 32% increase compared to the prior year. This was driven by strong commercial and residential mortgage loan growth, prudent expense management and lower provision for credit losses.

For fiscal 2022, the Bank exceeded its medium-term profitability targets on an adjusted basis, in terms of earnings per share growth and return on equity metrics. With a Common Equity Tier 1 capital ratio of 11.5%, the Bank remains well capitalized to support its strategic growth plans and return capital to shareholders. The quarterly dividend remains unchanged at $1.03 per common share.

This year, the Bank released its inaugural Net-Zero Pathways Report, which includes sector-specific decarbonization baselines and targets. The Bank has made significant progress in achieving its climate-related financing target, having mobilized a total of $96 billion in climate-related finance, up from $58 billion last year. In 2022, the Bank released its inaugural ScotiaRISE Impact Report, which highlights the program's first-year results, from the Bank's $500 million, 10-year community investment commitment. Since the launch of ScotiaRISE, the Bank has partnered with more than 200 community organizations and invested more than $60 million in communities across Scotiabank's footprint.

"I am exceedingly proud of what our team of 90,000 Scotiabankers has accomplished over the past 10 years. We have made strategic investments to refocus and strengthen our footprint and position the Bank for continued success over the long term. The Bank is stronger, more diverse, and more inclusive than it has ever been. Simply put, our Bank is a different bank today—one well-placed to deliver consistent long-term growth, and to cultivate our world-class culture, now and into the future," continued Mr. Porter. "It has been the privilege of my life to serve as the CEO of this storied institution. At 190 years old, Scotiabank is older than the country of Canada itself and as we look ahead to 2023, I have every confidence that the Bank's best days are yet to come."

_________________________________________

(1) Refer to page 133 of the Management's Discussion & Analysis in the Bank's 2022 Annual Report, available on www.sedar.com, for an explanation of the composition of the measure. Such explanation is incorporated by reference hereto.

(2) Refer to Non-GAAP Measures section starting on page 22.

(3) This measure has been disclosed in this document in accordance with OSFI Guideline - Capital Adequacy Requirements (November 2018).


Financial Highlights


As at and for the three months ended

As at and for the year ended


October 31


July 31


October 31 

October 31


October 31 


2022


2022


2021

2022


2021

Operating results ($ millions)









Net interest income

4,622


4,676


4,217

18,115


16,961

Non-interest income

3,004


3,123


3,470

13,301


14,291

Total revenue

7,626


7,799


7,687

31,416


31,252

Provision for credit losses

529


412


168

1,382


1,808

Non-interest expenses

4,529


4,191


4,271

17,102


16,618

Income tax expense

475


602


689

2,758


2,871

Net income

2,093


2,594


2,559

10,174


9,955

Net income attributable to common shareholders of the Bank

1,949


2,504


2,411

9,656


9,391

Operating performance









Basic earnings per share ($)

1.64


2.10


1.98

8.05


7.74

Diluted earnings per share ($)

1.63


2.09


1.97

8.02


7.70

Return on equity (%)(1)

11.9


15.3


14.8

14.8


14.7

Return on tangible common equity (%)(2)

15.0


19.2


18.7

18.6


18.7

Productivity ratio (%)(1)

59.4


53.7


55.6

54.4


53.2

Operating leverage (%)(1)






(2.4)


1.1

Net interest margin (%)(2)

2.18


2.22


2.17

2.20


2.23

Financial position information ($ millions)









Cash and deposits with financial institutions

65,895


67,715


86,323




Trading assets

113,154


118,605


146,312




Loans

744,987


713,378


636,986




Total assets

1,349,418


1,292,102


1,184,844




Deposits

916,181


879,582


797,259




Common equity

65,150


65,043


64,750




Preferred shares and other equity instruments

8,075


7,052


6,052




Assets under administration(1)

641,636


630,087


652,924




Assets under management(1)

311,099


319,612


345,762




Capital and liquidity measures









Common Equity Tier 1 (CET1) capital ratio (%)(3)

11.5


11.4


12.3




Tier 1 capital ratio (%)(3)

13.2


13.0


13.9




Total capital ratio (%)(3)

15.3


15.0


15.9




Total loss absorbing capacity (TLAC) ratio (%)(4)

27.4


28.4


27.8




Leverage ratio (%)(5)

4.2


4.2


4.8




TLAC Leverage ratio (%)(4)

8.8


9.3


9.6




Risk-weighted assets ($ millions)(3)

462,448


452,800


416,105




Liquidity coverage ratio (LCR) (%)(6)

119


122


124




Net stable funding ratio (NSFR) (%)(7)

111


109


110




Credit quality









Net impaired loans ($ millions)

3,151


2,695


2,801




Allowance for credit losses ($ millions)(8)

5,499


5,295


5,731




Gross impaired loans as a % of loans and acceptances(1)

0.62


0.58


0.67




Net impaired loans as a % of loans and acceptances(1)

0.41


0.36


0.42




Provision for credit losses as a % of average net loans and acceptances(1)(9)

0.28


0.22


0.10

0.19


0.29

Provision for credit losses on impaired loans as a % of average net loans and acceptances(1)(9)

0.26


0.21


0.31

0.24


0.53

Net write-offs as a % of average net loans and acceptances(1)

0.24


0.21


0.34

0.24


0.54

Adjusted results(2)









Adjusted net income ($ millions)

2,615


2,611


2,716

10,749


10,169

Adjusted diluted earnings per share ($)

2.06


2.10


2.10

8.50


7.87

Adjusted return on equity (%)

15.0


15.4


15.6

15.6


15.0

Adjusted return on tangible common equity (%)

18.7


19.2


19.6

19.5


19.0

Adjusted productivity ratio (%)

53.7


53.4


52.8

52.8


52.2

Adjusted operating leverage (%)






(1.1)


1.5

Common share information









Closing share price ($) (TSX)

65.85


78.01


81.14




Shares outstanding (millions)










Average – Basic

1,192


1,195


1,215

1,199


1,214


Average – Diluted

1,199


1,203


1,224

1,208


1,225


End of period

1,191


1,193


1,215




Dividends paid per share ($)

1.03


1.03


0.90

4.06


3.60

Dividend yield (%)(1)

5.7


5.2


4.5

5.1


5.2

Market capitalization ($ millions) (TSX)

78,452


93,059


98,612




Book value per common share ($)(1)

54.68


54.52


53.28




Market value to book value multiple(1)

1.2


1.4


1.5




Price to earnings multiple (trailing 4 quarters)(1)

8.2


9.3


10.5




Other information









Employees (full-time equivalent)

90,979


90,978


89,488




Branches and offices

2,384


2,392


2,518




(1)

Refer to page 133 of the Management's Discussion & Analysis in the Bank's 2022 Annual Report, available on www.sedar.com, for an explanation of the composition of the measure. Such explanation is incorporated by reference hereto.

(2)

Refer t...