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01/10 19:42
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong capital markets revenue growth, conservative yet positive ROE targets, and disciplined capital deployment. Despite some concerns about international banking growth, the overall outlook remains optimistic with expected EPS growth, margin expansion, and strong fee revenue. The Q&A session further supports this with expectations of double-digit EPS growth in key segments and stable deposit growth, leading to a positive sentiment overall.
EPS (Earnings Per Share) EPS grew by 10% for the full year.
ROE (Return on Equity) Ended Q4 with an ROE of 12.5%, up 190 basis points year-over-year.
Efficiency Ratio Ended Q4 with an efficiency ratio of 54.3%, an improvement of 180 basis points versus the prior period.
Closed Referrals Closed referrals between Canadian retail, commercial, and wealth were $15 billion for the year, up 18% over last year.
P&C Deposits Increased mix of P&C deposits for the second year in a row.
Wholesale Funding Ratio Reduced wholesale funding ratio by 60 basis points this past year.
Loan-to-Deposit Ratio Loan-to-deposit ratio closed the year at 104%.
CET1 Ratio Ended the year with a CET1 ratio of 13.2% after repurchasing 10.8 million shares in fiscal 2025.
Q4 Earnings Delivered earnings of $2.6 billion or $1.93 per share, up 23% year-over-year.
Day-to-Day and Savings Deposits Day-to-day and savings deposits rose by 6% year-over-year.
Commercial Banking Pre-Tax Pre-Provision Earnings Full year pre-tax pre-provision earnings were up 21%, even as average loan balances declined by 1%.
Global Wealth Management Earnings Earnings were up 17% year-over-year, benefiting from strong AUM growth of 16%.
Global Banking and Markets Earnings Earnings were up 30% year-over-year, with ROE increasing by 320 basis points.
International Banking ROE ROE came in at almost 15%, up 110 basis points versus the prior year.
Global Asset Management Retail Net Sales Retail net sales improved by almost $7 billion in fiscal 2025.
Global Banking and Markets Underwriting and Advisory Fees Underwriting and advisory fees rose 35%, marking the best year in history for this metric.
Global Banking and Markets Loan Balances Loan balances were down 13%, but earnings in this division were up 30%.
Canadian Banking Earnings Earnings were $3.4 billion, down 9%, impacted by higher PCLs of approximately $600 million and lower margins due to rate cuts.
Global Wealth Management AUM Assets under management grew 16% year-over-year.
International Banking Earnings Earnings were $2.7 billion, up 1% year-over-year.
Canadian Banking Net Interest Margin Net interest margin was down 2 basis points year-over-year.
Canadian Banking Retail Savings Deposits Retail savings deposits grew 7% year-over-year.
Canadian Banking Retail Day-to-Day Balances Retail day-to-day balances grew 6% year-over-year.
Global Banking and Markets Capital Markets Revenues Capital markets revenues were up 43% year-over-year.
Global Banking and Markets Deposits Deposits were up 4% year-over-year.
International Banking Deposits Deposits were up 4% year-over-year.
International Banking Loans Loans were down 2% year-over-year.
New product capabilities: Focus on building out global transaction banking platform, enhancing technology platforms including AI investments, and adding new product capabilities to drive client primacy.
Mortgage+ program: Key contributor to growth in multiproduct banking relationships, driving deposits and cards growth.
Private asset funds: Launched 4 new private asset funds tailored for wealth and institutional investors.
Geographic diversification: Demonstrated benefits of geographic diversification in International Banking segment, with strong performance in Mexico, Peru, and Chile.
Davivienda transaction: Acquisition in Colombia creates additional scale and is immediately accretive with further upside from scale and diversification.
U.S. market expansion: Investments in U.S. capabilities, including cash management business and prime services, contributed to 50% of GBM earnings in fiscal 2025.
Efficiency improvements: Simplified Canadian operations, streamlined organizational setup, and reduced wholesale funding ratio by 60 basis points.
Technology investments: Increased technology spend in 2026 focused on AI, fraud monitoring, and enhancing client experience.
Balance sheet optimization: Accelerated balance sheet velocity and reduced GBM loan balances by 13% while increasing earnings by 30%.
Client primacy strategy: Added 400,000 primary clients and increased closed referrals between Canadian retail, commercial, and wealth by 18%.
Focus on natural resources: Aligned with Canada's renewed focus on natural resource development, supporting energy and mining sectors.
North American connectivity: Pursuing deeper connectivity across North America, optimizing global transaction banking, and leveraging international footprint.
Trade-related economic challenges: The company faced unexpected trade-related economic challenges in fiscal 2025, which could continue to impact operations and financial performance.
Restructuring charges: The company incurred restructuring charges to simplify Canadian operations, which, while necessary, indicate challenges in operational efficiency and cost management.
Macroeconomic uncertainty: The company operates in a highly uncertain macroeconomic environment, including shifting tariff policies and unclear trade negotiations, which could affect economic activity and business performance.
Credit losses: Higher provisions for credit losses, particularly in Canadian and International Banking, indicate potential risks in loan performance and credit quality.
Elevated unemployment: Elevated unemployment in Canada is contributing to stress in retail portfolios, particularly in unsecured lines and mortgages.
Consumer finance portfolio in Chile: Continued credit quality deterioration in Chile's consumer finance portfolio poses risks to the International Banking segment.
Political and economic uncertainty in International markets: Evolving political dynamics in Peru and Chile, as well as trade negotiations in Mexico, create risks for the International Banking segment.
Technology and operational investments: Increased technology spending to strengthen and grow the bank could strain resources if not managed effectively.
Loan and deposit growth challenges: Challenges in achieving balanced loan and deposit growth, particularly in International Banking, could impact financial performance.
Regulatory and tax changes: Higher tax rates and global minimum tax implementation could affect profitability.
Technology Investments: In 2026, technology spending will focus on building out the global transaction banking platform, enhancing technology platforms including AI investments, balancing security and client experience, and adding new product capabilities to drive client primacy.
Canadian Banking Growth: Fiscal 2025 laid the groundwork for stronger earnings growth in 2026, with improvements in client primacy, core deposits, and efficiency. Mortgage growth is outpacing commercial loans and cards, and the bank aims to accelerate card growth through the Scene+ loyalty program and Mortgage+ proposition.
Global Wealth Management: Strong earnings growth is expected in 2026, driven by sales momentum, growth in relationship managers, and expansion in Private Bank and ScotiaMcLeod.
Global Banking and Markets: Earnings are expected to grow modestly in 2026 after a strong fiscal 2025. Investments will continue in U.S. capabilities, including the build-out of the U.S. cash management business.
International Banking: Earnings are expected to be modestly higher in 2026, adjusting for divestitures. Growth in pretax pre-provision earnings is expected to be offset by slightly elevated loan loss provisions and a higher tax rate.
Overall Financial Outlook: The bank expects strong earnings growth in 2026, underpinned by growth in net interest income and noninterest revenue, lower credit loss provisions, and positive operating leverage. Double-digit EPS growth is anticipated despite an uncertain operating environment.
Capital and Liquidity: The bank remains committed to maintaining strong capital and liquidity ratios in 2026.
Canada's Economic Trajectory: Canada's renewed focus on natural resource development is expected to drive higher GDP growth and improved national prosperity over the medium term. The bank is well-positioned to support large-scale infrastructure projects in mining, energy, and critical infrastructure.
Dividend Program: No specific details about a dividend program were mentioned in the transcript.
Share Repurchase: The company repurchased 10.8 million shares in fiscal 2025, contributing to a CET1 ratio of 13.2%.
The earnings call highlights strong capital markets revenue growth, conservative yet positive ROE targets, and disciplined capital deployment. Despite some concerns about international banking growth, the overall outlook remains optimistic with expected EPS growth, margin expansion, and strong fee revenue. The Q&A session further supports this with expectations of double-digit EPS growth in key segments and stable deposit growth, leading to a positive sentiment overall.
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