Bank of Nova Scotia (NYSE:BNS) reported record third-quarter results for fiscal 2026, with management citing broad-based earnings strength, improving returns in Canadian Banking and continued growth in wealth management and capital markets.
The bank posted quarterly net income of C$3 billion and diluted earnings per share of C$2.28, up 21% from a year earlier. Adjusted return on equity reached 14.2%, exceeding the bank’s medium-term target of more than 14% earlier than management had anticipated.
Revenue growth and capital deployment
Revenue increased 16% year over year, supported by 12% growth in net interest income and a 21% increase in non-interest income. The bank said higher banking and wealth-management revenue, underwriting and advisory fees, commissions and income from associated corporations contributed to the gains.
Net interest margin rose 18 basis points from a year earlier, although it was unchanged sequentially. Margin gains in Canadian Banking and Global Banking and Markets were offset by lower margins in International Banking, where the prior quarter included seasonal benefits.
Expenses rose 14%, reflecting higher performance-based and share-based compensation, as well as greater technology spending. Technology investment increased 16% to C$1.5 billion during the quarter. Still, the bank delivered positive operating leverage for the 10th consecutive quarter, with its productivity ratio improving 90 basis points year over year to 52.5%.
Scotiabank’s CET1 capital ratio ended the quarter at 13.1%. The bank repurchased 8.6 million shares during the quarter, using 20 basis points of capital, and said it had returned C$8.3 billion to shareholders through dividends and buybacks over the past 12 months. Thomson said capital deployment priorities remain organic growth, followed by share repurchases and strategic tuck-in acquisitions.
Chief Financial Officer Raj Viswanathan said certain International Banking portfolios will move from the standardized approach to the advanced internal ratings-based approach in the fourth quarter. The change is expected to reduce the CET1 ratio by about 15 basis points, though the bank expects to maintain its ratio around 13%.
Canadian Banking leads return improvement
Canadian Banking earned C$1.1 billion, up 12% from a year earlier. The segment’s return on equity reached 19.4%, improving 160 basis points sequentially, according to Thomson.
Loans in the segment increased 3% year over year, including 4% mortgage growth and 3% growth in commercial and small-business loans. Net interest income rose 7%, while non-interest income climbed 11%, helped by mutual-fund distribution fees, credit-card revenue and insurance income. Net interest margin expanded for the fifth straight quarter, rising two basis points sequentially.
Aris Bogdaneris, group head of Canadian Banking, said the bank is expanding its mid-market business, adding nearly 700 mid-market clients year to date, up nearly 85% year over year. He said the segment is targeting more deposit-rich and higher-margin lending relationships, while smaller-business lending continued to deliver double-digit loan growth.
The bank also cited progress in retail deposits and wealth referrals. More than 90% of retail guaranteed investment certificate maturities were retained year to date, either within Canadian Banking or in retail mutual funds. Retail mutual-fund net sales reached C$4 billion year to date, nearly 2.5 times the prior-year level.
Wealth, capital markets and international operations grow
Global Wealth Management earnings rose 23% to C$515 million. Assets under management and assets under administration grew 16% and 13%, respectively, from market appreciation and net sales. Quarterly net sales totaled C$3 billion, a record for a third quarter and the bank’s eighth consecutive quarter of positive flows.
Global Banking and Markets recorded earnings of C$647 million, up 37% year over year, as revenue rose 32%. Capital-markets revenue increased 33%, while business-banking revenue rose 30%. The segment also reported strong loan and deposit growth, including 7% sequential loan growth and 9% sequential deposit growth.
Travis Machen, chief executive officer and group head of Global Banking and Markets, said the bank has been investing in products, services and sectors across its core Canadian, U.S. and international footprint. He described the third quarter’s performance as broad-based across products and regions, while noting that capital-markets results can be difficult to predict because they depend on market conditions.
International Banking earned C$725 million, up 6% from a year earlier on a constant-currency basis and excluding divested operations. Revenue increased 7%, while retail loans grew 5% and non-retail loans declined 7% as the bank continued to restrain growth in selected portfolios. Deposits rose 6% year over year.
Francisco Aristeguieta, group head of International Banking, said the segment’s strategy is centered on “primacy” relationships that combine transaction accounts, cards, personal loans, payroll, insurance and investment advice. He said the business is targeting revenue growth of 6% to 8% in 2027 and beyond, with expenses expected to remain near 4% growth.
Credit trends improve amid trade uncertainty
Chief Risk Officer Shannon McGinnis said all-bank provisions for credit losses declined to C$1.1 billion, or 56 basis points, down 10 basis points from the prior quarter. Impaired provisions fell to C$1 billion, or 52 basis points, as performance improved in Canadian retail and International Banking provisions declined from elevated levels in the second quarter.
Canadian Banking provisions were C$498 million, or 42 basis points, down eight basis points sequentially. McGinnis cited lower write-offs in unsecured lines of credit, lower auto impairments and improved collection results. She said mortgage delinquencies remain elevated in some areas, though the bank’s overall retail portfolio remains strong, with an average FICO score of 798.
Management said it continues to monitor trade-policy developments, energy costs, inflation and geopolitical conditions. McGinnis said recently announced tariff measures represented less than 1% of the bank’s total loans, while Thomson characterized the current impact as manageable and said the bank sees opportunities to support clients in infrastructure, natural resources, artificial intelligence and defense.
About Bank of Nova Scotia (NYSE:BNS)
Bank of Nova Scotia, commonly known as Scotiabank, is a Canadian multinational banking and financial services company founded in 1832 and headquartered in Toronto, Ontario. It is one of Canada’s largest banks and provides a broad range of financial services to retail, commercial, corporate and institutional clients. The bank combines a domestic Canadian franchise with an extensive international presence to serve customers across multiple markets.
Scotiabank’s core activities include personal and commercial banking, wealth management, corporate and investment banking, capital markets, and global transaction banking.
