ENHANCED DISCLOSURE TASK FORCE (EDTF) RECOMMENDATIONS

The Enhanced Disclosure Task Force (EDTF) was established by the Financial Stability Board in May 2012 with the goal of developing fundamental disclosure principles. On October 29, 2012, the EDTF published its report, “Enhancing the Risk Disclosures of Banks,” which sets forth recommendations around improving risk disclosures and identifies existing leading practice risk disclosures.

Below is the index of all these recommendations to facilitate easy reference in the Bank’s annual report and other public disclosure documents available on www.scotiabank.com/investorrelations.

 

		Reference Table for EDTF
								Pages
		Type of risk		Number		Disclosure		MD&A				Financial Statements				Supplementary Regulatory Capital Disclosures
		General		1		The index of risks to which the business is exposed.			16
				2		The Bank’s risk terminology, measures and key parameters.			76-83
				3		Top and emerging risks, and the changes during the reporting period.			85-87, 91-96
				4		Discussion on the regulatory development and plans to meet new regulatory ratios.			60-63, 120-121
		Risk governance, risk management and business model		5		The Bank’s Risk Governance structure.			78-80
				6		Description of risk culture and procedures applied to support the culture.			80-83
				7		Description of key risks from the Bank’s business model.			84
				8		Stress testing use within the Bank’s risk governance and capital management.			80-82
		Capital Adequacy and risk-weighted assets		9		Pillar 1 capital requirements, and the impact for global systemically important banks.			60-63				208				4, 5
				10		a) Regulatory capital components.			64								22-24
						b) Reconciliation of the accounting balance sheet to the regulatory balance sheet.											18-19
				11		Flow statement of the movements in regulatory capital since the previous reporting period, including changes in common equity tier 1, additional tier 1 and tier 2 capital.			65-66								100
				12		Discussion of targeted level of capital, and the plans on how to establish this.			60-63
				13		Analysis of risk-weighted assets by risk type, business, and market risk RWAs.			68-73, 84, 127				178				6, 37-40, 44-49, 50-55, 56-61, 73-75, 76-78, 82, 97, 103
				14		Analysis of the capital requirements for each Basel asset class.			68-73				178, 224-228				16-17, 37-62, 71-78, 82, 87-90
				15		Tabulate credit risk in the Banking Book.			68-73				225				16-17, 37-62, 82, 87-90
				16		Flow statements reconciling the movements in risk-weighted assets for each risk-weighted asset type.			68-73								63, 81, 102
				17		Discussion of Basel III Back-testing requirement including credit risk model performance and validation.			69-71								64-67, 107
		Liquidity Funding		18		Analysis of the Bank’s liquid assets.			103-108
				19		Encumbered and unencumbered assets analyzed by balance sheet category.			105
				20		Consolidated total assets, liabilities and off-balance sheet commitments analyzed by remaining contractual maturity at the balance sheet date.			109-111
				21		Analysis of the Bank’s sources of funding and a description of the Bank’s funding strategy.			108-109
		Market Risk		22		Linkage of market risk measures for trading and non-trading portfolios and the balance sheet.			102
				23		Discussion of significant trading and non-trading market risk factors.			97-103
				24		Discussion of changes in period on period VaR results as well as VaR assumptions, limitations, backtesting and validation.			97-103
				25		Other risk management techniques e.g. stress tests, tail risk and market liquidity horizon.			97-103
		Credit Risk		26		Analysis of the aggregate credit risk exposures, including details of both personal and wholesale lending.			91-96, 123-127				188-189, 225-228				6, 37-40, 44-61, 73-78
				27		Discussion of the policies for identifying impaired loans, defining impairments and renegotiated loans, and explaining loan forbearance policies.							158-160
				28		Reconciliations of the opening and closing balances of impaired loans and impairment allowances during the year.			93, 122-125				189				34-35
				29		Analysis of counterparty credit risk that arises from derivative transactions.			88-90				176-179				108
				30		Discussion of credit risk mitigation, including collateral held for all sources of credit risk.			89-91, 94
		Other risks		31		Quantified measures of the management of operational risk.			72, 112-113
				32		Discussion of publicly known risk items.			85-87				205-206

 

16 | 2025 Scotiabank Annual Report

Management’s Discussion & Analysis

 

Management’s Discussion and Analysis (MD&A) is provided to enable readers to assess the Bank’s financial condition and results of operations as at and for the year ended October 31, 2025. The MD&A should be read in conjunction with the Bank’s 2025 Consolidated Financial Statements, including the Notes. This MD&A is dated December 2, 2025.

Additional information relating to the Bank, including the Bank’s 2025 Annual Report, are available on the Bank’s website at www.scotiabank.com. As well, the Bank’s 2025 Annual Report and Annual Information Form are available on the SEDAR+ website at www.sedarplus.ca and on the EDGAR section of the SEC’s website at www.sec.gov.

 

 

Table of Contents

 

 

2025 Scotiabank Annual Report | 17

Management’s Discussion and Analysis

 

FORWARD LOOKING STATEMENTS

From time to time, our public communications 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 (SEC), 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 2025 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,” “aim,” “achieve,” “foresee,” “forecast,” “anticipate,” “intend,” “estimate,” “outlook,” “seek,” “schedule,” “plan,” “goal,” “strive,” “target,” “project,” “commit,” “objective,” and similar expressions of future or conditional verbs, such as “will,” “may,” “should,” “would,” “might,” “can” and “could” and positive and negative variations thereof.

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 and globally; 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, including relating to the care and control of information, and other risks arising from the Bank’s use of third parties; 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; geopolitical risk (including policies and other changes related to, or affecting, economic or trade matters, including tariffs, countermeasures, tariff mitigation policies and tax-related risks); changes to our credit ratings; the possible effects on our business and the global economy of war, conflicts or terrorist actions and unforeseen consequences arising from such actions; technological changes, including open banking and the use of data and artificial intelligence in our business, and technology resiliency; 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, and the extent to which products or services previously sold by the Bank require the Bank to incur liabilities or absorb losses not contemplated at their origination; 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; anti-money laundering; disruptions or attacks (including cyberattacks) on the Bank’s information technology, internet connectivity, network accessibility, or other voice or data communications systems or services, which may result in data breaches, unauthorized access to sensitive information, denial of service and potential incidents of identity theft; increased competition in the geographic and business areas in which we operate, including through internet and mobile banking and non-traditional competitors; exposure related to significant litigation and regulatory matters; environmental, social and governance risks, including climate-related risk, our ability to implement various sustainability-related initiatives (both internally and with our clients and other stakeholders) under expected time frames, and our ability to scale our sustainable-finance products and services; the occurrence of natural and unnatural catastrophic events and claims resulting from such events, including disruptions to public infrastructure, such as transportation, communications, power or water supply; inflationary pressures; global supply-chain disruptions; Canadian housing and household indebtedness; the emergence or continuation of widespread health emergencies or pandemics, including their impact on the local, national or global economies, financial market conditions and the Bank’s business, results of operations, financial condition and prospects; 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 2025 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 2025 Annual Report under the headings “Outlook”, as updated by quarterly reports. The “Outlook” and “2026 Priorities” 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.sedarplus.ca and on the EDGAR section of the SEC’s website at www.sec.gov.

December 2, 2025

 

18 | 2025 Scotiabank Annual Report

FINANCIAL HIGHLIGHTS

T1 Financial highlights

 

As at and for the years ended October 31		2025				2024
Operating results ($ millions)
Net interest income			21,522				19,252
Non-interest income			16,219				14,418
Total revenue			37,741				33,670
Provision for credit losses			4,714				4,051
Non-interest expenses			22,518				19,695
Income tax expense			2,751				2,032
Net income			7,758				7,892
Net income attributable to common shareholders			7,283				7,286
Operating performance
Basic earnings per share ($)			5.84				5.94
Diluted earnings per share ($)			5.67				5.87
Return on equity (%)(1)			9.7				10.2
Return on tangible common equity (%)(2)			11.9				12.6
Productivity ratio (%)(1)			59.7				58.5
Operating leverage (%)(1)			(2.2	)			1.5
Net interest margin (%)(2)			2.33				2.16
Financial position information ($ millions)
Cash and deposits with financial institutions			65,967				63,860
Trading assets			152,223				129,727
Loans			771,045				760,829
Total assets			1,460,042				1,412,027
Deposits			966,279				943,849
Common equity			76,927				73,590
Preferred shares and other equity instruments			9,939				8,779
Assets under administration(1)			868,347				771,454
Assets under management(1)			432,375				373,030
Capital and liquidity measures
Common Equity Tier 1 (CET1) capital ratio (%)(3)			13.2				13.1
Tier 1 capital ratio (%)(3)			15.3				15.0
Total capital ratio (%)(3)			17.1				16.7
Total loss absorbing capacity (TLAC) ratio (%)(4)			29.1				29.7
Leverage ratio (%)(5)			4.5				4.4
TLAC Leverage ratio (%)(4)			8.5				8.8
Risk-weighted assets ($ millions)(3)			474,453				463,992
Liquidity coverage ratio (LCR) (%)(6)			128				131
Net stable funding ratio (NSFR) (%)(6)			116				119
Credit quality
Net impaired loans ($ millions)			4,903				4,685
Allowance for credit losses ($ millions)(7)			7,654				6,736
Gross impaired loans as a % of loans and acceptances(1)			0.93				0.88
Net impaired loans as a % of loans and acceptances(1)			0.63				0.61
Provision for credit losses as a % of average net loans and acceptances(1)(8)			0.62				0.53
Provision for credit losses on impaired loans as a % of average net loans and acceptances(1)(8)			0.54				0.52
Net write-offs as a % of average net loans and acceptances(1)			0.50				0.46
Adjusted results(2)
Adjusted total revenue ($ millions)			37,731				33,813
Adjusted non-interest expenses ($ millions)			20,581				18,961
Adjusted net income ($ millions)			9,510				8,627
Adjusted diluted earnings per share ($)			7.09				6.47
Adjusted return on equity (%)			11.8				11.3
Adjusted return on tangible common equity (%)			14.3				13.7
Adjusted productivity ratio (%)			54.5				56.1
Adjusted operating leverage (%)			3.0				2.3
Common share information
Closing share price ($) (TSX)			91.99				71.69
Shares outstanding (millions)
Average – Basic			1,244				1,226
Average – Diluted			1,248				1,232
End of period			1,236				1,244
Dividends paid per share ($)			4.32				4.24
Dividend yield (%)(1)			5.6				6.5
Market capitalization ($ millions) (TSX)			113,728				89,214
Book value per common share ($)(1)			62.22				59.14
Market value to book value multiple(1)			1.5				1.2
Price to earnings multiple (trailing 4 quarters)(1)			15.8				12.0
Other information
Employees (full-time equivalent)			86,431				88,488
Branches and offices			2,128				2,236

 

(1)	Refer to Glossary on page 136 for the description of the measure.

(2)	Refer to Non-GAAP Measures section starting on page 20.

(3)	The regulatory capital ratios are based on Basel III requirements as determined in accordance with the Office of the Superintendent of Financial Institutions (OSFI) Guideline – Capital Adequacy Requirements.

(4)	This measure has been disclosed in this document in accordance with OSFI Guideline – Total Loss Absorbing Capacity.

(5)	The leverage ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Leverage Requirements.

(6)	The LCR and NSFR are calculated in accordance with OSFI Guideline – Liquidity Adequacy Requirements (LAR).

(7)	Includes allowance for credit losses on all financial assets – loans, acceptances, off-balance sheet exposures, debt securities, and deposits with financial institutions.

(8)	Includes provision for credit losses on certain financial assets – loans, acceptances, and off-balance sheet exposures.

 

2025 Scotiabank Annual Report | 19

Management’s Discussion and Analysis

 

NON-GAAP MEASURES

The Bank uses a number of financial measures and ratios to assess its performance, as well as the performance of its operating segments. Some of these financial measures and ratios are presented on a non-GAAP basis and are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), are not defined by GAAP and do not have standardized meanings and therefore might not be comparable to similar financial measures and ratios disclosed by other issuers. The Bank believes that non-GAAP measures and ratios are useful as they provide readers with a better understanding of how management assesses performance. These non-GAAP measures and ratios are used throughout this report and defined below.

Adjusted results and diluted earnings per share

The following tables present a reconciliation of GAAP reported financial results to non-GAAP adjusted financial results. Management considers both reported and adjusted results and measures useful in assessing underlying ongoing business performance. Adjusted results and measures remove certain specified items from revenue, non-interest expenses, income taxes and non-controlling interests. Presenting results on both a reported basis and adjusted basis allows readers to assess the impact of certain items on results for the periods presented, and to better assess results and trends excluding those items that may not be reflective of ongoing business performance.

T2 Reconciliation of reported and adjusted results

 

As at October 31 ($ millions)		2025				2024
Reported Results
Net interest income		$	21,522			$	19,252
Non-interest income			16,219				14,418
Total revenue			37,741				33,670
Provision for credit losses			4,714				4,051
Non-interest expenses			22,518				19,695
Income before taxes			10,509				9,924
Income tax expense			2,751				2,032
Net income		$	7,758			$	7,892
Net income (loss) attributable to non-controlling interests in subsidiaries (NCI)			(31	)			134
Net income attributable to equity holders			7,789				7,758
Net income attributable to preferred shareholders and other equity instrument holders			506				472
Net income attributable to common shareholders		$	7,283			$	7,286
Adjustments
Adjusting items impacting non-interest income and total revenue (Pre-tax)
(a) Divestitures and wind-down of operations		$	(36	)		$	143
(d) Amortization of acquisition-related intangible assets			26				–
Total non-interest income and total revenue adjusting items (Pre-tax)			(10	)			143
Adjusting items impacting non-interest expenses (Pre-tax)
(a) Divestitures and wind-down of operations			1,422				(7	)
(b) Restructuring charge and severance provisions			373				53
(c) Legal provision			74				176
(d) Amortization of acquisition-related intangible assets			68				72
(e) Impairment of non-financial assets			–				440
Total non-interest expense adjusting items (Pre-tax)			1,937				734
Total impact of adjusting items on net income before taxes			1,927				877
Impact of adjusting items on income tax expense
(a) Divestitures and wind-down of operations			(32	)			(46	)
(b) Restructuring charge and severance provisions			(103	)			(15	)
(c) Legal provision			(20	)			–
(d) Amortization of acquisition-related intangible assets			(20	)			(20	)
(e) Impairment of non-financial assets			–				(61	)
Total impact of adjusting items on income tax expense			(175	)			(142	)
Total impact of adjusting items on net income			1,752				735
Impact of adjusting items on NCI			(191	)			(2	)
Total impact of adjusting items on net income attributable to equity holders		$	1,561			$	733
Adjusted Results
Adjusted net interest income		$	21,522			$	19,252
Adjusted non-interest income			16,209				14,561
Adjusted total revenue			37,731				33,813
Adjusted provision for credit losses			4,714				4,051
Adjusted non-interest expenses			20,581				18,961
Adjusted income before taxes			12,436				10,801
Adjusted income tax expense			2,926				2,174
Adjusted net income		$	9,510			$	8,627
Adjusted net income attributable to NCI			160				136
Adjusted net income attributable to equity holders			9,350				8,491
Adjusted net income attributable to preferred shareholders and other equity instrument holders			506				472
Adjusted net income attributable to common shareholders		$	8,844			$	8,019

 

20 | 2025 Scotiabank Annual Report

T2A Reconciliation of reported and adjusted diluted earnings per common share 

 

As at and for the year ended October 31 ($ millions)		2025				2024
Reported Results
Net income attributable to common shareholders		$	7,283			$	7,286
Foreign currency loss on redemption of Subordinated Additional Tier 1 Capital Notes			(22	)			–
Net income attributable to common shareholders used to calculate basic earnings per common share			7,261				7,286
Dilutive impact of share-based payment options and others			(181	)			(49	)
Net income attributable to common shareholders (diluted)			7,080				7,237
Weighted average number of diluted common shares outstanding (millions)			1,248				1,232
Diluted earnings per common share (in dollars)		$	5.67			$	5.87
Adjusted Results
Net income attributable to common shareholders used to calculate basic earnings per common share		$	7,261			$	7,286
Impact of adjusting items on net income attributable to common shareholders(1)			1,561				733
Foreign currency loss on redemption of Subordinated Additional Tier 1 Capital Notes			22				–
Adjusted net income attributable to common shareholders used to calculate adjusted basic earnings per common share			8,844				8,019
Dilutive impact of share-based payment options and others			7				(49	)
Adjusted net income attributable to common shareholders (diluted)			8,851				7,970
Weighted average number of diluted common shares outstanding (millions)			1,248				1,232
Adjusted diluted earnings per common share (in dollars)		$	7.09			$	6.47
Impact of adjustments on diluted earnings per share (in dollars)		$	1.42			$	0.60

 

(1)	Refer to Table T2 for details of adjusting items.

T3 Impact of adjustments on (income)/expenses

 

		For the year ended																For the three months ended
		2025								2024								October 31, 2025								October 31, 2024
($ millions)		Pre-tax				After-tax				Pre-tax				After-tax				Pre-tax				After-tax				Pre-tax				After-tax
(a) Divestitures and wind-down of operations		$	1,386			$	1,354			$	136			$	90			$	12			$	8			$	–			$	–
(b) Restructuring charge and severance provisions			373				270				53				38				373				270				53				38
(c) Legal provision			74				54				176				176				74				54				–				–
(d) Amortization of acquisition-related intangible assets			94				74				72				52				25				20				19				13
Impairment of non-financial assets:
(e) Investment in associates			–				–				343				309				–				–				343				309
(e) Intangible assets including software			–				–				97				70				–				–				97				70
Total		$	1,927			$	1,752			$	877			$	735			$	484			$	352			$	512			$	430
Diluted EPS Impact						$	1.42							$	0.60							$	0.28							$	0.35
CET1 Impact(1)							(20 bps	)							(9 bps	)							(7 bps	)							(5 bps	)

 

(1)	Including related impacts on regulatory capital and risk-weighted assets.

The Bank’s fiscal 2025 and 2024 results were adjusted for the following items. These amounts were recorded in the Other operating segment, unless otherwise noted.

 

a)

Divestitures and wind-down of operations

In Q1 2025, the Bank entered into an agreement to sell its banking operations in Colombia, Costa Rica and Panama in exchange for an approximately 20% ownership stake in the newly combined entity of Davivienda. On that date, the Bank recognized an impairment loss of $1,362 million ($1,355 million after-tax) as the banking operations that are part of the transaction were classified as held for sale. As of October 31, 2025, the Bank has recognized a total impairment loss of $1,422 million in non-interest expense and a credit of $45 million in non-interest income (collectively $1,342 million after-tax). These subsequent changes represent changes in the carrying value of net assets being sold and fair value of shares to be received less costs to sell, as well as changes in foreign currency.

In Q2 2025, the Bank completed the sale of CrediScotia Financiera S.A. (CrediScotia), a wholly-owned consumer finance subsidiary in Peru, to Banco Santander S.A. (Espana). The Bank recognized an additional loss of $9 million in non-interest income – other upon closing. In Q3 2024, the Bank had recognized an impairment loss of $143 million in non-interest income and a recovery of expenses of $7 million in non-interest expenses – salaries and employee benefits (collectively $90 million after-tax), the majority of which relates to goodwill.

For further details, please refer to Note 35 of the consolidated financial statements.

 

b)

Restructuring charge and severance provisions

In Q4 2025, the Bank recorded a restructuring charge and severance provision as well as other related charges of $373 million ($270 million after-tax) primarily related to workforce reductions. These amounts reflect actions taken by the Bank to simplify its organizational structure in Canadian Banking, restructure and right-size Asia operations in Global Banking and Markets and regionalize activities across its international footprint, in line with the Bank’s enterprise strategy. For further details, please refer to Note 22 of the consolidated financial statements.

 

2025 Scotiabank Annual Report | 21

Management’s Discussion and Analysis

 

In Q4 2024, the Bank recorded severance provisions of $53 million ($38 million after-tax) related to the Bank’s continued efforts to streamline its organizational structure and support execution of the Bank’s strategy.

 

c)

Legal provision

In Q4 2025, the Bank recognized a legal provision of $74 million ($54 million after-tax) related to several civil and other litigation matters.

In Q3 2024, the Bank recognized a $176 million expense for legal actions in Peru relating to certain value-added tax assessed amounts and associated interest. The legal actions arose from certain client transactions that occurred prior to the Bank’s acquisition of its Peruvian subsidiary. For further details, please refer to Note 22 of the consolidated financial statements.

 

d)

Amortization of acquisition-related intangible assets

These costs relate to the amortization of intangible assets recognized upon the acquisition of businesses, excluding software. The costs are recorded in non-interest expenses – depreciation and amortization for the Canadian Banking, International Banking and Global Wealth Management operating segments, and non-interest income – net income from investments in associated corporations for the Other operating segment.

 

e)

Impairment of non-financial assets

In Q4 2024, the Bank recorded impairment charges of $343 million ($309 million after-tax) related to its investment in associate, Bank of Xi’an Co. Ltd. in China, driven primarily by the continued weakening of the economic outlook in China and whose market value has remained below the Bank’s carrying value for a prolonged period. In Q4 2024, the Bank recorded an impairment of software intangible assets of $97 million ($70 million after-tax).

In addition to the above, the following adjustment also impacted earnings per share calculation.

 

f)

Foreign currency loss on redemption of Subordinated Additional Tier 1 Capital Note

In Q3 2025, the Bank redeemed all outstanding U.S. $1,250 million 4.900% Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (AT1 Note). The redemption resulted in a foreign currency loss of $22 million, which was recognized in retained earnings. The loss was deducted from net income attributable to common shareholders for the purposes of calculating basic and diluted earnings per share (EPS). For the adjusted diluted EPS calculation, the loss was added back as an adjusting item (refer to Table T2A for reconciliation). Please also refer to Note 23 (b) and Note 32 of the consolidated financial statements.

T4 Reconciliation of reported and adjusted results by business line

 

		For the year ended October 31, 2025(1)
($ millions)		Canadian Banking				International Banking				Global Wealth Management				Global Banking and Markets				Other				Total
Reported net income (loss)		$	3,425			$	2,789			$	1,680			$	1,921			$	(2,057	)		$	7,758
Net income attributable to non-controlling interests in subsidiaries (NCI)			–				158				10				(1	)			(198	)			(31	)
Reported net income attributable to equity holders			3,425				2,631				1,670				1,922				(1,859	)			7,789
Reported net income attributable to preferred shareholders and other equity instrument holders			–				–				–				–				506				506
Reported net income attributable to common shareholders		$	3,425			$	2,631			$	1,670			$	1,922			$	(2,365	)		$	7,283
Adjustments
Adjusting items impacting non-interest income and total revenue (Pre-tax)
Divestitures and wind-down of operations		$	–			$	–			$	–			$	–			$	(36	)		$	(36	)
Amortization of acquisition-related intangible assets			–				–				–				–				26				26
Total non-interest income adjustments (Pre-tax)			–				–				–				–				(10	)			(10	)
Adjusting items impacting non-interest expenses (Pre-tax)
Divestitures and wind-down of operations			–				–				–				–				1,422				1,422
Restructuring charge and severance provisions			–				–				–				–				373				373
Legal provision			–				–				–				–				74				74
Amortization of acquisition-related intangible assets			4				28				36				–				–				68
Total non-interest expenses adjustments (Pre-tax)			4				28				36				–				1,869				1,937
Total impact of adjusting items on net income before taxes			4				28				36				–				1,859				1,927
Total impact of adjusting items on income tax expense			(1	)			(8	)			(10	)			–				(156	)			(175	)
Total impact of adjusting items on net income			3				20				26				–				1,703				1,752
Impact of adjusting items on NCI			–				–				–				–				(191	)			(191	)
Total impact of adjusting items on net income attributable to equity holders			3				20				26				–				1,512				1,561
Adjusted net income (loss)		$	3,428			$	2,809			$	1,706			$	1,921			$	(354	)		$	9,510
Adjusted net income attributable to equity holders		$	3,428			$	2,651			$	1,696			$	1,922			$	(347	)		$	9,350
Adjusted net income attributable to common shareholders		$	3,428			$	2,651			$	1,696			$	1,922			$	(853	)		$	8,844

 

(1)	Refer to Business Line Overview on page 42.

 

22 | 2025 Scotiabank Annual Report

		For the year ended October 31, 2024(1)
($ millions)		Canadian Banking(2)				International Banking(2)				Global Wealth Management(2)				Global Banking and Markets(2)				Other(2)				Total
Reported net income (loss)		$	3,777			$	2,706			$	1,428			$	1,478			$	(1,497	)		$	7,892
Net income attributable to non-controlling interests in subsidiaries (NCI)			–				125				10				–				(1	)			134
Reported net income attributable to equity holders			3,777				2,581				1,418				1,478				(1,496	)			7,758
Reported net income attributable to preferred shareholders and other equity instrument holders			1				1				1				1				468				472
Reported net income attributable to common shareholders		$	3,776			$	2,580			$	1,417			$	1,477			$	(1,964	)		$	7,286
Adjustments
Adjusting items impacting non-interest income and total revenue (Pre-tax)
Divestitures and wind-down of operations		$	–			$	–			$	–			$	–			$	143			$	143
Adjusting items impacting non-interest expenses (Pre-tax)
Divestitures and wind-down of operations			–				–				–				–				(7	)			(7	)
Restructuring charge and severance provisions			–				–				–				–				53				53
Legal provision			–				–				–				–				176				176
Amortization of acquisition-related intangible assets			4				32				36				–				–				72
Impairment of non-financial assets			–				–				–				–				440				440
Total non-interest expenses adjustments (Pre-tax)			4				32				36				–				662				734
Total impact of adjusting items on net income before taxes			4				32				36				–				805				877
Total impact of adjusting items on income tax expense			(1	)			(9	)			(10	)			–				(122	)			(142	)
Total impact of adjusting items on net income			3				23				26				–				683				735
Impact of adjusting items on NCI			–				–				–				–				(2	)			(2	)
Total impact of adjusting items on net income attributable to equity holders			3				23				26				–				681				733
Adjusted net income (loss)		$	3,780			$	2,729			$	1,454			$	1,478			$	(814	)		$	8,627
Adjusted net income attributable to equity holders		$	3,780			$	2,604			$	1,444			$	1,478			$	(815	)		$	8,491
Adjusted net income attributable to common shareholders		$	3,779			$	2,603			$	1,443			$	1,477			$	(1,283	)		$	8,019

 

(1)	Refer to Business Line Overview on page 42.

(2)	Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 42 for further details.

Constant Dollar

International Banking business segment results are analyzed on a constant dollar basis which is a non-GAAP measure. Under the constant dollar basis, prior period amounts are recalculated using current period average foreign currency rates. The following table presents the reconciliation between reported, adjusted and constant dollar results for International Banking for prior periods. The Bank believes that constant dollar is useful for readers to understand business performance without the impact of foreign currency translation and is used by management to assess the performance of the business segment. The tables below are computed on a basis that is different than the table “Impact of foreign currency translation” in Overview of Performance on page 30.

T5 Reconciliation of International Banking’s reported and adjusted results and constant dollar results

 

For the year ended October 31 ($ millions)		2024(1)
(Taxable equivalent basis)		Reported results				Foreign exchange				Constant dollar
Net interest income		$	8,867			$	11			$	8,856
Non-interest income			2,999				19				2,980
Total revenue			11,866				30				11,836
Provision for credit losses			2,285				(8	)			2,293
Non-interest expenses			6,170				49				6,121
Income tax expense			705				1				704
Net Income		$	2,706			$	(12	)		$	2,718
Net income attributable to non-controlling interest in subsidiaries		$	125			$	(3	)		$	128
Net income attributable to equity holders of the Bank		$	2,581			$	(9	)		$	2,590
Other measures
Average assets ($ billions)		$	231			$	(1	)		$	232
Average liabilities ($ billions)		$	179			$	1			$	178

 

2025 Scotiabank Annual Report | 23

Management’s Discussion and Analysis

 

For the year ended October 31 ($ millions)		2024(1)
(Taxable equivalent basis)		Adjusted results				Foreign exchange				Constant dollar adjusted
Net interest income		$	8,867			$	11			$	8,856
Non-interest income			2,999				19				2,980
Total revenue			11,866				30				11,836
Provision for credit losses			2,285				(8	)			2,293
Non-interest expenses			6,138				49				6,089
Income tax expense			714				1				713
Net Income		$	2,729			$	(12	)		$	2,741
Net income attributable to non-controlling interest in subsidiaries		$	125			$	(3	)		$	128
Net income attributable to equity holders of the Bank		$	2,604			$	(9	)		$	2,613

 

(1)	Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 42 for further details.

Earning and non-earning assets, core earning assets, core net interest income and net interest margin

Net interest margin

Net interest margin is a non-GAAP ratio that is used to measure the return generated by the Bank’s core earning assets, net of the cost of funding. Net interest margin is calculated as core net interest income divided by average core earning assets. Management uses net interest margin to measure profitability and how efficiently the Bank earns income from its core earning assets relative to the cost of funding those assets.

Components of net interest margin are defined below:

Earning assets

Earning assets are defined as income generating assets which include deposits with financial institutions, trading assets, investment securities, investments in associates, securities borrowed or purchased under resale agreements, loans net of allowances, and customers’ liability under acceptances. This is a non-GAAP measure.

Non-earning assets

Non-earning assets are defined as cash, precious metals, derivative financial instruments, property and equipment, goodwill and intangible assets, deferred tax assets and other assets. This is a non-GAAP measure.

Core earning assets

Core earning assets are defined as interest-bearing deposits with financial institutions, investment securities and loans, net of allowances. This is a non-GAAP measure. The Bank believes that this measure is useful for readers as it presents the main interest-generating assets and eliminates the impact of trading businesses.

Core net interest income

Core net interest income is defined as net interest income earned from core earning assets. This is a non-GAAP measure.

T6 Calculation of net interest margin

Consolidated Bank

 

For the year ended October 31 (Unaudited) ($ millions)		2025				2024
Average total assets - Reported(1)		$	1,465,278			$	1,419,284
Less: Non-earning assets			115,718				108,110
Average total earning assets(1)		$	1,349,560			$	1,311,174
Less:
Trading assets			153,283				146,307
Securities purchased under resale agreements
and securities borrowed			209,261				193,090
Other deductions			35,149				53,819
Average core earning assets(1) (A)		$	951,867			$	917,958
Net Interest Income - Reported		$	21,522			$	19,252
Less: Non-core net interest income			(645	)			(620	)
Core net interest income (B)		$	22,167			$	19,872
Net interest margin (B/A)			2.33	%			2.16	%

 

(1)	Average balances represent the average of daily balances for the period.

 

24 | 2025 Scotiabank Annual Report

Canadian Banking

 

For the year ended October 31 (Unaudited) ($ millions)		2025				2024(1)
Average total assets - Reported(2)		$	462,670			$	449,469
Less: Non-earning assets			4,697				4,393
Average total earning assets(2)		$	457,973			$	445,076
Less:
Other deductions			182				16,380
Average core earning assets(2)		$	457,791			$	428,696
Net Interest Income - Reported		$	10,484			$	10,185
Less: Non-core net interest income			–				2
Core net interest income		$	10,484			$	10,183
Net interest margin			2.29	%			2.38	%

 

(1)	Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 42 for further details.

(2)	Average balances represent the average of daily balances for the period.

International Banking

 

For the year ended October 31 (Unaudited) ($ millions)		2025				2024(1)
Average total assets - Reported(2)		$	226,820			$	231,456
Less: Non-earning assets			13,843				15,949
Average total earning assets(2)		$	212,977			$	215,507
Less:
Trading assets			6,283				6,407
Securities purchased under resale agreements
and securities borrowed			3,763				4,063
Other deductions			7,184				6,660
Average core earning assets(2)		$	195,747			$	198,377
Net Interest Income - Reported		$	8,866			$	8,867
Less: Non-core net interest income			66				123
Core net interest income		$	8,800			$	8,744
Net interest margin			4.50	%			4.41	%

 

(1)	Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 42 for further details.

(2)	Average balances represent the average of daily balances for the period.

Global Banking and Markets

 

For the year ended October 31 (Unaudited) ($ millions)		2025				2024(1)
Average total assets - Reported(2)		$	509,263			$	494,595
Less: Non-earning assets			46,594				39,787
Average total earning assets(2)		$	462,669			$	454,808
Less:
Trading assets			139,466				132,210
Securities purchased under resale agreements
and securities borrowed			205,499				189,027
Other deductions			23,080				32,078
Average core earning assets(2)		$	94,624			$	101,493
Net Interest Income - Reported		$	1,400			$	1,102
Less: Non-core net interest income			(273	)			(475	)
Core net interest income		$	1,673			$	1,577
Net interest margin			1.77	%			1.55	%

 

(1)	Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 42 for further details.

(2)	Average balances represent the average of daily balances for the period.

Return on equity

Return on equity is a profitability measure that presents the net income attributable to common shareholders as a percentage of average common shareholders’ equity.

Adjusted return on equity is a non-GAAP ratio which represents adjusted net income attributable to common shareholders as a percentage of average common shareholders’ equity.

Attributed capital and operating segment return on equity

The amount of common equity allocated to each operating segment is referred to as attributed capital. The attribution of capital within each operating segment is intended to approximate a percentage of the Basel III common equity capital requirements based on credit, market and operational risks and leverage inherent within each operating segment. Attributed capital is a non-GAAP measure. The Bank attributes capital to its business lines to approximate 11.5% of the Basel III common equity capital requirements.

 

2025 Scotiabank Annual Report | 25

Management’s Discussion and Analysis

 

Return on equity for the operating segments is calculated as a ratio of net income attributable to common shareholders of the operating segment and the capital attributed. This is a non-GAAP measure. Management uses operating segment return on equity to evaluate the performance of its operating segments.

Adjusted return on equity for the operating segments is calculated as a ratio of adjusted net income attributable to common shareholders of the operating segment and the capital attributed. This is a non-GAAP measure.

Return on equity by operating segment

T7 Return on equity by operating segment

 

For the year ended October 31, 2025 ($ millions)		Canadian Banking				International Banking				Global Wealth Management				Global Banking and Markets				Other				Total
Reported
Net income (loss) attributable to common shareholders		$	3,425			$	2,631			$	1,670			$	1,922			$	(2,365	)(1)		$	7,283
Total average common equity(2)			21,030				18,061				10,417				14,968				10,529				75,005
Return on equity			16.3	%			14.6	%			16.0	%			12.8	%			nm	(3)			9.7	%
Adjusted(4)
Net income (loss) attributable to common shareholders			3,428				2,651				1,696				1,922				(853	)(1)			8,844
Return on equity			16.3	%			14.7	%			16.3	%			12.8	%			nm	(3)			11.8	%

 

(1)	Includes dividends paid on preferred shares and other equity instruments of $506.

(2)	Average amounts calculated using methods intended to approximate the daily average balances for the period.

(3)	Not meaningful.

(4)	Refer to Table on page 20.

 

For the year ended October 31, 2024 ($ millions)		Canadian Banking(1)				International Banking(1)				Global Wealth Management(1)				Global Banking and Markets(1)				Other(1)				Total
Reported
Net income (loss) attributable to common shareholders		$	3,776			$	2,580			$	1,417			$	1,477			$	(1,964	)(2)		$	7,286
Total average common equity(3)			20,585				19,148				10,210				15,342				5,842				71,127
Return on equity			18.3	%			13.5	%			13.9	%			9.6	%			nm	(4)			10.2	%
Adjusted(5)
Net income (loss) attributable to common shareholders			3,779				2,603				1,443				1,477				(1,283	)(2)			8,019
Return on equity			18.4	%			13.6	%			14.1	%			9.6	%			nm	(4)			11.3	%

 

(1)	Effective Q1 2025, changes were made to the methodology used to allocate certain income, expenses and balance sheet items between business segments. Prior period results for each segment have been reclassified to conform with the current period’s methodology. Refer to page 42 for further details.

(2)	Includes dividends paid on preferred shares and other equity instruments of $468.

(3)	Average amounts calculated using methods intended to approximate the daily average balances for the period.

(4)	Not meaningful.

(5)	Refer to Table on page 20.

Return on tangible common equity

Return on tangible common equity (ROTCE) is a profitability measure that is calculated by dividing the net income attributable to common shareholders, adjusted for the amortization of intangibles (excluding software), by average tangible common equity. Tangible common equity is defined as common shareholders’ equity adjusted for goodwill and intangible assets (excluding software), net of deferred taxes. This is a non-GAAP ratio. Management uses ROTCE to assess the Bank’s performance and ability to use its tangible common equity to generate returns.

Adjusted return on tangible common equity represents adjusted net income attributable to common shareholders as a percentage of average tangible common equity. This is a non-GAAP ratio.

T8 Return on tangible common equity

 

For the years ended October 31 ($ millions)		2025				2024
Reported
Average common equity – reported(1)		$	75,005			$	71,127
Average goodwill(1)(2)			(9,744	)			(9,056	)
Average acquisition-related intangibles (net of deferred tax)(1)			(3,577	)			(3,629	)
Average tangible common equity(1)		$	61,684			$	58,442
Net income attributable to common shareholders – reported		$	7,283			$	7,286
Amortization of acquisition-related intangible assets (after-tax)(3)			74				52
Net income attributable to common shareholders adjusted for amortization of acquisition-related intangible assets (after-tax)		$	7,357			$	7,338
Return on tangible common equity – reported			11.9	%			12.6	%
Adjusted(3)
Adjusted net income attributable to common shareholders		$	8,844			$	8,019
Return on tangible common equity – adjusted			14.3	%			13.7	%

 

(1)	Average amounts calculated using methods intended to approximate the daily average balances for the period.

(2)	Includes imputed goodwill from investments in associates.

(3)	Refer to Table on page 20.

 

26 | 2025 Scotiabank Annual Report