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Consolidated
Financial Statements
 
 
Table of Contents
 
       
 
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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION
The management of The Bank of Nova Scotia (the Bank) is responsible for the integrity and fair presentation of the financial information contained in this Annual Report. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements also comply with the accounting requirements of the Bank Act.
The consolidated financial statements, where necessary, include amounts which are based on the best estimates and judgment of management. Financial information presented elsewhere in this Annual Report is consistent with that shown in the consolidated financial statements.
Management has always recognized the importance of the Bank maintaining and reinforcing the highest possible standards of conduct in all of its actions, including the preparation and dissemination of statements fairly presenting the financial condition of the Bank. In this regard, management has developed and maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition, and liabilities are recognized. The system is augmented by written policies and procedures, the careful selection and training of qualified staff, the establishment of organizational structures providing an appropriate and well-defined division of responsibilities, and the communication of our Code throughout the Bank.
Management, under the supervision of and the participation of the President and Chief Executive Officer and the Group Head and Chief Financial Officer, have a process in place to evaluate disclosure controls and procedures and internal control over financial reporting in line with Canadian and U.S. securities regulations.
The system of internal controls is further supported by a professional staff of internal auditors who conduct periodic audits of all aspects of the Bank’s operations. As well, the Bank’s Chief Auditor has full and free access to, and meets periodically with the Audit and Conduct Review Committee of the Board of Directors. In addition, the Bank’s compliance function maintains policies, procedures and programs directed at ensuring compliance with regulatory requirements, including conflict of interest rules.
The Office of the Superintendent of Financial Institutions Canada, which is mandated to protect the rights and interests of the depositors and creditors of the Bank, examines and enquires into the business and affairs of the Bank, as deemed necessary, to determine whether the provisions of the Bank Act are being complied with, and that the Bank is in a sound financial condition.
The Audit and Conduct Review Committee, composed entirely of outside directors, reviews the consolidated financial statements with both management and the independent auditors before such statements are approved by the Board of Directors and submitted to the shareholders of the Bank.
The Audit and Conduct Review Committee reviews and reports its findings to the Board of Directors on all related party transactions that may have a material impact on the Bank.
KPMG LLP, the independent auditors appointed by the shareholders of the Bank, have audited the consolidated financial position of the Bank as at October 31, 2025 and October 31, 2024 and its consolidated financial performance and its consolidated cash flows for each of the years in the
two-year
period ended October 31, 2025 prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB) in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) and the effectiveness of internal control over financial reporting and have expressed their opinions upon completion of such audits in the reports to the shareholders. The Shareholders’ Auditors have full and free access to, and meet periodically with, the Audit and Conduct Review Committee to discuss their audits, including any findings as to the integrity of the Bank’s accounting, financial reporting and related matters.
 
 
Scott Thomson
President and Chief Executive Officer
Raj Viswanathan
Group Head and Chief Financial Officer
 
Toronto, Canada
December 2, 2025
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of The Bank of Nova Scotia
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of The Bank of Nova Scotia (the Bank) as of October 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Bank as of October 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Bank’s internal control over financial reporting as of October 31, 2025, based on criteria established in
Internal Control – Integrated Framework (2013)
 issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated December 2, 2025 expressed an unqualified opinion on the effectiveness of the Bank’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Bank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Audit and Conduct Review Committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
(i) Assessment of Allowance for Credit Losses (ACL)
Refer to Notes 3 and 12 to the consolidated financial statements.
The Bank’s ACL on loans was $7,463 million as at October 31, 2025. The Bank applies a three-stage approach to measure the ACL, using an expected credit loss (ECL) approach as required under IFRS 9 Financial Instruments. The Bank’s ACL calculations are outputs of a set of complex models. The ACL calculations reflect unbiased probability-weighted outcomes that consider multiple scenarios based on reasonable and supportable forecasts. The probability of default (PD), loss given default (LGD) and exposure at default (EAD) inputs used to estimate ECL are modeled based on historical default and loss experience, and macroeconomic variables that are closely related with credit losses in the relevant portfolio. The Bank assesses whether there has been a significant increase in credit risk since origination or where the financial asset is in default. If there has been a significant increase in credit risk or the financial asset is in default, then lifetime ACL is recorded; otherwise, an ACL equal to
12-month
expected credit losses is recorded. The estimation of ECL for each stage and the assessment of significant increases in credit risk consider information about past events and current conditions, as well as forecasts of future events and economic conditions. The estimation and application of forward-looking information requires significant judgment. Qualitative adjustments or overlays may also be recorded as temporary adjustments using expert credit judgment where the inputs, assumptions and/or models do not capture all relevant risk factors. The use of management overlays requires significant judgment that may impact the amount of ACL recognized.
We identified the assessment of the ACL as a critical audit matter. Significant auditor judgment was required because there was a high degree of measurement uncertainty due to the significant management judgments inherent in certain of the Bank’s key modeled inputs and methodologies. These management judgments impact certain inputs, assumptions, qualitative adjustments or overlays, and the determination of when there has been a significant increase in credit risk. The assessment of the ACL also required significant auditor attention and complex auditor judgment to apply and evaluate the results of audit procedures. Further, specialized skills and knowledge, including experience in the industry, were required to apply audit procedures and evaluate the results of those procedures.
The following are the primary procedures we performed to address this critical audit matter. With the assistance of our credit risk and economics professionals with specialized skills, industry knowledge and relevant experience, we evaluated the design and tested the operating effectiveness of certain internal controls related to the Bank’s ACL process. These included internal controls related to: (1) initial and periodic validation and performance monitoring of models used to derive key modeled inputs into the ACL calculations being PD, LGD and EAD; (2) benchmarking of certain macroeconomic variables, model validation associated with the derivation of the remaining variables and the alternative scenarios and review of probability weights used in the ACL models; (3) the methodology used to determine whether there has been a significant increase in credit risk; and (4) the methodology and assumptions used in the determination of qualitative adjustments or overlays. Additionally, for
non-retail
loans, we tested certain internal controls related to loan reviews over the determination of loan risk grades. We involved credit risk and economics professionals with specialized skills, industry knowledge and relevant experience who assisted in: (1) evaluating the methodology and models used to derive key modeled inputs into the ACL calculations being PD, LGD and EAD and the determination of whether there has been a significant increase in credit risk; (2) assessing the appropriateness of certain underlying macroeconomic variables against external economic data, evaluating
 
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the models used to derive other macroeconomic variables and evaluating the assumptions associated with the alternative economic scenarios and the related probabilities; and (3) assessing the qualitative adjustments or overlays by applying our knowledge of the industry and credit judgment to evaluate the appropriateness of the Bank’s underlying methodology and assumptions. Additionally, for a selection of
non-retail
loans, we evaluated the Bank’s assigned loan risk grades against the Bank’s borrower risk rating methodology.
(ii) Assessment of the Measurement of Fair Value of Certain Financial Instruments
Refer to Notes 3 and 6 to the consolidated financial statements.
The Bank measures certain financial assets and financial liabilities at fair value on a recurring basis. Where such financial instruments trade in inactive markets or when using internal models where observable parameters do not exist, significant management judgment is required in the selection of valuation techniques and model inputs. The valuation techniques used in determining the fair value of financial instruments include internal models and net asset valuations. The significant unobservable inputs used in the Bank’s valuation techniques include general partner valuations per net asset values (NAVs), interest rate volatility, equity volatility and equity correlation.
We identified the assessment of the measurement of fair value for certain financial instruments as a critical audit matter. Significant auditor judgment was required because there was a high degree of measurement uncertainty due to significant judgments inherent in the Bank’s valuation techniques and significant unobservable inputs used to develop the fair value of certain financial assets and financial liabilities. The assessment of the fair value also required significant auditor attention and complex auditor judgment to apply and evaluate the results of audit procedures. Further, specialized skills and knowledge, including experience in the industry, were required to apply audit procedures and evaluate the results of those procedures.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Bank’s processes to determine the fair value of certain financial instruments with the assistance of valuation and information technology professionals with specialized skills, industry knowledge and relevant experience. These included internal controls related to: (1) model validation at inception and periodically; (2) management’s review of NAVs; (3) independent price verification, including assessment of rate sources; and (4) segregation of duties and access controls. With the assistance of valuation professionals with specialized skills, industry knowledge and relevant experience, we tested the fair value of a selection of certain financial instruments. Depending on the nature of the financial instruments, we did this by comparing the NAVs to external information or by developing an independent estimate of fair value and comparing it to the fair value determined by the Bank.
(iii) Assessment of Uncertain Tax Provisions
Refer to Notes 3 and 26 to the consolidated financial statements.
The Bank maintains provisions for uncertain tax positions that it believes appropriately reflect the risk of tax positions under discussion, audit, dispute, or appeal with tax authorities, or which are otherwise considered to involve uncertainty. These provisions are made using the Bank’s best estimate of the amount expected to be paid based on an assessment of all relevant factors, which are reviewed at the end of each reporting period.
We identified the assessment of some uncertain tax provisions as a critical audit matter. Significant auditor judgment was required because there was a high degree of measurement uncertainty due to the significant judgments inherent in the Bank’s interpretation of tax legislation and its best estimate of the ultimate resolution of tax positions. This required significant auditor attention and complex auditor judgment to evaluate the results of audit procedures. Further, specialized skills, industry knowledge, and relevant experience were required to apply audit procedures and evaluate the results of those procedures.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Bank’s income tax uncertainties process with the assistance of taxation professionals with specialized skills, industry knowledge and relevant experience. These included internal controls related to: (1) the interpretation of tax legislation and the evaluation of the technical merits of tax positions; and (2) the determination of the best estimate of the provision required for these tax uncertainties. We involved tax professionals with specialized skills and knowledge, who assisted in: (1) evaluating the Bank’s interpretations of tax legislation based on our knowledge and experience; (2) reading and evaluating advice obtained by the Bank from external counsel, and considering its impact on the measurement, if applicable, of the uncertain tax provisions; and (3) inspecting correspondence with applicable taxation authorities.
 
 
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Bank’s auditor since 2006 and as joint auditor for 14 years prior to that.
Toronto, Canada
December 2, 2025
 
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of The Bank of Nova Scotia
Opinion on Internal Control Over Financial Reporting
We have audited The Bank of Nova Scotia’s (the Bank) internal control over financial reporting as of October 31, 2025, based on criteria established in
Internal Control – Integrated Framework (2013)
 issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of October 31, 2025, based on criteria established in
Internal Control – Integrated Framework (2013)
 issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Bank as of October 31, 2025, and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated December 2, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Bank’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Controls and Accounting Policies section of Management’s Discussion and Analysis under the heading “Internal control over financial reporting”. Our responsibility is to express an opinion on the Bank’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Bank in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
December 2, 2025
 
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Consolidated Statement of Financial Position
 
                  
As at October 31 ($ millions)  
Note
    
2025
    
2024
  
Assets
      
Cash and deposits with financial institutions
     5    
$
65,967
 
   $ 63,860  
Precious metals
    
 
5,156
 
     2,540  
Trading assets
      
Securities
     7 (a)   
 
140,844
 
     119,912  
Loans
     7 (b)   
 
8,487
 
     7,649  
Other
  
 
 
 
  
 
2,892
 
     2,166  
   
 
152,223
 
     129,727  
Securities purchased under resale agreements and securities borrowed
    
 
203,008
 
     200,543  
Derivative financial instruments
     9    
 
46,531
 
     44,379  
Investment securities
     11    
 
149,948
 
     152,832  
Loans
      
Residential mortgages
     12    
 
370,191
 
     350,941  
Personal loans
     12    
 
110,567
 
     106,379  
Credit cards
     12    
 
18,045
 
     17,374  
Business and government
     12    
 
279,705
 
     292,671  
   
 
778,508
 
     767,365  
Allowance for credit losses
     12 (e)   
 
7,463
 
     6,536  
   
 
771,045
 
     760,829  
Other
      
Customers’ liability under acceptances, net of allowance
    
 
177
 
     148  
Property and equipment
     15    
 
4,881
 
     5,252  
Investments in associates
     16    
 
6,317
 
     1,821  
Goodwill and other intangible assets
     17    
 
16,169
 
     16,853  
Deferred tax assets
     26 (c)   
 
3,253
 
     2,942  
Other assets
     18    
 
35,367
 
     30,301  
 
 
 
 
  
 
66,164
 
     57,317  
 
 
 
 
  
$
1,460,042
 
   $ 1,412,027  
Liabilities
      
Deposits
      
Personal
     19    
$
301,718
 
   $ 298,821  
Business and government
     19    
 
627,667
 
     600,114  
Financial institutions
     19    
 
36,894
 
     44,914  
   
 
966,279
 
     943,849  
Financial instruments designated at fair value through profit or loss
     8    
 
47,165
 
     36,341  
Other
      
Acceptances
    
 
178
 
     149  
Obligations related to securities sold short
    
 
38,104
 
     35,042  
Derivative financial instruments
     9    
 
56,031
 
     51,260  
Obligations related to securities sold under repurchase agreements and securities lent
    
 
189,144
 
     190,449  
Subordinated debentures
     20    
 
7,692
 
     7,833  
Other liabilities
     21    
 
66,862
 
     63,028  
 
 
 
 
  
 
358,011
 
     347,761  
 
 
 
 
  
 
1,371,455
 
     1,327,951  
Equity
      
Common equity
      
Common shares
     23 (a)   
 
22,067
 
     22,054  
Retained earnings
    
 
58,916
 
     57,751  
Accumulated other comprehensive income (loss)
    
 
(3,826
) 
     (6,147 ) 
Other reserves
  
 
 
 
  
 
(230
) 
     (68 ) 
Total common equity
    
 
76,927
 
     73,590  
Preferred shares and other equity instruments
     23 (b)   
 
9,939
 
     8,779  
Total equity attributable to equity holders of the Bank
    
 
86,866
 
     82,369  
Non-controlling
interests in subsidiaries
     30 (b)   
 
1,721
 
     1,707  
 
 
 
 
  
 
88,587
 
     84,076  
 
  
 
 
 
  
$
 1,460,042
 
   $  1,412,027  
 
Aaron W. Regent
  
Scott Thomson
  
Chair of the Board   President and Chief Executive Officer  
The accompanying notes are an integral part of these consolidated financial statements.
 
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Consolidated Statement of Income
 
For the year ended October 31 ($ millions)  
Note
    
2025
    
2024
  
Revenue
      
Interest income
(1)
     31      
Loans
    
$
 44,293
 
   $  47,811  
Securities
    
 
7,941
 
     9,160  
Securities purchased under resale agreements and securities borrowed
    
 
2,808
 
     1,602  
Deposits with financial institutions
  
 
 
 
  
 
2,560
 
     3,086  
 
 
 
 
  
 
57,602
 
     61,659  
Interest expense
     31      
Deposits
    
 
33,425
 
     39,480  
Subordinated debentures
    
 
385
 
     490  
Other
  
 
 
 
  
 
2,270
 
     2,437  
 
 
 
 
  
 
36,080
 
     42,407  
Net interest income
    
 
21,522
 
     19,252  
Non-interest
income
      
Card revenues
    
 
892
 
     869  
Banking services fees
    
 
1,997
 
     1,955  
Credit fees
    
 
1,249
 
     1,585  
Mutual funds
    
 
2,564
 
     2,282  
Brokerage fees
    
 
1,436
 
     1,251  
Investment management and trust
    
 
1,162
 
     1,096  
Underwriting and advisory fees
    
 
964
 
     702  
Non-trading
foreign exchange
    
 
948
 
     930  
Trading revenues
    
 
1,984
 
     1,634  
Net gain on sale of investment securities
     11 (e)   
 
71
 
     48  
Net income from investments in associated corporations
     16    
 
608
 
     198  
Insurance service results
    
 
485
 
     470  
Other fees and commissions
    
 
1,653
 
     1,247  
Other
  
 
 
 
  
 
206
 
     151  
 
 
 
 
  
 
16,219
 
     14,418  
Total revenue
    
 
37,741
 
     33,670  
Provision for credit losses
     12 (e)   
 
4,714
 
     4,051  
 
 
 
 
  
 
33,027
 
     29,619  
Non-interest
expenses
      
Salaries and employee benefits
    
 
10,824
 
     9,855  
Premises and technology
    
 
3,297
 
     2,896  
Depreciation and amortization
    
 
1,604
 
     1,760  
Communications
    
 
384
 
     381  
Advertising and business development
    
 
672
 
     614  
Professional
    
 
880
 
     793  
Business and capital taxes
    
 
708
 
     682  
Other
  
 
 
 
  
 
4,149
 
     2,714  
 
 
 
 
  
 
 22,518
 
     19,695  
Income before taxes
    
 
10,509
 
     9,924  
Income tax expense
     26    
 
2,751
 
     2,032  
Net income
  
 
 
 
  
$
7,758
 
   $ 7,892  
Net income attributable to
non-controlling
interests in subsidiaries
     30 (b)   
 
(31
) 
     134  
Net income attributable to equity holders of the Bank
    
$
7,789
 
   $ 7,758  
Preferred shareholders and other equity instrument holders
    
 
506
 
     472  
Common shareholders
  
 
 
 
  
$
7,283
 
   $ 7,286  
Earnings per common share (in dollars)
      
Basic
     32    
$
5.84
 
   $ 5.94  
Diluted
     32    
 
5.67
 
     5.87  
Dividends paid per common share (in dollars)
     23 (a)   
 
4.32
 
     4.24  
 
(1)
Includes interest income on financial assets measured at amortized cost and FVOCI, calculated using the effective interest method, of $
56,404
for the year ended October 31, 2025 (October 31, 2024 – $59,871).
The accompanying notes are an integral part of these consolidated financial statements.
 
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Consolidated Statement of Comprehensive Income
 
For the year ended October 31 ($ millions)  
2025
    
2024
  
Net income
  
$
7,758
 
   $ 7,892  
Other comprehensive income (loss)
    
Items that will be reclassified subsequently to net income
    
Net change in unrealized foreign currency translation gains (losses):
    
Net unrealized foreign currency translation gains (losses)
  
 
1,681
 
     (2,511 ) 
Net gains (losses) on hedges of net investments in foreign operations
  
 
(1,222
) 
     886  
Income tax expense (benefit):
    
Net unrealized foreign currency translation gains (losses)
  
 
20
 
     2  
Net gains (losses) on hedges of net investments in foreign operations
  
 
(341
) 
     238  
 
 
780
 
     (1,865 ) 
Net change in fair value due to change in debt instruments measured at fair value through
other comprehensive income:
    
Net gains (losses) in fair value
  
 
1,717
 
     2,977  
Reclassification of net (gains) losses to net income
  
 
(1,001
) 
     (2,126 ) 
Income tax expense (benefit):
    
Net gains (losses) in fair value
  
 
454
 
     806  
Reclassification of net (gains) losses to net income
  
 
(273
) 
     (567 ) 
 
 
535
 
     612  
Net change in gains (losses) on derivative instruments designated as cash flow hedges:
    
Net gains (losses) on derivative instruments designated as cash flow hedges
  
 
3,937
 
     5,195  
Reclassification of net (gains) losses to net income
  
 
(2,493
) 
     (2,000 ) 
Income tax expense (benefit):
    
Net gains (losses) on derivative instruments designated as cash flow hedges
  
 
1,197
 
     1,363  
Reclassification of net (gains) losses to net income
  
 
(806
) 
     (511 ) 
 
 
1,053
 
     2,343  
Net changes in finance income/(expense) from insurance contracts:
    
Net finance income/(expense) from insurance contracts
  
 
20
 
     2  
Income tax expense (benefit)
  
 
1
 
     1  
 
 
19
 
     1  
Other comprehensive income (loss) from investments in associates
  
 
176
 
     (1 ) 
Items that will not be reclassified subsequently to net income
    
Net change in remeasurement of employee benefit plan asset and liability:
    
Actuarial gains (losses) on employee benefit plans
  
 
365
 
     (195 ) 
Income tax expense (benefit)
  
 
99
 
     (59 ) 
 
 
266
 
     (136 ) 
Net change in fair value due to change in equity instruments designated at fair value through
other comprehensive income:
    
Net gains (losses) in fair value
  
 
90
 
     444  
Income tax expense (benefit)
  
 
29
 
     106  
 
 
61
 
     338  
Net change in fair value due to change in own credit risk on financial liabilities designated
under the fair value option:
    
Change in fair value due to change in own credit risk on financial liabilities designated under the fair value option
  
 
(693
) 
     (804 ) 
Income tax expense (benefit)
  
 
(193
) 
     (223 ) 
 
 
(500
) 
     (581 ) 
Other comprehensive income (loss) from investments in associates
  
 
7
 
     1  
Other comprehensive income (loss)
  
 
2,397
 
     712  
Comprehensive income
  
$
 10,155
 
   $ 8,604  
Comprehensive income (loss) attributable to
non-controlling
interests
  
 
45
 
     62  
Comprehensive income attributable to equity holders of the Bank
  
$
10,110
 
   $ 8,542  
Preferred shareholders and other equity instrument holders
  
 
506
 
     472  
Common shareholders
  
$
9,604
 
   $   8,070  
The accompanying notes are an integral part of these consolidated financial statements.
 
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Table of Contents
Consolidated Financial Statements
 
Consolidated Statement of Changes in Equity
 
   
For the year ended October 31, 2025
  
               
Accumulated other comprehensive income (loss)
                                      
($ millions)  
Common
shares
(Note 23)
    
Retained
earnings
(1)
    
Foreign
currency
translation
    
Debt
instruments
FVOCI
    
Equity
instruments
FVOCI
    
Cash flow
hedges
    
Other
(2)
    
Other
reserves
    
Total
common
equity
    
Preferred
shares and
other equity
instruments
(Note 23)
    
Total attributable
to equity
holders
    
Non-
controlling
interests in
subsidiaries
(Note 30(b))
    
Total
  
Balance as at October 31, 2024
  
$
 22,054
 
  
$
 57,751
 
  
$
 (3,559
) 
  
$
(491
) 
  
$
 339
 
  
$
 (2,197
) 
  
$
(239
) 
  
$
(68
) 
  
$
 73,590
 
  
$
 8,779
 
  
$
 82,369
 
  
$
 1,707
 
  
$
 84,076
 
Net income
  
 
–
 
  
 
7,283
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
7,283
 
  
 
506
 
  
 
7,789
 
  
 
(31
) 
  
 
7,758
 
Other comprehensive income (loss)
  
 
–
 
  
 
–
 
  
 
708
 
  
 
533
 
  
 
59
 
  
 
1,057
 
  
 
(36
)
  
 
–
 
  
 
2,321
 
  
 
–
 
  
 
2,321
 
  
 
76
 
  
 
2,397
 
Total comprehensive income
  
$
–
 
  
$
7,283
 
  
$
708
 
  
$
533
 
  
$
59
 
  
$
1,057
 
  
$
(36
)
  
$
–
 
  
$
9,604
 
  
$
506
 
  
$
10,110
 
  
$
45
 
  
$
10,155
 
Shares/instruments issued
  
 
210
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(14
)
  
 
196
 
  
 
2,848
 
  
 
3,044
 
  
 
–
 
  
 
3,044
 
Shares repurchased/redeemed
  
 
(197
)
  
 
(716
)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(913
) 
  
 
(1,688
) 
  
 
(2,601
) 
  
 
–
 
  
 
(2,601
) 
Dividends and distributions paid to equity holders
  
 
–
 
  
 
(5,369
)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(5,369
) 
  
 
(506
) 
  
 
(5,875
) 
  
 
(82
) 
  
 
(5,957
) 
Share-based payments
(3)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
15
 
  
 
15
 
  
 
–
 
  
 
15
 
  
 
–
 
  
 
15
 
Foreign currency loss on redemption of Subordinated Additional Tier 1
                          
Capital Notes
(4)
  
 
–
 
  
 
(22
)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(22
)
  
 
–
 
  
 
(22
)
  
 
–
 
  
 
(22
) 
Other
  
 
–
 
  
 
(11
)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(163
)
  
 
(174
)
  
 
–
 
  
 
(174
)
  
 
51
 
  
 
(123
) 
Balance as at October 31, 2025
  
$
22,067
 
  
$
58,916
 
  
$
(2,851
) 
  
$
42
 
  
$
398
 
  
$
(1,140
) 
  
$
(275
) 
  
$
 (230
) 
  
$
76,927
 
  
$
9,939
 
  
$
86,866
 
  
$
1,721
 
  
$
88,587
 
   
For the year ended October 31, 2024
  
               
Accumulated other comprehensive income (loss)
                                      
($ millions)  
Common
shares
(Note 23)
    
Retained
earnings
(1)
    
Foreign
currency
translation
    
Debt
instruments
FVOCI
    
Equity
instruments
FVOCI
    
Cash flow
hedges
    
Other
(2)
    
Other
reserves
    
Total
common
equity
    
Preferred
shares and
other equity
instruments
(Note 23)
    
Total attributable
to equity
holders
    
Non-
controlling
interests in
subsidiaries
(Note 30(b))
    
Total
  
Balance as at October 31, 2023
   $ 20,109     $ 55,673     $ (1,755 )    $ (1,104 )    $ 14     $ (4,545 )    $   459     $ (84 )    $ 68,767     $ 8,075     $ 76,842     $ 1,729     $ 78,571  
Net income
     –       7,286       –       –       –       –       –       –       7,286       472       7,758       134       7,892  
Other comprehensive income (loss)
     –       –       (1,804 )          613       325         2,348       (698 )      –       784       –       784       (72 )      712  
Total comprehensive income
   $ –     $ 7,286     $ (1,804 )    $ 613     $  325     $ 2,348     $ (698 )    $ –     $ 8,070     $ 472     $ 8,542     $ 62     $ 8,604  
Shares/instruments issued
     1,945       –       –       –       –       –       –       (4 )      1,941       1,004       2,945       –       2,945  
Shares repurchased/redeemed
     –       –       –       –       –       –       –       –       –       (300 )      (300 )      –       (300 ) 
Dividends and distributions paid to equity holders
     –       (5,198 )      –       –       –       –       –       –       (5,198 )      (472 )      (5,670 )      (88 )      (5,758 ) 
Share-based payments
(3)
     –       –       –       –       –       –       –         13       13       –       13       –       13  
Other
     –       (10 )      –       –       –       –       –       7       (3 )      –       (3 )      4       1  
Balance as at October 31, 2024
   $ 22,054     $ 57,751     $ (3,559 )    $ (491 )    $ 339     $ (2,197 )    $ (239 )    $ (68 )    $ 73,590     $ 8,779     $ 82,369     $ 1,707     $ 84,076  
 
(1)
Includes undistributed retained earnings of $76 (2024 – $74) related to a foreign associated corporation, which is subject to local regulatory restriction.
(2)
Includes Share from associates, Employee benefits, Own credit risk, and Insurance contracts.
(3)
Represents amounts on account of share-based payments (refer to Note 25).
(4)
Refer to Note 23 (b) for further details on the redemption of the equity instrument.
The accompanying notes are an integral part of these consolidated financial statements
 
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Table of Contents
Consolidated Financial Statements
 
Consolidated Statement of Cash Flows
 
Sources (uses) of cash flows for the year ended October 31 ($ millions)  
2025
    
2024
  
Cash flows from operating activities
    
Net income
  
$
7,758
 
   $   7,892  
Adjustment for:
    
Net interest income
  
 
(21,522
) 
     (19,252 ) 
Depreciation and amortization
  
 
1,604
 
     1,760  
Provision for credit losses
  
 
4,714
 
     4,051  
Impairment on investments in associates
  
 
–
 
     343  
Equity-settled share-based payment expense
  
 
15
 
     13  
Net gain on sale of investment securities
  
 
(71
) 
     (48 ) 
Net (gain)/loss on divestitures
  
 
1,386
 
     136  
Net income from investments in associated corporations
  
 
(608
) 
     (198 ) 
Income tax expense
  
 
2,751
 
     2,032  
Changes in operating assets and liabilities:
    
Trading assets
  
 
(20,462
) 
     (11,370 ) 
Securities purchased under resale agreements and securities borrowed
  
 
(4
) 
     108  
Loans
  
 
(6,591
) 
     (17,712 ) 
Deposits
  
 
19,533
 
     (816 ) 
Obligations related to securities sold short
  
 
2,721
 
     (1,690 ) 
Obligations related to securities sold under repurchase agreements and securities lent
  
 
(4,048
) 
     28,753  
Net derivative financial instruments
  
 
6,490
 
     4,159  
Other, net
  
 
(5,568
) 
     457  
Interest and dividends received
  
 
58,086
 
     61,292  
Interest paid
  
 
(37,197
) 
     (42,273 ) 
Income tax paid
  
 
(3,580
) 
     (1,985 ) 
Net cash from/(used in) operating activities
  
 
5,407
 
     15,652  
Cash flows from investing activities
    
Interest-bearing deposits with financial institutions
  
 
(344
) 
     25,557  
Purchase of investment securities
  
 
(70,096
) 
     (108,281 ) 
Proceeds from sale and maturity of investment securities
  
 
75,455
 
     76,794  
Acquisition/divestiture of subsidiaries, associated corporations or business units, net of cash acquired
  
 
(2,637
) 
     –  
Property and equipment, net of disposals
  
 
(347
) 
     (489 ) 
Other, net
  
 
(463
) 
     (1,031 ) 
Net cash from/(used in) investing activities
  
 
1,568
 
     (7,450 ) 
Cash flows from financing activities
    
Proceeds from issue of subordinated debentures
  
 
–
 
     1,000  
Redemption of subordinated debentures
  
 
(250
) 
     (3,250 ) 
Proceeds from preferred shares and other equity instruments issued
  
 
2,848
 
     1,004  
Redemption of preferred shares and other equity instruments
  
 
(1,688
) 
     (300 ) 
Proceeds from common shares issued
  
 
210
 
     1,945  
Common shares purchased for cancellation
  
 
(895
) 
     –  
Cash dividends and distributions paid
  
 
(5,875
) 
     (5,670 ) 
Distributions to
non-controlling
interests
  
 
(82
) 
     (88 ) 
Payment of lease liabilities
  
 
(298
) 
     (303 ) 
Other, net
  
 
(278
) 
     (3,176 ) 
Net cash from/(used in) financing activities
  
 
(6,308
) 
     (8,838 ) 
Effect of exchange rate changes on cash and cash equivalents
  
 
183
 
     (131 ) 
Net change in cash and cash equivalents
  
 
850
 
     (767 ) 
Cash and cash equivalents at beginning of year
(1)
  
 
9,406
 
     10,173  
Cash and cash equivalents at end of year
(1)
  
$
  10,256
 
   $ 9,406  
 
(1)
Represents cash and
non-interest-bearing
deposits with financial institutions (refer to Note 5).
The accompanying notes are an integral part of these consolidated financial statements.
 
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Table of Contents
Consolidated Financial Statements
 
Notes to the
2025 Consolidated
Financial Statements
 
 
Table of Contents
 
Page   Note    
153   1   Reporting entity
153   2   Basis of preparation
154   3   Material accounting policies
167   4   Future accounting developments
168   5   Cash and deposits with financial institutions
168   6   Fair value of financial instruments
174   7   Trading assets
175   8   Financial instruments designated at fair value through profit or loss
176   9   Derivative financial instruments
184   10   Offsetting financial assets and financial liabilities
185   11   Investment securities
188   12   Loans, impaired loans and allowance for credit losses
197   13   Derecognition of financial assets
198   14   Structured entities
201   15   Property and equipment
201   16   Investments in associates
202   17   Goodwill and other intangible assets
204   18   Other assets
204   19   Deposits
 
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Consolidated Financial Statements
 
1
Reporting Entity
The Bank of Nova Scotia (the Bank) is a chartered Schedule I bank under the Bank Act (Canada) (the Bank Act) and is regulated by the Office of the Superintendent of Financial Institutions (OSFI). The Bank is a global financial services provider offering a diverse range of products and services, including personal, commercial, corporate and investment banking. The head office of the Bank is located at 1709 Hollis Street, Halifax, Nova Scotia, Canada and its executive offices are at 40 Temperance Street, Toronto, Canada. The common shares of the Bank are listed on the Toronto Stock Exchange (TSX) and the New York Stock Exchange.
 
2
Basis of Preparation
Statement of compliance
These consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and accounting requirements of OSFI in accordance with Section 308 of the Bank Act. Section 308 states that, except as otherwise specified by OSFI, the financial statements are to be prepared in accordance with IFRS.
The consolidated financial statements for the year ended October 31, 2025 have been approved by the Board of Directors for issue on December 2, 2025.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following material items that are measured at fair value in the Consolidated Statement of Financial Position:
 
  •  
Financial assets and liabilities measured at fair value through profit or loss
  •  
Financial assets and liabilities designated at fair value through profit or loss
  •  
Derivative financial instruments
  •  
Equity instruments designated at fair value through other comprehensive income
  •  
Debt instruments measured at fair value through other comprehensive income
Functional and presentation currency
These consolidated financial statements are presented in Canadian dollars, which is the Bank’s functional currency. All financial information presented in Canadian dollars has been rounded to the nearest million unless otherwise stated.
Management’s use of estimates, assumptions and judgments
The Bank’s accounting policies require estimates, assumptions and judgments that relate to matters that are inherently uncertain. The Bank has established procedures to ensure that accounting policies are applied consistently. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised.
Use of estimates and assumptions
The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements, and other comprehensive income and income and expenses during the reporting period. Estimates made by management are based on historical experience and other factors and assumptions that are believed to be reasonable. Key areas of estimation uncertainty include those relating to the allowance for credit losses, the fair value of financial instruments (including derivatives), corporate income taxes, employee benefits, goodwill and intangible assets, the fair value of all identifiable assets and liabilities as a result of business combinations, impairment of
non-financial
assets and provisions. The Bank has utilized estimates, assumptions and judgments that reflect this uncertainty. While management makes its best estimates and assumptions, actual results could differ from these and other estimates.
Currently, there continues to be uncertainty surrounding U.S. trade policies and the impact of tariffs. This results in increased measurement uncertainty for estimates used in financial reporting. In particular, the allowance for credit losses, using an expected credit loss approach as required under IFRS 9, is estimated using complex models and incorporates inputs, assumptions, and techniques that require a high degree of judgement and is heavily dependent on the forecast of macroeconomic variables. Due to the ongoing uncertainty surrounding U.S. trade policy and tariffs, estimates and valuation models applied based on conditions and information existing as at October 31, 2025 may be significantly different from the actual outcome.
Significant judgments
In the preparation of these consolidated financial statements, management is required to make significant judgments in the classification and presentation of transactions and instruments and accounting for the Bank’s involvement with other entities.
 
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Consolidated Financial Statements
 
Significant estimates, assumptions and judgments have been made in the following areas and are discussed as noted in the consolidated financial statements:
 
Allowance for credit losses   
Note 3
Note 12(e)
Fair value of financial instruments   
Note 3
Note 6
Corporate income taxes   
Note 3
Note 26
Employee benefits   
Note 3
Note 27
Goodwill and intangible assets   
Note 3
Note 17
Fair value of all identifiable assets and liabilities as a result of business combinations   
Note 3
Note 35
Impairment of investment securities   
Note 3
Note 11
Impairment of
non-financial
assets		   
Note 3
Note 15
Note 17
Structured entities   
Note 3
Note 14
De facto control of other entities   
Note 3
Note 30
Derecognition of financial assets and liabilities   
Note 3
Note 13
Provisions   
Note 3
Note 22
 
3
Material Accounting Policies
The material accounting policies used in the preparation of these consolidated financial statements, including any additional accounting requirements of OSFI, as set out below, have been applied consistently to all periods presented in these consolidated financial statements.
Basis of consolidation
The consolidated financial statements include the assets, liabilities, financial performance and cash flows of the Bank and all of its subsidiaries, after elimination of intercompany transactions and balances. Subsidiaries are defined as entities controlled by the Bank. The Bank’s subsidiaries can be classified as entities controlled through voting interests or structured entities. The Bank consolidates a subsidiary from the date it obtains control. For the Bank to control an entity, all three elements of control should be in existence:
 
  •  
power over the investee;
  •  
exposure, or rights, to variable returns from involvement with the investee; and
  •  
the ability to use power over the investee to affect the amount of the Bank’s returns.
The Bank does not control an investee when it is acting as an agent. The Bank assesses whether it is an agent by determining whether it is primarily engaged to act on behalf of and for the benefit of another party or parties. The Bank reassesses whether it controls an investee if facts and circumstances indicate that one or more of the elements of control have changed.
Voting-interest subsidiaries
Control is presumed with an ownership interest of more than 50% of the voting rights in an entity unless there are other factors that indicate that the Bank does not control the entity despite having more than 50% of voting rights.
The Bank may consolidate an entity when it owns less than 50% of the voting rights when it has one or more other attributes of power:
 
  •  
by virtue of an agreement, over more than half of the voting rights;
  •  
to govern the financial and operating policies of the entity under a statute or an agreement;
  •  
to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body; or
  •  
to govern the financial and operating policies of the entity through the size of its holding of voting rights relative to the size and dispersion of holding of the other vote holders and voting patterns at shareholder meetings (i.e., de facto control).
Non-controlling
interests are presented within equity in the Consolidated Statement of Financial Position separate from equity attributable to equity holders of the Bank. The net income attributable to
non-controlling
interests is presented separately in the Consolidated Statement of Income. Partial sales and incremental purchases of interests in subsidiaries that do not result in a change of control are accounted for as equity transactions with
non-controlling
interest holders. Any difference between the carrying amount of the interest and the transaction amount is recorded as an adjustment to retained earnings.
Structured entities
Structured entities are designed to accomplish certain well-defined objectives and for which voting or similar rights are not the dominant factor in deciding who controls the entity. The Bank controls an entity when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The Bank consolidates all structured entities that it controls.
 
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Consolidated Financial Statements
 
Investments in associates
An associate is an entity in which the Bank has significant influence, but not control, over the operating and financial policies of the entity.
Investments in associates are recognized initially at cost, which includes the purchase price and other costs directly attributable to the purchase. Associates are accounted for using the equity method, which reflects the Bank’s share of the increase or decrease of the post-acquisition earnings and other movements in the associate’s equity.
Investments in associates are evaluated for impairment at the end of each financial reporting period, or more frequently if events or changes in circumstances indicate the existence of objective evidence of impairment.
For purposes of applying the equity method for an investment that has a different reporting period from the Bank, adjustments are made for the effects of any significant events or transactions that occur between the reporting date of the investment and the reporting date of the Bank.
Joint arrangements
The Bank’s investments in joint arrangements over which the Bank has joint control are classified as either joint operations or joint ventures, depending on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement.
Similar to accounting for investments in associates, for joint ventures, investments are recognized initially at cost and accounted for using the equity method, which reflects the Bank’s share of the increase or decrease of the post-acquisition earnings and other movements in the joint venture’s equity. Investments in joint ventures are evaluated for impairment at the end of each financial reporting period, or more frequently if events or changes in circumstances indicate the existence of objective evidence of impairment.
For joint operations, the Bank recognizes its direct rights to, and its share of jointly held assets, liabilities, revenues and expenses. These have been incorporated in the consolidated financial statements under the appropriate headings.
Translation of foreign currencies
The financial statements of each of the Bank’s foreign operations are measured using its functional currency, being the currency of the primary economic environment of the foreign operation.
Translation gains and losses related to the Bank’s monetary items are recognized in
non-interest
income in the Consolidated Statement of Income. Revenues and expenses denominated in foreign currencies are translated using average exchange rates. Foreign currency
non-monetary
items that are measured at historical cost are translated into the functional currency at historical rates. Foreign currency
non-monetary
items measured at fair value are translated into functional currency using the rate of exchange at the date the fair value was determined. Foreign currency gains and losses on
non-monetary
items are recognized in the Consolidated Statement of Income or Consolidated Statement of Comprehensive Income consistent with the gain or loss on the
non-monetary
item.
Unrealized gains and losses arising upon translation of foreign operations, together with any gains or losses arising from hedges of those net investment positions to the extent effective, are credited or charged to net change in unrealized foreign currency translation gains/losses in other comprehensive income in the Consolidated Statement of Comprehensive Income. On disposal or meeting the definition of partial disposal of a foreign operation, an appropriate portion of the translation differences previously recognized in other comprehensive income are recognized in the Consolidated Statement of Income.
Financial assets and liabilities
Recognition and initial measurement
The Bank, on the date of origination or purchase, recognizes loans, debt and equity securities, deposits and subordinated debentures at the fair value of the consideration paid or received.
Regular-way
purchases and sales of financial assets are recognized on the settlement date. All other financial assets and liabilities, including derivatives, are initially recognized on the trade date at which the Bank becomes a party to the contractual provisions of the instrument.
The initial measurement of a financial asset or liability is at fair value plus transaction costs that are directly attributable to its purchase or issuance. For instruments measured at fair value through profit or loss, transaction costs are recognized immediately in profit or loss.
Classification and measurement, derecognition, and impairment of financial instruments
Classification and measurement
Classification and measurement of financial assets
Financial assets include both debt and equity instruments, are classified into one of the following measurement categories:
 
  •  
Amortized cost;
  •  
Fair value through other comprehensive income (FVOCI);
  •  
Fair value through profit or loss (FVTPL);
  •  
Elected at fair value through other comprehensive income (Equities only); or
  •  
Designated at FVTPL
Debt instruments
Debt instruments, including loans and debt securities, are classified into one of the following measurement categories:
 
  •  
Amortized cost;
  •  
Fair value through other comprehensive income (FVOCI);
  •  
Fair value through profit or loss (FVTPL); or
  •  
Designated at FVTPL
Classification of debt instruments is determined based on:
 
(i)
The business model under which the asset is held; and
(ii)
The contractual cash flow characteristics of the instrument.
 
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Consolidated Financial Statements
 
Business model assessment
A business model assessment involves determining how financial assets are managed to generate cash flows. The Bank’s business model assessment is based on the following categories:
 
  •  
Held to collect: The objective of this business model is to hold assets and collect contractual cash flows. Any sales of the asset are incidental to the objective of the model.
  •  
Held to collect and for sale: Both collecting contractual cash flows and sales are integral to achieving the objectives of the business model.
  •  
Other business model: The business model is neither
held-to-collect
nor
held-to-collect
and for sale.
The Bank assesses the business model at a portfolio level reflective of how groups of assets are managed together to achieve a particular business objective. For the assessment of a business model, the Bank takes into consideration the following factors:
 
  •  
How the performance of assets in a portfolio is evaluated and reported to group heads and other key decision makers within the Bank’s business lines;
  •  
How compensation is determined for the Bank’s business lines’ management that manages the assets;
  •  
How the business lines’ management is compensated for managing the Bank’s assets based on the fair value or the contractual cash flows collected;
  •  
Whether the assets are held for trading purposes;
  •  
The risks that affect the performance of assets held within a business model and how those risks are managed; and
  •  
The frequency and volume of sales in prior periods and expectations about future sales activity.
Contractual cash flow characteristics assessment
The contractual cash flow characteristics assessment involves assessing the contractual features of an instrument to determine if they give rise to cash flows that are consistent with a basic lending arrangement. Contractual cash flows are consistent with a basic lending arrangement if they represent cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).
Principal is defined as the fair value of the instrument at initial recognition. Principal may change over the life of the instrument due to repayments or amortization of premium/discount.
Interest is defined as the consideration for the time value of money and the credit risk associated with the principal amount outstanding and for other basic lending risks and costs (liquidity risk and administrative costs), and a profit margin.
If the Bank identifies any contractual features that could significantly modify the cash flows of the instrument such that they are no longer consistent with a basic lending arrangement, the related financial asset is classified and measured at FVTPL.
Debt instruments measured at amortized cost
Debt instruments are measured at amortized cost if they are held within a business model whose objective is to hold for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. After initial measurement, debt instruments in this category are carried at amortized cost. Interest income on these instruments is recognized in interest income using the effective interest rate method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. Amortized cost is calculated by taking into account any discount or premium on the acquisition, transaction costs and fees that are an integral part of the effective interest rate.
Impairment on debt instruments measured at amortized cost is calculated using the expected credit loss approach. Loans and debt securities measured at amortized cost are presented net of the allowance for credit losses (ACL) in the Statement of Financial Position.
Debt instruments measured at FVOCI
Debt instruments are measured at FVOCI if they are held within a business model whose objective is to hold for collection of contractual cash flows and for selling financial assets, where the assets’ cash flows represent payments that are solely payments of principal and interest. Subsequent to initial recognition, unrealized gains and losses on debt instruments measured at FVOCI are recorded in other comprehensive income (OCI), unless the instrument is designated in a fair value hedge relationship. When designated in a fair value hedge relationship, any changes in fair value due to changes in the hedged risk are recognized in
Non-interest
income in the Consolidated Statement of Income, along with changes in fair value of the hedging instrument. Upon derecognition, realized gains and losses are reclassified from OCI and recorded in
Non-interest
income in the Consolidated Statement of Income. Foreign exchange gains and losses that relate to the amortized cost of the debt instrument are recognized in the Consolidated Statement of Income. Premiums, discounts and related transaction costs are amortized over the expected life of the instrument to Interest income in the Consolidated Statement of Income using the effective interest rate method.
Impairment on debt instruments measured at FVOCI is determined using the expected credit loss approach. The ACL on debt instruments measured at FVOCI does not reduce the carrying amount of the asset in the Consolidated Statement of Financial Position, which remains at its fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortized cost is recognized in OCI with a corresponding charge to provision for credit losses in the Consolidated Statement of Income. The accumulated allowance recognized in OCI is recycled to the Consolidated Statement of Income upon derecognition of the debt instrument.
Debt instruments measured at FVTPL
Debt instruments are measured at FVTPL if assets:
 
(i)
are held for trading purposes;
(ii)
are held as part of a portfolio managed on a fair value basis; or
(iii)
whose cash flows do not represent payments that are solely payments of principal and interest.
These instruments are measured at fair value in the Consolidated Statement of Financial Position, with transaction costs recognized immediately in the Consolidated Statement of Income as part of
Non-interest
income. Realized and unrealized gains and losses are recognized as part of
Non-interest
income in the Consolidated Statement of Income.
Debt instruments designated at FVTPL
The Bank designates certain debt instruments at FVTPL upon initial recognition, and the designation is irrevocable. The FVTPL designation is available when a fair value is reliably estimated, and doing so eliminates or significantly reduces an accounting mismatch which would otherwise arise.
 
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Debt instruments designated at FVTPL are recorded in the Consolidated Statement of Financial Position at fair value. Changes in fair value are recognized in
Non-interest
income in the Consolidated Statement of Income.
Equity instruments
Equity instruments are classified into one of the following measurement categories:
 
  •  
Fair value through profit or loss (FVTPL); or
  •  
Elected at fair value through other comprehensive income (FVOCI).
Equity instruments measured at FVTPL
Equity instruments are measured at FVTPL, unless an election is made to designate them at FVOCI upon purchase, with transaction costs recognized immediately in the Consolidated Statement of Income as part of
Non-interest
income. Subsequent to initial recognition, the changes in fair value and dividends received are recognized in the Consolidated Statement of Income.
Equity instruments measured at FVOCI
At initial recognition, the Bank has an option to classify
non-trading
equity instruments at FVOCI. This election is irrevocable and is made on an
instrument-by-instrument
basis.
Gains and losses on these instruments, including when derecognized/sold, are recorded in OCI and are not subsequently reclassified to the Consolidated Statement of Income. As such, there is no specific impairment requirement. Dividends received are recorded in Interest income in the Consolidated Statement of Income. Any transaction costs incurred upon purchase of the security are added to the cost basis of the security and are not reclassified to the Consolidated Statement of Income on sale of the security.
Classification and measurement of financial liabilities
Financial liabilities are classified into one of the following measurement categories:
 
  •  
Fair value through profit or loss (FVTPL);
  •  
Amortized cost; or
  •  
Designated at FVTPL.
Financial liabilities measured at FVTPL
Financial liabilities measured at FVTPL are held principally for the purpose of repurchasing in the near term, or form part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit-taking. Financial liabilities are recognized on a trade date basis and accounted for at fair value, with changes in fair value and any gains or losses recognized in the Consolidated Statement of Income as part of the
non-interest
income. Transaction costs are expensed as incurred.
Financial liabilities measured at amortized cost
Deposits, subordinated notes and debentures are accounted for at amortized cost. Interest on deposits, calculated using the effective interest rate method, is recognized as interest expense. Interest on subordinated notes and debentures, including capitalized transaction costs, is recognized using the effective interest rate method as interest expense.
Financial liabilities designated at FVTPL
The Bank designates certain financial liabilities at FVTPL upon initial recognition, and the designation is irrevocable. The FVTPL designation is available when a fair value is reliably estimated.
Financial liabilities are designated at FVTPL when it meets one of the following criteria:
 
  •  
The designation eliminates or significantly reduces an accounting mismatch which would otherwise arise; or
  •  
A group of financial liabilities are managed and their performance is evaluated on a fair value basis, in line with a documented risk management strategy; or
  •  
The financial liability contains one or more embedded derivatives which significantly modify the cash flows otherwise required.
Financial liabilities designated at FVTPL are recorded in the Consolidated Statement of Financial Position at fair value. Any changes in fair value are recognized in
Non-interest
income in the Consolidated Statement of Income, except for changes in fair value arising from changes in the Bank’s own credit risk which are recognized in OCI. Changes in fair value due to changes in the Bank’s own credit risk are not subsequently reclassified to the Consolidated Statement of Income upon derecognition/extinguishment of the liabilities.
Determination of fair value
The fair value of a financial asset or liability is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal, or in its absence, the most advantageous market to which the Bank has access at the measurement date.
The Bank values instruments carried at fair value using quoted market prices, where available. Fair value based on unadjusted quoted market prices for identical instruments in active markets represents a Level 1 valuation. When quoted market prices are not available, the Bank maximizes the use of observable inputs within valuation models. When a fair value is based on all significant market observable inputs, the valuation is classified as Level 2. Valuations that require the significant use of unobservable inputs are considered Level 3.
Inception gains and losses are only recognized where the valuation is dependent on observable market data; otherwise, they are deferred and amortized over the life of the related contract or until the valuation inputs become observable.
IFRS 13,
Fair Value Measurement
permits a measurement exception that allows an entity to determine the fair value of a group of financial assets and liabilities with offsetting risks based on the sale or transfer of its net exposure to a particular risk (or risks). The Bank has adopted this exception through an accounting policy choice. Consequently, the fair values of certain portfolios of financial instruments are determined based on the net exposure of those instruments to market, credit or funding risk.
In determining fair value for certain instruments or portfolios of instruments, valuation adjustments or reserves may be required to arrive at a more accurate representation of fair value. These adjustments include those made for credit risk,
bid-offer
spreads, unobservable parameters, funding costs and constraints on prices in inactive or illiquid markets.
 
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Table of Contents
Consolidated Financial Statements
 
Derecognition of financial assets and liabilities
Derecognition of financial assets
A financial asset is derecognized when the contractual rights to the cash flows from the asset has expired; or the Bank transfers the contractual rights to receive the cash flows from the financial asset; or has assumed an obligation to pay those cash flows to an independent third-party; or the Bank has transferred substantially all the risks and rewards of ownership of that asset to an independent third-party. Management determines whether substantially all the risk and rewards of ownership have been transferred by quantitatively comparing the variability in cash flows before and after the transfer. If the variability in cash flows remains significantly similar subsequent to the transfer, the Bank has retained substantially all of the risks and rewards of ownership.
Where substantially all the risks and rewards of ownership of the financial asset are neither retained nor transferred, the Bank derecognizes the transferred asset only if it has lost control over that asset. Control over the asset is represented by the practical ability to sell the transferred asset. If the Bank retains control over the asset, it will continue to recognize the asset to the extent of its continuing involvement. At times such continuing involvement may be in the form of investment in senior or subordinated tranches of notes issued by
non-consolidated
structured entities.
On derecognition of a financial asset, the difference between the carrying amount and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in other comprehensive income is recognized in the Consolidated Statement of Income.
Transfers of financial assets that do not qualify for derecognition are reported as secured financings in the Consolidated Statement of Financial Position.
The derecognition criteria are applied to the transfer of part of an asset, rather than the asset as a whole, only if such part comprises specifically identified cash flows from the asset, a fully proportionate share of the cash flows from the asset, or a fully proportionate share of specifically identified cash flows from the asset.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged, canceled or expires. If an existing financial liability is replaced by another from the same counterparty on substantially different terms, or the terms of the existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability at fair value. The difference in the respective carrying amount of the existing liability and the new liability is recognized as a gain/loss in the Consolidated Statement of Income.
Impairment
Scope
The Bank applies a three-stage approach to measure allowance for credit losses, using an expected credit loss approach as required under IFRS 9, for the following categories of financial instruments that are not measured at fair value through profit or loss:
 
  •  
Amortized cost financial assets;
  •  
Debt securities classified as FVOCI;
  •  
Off-balance
sheet loan commitments; and
  •  
Financial guarantee contracts.
Expected credit loss impairment model
The Bank’s allowance for credit losses calculations are outputs of models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. The expected credit loss impairment model reflects the present value of all cash shortfalls related to default events either (i) over the following twelve months or (ii) over the expected life of a financial instrument depending on credit deterioration from inception. The allowance for credit losses reflects an unbiased, probability-weighted outcome which considers multiple scenarios based on reasonable and supportable forecasts.
This impairment model measures credit loss allowances using a three-stage approach based on the extent of credit deterioration since origination:
 
 
•
 
Stage 1 – Where there has not been a significant increase in credit risk (SIR) since initial recognition of a financial instrument, an amount equal to 12 months expected credit loss is recorded. The expected credit loss is computed using a probability of default (PD) occurring over the next 12 months. For those instruments with a remaining maturity of less than 12 months, a PD corresponding to remaining term to maturity is used.
 
•
 
Stage 2 – When a financial instrument experiences a SIR subsequent to origination but is not considered to be in default, it is included in Stage 2. This requires the computation of expected credit loss based on the PD over the remaining estimated life of the financial instrument.
 
•
 
Stage 3 – Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected credit losses.
Measurement of expected credit loss
The PD, exposure at default (EAD), and loss given default (LGD) inputs used to estimate expected credit losses are modelled based on macroeconomic variables that are closely related with credit losses in the relevant portfolio.
Details of these statistical parameters/inputs are as follows:
 
 
•
 
PD – The probability of default is an estimate of the likelihood of default over a given time horizon. A default may only happen at a certain time over the remaining estimated life if the facility has not been previously derecognized and is still in the portfolio.
 
•
 
EAD – The exposure at default is an estimate of the exposure at a future default date, considering expected changes in the exposure after the reporting date, including repayments of principal and interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities, and accrued interest from missed payments.
 
•
 
LGD – The loss given default is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, including from the realization of any collateral. It is usually expressed as a percentage of the EAD.
 
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Forward-looking information
The estimation of expected credit losses for each stage and the assessment of SIR consider information about past events and current conditions as well as reasonable and supportable forecasts of future events and economic conditions. The estimation and application of forward-looking information may require significant judgment.
Macroeconomic factors
In its models, the Bank relies on a broad range of forward-looking economic information as inputs, such as: GDP growth, unemployment rates, central bank interest rates, and house price indices. The inputs and models used for calculating expected credit losses may not always capture all characteristics of the market at the date of the financial statements. Qualitative adjustments or overlays may be made as temporary adjustments using expert credit judgment.
Multiple forward-looking scenarios
The Bank determines its allowance for credit losses using four probability-weighted forward-looking scenarios. The Bank considers both internal and external sources of information and data in order to achieve unbiased projections and forecasts. The scenarios are prepared using forecasts generated by Scotiabank Economics (SE). The forecasts are created using internal and external models which are modified by SE as necessary to formulate a ‘base case’ view of the most probable future direction of relevant economic variables as well as a representative range of other possible forecast scenarios. The process involves the development of three additional economic scenarios and consideration of the relative probabilities of each outcome.
The ‘base case’ represents the most likely outcome and is aligned with information used by the Bank for other purposes such as strategic planning and budgeting. The other scenarios represent more optimistic and more pessimistic outcomes. The Bank has identified and documented key drivers of credit risk and credit losses for each portfolio of financial instruments and, using an analysis of historical data, has estimated relationships between macroeconomic variables, credit risk, and credit losses.
Assessment of significant increase in credit risk
At each reporting date, the Bank assesses whether there has been a SIR for exposures since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date and the date of initial recognition. The assessment considers borrower-specific quantitative and qualitative information without consideration of collateral, and the impact of forward-looking macroeconomic factors.
The common assessments for SIR on retail and
non-retail
portfolios include macroeconomic outlook, management judgment, and delinquency and monitoring. Forward-looking macroeconomic factors are a key component of the macroeconomic outlook. The importance and relevance of each specific macroeconomic factor depends on the type of product, characteristics of the financial instruments and the borrower and the geographical region. Quantitative models may not always be able to capture all reasonable and supportable information that may indicate a SIR. Qualitative factors may be assessed to supplement the gap. Examples of situations include changes in adjudication criteria for a particular group of borrowers, changes in portfolio composition, and natural disasters impacting certain portfolios. With regards to delinquency and monitoring, there is a rebuttable presumption that the credit risk of the financial instrument has increased since initial recognition when contractual payments are more than 30 days overdue.
Retail portfolio – For retail exposures, a SIR is assessed based on thresholds that exist by product which consider the change in PD. The thresholds used for PD migration are reviewed and assessed at least annually unless there is a significant change in credit risk management practices, in which case the review is brought forward.
Non-retail
portfolio – The Bank uses a risk rating scale (IG codes) for its
non-retail
exposures. All
non-retail
exposures have an IG code assigned that reflects the PD of the borrower. Both borrower specific and
non-borrower
specific (i.e. macroeconomic) forward-looking information is considered and reflected in the IG rating. SIR is evaluated based on the migration of the exposures among IG codes.
Expected life
When measuring expected credit loss, the Bank considers the maximum contractual period over which the Bank is exposed to credit risk. All contractual terms are considered when determining the expected life, including prepayment, and extension and rollover options. For certain revolving credit facilities, such as credit cards, the expected life is estimated based on the period over which the Bank is exposed to credit risk and how the credit losses are mitigated by management actions.
Presentation of allowance for credit losses in the Statement of Financial Position
 
 
•
 
Financial assets measured at amortized cost: as a deduction from the gross carrying amount of the financial assets;
 
•
 
Debt instruments measured at fair value through other comprehensive income: no allowance is recognized in the Statement of Financial Position because the carrying value of these assets is their fair value. However, the allowance determined is presented in the accumulated other comprehensive income;
 
•
 
Off-balance
sheet credit risks include undrawn lending commitments, letters of credit and letters of guarantee: as a provision in other liabilities.
Modified financial assets
If the terms of a financial asset are modified or an existing financial asset is replaced with a new one, an assessment is made to determine if the existing financial asset should be derecognized. Where a modification does not result in derecognition, the date of origination continues to be used to determine SIR. Where a modification results in derecognition, the new financial asset is recognized at its fair value on the modification date. The modification date is also the date of origination for this new asset.
The Bank may modify the contractual terms of loans for either commercial or credit reasons. The terms of a loan in good standing may be modified for commercial reasons to provide competitive pricing to borrowers. Loans are also modified for credit reasons where the contractual terms are modified to grant a concession to a borrower that may be experiencing financial difficulty.
For all financial assets, modifications of the contractual terms may result in derecognition of the original asset when the changes to the terms of the loans are considered substantial. These terms include interest rate, authorized amount or term. The original loan is derecognized, and the new loan is recognized at its fair value. The difference between the carrying value of the derecognized asset and the fair value of the new asset is recognized in the Consolidated Statement of Income.
 
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Consolidated Financial Statements
 
For all loans, performing and credit-impaired, where the modification of terms did not result in the derecognition of the loan, the gross carrying amount of the modified loan is recalculated based on the present value of the modified cash flows discounted at the original effective interest rate
,
and any gain or loss from the modification is recorded in the provision for credit losses line in the Consolidated Statement of Income.
Definition of default
The Bank considers a financial instrument to be in default when one or more loss events occur after the date of initial recognition of the instrument, and the loss event has a negative impact on the estimated future cash flows of the instrument that can be reliably estimated. This includes events that indicate:
 
 
•
 
significant financial difficulty of the borrower;
 
•
 
default or delinquency in interest or principal payments;
 
•
 
high probability of the borrower entering a phase of bankruptcy or a financial reorganization;
 
•
 
measurable decrease in the estimated future cash flows from the loan or the underlying assets that back the loan.
The Bank considers that default has occurred and classifies the financial asset as impaired when it is more than 90 days past due, except for credit card receivables that are treated as defaulted when 180 days past due, unless reasonable and supportable information demonstrates that a more lagging default criterion is appropriate.
Write-off
policy
The Bank writes off an impaired financial asset (and the related impairment allowance), either partially or in full, when there is no realistic prospect of recovery. Where financial assets are secured,
write-off
is generally after receipt of any proceeds from the realization of security. In circumstances where the net realizable value of any collateral has been determined and there is no reasonable expectation of further recovery,
write-off
may be earlier. Credit card receivables 180 days past due are
written-off.
In subsequent periods, any recoveries of amounts previously written off are credited to the provision for credit losses in the Consolidated Statement of Income.
Purchased loans
All purchased loans are initially measured at fair value on the date of acquisition. As a result, no allowance for credit losses would be recorded in the Consolidated Statement of Financial Position on the date of acquisition. Purchased loans may fit into either of the two categories: Performing loans or Purchased Credit-Impaired (PCI) loans.
Purchased performing loans follow the same accounting as originated performing loans and are reflected in Stage 1 on the date of the acquisition. They will be subject to a 12 month allowance for credit losses
,
which is recorded as a provision for credit losses in the Consolidated Statement of Income. The fair value adjustment set up for these loans on the date of acquisition is amortized into interest income over the life of these loans.
PCI loans are reflected in Stage 3 and are always subject to lifetime allowance for credit losses. Any changes in the expected cash flows since the date of acquisition are recorded as a charge/recovery in the provision for credit losses in the Consolidated Statement of Income at the end of all reporting periods subsequent to the date of acquisition.
Offsetting of financial instruments
Financial assets and financial liabilities with the same counterparty are offset, with the net amount reported in the Consolidated Statement of Financial Position, only if there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. When financial assets and financial liabilities are offset in the Consolidated Statement of Financial Position, the related income and expense items will also be offset in the Consolidated Statement of Income, unless specifically prohibited by an applicable accounting standard.
Cash and deposits with financial institutions
Cash and deposits with financial institutions comprise cash, cash equivalents, demand deposits with banks and other financial institutions, and highly liquid investments that are readily convertible to cash, subject to an insignificant risk of changes in value. These investments are those with less than three months maturity from the date of acquisition.
Precious metals
Precious metals are carried at fair value less costs to sell, and any changes in value are credited or charged to
non-interest
income – trading revenues in the Consolidated Statement of Income.
Securities purchased and sold under resale agreements
Securities purchased under resale agreements (reverse repurchase agreements) require the purchase of securities by the Bank from a counterparty with an agreement entered to resell the securities at a fixed price at a future date. Since the Bank is reselling the securities at a fixed price at a future date, the risks and rewards have not been transferred to the Bank. The Bank has the right to liquidate the securities purchased in the event of counterparty default.
Whereas securities sold under agreements to repurchase (repurchase agreements) require the sale of securities by the Bank to a counterparty with an agreement entered simultaneously to purchase the securities back at a fixed price at a future date. Since the Bank is purchasing the securities back at a fixed price at a future date, the risks and rewards have not been transferred from the Bank. The counterparty has the right to use the collateral pledged by the Bank in the event of default.
These agreements are treated as collateralized financing arrangements and are initially recognized at amortized cost. The party disbursing the cash takes possession of the securities serving as collateral for the financing and having a market value equal to, or more than, the principal amount loaned. The securities received under reverse repurchase agreements and securities delivered under repurchase agreements are not recognized on, or derecognized from, the Consolidated Statement of Financial Position, unless the risks and rewards of ownership are obtained or relinquished. The related interest income and interest expense are recorded on an accrual basis using the effective interest rate in the Consolidated Statement of Income.
 
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Obligations related to securities sold short
Obligations related to securities sold short arise in dealing and market-making activities where debt securities and equity shares are sold without possessing such securities.
Similarly, if securities purchased under an agreement to resell are subsequently sold to third parties, the obligation to return the securities is recorded as a short sale within obligations related to securities sold short in the Consolidated Statement of Financial Position. These trading liabilities are measured at fair value with any gains or losses included in
non-interest
income – trading revenues in the Consolidated Statement of Income. Interest expense accruing on debt securities sold short is recorded in the Consolidated Statement of Income.
Securities lending and borrowing
Securities lending and borrowing transactions are usually collateralized by securities or cash. The transfer of the securities to counterparties is only reflected on the Consolidated Statement of Financial Position if the risks and rewards of ownership are also transferred. For cash collateral advanced or received, the Bank presents these transactions as securities sold under a repurchase agreement or securities purchased under a reverse repurchase agreement, respectively. Interest income on cash collateral paid and interest expense on cash collateral received together with securities lending income and securities borrowing fee are reported in the Consolidated Statement of Income.
Securities borrowed are not recognized on the Consolidated Statement of Financial Position unless they are then sold to third parties, in which case the obligation to return the securities is recorded as a trading liability and measured at fair value with any gains or losses included
in non-interest
income – trading revenues, in the Consolidated Statement of Income.
Derivative instruments
Derivative instruments are contracts whose value is derived from interest rates, foreign exchange rates, commodity prices, equity prices or other financial variables. Most derivative instruments can be characterized as interest rate contracts, foreign exchange and gold contracts, commodity contracts, equity contracts or credit contracts. Derivative instruments are either exchange-traded contracts or negotiated
over-the-counter
contracts. Negotiated
over-the-counter
contracts include swaps, forwards and options.
The Bank enters into these derivative contracts for trading purposes, as well as to manage its risk exposures (i.e., to manage the Bank’s
non-trading
interest rate, foreign currency and other risk exposures). Trading activities are undertaken to meet the needs of the Bank’s customers, as well as for the Bank’s own account.
Derivatives embedded in other financial liabilities or host contracts are treated as separate stand-alone derivatives when the following conditions are met:
 
  •  
their economic characteristics and risks are not closely related to those of the host contract;
  •  
a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
  •  
the combined contract is not held for trading or designated at fair value through profit or loss.
Where an embedded derivative is separable from the host contract but the fair value, as at the acquisition or reporting date, cannot be reliably measured separately, the entire combined contract is measured at fair value. All embedded derivatives are presented on the Consolidated Statement of Financial Position on a combined basis with the host contracts. Changes in fair value of embedded derivatives that are separated from the host contract are recognized in
non-interest
income in the Consolidated Statement of Income.
All derivatives, including embedded derivatives that must be separately accounted for, are recorded at fair value in the Consolidated Statement of Financial Position. The determination of the fair value of derivatives includes consideration of credit risk, estimated funding costs and ongoing direct costs over the life of the instruments. Inception gains or losses on derivatives are only recognized where the valuation is dependent on observable market data; otherwise, they are deferred and amortized over the life of the related contract, or until the valuation inputs become observable.
The gains and losses resulting from changes in fair values of trading derivatives are included in
non-interest
income – trading revenues in the Consolidated Statement of Income.
Changes in the fair value of derivatives that do not qualify for hedge accounting are recorded in the Consolidated Statement of Income in
non-interest
income – other. Where derivative instruments are used to manage the volatility of share-based payment expense, these derivatives are carried at fair value with changes in the fair value in relation to units hedged included in
non-interest
expenses – salaries and employee benefits in the Consolidated Statement of Income.
Changes in the fair value of derivatives that qualify for hedge accounting are recorded as
non-interest
income – other in the Consolidated Statement of Income for fair value hedges and other comprehensive income in the Consolidated Statement of Comprehensive Income for cash flow hedges and net investment hedges.
Hedge accounting
The Bank has elected to continue to apply the hedge accounting requirements of IAS 39. Also, the Bank has implemented the additional hedge accounting disclosures that are required by the IFRS 9 related amendments to IFRS 7
Financial Instruments: Disclosures
.
The Bank formally documents all hedging relationships and its risk management objective and strategy for undertaking these hedge transactions at inception. The hedge documentation includes identification of the asset, liability, firm commitment or highly probable forecasted transaction being hedged, the nature of the risk being hedged, the hedging instrument used, and the method used to assess the effectiveness of the hedge.
The Bank also formally assesses, both at each hedge’s inception and on an ongoing basis, whether the hedging instruments are highly effective in offsetting changes in fair value or cash flows of the hedged items within an
80-125%
range. This assessment incorporates a comparison of critical terms of the hedged and hedging item, and regression analysis, in order to determine (i) whether the hedge relationship is expected to be highly effective going forward (i.e. prospective effectiveness assessment) and (ii) whether the hedge was actually highly effective for the designated period (i.e. retrospective effectiveness assessment).
Hedge ineffectiveness is measured and recorded in
non-interest
income – other in the Consolidated Statement of Income.
There are three types of hedges: (i) fair value hedges, (ii) cash flow hedges and (iii) net investment hedges.
 
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Fair value hedges
For fair value hedges, the change in fair value of the hedging instrument is offset in the Consolidated Statement of Income by the change in fair value of the hedged item attributable to the hedged risk. For hedges that are discontinued, the hedged item is no longer adjusted for changes in fair value. The cumulative fair value adjustment of the hedged item is amortized to interest income over its remaining term to maturity or written off to
non-interest
income directly if the hedged item ceases to exist. The Bank uses fair value hedges primarily to convert fixed rate financial instruments to floating rate financial instruments. Hedged items include debt securities, loans, deposit liabilities and subordinated debentures. Hedging instruments include single-currency interest rate swaps and cross-currency interest rate swaps.
Cash flow hedges
For cash flow hedges, the change in fair value of the hedging instrument, to the extent effective, is recorded in other comprehensive income until the corresponding gains and losses on the hedged item are recognized in income. For hedges that are discontinued, the cumulative unrealized gain or loss recognized in other comprehensive income is reclassified to interest income and/or salaries and employee benefits as the variability in the cash flows of hedged item affects income. However, if the hedged item is derecognized or the forecasted transaction is no longer expected to occur, the unrealized gain or loss is reclassified immediately to
non-interest
income and/or salaries and employee benefits. The Bank uses cash flow hedges primarily to hedge the variability in cash flows relating to floating rate financial instruments and highly probable forecasted revenues and expenses. Hedged items include debt securities, loans, deposit liabilities, subordinated debentures and highly probable forecasted transactions. Hedging instruments include single-currency interest rate swaps, cross-currency interest rate swaps, total return swaps, foreign currency forwards and foreign currency assets or liabilities.
Net investment hedges
For net investment hedges, the change in fair value of the hedging instrument, to the extent effective, is recorded in other comprehensive income until the corresponding cumulative translation adjustments on the hedged net investment are recognized in income. The Bank designates foreign currency liabilities and foreign currency forwards as hedging instruments to manage the foreign currency exposure and impact on capital ratios arising from foreign operations.
Property and equipment
Land is carried at cost. Buildings (including building fittings), equipment, and leasehold improvements are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. Depreciation is calculated using the straight-line method over the estimated useful life of the related asset less any residual value as follows: buildings – up to 40 years; building fittings – up to 15 years; equipment – 3 to 10 years; and leasehold improvements – lease term determined by the Bank. Depreciation expense is included in the Consolidated Statement of Income under
non-interest
expenses – depreciation and amortization. Depreciation methods, useful lives and residual values are reassessed at each financial
year-end
and adjusted as appropriate.
When major components of buildings and equipment have different useful lives, they are accounted for separately and depreciated over each component’s estimated useful life.
Net gains and losses on disposal are included in
non-interest
income – other in the Consolidated Statement of Income in the year of disposal.
Assets held for sale
Non-current
non-financial
assets (and disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. These assets meet the criteria for classification as held for sale if they are available for immediate sale in their present condition and their sale is considered highly probable to occur within one year.
Non-current
non-financial
assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell and are presented within other assets in the Consolidated Statement of Financial Position. Any subsequent write-down to fair value less costs to sell is recognized in the Consolidated Statement of Income, in
non-interest
income or
non-interest
expense. Any subsequent increase in the fair value less costs to sell, to the extent this does not exceed the cumulative write-down, is also recognized in
non-interest
income or
non-interest
expense, together with any realized gains or losses on disposal.
Non-financial
assets acquired in exchange for loans as part of an orderly realization are recorded as assets held for sale or assets held for use. If the acquired asset does not meet the requirement to be considered held for sale, the asset is considered held for use, measured initially at cost which equals the carrying value of the loan and accounted for in the same manner as a similar asset acquired in the normal course of business.
Business combinations and goodwill
The Bank follows the acquisition method of accounting for the acquisition of a business. The Bank considers the date on which control is obtained, and it legally transfers the consideration for the acquired assets and assumed liabilities of the subsidiary, to be the date of acquisition. The cost of an acquisition is measured at the fair value of the consideration paid. The fair value of the consideration transferred by the Bank in a business combination is calculated as the sum of the acquisition date fair value of the assets transferred by the Bank, the liabilities incurred by the Bank to former owners of the acquiree, and the equity interests, including any options, issued by the Bank. The Bank recognizes the acquisition date fair values of any previously held investment in the subsidiary and contingent consideration as part of the consideration transferred in exchange for the acquisition. A gain or loss on any previously held investments of an acquiree is recognized in
non-interest
income – other in the Consolidated Statement of Income.
In general, all identifiable assets acquired (including intangible assets) and liabilities assumed (including any contingent liabilities) are measured at the acquisition date fair value. The Bank records identifiable intangible assets irrespective of whether the assets have been recognized by the acquiree before the business combination.
Non-controlling
interests, if any, are recognized at their proportionate share of the fair value of identifiable assets and liabilities, unless otherwise indicated. Where the Bank has an obligation to purchase a
non-controlling
interest for cash or another financial asset, a financial liability is recognized based on management’s best estimate of the present value of the redemption amount. Where the Bank has a corresponding option to settle the purchase of a
non-controlling
interest by issuing its own common shares, no financial liability is recorded.
Any excess of the cost of acquisition over the Bank’s share of the net fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. If the cost of acquisition is less than the fair value of the Bank’s share of the identifiable assets acquired and liabilities assumed, the resulting gain is recognized immediately in
non-interest
income – other in the Consolidated Statement of Income.
 
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During the measurement period (which is within one year from the acquisition date), the Bank may, on a retrospective basis, adjust the amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date.
The Bank accounts for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received.
Subsequent to acquisition, the Bank accounts for the following assets and liabilities recognized in a business combination as described below:
 
  •  
Contingent liabilities, until resolved, are measured at the higher of the amount that would be recognized as a provision or the amount initially recognized, with any change recognized in the Consolidated Statement of Income.
  •  
Indemnification assets are measured on the same basis as the item to which the indemnification relates.
  •  
Contingent consideration classified as a liability is measured at fair value, with any change recognized in the Consolidated Statement of Income.
  •  
Liabilities to
non-controlling
interest holders when remeasured at the end of each reporting period, a corresponding change is recorded in equity.
After initial recognition of goodwill in a business combination, goodwill in aggregate is measured at cost less any accumulated impairment losses. Goodwill is not amortized but tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Goodwill is reviewed at each reporting date to determine whether there is any indication of impairment. For the purpose of impairment testing, goodwill acquired in a business combination is, on the acquisition date, allocated to each of the Bank’s group of cash-generating units (CGUs) that is expected to benefit from the combination. CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal management purposes.
The Bank determines the carrying value of the CGU using a regulatory capital approach based on credit, market, operational risks and leverage, consistent with the Bank’s capital attribution for business line performance measurement. Corporate capital that is not directly attributable is allocated to each CGU on a proportional basis, based on the relative attributed capital prior to the corporate capital allocation. The recoverable amount is the greater of fair value less costs of disposal (FVLCD) and value in use (VIU). If either FVLCD or VIU exceeds the carrying amount, there is no need to determine the other. An impairment loss is recognized if the carrying amount of the CGU exceeds the recoverable amount. An impairment loss on goodwill is not reversed.
FVLCD is the price that would be received from the sale of a CGU in an orderly transaction between market participants, less cost of disposal, at the measurement date. In determining FVLCD, an appropriate valuation model is used which considers various factors, including normalized net income, control premiums and price earnings multiples. These calculations are corroborated by valuation multiples and quoted share prices for publicly traded subsidiaries or other available fair value indicators.
VIU is the present value of the future cash flows expected to be derived from a CGU. The determination of VIU involves judgment in estimating cash flow projections, discount rate and terminal growth rate. The future cash flows are based on management approved budgets and plans which factor in market trends, macroeconomic conditions, forecasted earnings and business strategy for the CGU. The discount rate is based on the cost of capital while the terminal growth rate is based on the long-term growth expectations in the relevant countries.
Intangible assets
Intangible assets represent identifiable
non-monetary
assets and are acquired either separately, through a business combination, or generated internally. The Bank’s intangible assets are mainly comprised of computer software, customer relationships, contract intangibles, core deposit intangibles and fund management contracts.
The cost of a separately acquired intangible asset includes its purchase price and directly attributable costs of preparing the asset for its intended use. Intangibles acquired as part of a business combination are initially recognized at fair value.
In respect of internally generated intangible assets, initial measurement includes all directly attributable costs necessary to create, produce and prepare the asset to be capable of operating in the manner intended by management.
After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and accumulated impairment losses.
Intangible assets that have finite useful lives are initially measured at cost and amortized on a straight-line basis over their useful lives as follows: computer software – up to 10 years; and other intangible assets – 5 to 20 years. Amortization expense is included in the Consolidated Statement of Income under operating expenses – depreciation and amortization. As intangible assets are
non-financial
assets, the impairment model for
non-financial
assets is applied. Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Intangible assets with finite useful lives are only tested for impairment when events or circumstances indicate that the carrying value may be impaired.
Impairment of
non-financial
assets
The carrying amount of the Bank’s
non-financial
assets, other than goodwill, indefinite life intangible assets and deferred tax assets, which are separately addressed, is reviewed at each reporting date to determine whether there is any indication of impairment. For the purpose of impairment testing,
non-financial
assets that cannot be tested individually are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent from the cash inflows of other assets or groups of assets.
If any indication of impairment exists, the asset’s recoverable amount is estimated. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. The Bank’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses of continuing operations are recognized in the Consolidated Statement of Income in those expense categories consistent with the nature of the impaired asset. Impairment losses recognized in prior periods are reassessed at each reporting date for any indication that the loss had decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Such reversal is recognized in the Consolidated Statement of Income.
Significant judgment is applied in determining the
non-financial
asset’s recoverable amount and assessing whether certain events or circumstances constitute objective evidence of impairment.
 
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Corporate income taxes
The Bank follows the balance sheet liability method for corporate income taxes. Under this method, deferred tax assets and liabilities represent the cumulative amount of tax applicable to temporary differences, which are the differences between the carrying amount of the assets and liabilities, and their values for tax purposes. Deferred tax assets are recognized only to the extent it is probable that sufficient taxable profits will be available against which the benefit of these deferred tax assets can be utilized.
Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting group and where the Bank has both the legal right and the intention to settle on a net basis or to realize the asset and settle the liability simultaneously.
The Bank maintains provisions for uncertain tax positions that it believes appropriately reflect the risk of tax positions under discussion, audit, dispute or appeal with tax authorities, or which are otherwise considered to involve uncertainty. These provisions are made using the Bank’s best estimate of the amount expected to be paid based on an assessment of all relevant factors, which are reviewed at the end of each reporting period. It is possible that additional liability and income tax expense could arise in the future, depending on the acceptance of the Bank’s tax positions by the relevant tax authorities in the jurisdictions in which the Bank operates.
Income tax is recognized in the Consolidated Statement of Income, except where it relates to items recognized in other comprehensive income or directly in equity, in which case income tax is recognized in the same line as the related item.
Leases
At inception of a contract, the Bank assesses whether a contract is, or contains, a lease. A contract is a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. When the Bank is a lessee, it recognizes a
right-of-use
(ROU) asset and a lease liability, except for short-term leases for assets that have a lease term of 12 months or less and leases of low value items. For short-term leases and low value items, the Bank recognizes the lease payment associated with these leases as an expense on a straight-line basis over the lease term.
Asset
A ROU is an asset that represents a lessee’s right to use an underlying asset for the lease term. The ROU asset is initially measured at cost, which is based on the initial amount of the lease liability, any direct costs incurred, any lease payments made at or before the commencement date net of lease incentives received and estimated decommissioning costs.
The ROU asset is subsequently measured at cost less accumulated depreciation and accumulated impairment losses, if any. The ROU asset is depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. The depreciation is recorded in Depreciation and amortization in the Consolidated Statement of Income. In addition, the ROU asset is adjusted for certain remeasurements of the lease liability.
Liability
At commencement date, the Bank initially measures the lease liability at the present value of the future lease payments, discounted using the Bank’s incremental borrowing rate that takes into account the Bank’s credit risk and economic environment in which the lease is entered. The lease liability is subsequently measured at amortized cost using the effective interest method. It is
re-measured
if the Bank changes its assessment of whether it will exercise a purchase, extension or termination option. Interest expense is recorded in Interest expense – other in the Consolidated Statement of Income.
When the lease liability is
re-measured
in this way, a corresponding adjustment is made to the carrying amount of the ROU asset or is recorded in profit or loss if the carrying amount of the
right-of-use
asset has been reduced to zero.
Presentation
The Bank presents ROU assets in Property and equipment and lease liabilities in Other liabilities in the Consolidated Statement of Financial Position.
Determining lease term
The Bank’s expectation of exercising the option to renew a lease is determined by assessing if the Bank is “reasonably certain” to exercise that option. The Bank will be reasonably certain to exercise an option when factors create a significant economic incentive to do so. This assessment considers the following criteria: key locations for its branch network, locations on which the Bank has spent significant capital on renovation work, contribution to profit, value of locations based on current economic environment and the remaining term of existing leases.
Provisions
A provision, including for restructuring, is recognized if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
The amount recognized as a provision is the Bank’s best estimate of the consideration required to settle the present obligation, taking into account the risks and uncertainties surrounding the obligation. If the effect of the time value of money is considered material, provisions are determined by discounting the expected future cash flows at a
pre-tax
rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recorded as interest expense – other in the Consolidated Statement of Income.
Insurance contracts
The Bank identifies its insurance contracts under which it accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. For short duration contracts, the Bank applies the premium allocation approach which requires that the expected premium be recognized into income over the coverage period and a liability for remaining coverage be established to the extent that cash inflows are received earlier than the recognition of premiums into insurance revenue. A liability for incurred claims is established based on expected claims and expenses, with a risk adjustment for
non-financial
risk, required to settle past insured events.
 
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For long duration contracts, the Bank recognizes probability-weighted discounted fulfilment cashflows and a risk adjustment for
non-financial
risk for groups of contracts. To the extent that those groups of contracts are expected to be profitable, a contractual service margin liability is recognized on the Consolidated Statement of Financial Position which represents unearned profits that will be recognized in the Consolidated Statement of Income in the future over the life of the contract.
Insurance revenue is earned over the period the Bank provides insurance coverage and as risk is released. For all insurance contracts, losses on onerous contracts are recognized in income immediately.
Guarantees
A guarantee is a contract that contingently requires the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor failed to make payment when due in accordance with the original or modified terms of a debt instrument. Guarantees include standby letters of credit, letters of guarantee, indemnifications, credit enhancements and other similar contracts. Guarantees that qualify as a derivative are accounted for in accordance with the policy for derivative instruments. For guarantees that do not qualify as a derivative, a liability is recorded for the fair value of the obligation assumed at inception. The fair value of the obligation at inception is generally based on the discounted cash flow of the premium to be received for the guarantee, resulting in a corresponding asset. Subsequent to initial recognition, such guarantees are measured at the higher of the initial amount, less amortization to recognize any fee income earned over the period, and the best estimate of the amount required to settle any financial obligation arising as a result of the guarantee. Any increase in the liability is reported in the Consolidated Statement of Income.
Employee benefits
The Bank provides pension and other benefit plans for eligible employees globally. Pension benefits are offered in the form of defined benefit pension plans (generally based on an employee’s length of service and earnings) and defined contribution pension plans (where the Bank’s contribution is fixed and there is no legal or constructive obligation to pay further amounts). Other benefits provided include post-retirement health care, dental care and life insurance, along with other long-term employee benefits, such as long-term disability benefits.
Defined benefit pension plans and other post-retirement benefit plans
The cost of these employee benefits is actuarially determined each year using the projected unit credit method. The calculation uses management’s best estimate of a number of assumptions, including the discount rate, future compensation, health care costs, mortality, as well as the retirement age of employees. The most significant assumption is the discount rate used to determine the defined benefit obligation, which is set by reference to the yields on high quality corporate bonds that have durations that match the terms of the Bank’s obligations. Separate discount rates are used to determine the annual benefit expense in Canada and the U.S. These rates are determined with reference to the yields on high quality corporate bonds with durations that match the various components of the annual benefit expense. The discount rate used to determine the annual benefit expense for all other plans is the same as the rate used to determine the defined benefit obligation.
The Bank’s net asset or liability in respect of employee benefit plans is calculated separately for each plan as the difference between the present value of future benefits earned in respect of service for prior periods and the fair value of plan assets. The net asset or liability is included in other assets and other liabilities, as appropriate, in the Consolidated Statement of Financial Position. When the net amount in the Consolidated Statement of Financial Position is an asset, the recognized asset is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
The current service cost, net interest expense (income), past service cost (credit), settlement gain (loss) and administrative expense are recognized in net income. Net interest expense (income) is calculated by applying the discount rate to the net defined benefit asset or liability. When the benefits of a plan are improved (reduced), a past service cost (credit) is recognized immediately in net income.
Remeasurements comprising of actuarial gains and losses, the effect of the asset ceiling and the return on plan assets in excess of or less than the interest income on the fair value of assets are recognized immediately in the Consolidated Statement of Financial Position, with a charge or credit to the Statement of Other Comprehensive Income (OCI) in the period in which they occur. Amounts recorded in OCI are not recycled to the Consolidated Statement of Income.
Other long-term employee benefits
Other long-term employee benefits are accounted for similarly to defined benefit pension plans and other post-retirement benefit plans described above, except that remeasurements are recognized in the Consolidated Statement of Income in the period in which they arise.
Defined contribution plans
The costs of such plans are equal to contributions payable by the Bank to employees’ accounts for service rendered during the period and expensed.
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided and a liability is measured on an undiscounted basis net of payments made.
Interest and similar income and expenses
For all
non-trading
interest-bearing financial instruments, interest income or expense is recorded in net interest income using the effective interest rate. This is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or financial liability. The calculation takes into account all the contractual terms of the financial instrument (for example, prepayment options) and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective interest rate, but not future credit losses.
For trading financial instruments,
mark-to-market
changes including related interest income or expense are recorded in
non-interest
income – trading revenues.
The carrying amount of interest-bearing financial instruments, measured at amortized cost or classified as FVOCI, is adjusted if the Bank revises its estimates of payments or receipts. The adjusted carrying amount is calculated based on the original effective interest rate and the change in carrying amount is recorded as
non-interest
income in the Consolidated Statement of Income.
 
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Once the carrying value of a financial asset or a group of similar financial assets has been reduced due to an impairment loss, interest income continues to be recognized based on net effective interest rate inherent in the investment.
Loan origination costs are deferred and amortized into interest income using the effective interest method over the expected term of the loan. Loan fees are recognized in interest income over the appropriate lending or commitment period. Mortgage prepayment fees are recognized in interest income when received, unless they relate to a minor modification to the terms of the mortgage, in which case the fees are deferred and amortized using the effective interest method over the remaining period of the original mortgage.
Loan syndication fees are deferred and amortized in interest income over the term of the loan where the yield the Bank retains is less than that of the comparable lenders in the syndicate.
Loan commitment fees for loans that are likely to be drawn down and other credit related fees are deferred (together with any incremental costs) and recognized as part of the interest income on the loan. When it is unlikely that a loan will be drawn down, the loan commitment fees are recognized in
non-interest
income.
Fee and commission revenues
Revenue is recognized once the Bank’s customer has obtained control of the service. The transfer of control occurs when the Bank’s customer has the ability to direct the use of and obtain the benefits of the banking services and the contractual performance obligation to the customer has been satisfied. The Bank records revenue gross of expenses where it is the principal in performing a service to the customer and net of expenses where the Bank is an agent for these services. The assessment of principal or agent requires judgement on the basis of whether the Bank controls the services before they are transferred to the customer. From time to time, the Bank may receive variable consideration such as performance fees. These fees are only recognized when it is highly probable that the Bank will not need to reverse a significant amount of revenue.
Card revenues include interchange fees, annual fees and other card related fees. Interchange fees are calculated as a percentage of the transaction and are recognized on the transaction date. Annual fees are recognized in income over 12 months. Other card fees are transaction-based and are recognized on the transaction date.
The Bank operates various loyalty points programs, which allow customers to accumulate points when using the Bank’s products and services. Loyalty point liabilities are subject to periodic remeasurement to reflect the expected cost of redemption. Where the customer has the option to redeem points for statement credits, the cost of the loyalty program is presented net of card fees. Where points can only be redeemed for goods or services, interchange revenue allocated to the loyalty rewards is recognized when the rewards are redeemed. Reward costs are recorded in
non-interest
expenses.
Banking services fees consist of fees earned on personal, business and government deposit activities. Personal deposit-related fees consist of account maintenance and various transaction-based services. Business and government deposit-related fees consist of commercial deposit and treasury management services and other cash management services. These fees are recognized on the transaction date or over time as services are provided to the customer.
Credit fees include fees earned for providing letters of credit and guarantee, loan commitments, bankers’ acceptances, and for arranging loan syndications. These fees are recognized on the transaction date or over time as services are provided based on contractual agreements with the customer.
Mutual funds fees include management and administration fees which are earned in the Bank’s wealth management business. These fees are calculated as a percentage of the fund’s net asset value and recognized as the service is provided. From time to time, the Bank may also recognize performance fees from some funds. These fees are only recognized to the extent that it is highly probable that a significant reversal of revenue will not occur.
Brokerage fees relate to fees earned for providing full-service and discount brokerage services to clients. These fees are contractually agreed and can be asset-based or linked to individual transactions. Such fees are recognized as the service is provided to clients or on the trade date.
Investment management and trust fees include administration, trust services and other investment services provided to clients. These fees are contractually agreed upon and can be linked to portfolio values or individual transactions. Such fees are recognized as the service is provided to clients to the extent that it is highly probable that a significant reversal of revenue will not occur.
Underwriting and other advisory fees relate to fees earned for services provided to clients in relation to the placement of debt and equities. Such fees also include services to clients for mergers, acquisitions, financial restructurings and other corporate finance activities. These fees are recognized when the service has been performed and/or contractual milestones are completed. Performance and completion fees are variable consideration and generally contingent on the successful completion of a transaction.
Other fees and commissions include commissions earned on the sale of third party insurance products to the Bank’s customers. Such fees and commissions are recognized when the performance obligation is completed.
Fee and commission expenses
Fee and commission expenses relate to transaction and service fees which are expensed as the services are received.
Dividend income
Dividend income on equity securities is recognized when the Bank’s right to receive payment is established, which is on the
ex-dividend
date for listed equity securities.
Share-based payments
Share-based payments awarded to employees are recognized as compensation expense in the Consolidated Statement of Income over the vesting period based on the number of awards expected to vest, including the impact of expected forfeitures. For awards that are delivered in tranches, each tranche is considered a separate award and accounted for separately.
Plain vanilla options and other awards that must be settled for shares are classified as equity awards. Equity-classified awards are expensed based on the grant date fair value with a corresponding increase to equity – other reserves in the Consolidated Statement of Financial Position. If an option is exercised, both the exercise price proceeds together with the amount recorded in other reserves is credited to equity – common shares in the Consolidated Statement of Financial Position.
 
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Stock appreciation rights and other awards that must be settled for cash are classified as liabilities. Liability-classified awards are remeasured to fair value at each reporting date while they remain outstanding, with any changes in fair value recognized in compensation expense in the period. The liability is expensed over the vesting period, which incorporates the remeasurement of the fair value and a revised forfeiture rate that anticipates units expected to vest.
For plain vanilla options and stock appreciation rights, the Bank estimates fair value using an option pricing model. The option pricing model requires inputs such as the exercise price of the option, the current share price, the risk-free interest rate, expected dividends, expected volatility (calculated using an equal weighting of implied and historical volatility) and specific employee exercise behaviour patterns based on statistical data. For other awards, fair value is the quoted market price of the Bank’s common shares at the reporting date.
Where derivatives are used to economically hedge share-based payment expense, related
mark-to-market
gains and losses are included in
non-interest
expenses – salaries and employee benefits in the Consolidated Statement of Income.
Dividends on shares
Dividends on common and preferred shares and other equity instruments are recognized as a liability and deducted from equity when they are declared and no longer at the discretion of the Bank.
Segment reporting
Management’s internal view is the basis for the determination of operating segments. The operating segments are those whose operating results are regularly reviewed by the Bank’s chief operating decision-maker to make decisions about resources to be allocated to the segment and assess its performance. The Bank has four operating segments: Canadian Banking, International Banking, Global Wealth Management and Global Banking and Markets. The Other category represents smaller operating segments, including Group Treasury and other corporate items, which are not allocated to an operating segment. These segments offer different products and services and are managed separately based on the Bank’s management and internal reporting structure.
The results of these business segments are based upon the internal financial reporting systems of the Bank. The accounting policies used in these segments are generally consistent with those followed in the preparation of the consolidated financial statements by the Bank. The only notable accounting measurement difference is the grossing up of revenues which are
tax-exempt
and income from associate corporations to an equivalent
before-tax
basis for those affected segments. This change in measurement enables comparison of income arising from taxable and
tax-exempt
sources.
Given the complexity of the Bank, various estimates and allocation methodologies are used in the preparation of the business segment financial information. The funding value of assets and liabilities is transfer-priced at wholesale market rates, and corporate expenses are allocated to each segment on an equitable basis using various parameters. As well, capital is apportioned to the business segments on a risk-based methodology. Transactions between segments are recorded within segment results as if conducted with a third-party and are eliminated on consolidation.
Earnings per share (EPS)
Basic EPS is computed by dividing net income for the period attributable to the Bank’s common shareholders by the weighted-average number of common shares outstanding during the period.
Diluted EPS is calculated by dividing adjusted net income for the period attributable to common shareholders by the weighted-average number of diluted common shares outstanding for the period. In the calculation of diluted earnings per share, earnings are adjusted for changes in income or expenses that would result from the issuance of dilutive shares. The weighted-average number of diluted common shares outstanding for the period reflects the potential dilution that would occur if options, securities or other contracts that entitle their holders to obtain common shares had been outstanding from the beginning of the period (or a later date) to the end of the period (or an earlier date). Instruments determined to have an antidilutive impact for the period are excluded from the calculation of diluted EPS.
The number of additional shares for inclusion in diluted EPS for share-based payment options is determined using the treasury share method. Under this method, the net number of incremental common shares is determined by assuming that
in-the-money
stock options are exercised and the proceeds are used to purchase common shares at the average market price during the period.
The number of additional shares associated with capital instruments that potentially result in the issuance of common shares is based on the terms of the contract. On occurrence of contingencies as specified in the
Non-Viability
Contingent Capital (NVCC) instruments, the number of additional common shares associated with the NVCC subordinated debentures, NVCC subordinated additional Tier 1 capital notes, NVCC limited recourse capital notes and NVCC preferred shares is based on an automatic conversion formula as set out in the respective prospectus supplements.
 
4
Future Accounting Developments
The Bank actively monitors developments and changes in accounting standards from the IASB, as well as requirements from the other regulatory bodies, including OSFI. The Bank is currently assessing the impact of adoption of new standards issued by the IASB on its consolidated financial statements and also evaluating the alternative elections available on transition.
Effective November 1, 2026
IFRS 9
Financial Instruments
and IFRS 7
Financial Instruments
: Disclosures
– Amendments
On May 30, 2024, the IASB issued “Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)” to address post-implementation review findings of IFRS 9
Financial Instruments
.
The amendments introduce an accounting policy choice to derecognize financial liabilities settled through an electronic payment system before the settlement date upon meeting certain conditions. The amendments clarify the assessment of contractual cash flow characteristics of financial assets based on contingent events, such as interest rates linked to environmental, social and governance (ESG) targets, the treatment of
non-recourse
assets, and contractually linked instruments. The amendments introduce new disclosure requirements for financial instruments with contractual terms that can change cash flows due to events not directly related to changes in basic lending risks, such as certain loans subject to ESG targets. Additionally, the amendments change some of the disclosure requirements for equity instruments designated at fair value through other comprehensive income.
 
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The amendments are effective for the Bank on November 1, 2026, and early adoption is permitted. The Bank is required to apply the amendments retrospectively but is not required to restate prior periods. The Bank is currently assessing the impact of these amendments.
Effective November 1, 2027
IFRS 18
Presentation and Disclosure in Financial Statements
The IASB issued IFRS 18
Presentation and Disclosure in Financial Statements
on April 9, 2024, to replace IAS 1
Presentation of Financial Statements
and is effective for annual periods beginning on or after January 1, 2027. IFRS 18 introduces a defined structure for the presentation of the statement of income, including required totals and subtotals, as well as aggregating and disaggregating principles to categorize financial information. The standard also requires all Management-defined performance measures to be disclosed in the notes to the financial statements.
IFRS 18 will be effective for the Bank on November 1, 2027, with early adoption permitted. The Bank is currently assessing the impact of this new standard.
 
5
Cash and Deposits with Financial Institutions
 
As at October 31 ($ millions)  
2025
    
2024
  
Cash and
non-interest-bearing
deposits with financial institutions
  
$
10,256
 
   $ 9,406  
Interest-bearing deposits with financial institutions
  
 
55,711
 
     54,454  
Total
  
$
 65,967
(1)
 
   $  63,860
(1)
 
 
(1)
Net of allowances of $4 (2024 – $3).
The Bank is required to maintain balances with central banks, other regulatory authorities and certain counterparties. These amounted to $6,759 million (2024 – $5,322 million) and are included above.
 
6
Fair Value of Financial Instruments
Determination of fair value
The calculation of fair value is based on market conditions at a specific point in time and therefore may not be reflective of future fair values. The Bank has controls and processes in place to ensure that the valuation of financial instruments is appropriately determined.
The Bank discloses the classification of all financial instruments carried at fair value in a hierarchy based on the determination of fair value. The best evidence of fair value for a financial instrument is the quoted price in an active market. Fair value based on unadjusted quoted market prices for identical instruments in active markets represents a Level 1 valuation. Where possible, valuations are based on quoted prices or observable inputs obtained from active markets.
Independent Price Verification (IPV) is undertaken to assess the accuracy of prices and inputs used in the determination of fair value. The IPV process is performed by price verification groups that are independent of the business. The Bank maintains a list of approved pricing sources that are used in the IPV process. These sources include, but are not limited to, brokers, exchanges and pricing services. The valuation policies relating to the IPV process require that all pricing or rate sources used be external to the Bank. At least annually, an independent assessment of pricing or rate sources is performed to determine the market presence and reliability of market levels.
Quoted prices are not always available for
over-the-counter
(OTC) transactions as well as for transactions in inactive or illiquid markets. OTC transactions are valued using internal models that maximize the use of observable inputs to estimate fair value. The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction. When fair value is based on all significant market observable inputs, the valuation is classified as Level 2. Financial instruments traded in a less active market can be valued using indicative market prices, the present value of cash flows or other valuation techniques. Fair value estimates normally do not consider forced or liquidation sales.
Where financial instruments trade in inactive markets or when using models where observable parameters do not exist, significant management judgment is required for valuation methodologies and model inputs. Valuations that require the significant use of unobservable inputs are considered Level 3.
The specific inputs and valuation techniques used in determining the fair value of financial instruments are noted below. For Level 3 instruments, additional information is disclosed in the Level 3 sensitivity analysis on page 173.
The fair values of cash and deposits with banks, securities purchased under resale agreements and securities borrowed, customers’ liability under acceptances, obligations related to securities sold under repurchase agreements and securities lent, acceptances, and obligations related to securities sold short are assumed to approximate their carrying values, either due to their short-term nature or because they are frequently repriced to current market rates.
Trading loans
Trading loans are comprised of loans that serve as hedges to total return swaps, hedges for precious metal certificate liabilities and loans subject to sale through syndication. Trading loans that serve as hedges to loan-based credit total return swaps and precious metals certificate liabilities are valued using consensus prices from Bank approved independent pricing services. The fair value of loans subject to sale through syndication approximates their carrying value due to the short-term nature of these loans.
Government issued or guaranteed securities
The fair values of government issued or guaranteed debt securities are primarily based on unadjusted quoted prices in active markets, where available. Where quoted prices in active markets are not available, the fair value is determined by utilizing recent transaction prices, reliable broker quotes, or pricing services, which derive fair values using only observable valuation inputs, which are significant to the fair values.
 
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|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
For securities for which quoted prices are not available, the Bank uses a discounted cash flow method, using the effective yield of a similar instrument adjusted for instrument-specific risk factors that are observable inputs such as credit spread and contracted features.
Corporate and other debt
Corporate and other debt securities are valued using unadjusted quoted prices from independent market data providers or third-party broker quotes from an active market. Where direct prices from active markets are not available, the valuation is performed with a yield-based valuation approach. In some instances, interpolated yields of similar bonds are used to price securities. The Bank uses pricing models with observable inputs from market sources such as credit spread, and interest rate curves. These inputs are verified through an IPV process on a monthly basis.
For certain securities where there is no active market, no consensus market pricing and no indicative or executable independent third-party quotes, the Bank uses pricing by third-party providers or internal pricing models and cannot readily observe the significant inputs used to price such instruments.
Mortgage-backed securities
The fair value of residential mortgage-backed securities is primarily determined using broker quotes and independent market data providers. In limited circumstances, an internal price-based model may be used with the unobservable inputs that are significant to the fair value.
Equity securities
The fair value of equity securities is based on unadjusted quoted prices in active markets, where available. Where equity securities are less frequently traded, the most recent exchange-quoted pricing is used to determine fair value.
For private equity securities, where quoted prices in active markets are not readily available, the fair value is determined as a multiple of the underlying earnings or percentage of underlying net asset value obtained from third-party general partner statements.
Derivatives
Fair values of exchange-traded derivatives are based on unadjusted quoted market prices from an active market. Fair values of
over-the-counter
(OTC) derivatives or inactive exchange-traded derivatives are determined using pricing models, which take into account observable valuation inputs such as current market and contractual prices of the underlying instruments, as well as time value and yield curve or volatility factors underlying the positions. The determination of the fair value of derivatives includes consideration of credit risk, estimated funding costs and ongoing direct costs over the life of the instruments.
Derivative products valued using a valuation technique with market-observable inputs mainly include interest rate swaps and options, currency swaps and forward foreign exchange contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including foreign exchange spot, forward rates and interest rate curves.
Derivative products valued using a valuation technique with significant unobservable inputs, such as volatility, correlation, and forward curves, may include long dated contracts (interest rate swaps, currency swaps, option contracts, commodity contracts and certain credit default swaps) and other derivative products that reference a basket of assets.
Loans
The estimated fair value of loans carried at amortized cost reflects changes in the general level of interest rates and creditworthiness of borrowers that have occurred since the loans were originated or purchased. The particular valuation methods used are as follows:
 
  •  
Canadian fixed rate residential mortgages are fair valued by discounting the expected future contractual cash flows, taking into account expected prepayments and using management’s best estimate of average market interest rates currently offered for mortgages with similar remaining terms.
  •  
For fixed rate business and government loans, fair value is determined by discounting the expected future contractual cash flows at market interest rates for loans with similar credit risks.
  •  
For all other fixed rate loans, fair value is determined by discounting the expected future contractual cash flows of these loans at market interest rates.
  •  
For all floating rate loans fair value is assumed to equal carrying value.
The fair value of loans is not adjusted for the value of any credit protection the Bank has purchased to mitigate credit risk.
Deposits
The fair values of deposits payable on demand or after notice or floating rate deposits payable on a fixed date is assumed to equal carrying value.
The estimated fair values of Canadian personal fixed rate deposits payable on a fixed date are fair valued by discounting the expected future contractual cash outflows, using management’s best estimate of average market interest rates currently offered for deposits with similar remaining terms.
Deposits under the Canada Mortgage Bond (CMB) program are fair valued by discounting expected future contractual cash flows using market observable inputs.
For all other fixed rate deposits, fair value is determined by discounting the expected future contractual cash flows of these deposits at interest rates currently offered for deposits with similar terms.
For structured notes containing embedded features that are bifurcated from plain vanilla notes, the fair value of the embedded derivatives is determined using option pricing models with observable inputs similar to other interest rate or equity derivative contracts.
Certain deposits that are designated at FVTPL are structured notes. Their coupon or repayment terms can be linked to the performance of market parameters such as interest rates, equities, and foreign currencies. The fair value of these structured notes is determined using models which incorporate observable market inputs, such as interest rate curves, equity prices, equity volatility and foreign exchange rates. Some structured notes may have significant unobservable inputs to model valuation such as interest rate volatility and equity correlation.
Obligations related to securities sold short
The fair values of these obligations are based on the fair value of the underlying securities, which can include debt or equity securities. The method used to determine fair value is based on the quoted market prices where available in an active market.
 
2025 Scotiabank Annual Report 
|
 
169
Consolidated Financial Statements
 
Subordinated debentures and other liabilities
The fair values of subordinated debentures, including debentures issued by subsidiaries which are included in other liabilities, are determined by reference to quoted market prices where available or market prices for debt with similar terms and risks. The fair values of other liabilities are determined by the discounted contractual cash flow method with appropriate currency swap curves for the remaining term or market prices for instruments with similar terms and risks.
Fair value of financial instruments
The following table sets out the fair values of financial instruments of the Bank using the valuation methods and assumptions described above. The fair values disclosed do not include
non-financial
assets, such as property and equipment, investments in associates, precious metals, goodwill and other intangible assets.
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Total
fair
value
    
Total
carrying
value
    
Total
fair
value
    
Total
carrying
value
  
Assets:
        
Cash and deposits with financial institutions
  
$
65,967
 
  
$
65,967
 
   $ 63,860     $ 63,860  
Trading assets
  
 
152,223
 
  
 
152,223
 
     129,727       129,727  
Securities purchased under resale agreements and securities borrowed
  
 
203,008
 
  
 
203,008
 
     200,543       200,543  
Derivative financial instruments
  
 
46,531
 
  
 
46,531
 
     44,379       44,379  
Investment securities – FVOCI and FVTPL
  
 
126,226
 
  
 
126,226
 
     123,420       123,420  
Investment securities – Amortized cost
  
 
23,239
 
  
 
23,722
 
     28,422       29,412  
Loans
  
 
769,900
 
  
 
771,045
 
      757,825        760,829  
Customers’ liability under acceptances
  
 
177
 
  
 
177
 
     148       148  
Other financial assets
  
 
28,128
 
  
 
28,128
 
     22,467       22,467  
Liabilities:
        
Deposits
  
 
 965,925
 
  
 
 966,279
 
     941,290       943,849  
Financial instruments designated at fair value through profit or loss
  
 
47,165
 
  
 
47,165
 
     36,341       36,341  
Acceptances
  
 
178
 
  
 
178
 
     149       149  
Obligations related to securities sold short
  
 
38,104
 
  
 
38,104
 
     35,042       35,042  
Derivative financial instruments
  
 
56,031
 
  
 
56,031
 
     51,260       51,260  
Obligations related to securities sold under repurchase agreements and
securities lent
  
 
189,144
 
  
 
189,144
 
     190,449       190,449  
Subordinated debentures
  
 
7,749
 
  
 
7,692
 
     7,814       7,833  
Other financial liabilities
  
 
56,500
 
  
 
56,529
 
     53,342       53,387  
Changes in interest rates, credit spreads and liquidity costs are the main cause of changes in the fair value of the Bank’s financial instruments resulting in a favourable or unfavourable variance compared to carrying value. For the Bank’s financial instruments carried at cost or amortized cost, the carrying value is not adjusted to reflect increases or decreases in fair value due to market fluctuations, including those due to interest rate changes. For FVOCI investment securities, derivatives and financial instruments measured at FVTPL or designated as fair value through profit or loss, the carrying value is adjusted regularly to reflect the fair value.
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
Fair value hierarchy
The following table outlines the fair value hierarchy of instruments carried at fair value on a recurring basis and of instruments not carried at fair value.
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Level 1
    
Level 2
    
Level 3
    
Total
    
Level 1
    
Level 2
    
Level 3
    
Total
  
Instruments carried at fair value on a recurring basis:
                
Assets:
                
Precious metals
(1)
  
$
–
 
  
$
5,156
 
  
$
–
 
  
$
5,156
 
   $ –     $ 2,540     $ –     $ 2,540  
Trading assets
                
Loans
  
 
–
 
  
 
8,486
 
  
 
1
 
  
 
8,487
 
     –       7,649       –       7,649  
Canadian federal government and government guaranteed debt
  
 
13,838
 
  
 
1,963
 
  
 
–
 
  
 
15,801
 
     11,229       3,742       –       14,971  
Canadian provincial and municipal debt
  
 
8,374
 
  
 
3,336
 
  
 
–
 
  
 
11,710
 
     6,228       2,185       –       8,413  
U.S. treasury and other U.S. agencies’ debt
  
 
9,132
 
  
 
–
 
  
 
–
 
  
 
9,132
 
     15,050       –       –       15,050  
Other foreign governments’ debt
  
 
1,837
 
  
 
8,451
 
  
 
–
 
  
 
10,288
 
     422       9,932       –       10,354  
Corporate and other debt
  
 
3,523
 
  
 
6,593
 
  
 
–
 
  
 
10,116
 
     4,940       6,990       4       11,934  
Equity securities
  
 
83,412
 
  
 
373
 
  
 
12
 
  
 
83,797
 
     59,081       88       21       59,190  
Other
  
 
–
 
  
 
2,892
 
  
 
–
 
  
 
2,892
 
     –       2,166       –       2,166  
 
$
 120,116
 
  
$
32,094
 
  
$
13
 
  
$
 152,223
 
   $  96,950     $  32,752     $ 25     $  129,727  
Investment securities
(2)
                
Canadian federal government and government guaranteed debt
  
$
15,143
 
  
$
7,967
 
  
$
–
 
  
$
23,110
 
   $ 12,739     $ 8,801     $ –     $ 21,540  
Canadian provincial and municipal debt
  
 
16,293
 
  
 
4,550
 
  
 
–
 
  
 
20,843
 
     12,823       4,702       –       17,525  
U.S. treasury and other U.S. agencies’ debt
  
 
 42,300
 
  
 
6,736
 
  
 
–
 
  
 
49,036
 
     39,999       6,377       –       46,376  
Other foreign governments’ debt
  
 
7,099
 
  
 
20,627
 
  
 
–
 
  
 
27,726
 
     3,940       25,346       –       29,286  
Corporate and other debt
  
 
116
 
  
 
2,892
 
  
 
32
 
  
 
3,040
 
     133       3,359       35       3,527  
Equity securities
  
 
96
 
  
 
329
 
  
 
2,046
 
  
 
2,471
 
     2,983       317       1,866       5,166  
 
$
81,047
 
  
$
43,101
 
  
$
2,078
 
  
$
126,226
 
   $ 72,617     $ 48,902     $ 1,901     $ 123,420  
Derivative financial instruments
                
Interest rate contracts
  
$
–
 
  
$
9,804
 
  
$
3
 
  
$
9,807
 
   $ –     $ 11,584     $ –     $ 11,584  
Foreign exchange and gold contracts
  
 
–
 
  
 
26,411
 
  
 
1
 
  
 
26,412
 
     –       26,004       –       26,004  
Equity contracts
  
 
816
 
  
 
6,452
 
  
 
161
 
  
 
7,429
 
     150       4,313       44       4,507  
Credit contracts
  
 
–
 
  
 
269
 
  
 
4
 
  
 
273
 
     –       180       2       182  
Commodity contracts
  
 
–
 
  
 
2,594
 
  
 
16
 
  
 
2,610
 
     –       2,095       7       2,102  
 
$
816
 
  
$
45,530
 
  
$
185
 
  
$
46,531
 
   $ 150     $ 44,176     $ 53     $ 44,379  
Liabilities:
                
Deposits
(3)
  
$
–
 
  
$
335
 
  
$
–
 
  
$
335
 
   $ –     $ 193     $ –     $ 193  
Financial liabilities designated at fair
value through profit or loss
  
 
–
 
  
 
47,165
 
  
 
–
 
  
 
47,165
 
     –       36,341       –       36,341  
Obligations related to securities sold short
  
 
34,864
 
  
 
3,240
 
  
 
–
 
  
 
38,104
 
     30,721       4,319       2       35,042  
Derivative financial instruments
                
Interest rate contracts
  
 
–
 
  
 
17,181
 
  
 
8
 
  
 
17,189
 
     –       17,895       13       17,908  
Foreign exchange and gold contracts
  
 
–
 
  
 
25,793
 
  
 
–
 
  
 
25,793
 
     –       25,900       –       25,900  
Equity contracts
  
 
783
 
  
 
9,288
 
  
 
43
 
  
 
10,114
 
     139       4,687       19       4,845  
Credit contracts
  
 
–
 
  
 
24
 
  
 
2
 
  
 
26
 
     –       46       1       47  
Commodity contracts
  
 
–
 
  
 
2,897
 
  
 
12
 
  
 
2,909
 
     –       2,550       10       2,560  
 
$
783
 
  
$
55,183
 
  
$
65
 
  
$
56,031
 
   $ 139     $ 51,078     $ 43     $ 51,260  
Instruments not carried at fair value
(4)
:
                
Assets:
                
Investment securities – amortized cost
  
$
1,548
 
  
$
21,691
 
  
$
–
 
  
$
23,239
 
   $ 1,127     $ 27,295     $ –     $ 28,422  
Loans
(5)
  
 
–
 
  
 
–
 
  
 
 400,574
 
  
 
400,574
 
     –       –        399,139       399,139  
Liabilities:
                
Deposits
(5)
  
 
–
 
  
 
 392,222
 
  
 
–
 
  
 
392,222
 
     –       411,838       –       411,838  
Subordinated debentures
  
 
7,345
 
  
 
404
 
  
 
–
 
  
 
7,749
 
     –       7,814       –       7,814  
Other liabilities
  
 
–
 
  
 
22,098
 
  
 
486
 
  
 
22,584
 
     –       21,563       499       22,062  
 
(1)
The fair value of precious metals is determined based on quoted market prices and forward spot prices, where applicable, less the cost to sell.
(2)
Excludes debt investment securities measured at amortized cost of $23,722 (October 31, 2024 – $29,412).
(3)
These amounts represent embedded derivatives bifurcated from structured note liabilities measured at amortized cost.
(4)
Represents the fair value of financial assets and liabilities where the carrying amount is not a reasonable approximation of fair value.
(5)
Represents fixed rate instruments.
 
2025 Scotiabank Annual Report 
|
 
171
Consolidated Financial Statements
 
Level 3 instrument fair value changes
Financial instruments categorized as Level 3 in the fair value hierarchy as at October 31, 2025, comprised of loans, structured corporate bonds, equity securities and derivatives.
The following table summarizes the changes in Level 3 instruments carried at fair value for the year ended October 31, 2025.
All positive balances represent assets and negative balances represent liabilities. Consequently, positive amounts indicate purchases of assets or settlements of liabilities and negative amounts indicate sales of assets or issuances of liabilities.
 
   
As at October 31, 2025
  
($ millions)  
Fair value
November 1
2024
    
Gains/(losses)
recorded in
income
(1)
    
Gains/(losses)
recorded in
OCI
    
Purchases/
Issuances
    
Sales/
Settlements
    
Transfers
into/out of
Level 3
    
Fair value
October 31
2025
    
Change in
unrealized
gains/(losses)
recorded in
income for
instruments
still held
(2)
  
Trading assets
                
Loans
   $ –    
$
   –
 
  
$
   –
 
  
$
1
 
  
$
(179
)
  
$
179
 
  
$
1
 
  
$
   –
 
Corporate and other debt
     4    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(4
)
  
 
–
 
  
 
–
 
Equity securities
     21    
 
–
 
  
 
–
 
  
 
7
 
  
 
(19
)
  
 
3
 
  
 
12
 
  
 
1
 
    25    
 
–
 
  
 
–
 
  
 
8
 
  
 
(198
)
  
 
178
 
  
 
13
 
  
 
1
 
   
Investment securities
                
Corporate and other debt
     35    
 
(5
) 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
2
 
  
 
32
 
  
 
(5
) 
Equity securities
     1,866    
 
148
 
  
 
69
 
  
 
197
 
  
 
(228
) 
  
 
(6
) 
  
 
2,046
 
  
 
141
 
     1,901    
 
143
 
  
 
69
 
  
 
197
 
  
 
(228
) 
  
 
(4
) 
  
 
 2,078
 
  
 
136
 
   
Derivative financial instruments – assets
                
Interest rate contracts
     –    
 
2
 
  
 
–
 
  
 
4
 
  
 
(3
)
  
 
–
 
  
 
3
 
  
 
2
(
4
)
 
Foreign exchange and gold contracts
     –    
 
–
 
  
 
–
 
  
 
2
 
  
 
–
 
  
 
(1
)
  
 
1
 
  
 
–
 
Equity contracts
     44    
 
97
 
  
 
–
 
  
 
17
 
  
 
–
 
  
 
3
 
  
 
161
 
  
 
97
(3)
 
Credit contracts
     2    
 
(1
)
  
 
–
 
  
 
3
 
  
 
–
 
  
 
–
 
  
 
4
 
  
 
(1
) 
Commodity contracts
     7    
 
9
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
16
 
  
 
9
 
   
Derivative financial instruments – liabilities
                
Interest rate contracts
     (13 )   
 
(10
) 
  
 
–
 
  
 
(5
) 
  
 
22
 
  
 
(2
) 
  
 
(8
) 
  
 
(10
)
(4)
 
Equity contracts
     (19 )   
 
(15
) 
  
 
–
 
  
 
(26
) 
  
 
–
 
  
 
17
 
  
 
(43
) 
  
 
(15
)
(3)
 
Credit contracts
     (1 )   
 
1
 
  
 
–
 
  
 
(2
) 
  
 
–
 
  
 
–
 
  
 
(2
) 
  
 
1
 
Commodity contracts
     (10 )   
 
(2
) 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(12
) 
  
 
(2
) 
    10    
 
81
 
  
 
–
 
  
 
(7
)
  
 
19
 
  
 
17
 
  
 
120
 
  
 
81
 
Obligations related to securities sold short
     (2 )   
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
2
 
  
 
–
 
  
 
–
 
Total
   $ 1,934    
$
224
 
  
$
69
 
  
$
 198
 
  
$
 (407
) 
  
$
 193
 
  
$
2,211
 
  
$
218
 
 
(1)
Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 2.
(2)
These amounts represent the unrealized gains and losses from fair value changes of Level 3 instruments still held at the end of the period that are recorded in the Consolidated Statement of Income.
(3)
Certain unrealized gains and losses on derivative assets and liabilities are largely offset by
mark-to-market
changes on other instruments included in trading revenues in the Consolidated Statement of Income, since these instruments act as an economic hedge to certain derivative assets and liabilities.
(4)
Certain unrealized gains and losses on interest rate derivative contracts are largely offset by mark-to-market changes on embedded derivatives on certain deposit liabilities in the Consolidated Statement of Income.
The following table summarizes the changes in Level 3 instruments carried at fair value for the year ended October 31, 2024.
 
   
As at October 31, 2024
  
($ millions)  
Fair value
November 1
2023
    
Gains/(losses)
recorded in
income
(1)
    
Gains/(losses)
recorded
in OCI
    
Purchases/
Issuances
    
Sales/
Settlements
    
Transfers
into/out of
Level 3
    
Fair value
October 31
2024
  
Trading assets
     20       (1 )      –       44       (22 )      (16 )      25  
Investment securities
     1,749       100       (25 )      251       (207 )      33       1,901  
Derivative financial instruments
     15       (11 )      –       9       (9 )      6       10  
Obligations related to securities sold short
     –       –       –       –       –       (2 )      (2 ) 
 
(1)
Gains or losses for items in Level 3 may be offset with losses or gains on related hedges in Level 1 or Level 2.
Significant transfers
Significant transfers can occur between the fair value hierarchy levels when additional or new information regarding valuation inputs and their refinement and observability becomes available. The Bank recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
The following significant transfers made between Levels 1 and 2 were based on whether the fair value was determined using quoted market prices from an active market.
 
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Consolidated Financial Statements
 
During the year ended October 31, 2025:
 
  •  
Trading assets of $620 million, investment securities of $2,310 million and obligations related to securities sold short of $265 million were transferred out of Level 2 into Level 1.
  •  
Trading assets of $914 million, investment securities of $1,532 million and obligations related to securities sold short of $268 million were transferred out of Level 1 into Level 2.
During the year ended October 31, 2024:
 
  •  
Trading assets of $1,867 million, investment securities of $3,010 million and obligations related to securities sold short of $396 million were transferred out of Level 2 into Level 1.
  •  
Trading assets of $712 million, investment securities of $698 million and obligations related to securities sold short of $6 million were transferred out of Level 1 into Level 2.
There was
no
significant transfer into and out of Level 3 during the year ended October 31, 2025 and October 31, 2024.
Level 3 sensitivity analysis
The table below sets out information about significant unobservable inputs used in measuring financial instruments categorized as Level 3 in the fair value hierarchy.
 
    
Valuation technique
       
Significant unobservable inputs
       
Range of estimates for
unobservable inputs
(1)
         
Changes in fair value
from reasonably
possible alternatives
($ millions)
       
Investment securities
      
General Partner valuations
        
       
Private equity securities
(2)
   Market comparable  
 
   per net asset value  
 
     n/a    
 
   (84)/84
       
Derivative financial instruments
              
       
Interest rate contracts
  
Option pricing
    
Interest rate
        
 
   model  
 
   volatility  
 
    
59% - 220%
    
 
   (1)/1
       
Equity contracts
  
Option pricing
     Equity volatility      
5% - 397%
      
 
   model  
 
   Equity correlation  
 
    
(114%) - 114%
    
 
   (45)/45
Commodity contracts
   Discounted cash flow  
 
   Forward curves  
 
    
9% - 15%
    
 
   (5)/5
 
(1)
The range of estimates represents the actual lowest and highest level inputs used to fair value financial instruments within each financial statement category.
(2)
The valuation of private equity securities utilizes net asset values as reported by fund managers. Net asset values are not considered observable as the Bank cannot redeem these instruments at such values. The range for net asset values per unit or price per share has not been disclosed for these instruments since the valuations are not model-based.
The Bank applies judgment in determining unobservable inputs used to calculate the fair value of Level 3 instruments.
The following section discusses the significant unobservable inputs for Level 3 instruments.
General Partner (GP) Valuations per Net Asset Value
Net asset values provided by GPs represent the fair value of investments in private equity securities.
Correlation
Correlation becomes an input into equity derivative pricing when the relationship between price movements of two or more of the underlying assets is relevant.
Volatility
Volatility for equity derivatives is a measure of the underlying price fluctuation. Interest rate volatility measures variability of a security yield or interest rate. Historic volatility is often calculated as the annualized standard deviation of daily price or yield variation for a given time period. Implied volatility is such that, when input into an option pricing model, returns a value equal to the current market value of the option.
Forward curves
Monthly forward curves for commodity contracts are required inputs to valuation. A portion of the forward curves are unobservable.
 
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173
Table of Contents
Consolidated Financial Statements
 
7
Trading Assets
 
(a)
Trading securities
An analysis of the carrying value of trading securities is as follows:
 
As at October 31, 2025 ($ millions)  
Remaining term to maturity
         
    
Within three
months
    
Three to
twelve
months
    
One to
five years
    
Five to ten
years
    
Over ten
years
    
No specific
maturity
    
Carrying
value
  
Trading securities:
              
Canadian federal government issued or guaranteed debt
  
$
357
 
  
$
2,143
 
  
$
7,102
 
  
$
3,606
 
  
$
2,593
 
  
$
–
 
  
$
15,801
 
Canadian provincial and municipal debt
  
 
1,410
 
  
 
1,545
 
  
 
2,101
 
  
 
1,856
 
  
 
4,798
 
  
 
–
 
  
 
11,710
 
U.S. treasury and other U.S. agency debt
  
 
807
 
  
 
1,628
 
  
 
3,961
 
  
 
1,871
 
  
 
865
 
  
 
–
 
  
 
9,132
 
Other foreign government debt
  
 
670
 
  
 
3,441
 
  
 
4,347
 
  
 
1,406
 
  
 
424
 
  
 
–
 
  
 
10,288
 
Equity securities
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
83,797
 
  
 
83,797
 
Other
  
 
730
 
  
 
1,044
 
  
 
5,591
 
  
 
2,019
 
  
 
732
 
  
 
–
 
  
 
10,116
 
Total
  
$
3,974
 
  
$
9,801
 
  
$
23,102
 
  
$
10,758
 
  
$
9,412
 
  
$
83,797
 
  
$
140,844
 
Total by currency (in Canadian equivalent):
              
Canadian dollar
  
$
2,328
 
  
$
4,115
 
  
$
11,627
 
  
$
6,147
 
  
$
7,889
 
  
$
24,118
 
  
$
56,224
 
U.S. dollar
  
 
920
 
  
 
2,339
 
  
 
8,266
 
  
 
3,711
 
  
 
1,125
 
  
 
44,421
 
  
 
60,782
 
Mexican peso
  
 
408
 
  
 
1,915
 
  
 
1,976
 
  
 
157
 
  
 
161
 
  
 
76
 
  
 
4,693
 
Other currencies
  
 
318
 
  
 
1,432
 
  
 
1,233
 
  
 
743
 
  
 
237
 
  
 
15,182
 
  
 
19,145
 
Total trading securities
  
$
3,974
 
  
$
9,801
 
  
$
23,102
 
  
$
10,758
 
  
$
9,412
 
  
$
83,797
 
  
$
140,844
 
As at October 31, 2024 ($ millions)  
Remaining term to maturity
         
    
Within three
months
    
Three to
twelve
months
    
One to
five years
    
Five to ten
years
    
Over ten
years
    
No specific
maturity
    
Carrying
value
  
Trading securities:
              
Canadian federal government issued or guaranteed debt
   $ 352     $ 1,646     $ 6,182     $ 3,626     $ 3,165     $ –     $ 14,971  
Canadian provincial and municipal debt
     920       893       1,774       937       3,889       –       8,413  
U.S. treasury and other U.S. agency debt
     1,724       2,439       7,237       2,461       1,189       –       15,050  
Other foreign government debt
     1,458       3,663       3,883       1,046       304       –       10,354  
Equity securities
     –       –       –       –       –       59,190       59,190  
Other
     316       2,468       5,792       2,728       623       7       11,934  
Total
   $ 4,770     $ 11,109     $ 24,868     $ 10,798     $ 9,170     $ 59,197     $ 119,912  
Total by currency (in Canadian equivalent):
              
Canadian dollar
   $ 1,570     $ 3,452     $ 9,779     $ 5,029     $ 7,397     $ 27,688     $ 54,915  
U.S. dollar
     1,604       3,643       10,711       4,426       1,570       24,796       46,750  
Mexican peso
     704       1,714       2,135       101       63       59       4,776  
Other currencies
     892       2,300       2,243       1,242       140       6,654       13,471  
Total trading securities
   $  4,770     $  11,109     $  24,868     $  10,798     $  9,170     $  59,197     $  119,912  
 
(b)
Trading loans
The following table provides the geographic breakdown of trading loans:
 
As at October 31 ($ millions)  
2025
    
2024
  
Trading loans
(1)(2)
    
U.S.
(3)
  
$
6,290
 
   $ 6,154  
Europe
(3)
  
 
434
 
     458  
Canada
(4)
  
 
1,759
 
     980  
Other
  
 
4
 
     57  
Total
  
$
 8,487
 
   $  7,649  
 
(1)
Geographic segmentation of trading loans is based upon the location of the ultimate risk of the underlying asset.
(2)
Loans are primarily denominated in U.S. dollars.
(3)
Includes trading loans that serve as a hedge to loan-based credit total return swaps.
(4)
Includes trading loans that serve as hedges to total return swaps, hedges for precious metal certificate liabilities and loans subject to sale through syndication.
 
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Table of Contents
Consolidated Financial Statements
 
8
Financial Instruments Designated at Fair Value Through Profit or Loss
In accordance with its risk management strategy, the Bank has elected to designate certain senior note liabilities at fair value through profit or loss to reduce an accounting mismatch between fair value changes in these instruments and fair value changes in related derivatives, and where a hybrid financial liability contains one or more embedded derivatives that are not closely related to the host contract. Changes in fair value of financial liabilities arising from the Bank’s own credit risk are recognized in other comprehensive income, without subsequent reclassification to net income.
The cumulative fair value adjustment due to own credit risk is determined at a point in time by comparing the present value of expected future cash flows over the term of these liabilities discounted at the Bank’s effective funding rate, and the present value of expected future cash flows discounted at a benchmark rate.
The following table presents the fair value of financial liabilities designated at fair value through profit or loss and their changes in fair value.
 
   
Fair value
    
Change in fair value
(1)
Gains/(losses)
    
Cumulative change in FV
(2)
Gains/(losses)
  
   
 As at
    
For the year ended
         
October 31 ($ millions)  
2025
    
2024
    
2025
    
2024
    
2025
    
2024
  
Liabilities:
            
Senior note liabilities
(3)
  
$
 47,165
 
   $  36,341    
$
 (870
) 
   $  (4,515 )   
$
 3,270
 
   $  4,140  
 
(1)
Change in the difference between the contractual maturity amount and the carrying value.
(2)
The cumulative change in fair value is measured from the instrument’s date of initial recognition.
(3)
Changes in fair value attributable to changes in the Bank’s own credit risk are recorded in other comprehensive income. Other changes in fair value are recorded in
non-interest
income – trading revenues. The offsetting fair value changes from associated derivatives is also recorded in
non-interest
income – trading revenues.
The following table presents the changes in fair value attributable to changes in the Bank’s own credit risk for financial liabilities designated at fair value through profit or loss as well as their contractual maturity and carrying amounts.
 
    
Senior Note Liabilities
  
($ millions)  
Contractual
maturity
amount
    
Carrying
value
    
Difference
between
contractual
maturity
amount and
carrying value
    
Changes in fair value
for the period
attributable to
changes in own
credit risk recorded
in other
comprehensive
income
Gains/(losses)
    
Cumulative changes
in fair value
attributable to
changes in own
credit risk
(1)

Gains/(losses)
  
As at October 31, 2025
  
$
50,435
 
  
$
47,165
 
  
$
3,270
 
  
$
(693
) 
  
$
 (1,606
) 
As at October 31, 2024
   $  40,481     $  36,341     $  4,140     $  (804 )    $  (913 ) 
 
(1)
The cumulative change in fair value is measured from the instrument’s date of initial recognition.
 
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175
Table of Contents
Consolidated Financial Statements
 
9
Derivative Financial Instruments
 
(a)
Notional amounts
(1)
The following table provides the aggregate notional amounts of derivative financial instruments outstanding by type and segregated between those used by the Bank in its dealer capacity (Trading) and those derivatives designated in hedging relationships. The notional amounts of these contracts represent the derivatives volume outstanding and do not represent the potential gain or loss associated with the market risk or credit risk of such instruments. Credit derivatives within other derivative contracts are comprised primarily of purchased and sold credit default swap transactions. To a lesser extent, this category also includes total return swaps referenced to loans and debt securities. Commodity and other contracts includes energy, precious metals other than gold and other commodities.
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Trading
    
Hedging
    
Total
    
Trading
    
Hedging
    
Total
  
Interest rate contracts
            
Exchange-traded:
            
Futures
  
$
763,135
 
  
$
–
 
  
$
763,135
 
   $ 606,019     $ –     $ 606,019  
Options purchased
  
 
2,686
 
  
 
–
 
  
 
2,686
 
     5,848       –       5,848  
Options written
  
 
2,545
 
  
 
–
 
  
 
2,545
 
     5,430       –       5,430  
 
 
768,366
 
  
 
–
 
  
 
768,366
 
     617,297       –       617,297  
Over-the-counter:
            
Forward rate agreements
  
 
315
 
  
 
–
 
  
 
315
 
     215       –       215  
Swaps
  
 
467,384
 
  
 
58,791
 
  
 
526,175
 
     427,122       53,481       480,603  
Options purchased
  
 
84,306
 
  
 
–
 
  
 
84,306
 
     45,572       –       45,572  
Options written
  
 
83,090
 
  
 
–
 
  
 
83,090
 
     49,595       –       49,595  
 
 
635,095
 
  
 
58,791
 
  
 
693,886
 
     522,504       53,481       575,985  
Over-the-counter
(settled through central counterparties):
            
Forward rate agreements
  
 
157,033
 
  
 
–
 
  
 
157,033
 
     86,657       –       86,657  
Swaps
  
 
8,630,261
 
  
 
344,717
 
  
 
8,974,978
 
     5,694,823       278,314       5,973,137  
Options purchased
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Options written
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
 
 
8,787,294
 
  
 
344,717
 
  
 
9,132,011
 
     5,781,480       278,314       6,059,794  
Total
  
$
10,190,755
 
  
$
403,508
 
  
$
10,594,263
 
   $ 6,921,281     $ 331,795     $ 7,253,076  
Foreign exchange and gold contracts
            
Exchange-traded:
            
Futures
  
$
18,665
 
  
$
–
 
  
$
18,665
 
   $ 21,952     $ –     $ 21,952  
Options purchased
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Options written
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
 
 
18,665
 
  
 
–
 
  
 
18,665
 
     21,952       –       21,952  
Over-the-counter:
            
Spot and forwards
  
 
581,518
 
  
 
20,870
 
  
 
602,388
 
     541,732       21,156       562,888  
Swaps
  
 
869,035
 
  
 
102,579
 
  
 
971,614
 
     771,246       108,558       879,804  
Options purchased
  
 
32,750
 
  
 
–
 
  
 
32,750
 
     25,135       –       25,135  
Options written
  
 
46,781
 
  
 
–
 
  
 
46,781
 
     36,390       –       36,390  
 
 
1,530,084
 
  
 
123,449
 
  
 
1,653,533
 
     1,374,503       129,714       1,504,217  
Over-the-counter
(settled through central counterparties):
            
Spot and forwards
  
 
34,708
 
  
 
–
 
  
 
34,708
 
     24,865       –       24,865  
Swaps
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Options purchased
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Options written
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
 
 
34,708
 
  
 
–
 
  
 
34,708
 
     24,865       –       24,865  
Total
  
$
1,583,457
 
  
$
123,449
 
  
$
1,706,906
 
   $ 1,421,320     $ 129,714     $ 1,551,034  
Other derivative contracts
            
Exchange-traded:
            
Equity
  
$
128,297
 
  
$
–
 
  
$
128,297
 
   $ 59,329     $ –     $ 59,329  
Credit
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Commodity and other contracts
  
 
39,897
 
  
 
–
 
  
 
39,897
 
     46,304       –       46,304  
 
 
168,194
 
  
 
–
 
  
 
168,194
 
     105,633       –       105,633  
Over-the-counter:
            
Equity
  
 
131,393
 
  
 
1,284
 
  
 
132,677
 
     83,455       965       84,420  
Credit
  
 
20,457
 
  
 
–
 
  
 
20,457
 
     18,086       –       18,086  
Commodity and other contracts
  
 
40,993
 
  
 
–
 
  
 
40,993
 
     36,596       –       36,596  
 
 
192,843
 
  
 
1,284
 
  
 
194,127
 
     138,137       965       139,102  
Over-the-counter
(settled through central counterparties):
            
Equity
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Credit
  
 
7,374
 
  
 
–
 
  
 
7,374
 
     9,069       –       9,069  
Commodity and other contracts
  
 
501
 
  
 
–
 
  
 
501
 
     251       –       251  
 
 
7,875
 
  
 
–
 
  
 
7,875
 
     9,320       –       9,320  
Total
  
$
368,912
 
  
$
1,284
 
  
$
370,196
 
   $ 253,090     $ 965     $ 254,055  
Total notional amounts outstanding
  
$
 12,143,124
 
  
$
 528,241
 
  
$
 12,671,365
 
   $  8,595,691     $  462,474     $  9,058,165  
 
(1)
The notional amounts represent the amount to which a rate or price is applied to determine the amount of cash flows to be exchanged.
 
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Consolidated Financial Statements
 
(b)
Remaining term to maturity
The following table summarizes the remaining term to maturity of the notional amounts of the Bank’s derivative financial instruments by type:
 
As at October 31, 2025 ($ millions)  
Within one year
    
One to five years
    
Over five years
    
Total
  
Interest rate contracts
        
Futures
  
$
617,714
 
  
$
145,421
 
  
$
–
 
  
$
763,135
 
Forward rate agreements
  
 
122,168
 
  
 
34,865
 
  
 
315
 
  
 
157,348
 
Swaps
  
 
4,604,519
 
  
 
3,089,234
 
  
 
1,807,400
 
  
 
9,501,153
 
Options purchased
  
 
66,995
 
  
 
17,710
 
  
 
2,287
 
  
 
86,992
 
Options written
  
 
51,546
 
  
 
21,347
 
  
 
12,742
 
  
 
85,635
 
 
 
5,462,942
 
  
 
3,308,577
 
  
 
1,822,744
 
  
 
10,594,263
 
Foreign exchange and gold contracts
        
Futures
  
 
16,134
 
  
 
2,482
 
  
 
49
 
  
 
18,665
 
Spot and forwards
  
 
593,082
 
  
 
37,899
 
  
 
6,115
 
  
 
637,096
 
Swaps
  
 
243,425
 
  
 
489,190
 
  
 
238,999
 
  
 
971,614
 
Options purchased
  
 
25,053
 
  
 
7,183
 
  
 
514
 
  
 
32,750
 
Options written
  
 
37,985
 
  
 
8,230
 
  
 
566
 
  
 
46,781
 
 
 
915,679
 
  
 
544,984
 
  
 
246,243
 
  
 
1,706,906
 
Other derivative contracts
        
Equity
  
 
195,981
 
  
 
63,216
 
  
 
1,777
 
  
 
260,974
 
Credit
  
 
16,976
 
  
 
8,308
 
  
 
2,547
 
  
 
27,831
 
Commodity and other contracts
  
 
61,121
 
  
 
20,102
 
  
 
168
 
  
 
81,391
 
 
 
274,078
 
  
 
91,626
 
  
 
4,492
 
  
 
370,196
 
Total
  
$
6,652,699
 
  
$
3,945,187
 
  
$
2,073,479
 
  
$
 12,671,365
 
As at October 31, 2024 ($ millions)  
Within one year
    
One to five years
    
Over five years
    
Total
  
Interest rate contracts
        
Futures
   $ 478,886     $ 127,133     $ –     $ 606,019  
Forward rate agreements
     85,447       1,217       208       86,872  
Swaps
     2,190,218       2,760,062       1,503,460       6,453,740  
Options purchased
     30,562       18,095       2,763       51,420  
Options written
     23,960       19,897       11,168       55,025  
    2,809,073       2,926,404       1,517,599       7,253,076  
Foreign exchange and gold contracts
        
Futures
     16,289       5,663       –       21,952  
Spot and forwards
     543,486       38,039       6,228       587,753  
Swaps
     210,318       455,694       213,792       879,804  
Options purchased
     18,121       6,788       226       25,135  
Options written
     28,533       7,662       195       36,390  
    816,747       513,846       220,441       1,551,034  
Other derivative contracts
        
Equity
     103,234       39,521       994       143,749  
Credit
     12,661       9,553       4,941       27,155  
Commodity and other contracts
     57,307       25,467       377       83,151  
    173,202       74,541       6,312       254,055  
Total
   $  3,799,022     $  3,514,791     $  1,744,352     $  9,058,165  
 
(c)
Credit risk
As with other financial assets, derivative instruments are subject to credit risk. Credit risk arises from the possibility that counterparties may default on their obligations to the Bank. However, whereas the credit risk of other financial assets is represented by the principal amount net of any applicable allowance for credit losses, the credit risk associated with derivatives is normally a small fraction of the notional amount of the derivative instrument.
Derivative contracts generally expose the Bank to credit loss if changes in market rates affect a counterparty’s position unfavourably and the counterparty defaults on payment. Accordingly, exposure to credit risk of derivatives is represented by the positive fair value of the instrument.
Negotiated
over-the-counter
derivatives generally present greater credit exposure than exchange-traded contracts. The net change in the exchange-traded contracts is normally settled daily in cash with the exchange. Holders of these contracts look to the exchange for performance under the contract.
The Bank strives to limit credit risk by dealing with counterparties that it believes are creditworthy, and investment grade counterparties account for a significant portion of the credit risk exposure arising from the Bank’s derivative transactions as at October 31, 2025. To control credit risk associated with derivatives, the Bank uses similar credit risk management activities and procedures to the approaches used in the lending business in assessing and adjudicating exposure. The Bank utilizes a risk metric, potential future exposure (PFE) for derivatives, to measure
 
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Consolidated Financial Statements
 
utilization against established credit limits to the counterparty. PFE measures the effect that changes in the market have on derivative exposures throughout the lifetime of the counterparties’ trades. Additionally, PFE considers risk mitigants such as netting and collateralization. PFE limits and utilization for derivatives counterparties are authorized and monitored by the Bank’s risk management unit.
The Bank obtains the benefit of netting by entering into master netting arrangements with counterparties (typically industry standard International Swaps and Derivatives Association (ISDA) agreements), which allow for a single net settlement of all transactions covered by that agreement in the event of a default or early termination of the transactions. In this manner, the credit risk associated with favourable contracts is eliminated by the master netting arrangement to the extent that unfavourable contracts with the same counterparty are not settled before favourable contracts.
Collateralization is typically documented by way of an ISDA Credit Support Annex (CSA), the terms of which may vary according to each party’s view of the other party’s creditworthiness. CSAs can require one party to post initial margin at the onset of each transaction. CSAs also allow for variation margin to be called if total uncollateralized
mark-to-market
exposure exceeds an agreed upon threshold. Such variation margin provisions can be one way (only one party will ever post collateral) or
bi-lateral
(either party may post collateral depending upon which party is
in-the-money).
The CSA will also detail the types of collateral that are acceptable to each party, and the adjustments that will be applied against each collateral type. The terms of the ISDA master netting agreements and CSAs are taken into consideration in the calculation of counterparty credit risk exposure (see also page 90 of the 2025 Annual Report).
Derivative instruments used by the Bank include credit derivatives in its investment and loan portfolios: credit protection is sold as an alternative to acquiring exposure to bond or loan assets, and bought to manage or mitigate credit exposures.
The following table summarizes the credit exposure of the Bank’s derivative financial instruments. The credit risk amount (CRA) represents the estimated replacement cost, or positive fair value, for all contracts. CRA takes into account master netting or collateral arrangements that have been made
1
. CRA does not reflect actual or expected losses.
The credit equivalent amount (CEA) is the exposure at default (EAD) prescribed in the Capital Adequacy Requirements (CAR) Guidelines of the Office of the Superintendent of Financial Institutions (OSFI). The risk-weighted asset is calculated by multiplying the CEA by the capital requirement (K) times 12.5, where K is a function of the probability of default (PD), loss given default (LGD), maturity and prescribed correlation factors. Commodity and other contracts includes energy, precious metals other than gold, and other commodities.
 
   
2025
         
2024
  
As at October 31 ($ millions)  
Notional amount
    
Credit risk
amount
(CRA)
(1)
    
Credit
equivalent
amount
(CEA)
(1)
    
Risk-
Weighted
Assets
         
Notional amount
    
Credit risk
amount
(CRA)
(1)
    
Credit
equivalent
amount
(CEA)
(1)
    
Risk-
Weighted
Assets
  
Interest rate contracts
                  
Futures
  
$
763,135
 
  
$
–
 
  
$
73
 
  
$
3
 
     $ 606,019     $ –     $ 27     $ 1  
Forward rate agreements
  
 
157,348
 
  
 
61
 
  
 
38
 
  
 
22
 
       86,872       70       88       57  
Swaps
  
 
9,501,153
 
  
 
2,769
 
  
 
4,402
 
  
 
1,123
 
       6,453,740       4,052       4,157       876  
Options purchased
  
 
86,992
 
  
 
18
 
  
 
163
 
  
 
51
 
       51,420       13       229       56  
Options written
  
 
85,635
 
  
 
–
 
  
 
31
 
  
 
6
 
         55,025       –       16       4  
 
 
10,594,263
 
  
 
2,848
 
  
 
4,707
 
  
 
1,205
 
         7,253,076       4,135       4,517       994  
Foreign exchange and gold contracts
                  
Futures
  
 
18,665
 
  
 
–
 
  
 
891
 
  
 
18
 
       21,952       –       354       7  
Spot and forwards
  
 
637,096
 
  
 
1,741
 
  
 
5,758
 
  
 
1,417
 
       587,753       1,560       4,868       1,168  
Swaps
  
 
971,614
 
  
 
53
 
  
 
9,603
 
  
 
2,132
 
       879,804       40       7,965       1,472  
Options purchased
  
 
32,750
 
  
 
399
 
  
 
592
 
  
 
210
 
       25,135       343       633       214  
Options written
  
 
46,781
 
  
 
–
 
  
 
52
 
  
 
13
 
         36,390       –       19       4  
 
 
1,706,906
 
  
 
2,193
 
  
 
16,896
 
  
 
3,790
 
         1,551,034       1,943       13,839       2,865  
Other derivative contracts
                  
Equity
  
 
260,974
 
  
 
1,726
 
  
 
12,157
 
  
 
2,115
 
       143,749       1,586       10,848       1,742  
Credit
  
 
27,831
 
  
 
105
 
  
 
131
 
  
 
50
 
       27,155       107       141       29  
Commodity and other contracts
  
 
81,391
 
  
 
1,807
 
  
 
3,419
 
  
 
452
 
         83,151       1,098       3,259       487  
 
 
370,196
 
  
 
3,638
 
  
 
15,707
 
  
 
2,617
 
         254,055       2,791       14,248       2,258  
Credit Valuation Adjustment
  
 
–
 
  
 
–
 
  
 
–
 
  
 
5,394
 
         –       –       –       4,631  
Total derivatives
  
$
12,671,365
 
  
$
 8,679
 
  
$
 37,310
 
  
$
 13,006
 
       $  9,058,165     $  8,869     $  32,604     $  10,748  
Amount settled through central counterparties
(2)
                  
Exchange-traded
  
 
955,225
 
  
 
–
 
  
 
5,175
 
  
 
122
 
       744,882       –       5,158       117  
Over-the-counter
  
 
9,174,594
 
  
 
–
 
  
 
861
 
  
 
17
 
         6,093,979       –       1,063       21  
   
$
 10,129,819
 
  
$
–
 
  
$
6,036
 
  
$
139
 
       $ 6,838,861     $ –     $ 6,221     $ 138  
 
(1)
The amounts presented are net of collateral and master netting agreements at the product level. The total amounts relating to netting and collateral were $37,853 (2024 – $35,510) for CRA, and $102,031 (2024 – $87,284) for CEA.
(2)
Amounts are included under total derivatives above. Amounts include exposures settled directly through central counterparties and exposures settled through clearing members of central counterparties.
 
1
 
Regulatory haircuts prescribed by the OSFI CAR Guidelines are applied to the collateral balances of the CRA measure.
 
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Consolidated Financial Statements
 
(d)
Fair value
The following table summarizes the fair value of derivatives segregated by type and segregated between trading and those derivatives designated in hedging relationships.
 
As at October 31 ($ millions)  
2025
    
2025
           
2024
  
   
Average fair value
    
Year-end
fair value
          
Year-end
fair value
(1)
  
    
Favourable
    
Unfavourable
    
Favourable
    
Unfavourable
           
Favourable
    
Unfavourable
  
Trading
              
Interest rate contracts
              
Forward rate agreements
  
$
90
 
  
$
69
 
  
$
61
 
  
$
91
 
     $ 70     $ 72  
Swaps
  
 
7,398
 
  
 
11,440
 
  
 
6,865
 
  
 
10,294
 
       7,767       9,357  
Options
  
 
454
 
  
 
500
 
  
 
261
 
  
 
443
 
  
 
 
 
     803       496  
 
 
7,942
 
  
 
12,009
 
  
 
7,187
 
  
 
10,828
 
  
 
 
 
     8,640       9,925  
Foreign exchange and gold contracts
              
Forwards
  
 
6,568
 
  
 
5,929
 
  
 
6,726
 
  
 
5,332
 
       6,672       5,482  
Swaps
  
 
11,439
 
  
 
13,833
 
  
 
11,107
 
  
 
14,814
 
       11,110       14,272  
Options
  
 
604
 
  
 
575
 
  
 
538
 
  
 
494
 
  
 
 
 
     492       446  
 
 
18,611
 
  
 
20,337
 
  
 
18,371
 
  
 
20,640
 
  
 
 
 
     18,274       20,200  
Other derivative contracts
              
Equity
  
 
5,582
 
  
 
7,543
 
  
 
7,350
 
  
 
10,114
 
       4,469       4,844  
Credit
  
 
230
 
  
 
28
 
  
 
273
 
  
 
26
 
       182       47  
Commodity and other contracts
  
 
2,516
 
  
 
3,545
 
  
 
2,610
 
  
 
2,909
 
  
 
 
 
     2,102       2,560  
 
 
8,328
 
  
 
11,116
 
  
 
10,233
 
  
 
13,049
 
  
 
 
 
     6,753       7,451  
Trading derivatives’ market valuation
  
$
 34,881
 
  
$
 43,462
 
  
$
 35,791
 
  
$
 44,517
 
  
 
 
 
   $ 33,667     $ 37,576  
Hedging
              
Interest rate contracts
              
Swaps
      
$
2,620
 
  
$
6,361
 
  
 
 
 
   $ 2,944     $ 7,983  
Foreign exchange and gold contracts
              
Forwards
      
 
46
 
  
 
847
 
       410       255  
Swaps
      
 
7,995
 
  
 
4,306
 
  
 
 
 
     7,320       5,445  
     
$
8,041
 
  
$
5,153
 
  
 
 
 
   $ 7,730     $ 5,700  
Other derivative contracts
      
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Equity
      
$
79
 
  
$
–
 
  
 
 
 
   $ 38     $ 1  
Hedging derivatives’ market valuation
      
$
10,740
 
  
$
11,514
 
  
 
 
 
   $ 10,712     $ 13,684  
Total derivative financial instruments as per Statement of Financial Position
  
 
 
 
  
 
 
 
  
$
46,531
 
  
$
56,031
 
  
 
 
 
   $  44,379     $  51,260  
 
(1)
The average fair value of trading derivatives’ market valuation for the year ended October 31, 2024 was: favourable $29,999 and unfavourable $32,133. Average fair value amounts are based on the latest 13
month-end
balances.
 
(e)
Hedging activities
The Bank manages interest rate risk, foreign currency risk and equity risk through hedge accounting transactions.
Interest rate risk
Single-currency interest rate swaps are used to hedge interest rate risk exposure. In fair value hedges of interest rate risk, the interest rate exposure from fixed rate assets and liabilities is converted from fixed to floating rate exposure. In cash flow hedges of interest rate risk, the interest rate exposure from floating rate assets and liabilities is converted from floating to fixed rate exposure. The Bank generally hedges interest rate risk only to the extent of benchmark interest rates.
Foreign currency risk
In fair value hedges, cross-currency swaps and single-currency interest rate swaps are used to manage foreign currency exposure in conjunction with interest rate exposure. Cross-currency interest rate swaps or a combination of cross-currency basis swaps and single-currency interest rate swaps are mainly used to convert a foreign currency fixed rate exposure to a functional currency floating rate exposure. In hedges of both foreign currency and interest rate exposure, the interest rate risk is generally hedged only to the extent of the benchmark interest rate.
In cash flow hedges, cross-currency interest rate swaps, single-currency interest rate swaps, foreign currency forwards and foreign currency assets or liabilities are used to manage foreign currency exposure, or a combined foreign currency and interest rate exposure. Cross-currency interest rate swaps are used to offset the foreign currency exposure by exchanging the interest cash flows in one currency to another currency. Single-currency interest rate swaps may be used in conjunction with cross-currency swaps to convert the foreign currency exposure or resulting functional currency exposure from floating to fixed. Foreign currency forwards and foreign currency denominated assets and liabilities are used to offset the exposure arising from highly probable future cash flows, including purchase considerations for business acquisitions and sale proceeds for business divestitures that are denominated in a foreign currency. In hedges of both foreign currency and interest rate exposure, the interest rate risk is generally hedged only to the extent of the benchmark interest rate.
In net investment hedges, the Bank designates foreign currency liabilities and foreign currency forwards as hedging instruments to manage foreign currency exposure. The designated
non-derivative
liabilities are denominated in the functional currency of the net investment, such that the foreign currency translation impact from the net investment will be offset by the foreign currency impact from the designated liabilities. The foreign currency forward contracts are structured to sell the functional currency of the net investment in return for the Bank’s functional currency.
Equity risk
Equity risk is created by the Bank’s share-based compensation plans awarded to employees. In cash flow hedges, total return swaps are mainly used to offset the equity exposure by exchanging interest payments for payments based on the returns on the underlying shares.
 
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Consolidated Financial Statements
 
For all of the risks identified above, the economic relationship and hedge ratio are determined using a qualitative and quantitative assessment. This assessment incorporates comparison of critical terms of the hedged and hedging item, and regression analysis. For regression analysis, a hedging relationship is considered highly effective when all of the following criteria are met: correlation between the variables in the regression is at least 0.8 or greater; slope of the regression is within a
0.8-1.25
range; and confidence level of the slope is at least 95%. The main sources of hedge ineffectiveness include the following:
 
  •  
The use of different discount curves to value the hedged item and the hedging derivative in fair value hedges, in order to reflect the reduced credit risk of collateralized derivatives;
  •  
Differences in key terms such as the underlying reference interest rate tenor, reset/settlement frequency and floating spread between the hedging instruments and the hedged item.
The Bank has elected to continue to apply the hedge accounting requirements of IAS 39. However, the Bank has implemented the additional hedge accounting disclosures that are required by the IFRS 9 related amendments to IFRS 7 “
Financial Instruments: Disclosures
”.
The following table summarizes the notional amounts of derivatives and carrying amounts of cash and deposit liabilities designated as hedging instruments.
 
   
2025
    
2024
  
   
Notional amounts
(1)
    
Notional amounts
(1)
  
   
Remaining term to maturity
          
Remaining term to maturity
        
As at October 31 ($ millions)  
Within one year
    
One to five years
    
Over five years
    
Total
    
Within one year
    
One to five years
    
Over five years
    
Total
  
Fair value hedges
                
Interest rate risk – swaps
  
$
53,192
 
  
$
155,430
 
  
$
31,966
 
  
$
240,588
 
   $ 32,689     $ 137,123     $ 25,427     $ 195,239  
Foreign currency/interest rate risk – swaps
  
 
–
 
  
 
420
 
  
 
–
 
  
 
420
 
     –       –       –       –  
Cash flow hedges
                
Interest rate risk – swaps
  
 
57,151
 
  
 
73,038
 
  
 
9,315
 
  
 
139,504
 
     29,411       72,802       13,160       115,373  
Foreign currency/interest rate risk – swaps
  
 
6,542
 
  
 
16,892
 
  
 
5,485
 
  
 
28,919
 
     5,516       19,291       4,359       29,166  
Foreign currency risk
                
Swaps
  
 
44,824
 
  
 
88,035
 
  
 
15,142
 
  
 
148,001
 
     50,198       93,095       19,808       163,101  
Foreign currency forwards
  
 
266
 
  
 
–
 
  
 
–
 
  
 
266
 
     –       –       –       –  
Cash
  
 
92
 
  
 
–
 
  
 
–
 
  
 
92
 
     74       –       –       74  
Equity risk – total return swaps
  
 
576
 
  
 
708
 
  
 
–
 
  
 
1,284
 
     278       687       –       965  
Net investment hedges
                
Foreign currency risk
                
Foreign currency forwards
  
 
20,604
 
  
 
–
 
  
 
–
 
  
 
20,604
 
     21,156       –       –       21,156  
Deposit liabilities
  
 
6,287
 
  
 
–
 
  
 
–
 
  
 
6,287
 
     7,571       –       –       7,571  
Total
  
$
  189,534
 
  
$
 334,523
 
  
$
 61,908
 
  
$
 585,965
 
   $  146,893     $   322,998     $  62,754     $  532,645  
 
(1)
Notional amounts relating to derivatives that are hedging multiple risks in both assets and liabilities are included in more than one category.
 
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|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
The following table shows the average rate or price of significant hedging instruments.
 
   
2025
    
2024
  
   
Average rate or price
(1)
   
Average rate or price
(1)
 
As at October 31  
Fixed interest rate
    
FX rate
    
Price
    
Fixed interest rate
    
FX rate
    
Price
  
Fair value hedges
            
Interest rate risk – swaps
  
 
2.98
% 
  
 
n/a
 
  
 
n/a
 
     3.16 %      n/a       n/a  
Cash flow hedges
            
Interest rate risk – swaps
  
 
3.26
% 
  
 
n/a
 
  
 
n/a
 
     3.16 %      n/a       n/a  
Foreign currency/interest rate risk – swaps
            
USD-CAD
  
 
2.00
% 
  
 
1.31
 
  
 
n/a
 
     1.89 %      1.30       n/a  
Foreign currency risk
            
Swaps
            
USD-CAD
  
 
n/a
 
  
 
1.34
 
  
 
n/a
 
     n/a       1.31       n/a  
EUR-CAD
  
 
n/a
 
  
 
1.47
 
  
 
n/a
 
     n/a       1.46       n/a  
GBP-CAD
  
 
n/a
 
  
 
1.74
 
  
 
n/a
 
     n/a       1.70       n/a  
Equity price risk – total return swaps
  
 
n/a
 
  
 
n/a
 
  
$
 68.85
 
     n/a       n/a     $  69.11  
Net investment hedges
            
Foreign currency risk – foreign currency forwards
            
USD-CAD
  
 
n/a
 
  
 
1.37
 
  
 
n/a
 
     n/a       1.35       n/a  
CLP-CAD
  
 
n/a
 
  
 
0.0014
 
  
 
n/a
 
     n/a       0.0014       n/a  
MXN-CAD
  
 
n/a
 
  
 
0.07
 
  
 
n/a
 
     n/a       0.07       n/a  
PEN-CAD
  
 
n/a
 
  
 
0.38
 
  
 
n/a
 
     n/a       0.36       n/a  
 
(1)
The notional weighted average rate or price is calculated in aggregate for all of the Bank’s hedge relationships, including hedges of assets and liabilities.
For fair value hedges, the following table contains information related to items designated as hedging instruments, hedged items and ineffectiveness.
 
   
Carrying amount of the
hedging instruments
(1)
          
Hedge Ineffectiveness
(2)
          
Accumulated amount of fair
value hedge adjustment gains/
(losses) on the hedged
item
(4)
  
For the year ended
October 31, 2025 ($ millions)
  
Assets
    
Liabilities
           
Gains/
(losses) on
hedging instrument
used to calculate
hedge
ineffectiveness
    
Gains/
(losses) on
hedged item
used to calculate
hedge
ineffectiveness
    
Ineffectiveness
recorded in
non-interest

income  – other
    
Carrying amount
of the hedged
item
(3)
    
Active
hedges
    
Discontinued
hedges
  
Fair value hedges
        
 
 
 
  
 
 
 
  
 
 
 
      
Interest rate risk – swaps
  
$
 1,542
 
  
$
 (2,408
) 
    
$
 73
 
  
$
(95
) 
  
$
(22
) 
      
Investment securities
        
 
   (493
) 
  
 
481
 
  
 
(12
) 
  
$
 79,836
 
  
$
 1,519
 
  
$
(679
) 
Loans
        
 
(402
) 
  
 
388
 
  
 
(14
) 
  
 
109,149
 
  
 
287
 
  
 
112
 
Deposit liabilities
        
 
906
 
  
 
(902
) 
  
 
4
 
  
 
(72,001
) 
  
 
90
 
  
 
212
 
Subordinated debentures
        
 
62
 
  
 
(62
) 
  
 
–
 
  
 
(4,131
) 
  
 
(41
) 
  
 
–
 
Foreign currency/interest
                  
rate risk – swaps
  
 
–
 
  
 
(23
) 
    
 
6
 
  
 
(6
) 
  
 
–
 
  
 
(432
) 
  
 
(6
) 
  
 
–
 
Deposit liabilities
  
 
–
 
  
 
(23
) 
  
 
 
 
  
 
6
 
  
 
(6
) 
  
 
–
 
  
 
(432
) 
  
 
(6
) 
  
 
–
 
Total
  
$
1,542
 
  
$
(2,431
) 
  
 
 
 
  
$
79
 
  
$
   (101
) 
  
$
 (22
) 
  
$
 112,421
 
  
$
1,849
 
  
$
   (355
) 
 
(1)
Comprises unrealized gains/losses and are recorded within derivative financial instruments in assets and liabilities, respectively, in the Consolidated Statement of Financial Position.
(2)
Includes ineffectiveness related to hedges discontinued during the year ended October 31, 2025.
(3)
This represents the carrying value on the Consolidated Statement of Financial Position and comprises amortized cost before allowance for credit losses, plus fair value hedge adjustment, except for investment securities which are carried at fair value.
(4)
This represents the accumulated fair value hedge adjustment and is a component of the carrying amount of the hedged item, except for investment securities which are carried at fair value.
 
   
Carrying amount of the
hedging instruments
(1)
          
Hedge Ineffectiveness
(2)
          
Accumulated amount of fair
value hedge adjustment gains/
(losses) on the hedged
item
(4)
  
For the year ended
October 31, 2024 ($ millions)
  
Assets
    
Liabilities
           
Gains/
(losses) on
hedging instrument
used to calculate
hedge
ineffectiveness
    
Gains/
(losses) on
hedged item
used to calculate
hedge
ineffectiveness
    
Ineffectiveness
recorded in
non-interest

income – other
    
Carrying amount
of the hedged
item
(3)
    
Active
hedges
    
Discontinued
hedges
  
Fair value hedges
        
 
 
 
  
 
 
 
  
 
 
 
      
Interest rate risk – swaps
   $ 2,064     $ (2,672 )      $ (197 )    $ 160     $ (37 )       
Investment securities
            (1,493 )      1,484       (9 )    $ 72,595     $ 1,274     $ (1,392 ) 
Loans
           (876 )      851       (25 )      91,354       (35 )      (268 ) 
Deposit liabilities
           1,955        (1,959 )      (4 )      (71,363 )      986       446  
Subordinated debentures
  
 
 
 
  
 
 
 
  
 
 
 
     217       (216 )      1       (4,293 )      21       (1 ) 
Total
   $  2,064     $  (2,672 )   
 
 
 
   $  (197 )    $  160     $  (37 )    $   88,293     $  2,246     $  (1,215 ) 
 
(1)
Comprises unrealized gains/losses and are recorded within derivative financial instruments in assets and liabilities, respectively, in the Consolidated Statement of Financial Position.
(2)
Includes ineffectiveness related to hedges discontinued during the year ended October 31, 2024.
(3)
This represents the carrying value on the Consolidated Statement of Financial Position and comprises amortized cost before allowance for credit losses, plus fair value hedge adjustment, except for investment securities which are carried at fair value.
(4)
This represents the accumulated fair value hedge adjustment and is a component of the carrying amount of the hedged item, except for investment securities which are carried at fair value.
 
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181
Consolidated Financial Statements
 
For cash flow hedges and net investment hedges, the following table contains information related to items designated as hedging instruments, hedged items and ineffectiveness.
 
   
Carrying amount of the
hedging instruments
(1)
          
Hedge Ineffectiveness
(2)
  
For the year ended October 31, 2025 ($ millions)  
Assets
    
Liabilities
           
Gains/(losses) on
hedging instrument
used to calculate
hedge ineffectiveness
    
Gains/(losses) on
hypothetical
derivative used to
calculate hedge
ineffectiveness
(3)
    
Ineffectiveness
recorded in non-interest

income – other
(4)
  
Cash flow hedges
            
Interest rate risk – swaps
  
$
 1,969
 
  
$
(3,746
) 
    
$
171
 
  
$
169
 
  
$
(5
) 
Foreign currency/interest rate risk – swaps
  
 
200
 
  
 
(1,949
) 
    
 
173
 
  
 
166
 
  
 
5
 
Foreign currency risk
            
Swaps
  
 
6,904
 
  
 
(2,541
) 
    
 
3,242
 
  
 
3,259
 
  
 
(9
) 
Foreign currency forwards
  
 
–
 
  
 
(7
) 
    
 
(3
) 
  
 
(3
) 
  
 
–
 
Cash
  
 
92
 
  
 
–
 
    
 
(12
) 
  
 
(12
) 
  
 
–
 
Equity risk – total return swaps
  
 
79
 
  
 
–
 
  
 
 
 
  
 
357
 
  
 
357
 
  
 
–
 
 
 
9,244
 
  
 
(8,243
) 
  
 
 
 
  
 
3,928
 
  
 
3,936
 
  
 
(9
) 
Net investment hedges
            
Foreign currency risk
            
Foreign currency forwards
  
 
46
 
  
 
(840
) 
    
 
(1,294
) 
  
 
(1,294
) 
  
 
–
 
Deposit liabilities
  
 
n/a
 
  
 
(6,287
)
  
 
 
 
  
 
(67
)
  
 
(66
) 
  
 
–
 
 
 
46
 
  
 
(7,127
)
  
 
 
 
  
 
(1,361
)
  
 
(1,360
) 
  
 
–
 
Total
  
$
9,290
 
  
$
 (15,370
)
  
 
 
 
  
$
  2,567
 
  
$
 2,576
 
  
$
  (9
) 
 
(1)
Comprises unrealized gains/losses for derivative instruments and are recorded within derivative financial instruments in assets and liabilities, respectively, in the Consolidated Statement of Financial Position.
(2)
Includes ineffectiveness related to hedges discontinued during the year ended October 31, 2025.
(3)
For cash flow hedges, hypothetical derivatives having critical terms which match those of the underlying hedged item are used to assess hedge ineffectiveness.
(4)
For cash flow hedges, ineffectiveness is only recognized in the Consolidated Statement of Income when the life-to-date cumulative change in the hedging instrument exceeds the cumulative change in the hypothetical derivative.
 
   
Carrying amount of the
hedging instruments
(1)
          
Hedge Ineffectiveness
(2)
  
For the year ended October 31, 2024 ($ millions)  
Assets
    
Liabilities
           
Gains/(losses) on
hedging instrument
used to calculate
hedge ineffectiveness
    
Gains/(losses) on
hypothetical
derivative used to
calculate hedge
ineffectiveness
(3)
    
Ineffectiveness
recorded in non-interest

income – other
(4)
  
Cash flow hedges
            
Interest rate risk – swaps
   $ 1,865     $ (4,699 )      $ 1,775     $ 1,774     $ 29  
Foreign currency/interest rate risk – swaps
     245       (2,407 )        1,363       1,369       7  
Foreign currency risk
            
Swaps
     6,090       (3,650 )        1,826       1,787       10  
Foreign currency forwards
     –       –         5       5       –  
Cash
     74       –         9       9       –  
Equity risk – total return swaps
     38       (1 )   
 
 
 
     263       263       –  
    8,312       (10,757 )   
 
 
 
     5,241       5,207       46  
Net investment hedges
            
Foreign currency risk
            
Foreign currency forwards
     410       (255 )        178       178       –  
Deposit liabilities
     n/a       (7,571 )   
 
 
 
     (62 )      (62 )      –  
    410       (7,826 )   
 
 
 
     116       116       –  
Total
   $  8,722     $  (18,583 )   
 
 
 
   $  5,357     $  5,323     $  46  
 
(1)
Comprises unrealized gains/losses for derivative instruments and are recorded within derivative financial instruments in assets and liabilities, respectively, in the Consolidated Statement of Financial Position.
(2)
Includes ineffectiveness related to hedges discontinued during the year ended October 31, 2024.
(3)
For cash flow hedges, hypothetical derivatives having critical terms which match those of the underlying hedged item are used to assess hedge ineffectiveness.
(4)
For cash flow hedges, ineffectiveness is only recognized in the Consolidated Statement of Income when the
life-to-date
cumulative change in the hedging instrument exceeds the cumulative change in the hypothetical derivative.
 
182
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
For cash flow hedges and net investment hedges, the following table contains information regarding the impacts on the Consolidated Statement of Other Comprehensive Income on a
pre-tax
basis.
 
   
AOCI gains/
(losses) as at
November 1,
2024
    
Net gains/
(losses)
recognized in
OCI
    
Amount
reclassified
to net
income as
the hedged
item affects
net income
(1)
    
AOCI gains/
(losses) as at
October 31,
2025
    
Balance in cash flow hedge
reserve/unrealized foreign
currency translation account
as at October 31, 2025
  
For the year ended
October 31, 2025 ($ millions)
  
Active
hedges
    
Discontinued
hedges
  
Cash flow hedges
    
 
  
 
  
 
  
 
    
 
  
 
  
 
  
 
Interest rate risk
  
$
(1,176
) 
  
$
176
 
  
$
742
 
  
$
(258
) 
  
$
332
 
  
$
(590
) 
Foreign currency/interest rate risk
  
 
(699
) 
  
 
168
 
  
 
249
 
  
 
(282
) 
  
 
(296
) 
  
 
14
 
Foreign currency risk
  
 
(1,197
) 
  
 
3,236
 
  
 
(3,165
) 
  
 
(1,126
) 
  
 
(1,102
)
  
 
(24
)
Equity risk
  
 
57
 
  
 
357
 
  
 
(319
) 
  
 
95
 
  
 
95
 
  
 
–
 
 
 
(3,015
) 
  
 
3,937
 
  
 
(2,493
) 
  
 
(1,571
) 
  
 
(971
)
  
 
(600
)
Net investment hedges
            
Foreign currency risk
  
 
(3,175
) 
  
 
(1,361
) 
  
 
139
 
  
 
(4,397
) 
  
 
(4,326
)
  
 
(71
)
Total
  
$
  (6,190
) 
  
$
  2,576
 
  
$
 (2,354
) 
  
$
 (5,968
) 
  
$
 (5,297
)
  
$
 (671
)
 
(1)
Amounts reclassified from the cash flow hedge and net investment hedge reserves to net income are recorded in
non-interest
income-other except for amortization, which is recorded in interest income.
 
   
AOCI gains/
(losses) as at
November 1,
2023
    
Net gains/
(losses)
recognized in
OCI
    
Amount
reclassified
to net
income as
the hedged
item affects
net income
(1)
    
AOCI gains/
(losses) as at
October 31,
2024
    
Balance in cash flow hedge
reserve/unrealized foreign
currency translation account
as at October 31, 2024
  
For the year ended
October 31, 2024 ($ millions)
  
Active
hedges
    
Discontinued
hedges
  
Cash flow hedges
            
Interest rate risk
   $ (3,480 )    $ 1,746     $ 558     $ (1,176 )    $ (490 )    $ (686 ) 
Foreign currency/interest rate risk
     (2,007 )      1,356       (48)       (699 )      (733 )      34  
Foreign currency risk
     (703 )      1,830       (2,324 )      (1,197 )      (1,158 )      (39 ) 
Equity risk
     (20 )      263       (186 )      57       57       –  
    (6,210 )      5,195       (2,000 )      (3,015 )      (2,324 )      (691 ) 
Net investment hedges
            
Foreign currency risk
     (4,061 )      116       770       (3,175 )      (3,102 )      (73 ) 
Total
   $  (10,271 )    $   5,311     $  (1,230 )    $  (6,190 )    $  (5,426 )    $  (764 ) 
 
(1)
Amounts reclassified from the cash flow hedge and net investment hedge reserves to net income are recorded in
non-interest
income-other except for amortization, which is recorded in interest income.
 
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183
Table of Contents
Consolidated Financial Statements
 
10
Offsetting Financial Assets and Financial Liabilities
The Bank is eligible to present certain financial assets and financial liabilities as listed in the table below on a net basis on the Consolidated Statement of Financial Position pursuant to criteria described in Note 3 – Material accounting policies.
The following tables provide information on the impact of offsetting on the Bank’s Consolidated Statement of Financial Position, as well as the financial impact of netting for instruments that are subject to enforceable master netting arrangements or similar agreements, but do not qualify for offsetting in the Consolidated Statement of Financial Position, as well as available cash and financial instrument collateral.
 
As at October 31, 2025 ($ millions)                                            
Types of financial assets   
Gross amounts
of recognized
financial instruments
    
Gross amounts of
recognized financial
instruments offset in
the Consolidated
Statement of
Financial Position
     
Net amounts of
financial instruments
presented in the
Consolidated
Statement of
Financial Position
    
Related amounts not offset
in the Consolidated Statement
of Financial Position
        
 
Impact of
master netting
arrangements
or similar
agreements
(1)
    
Collateral
(2)(4)
    
Net amount
(3)
  
Derivative financial instruments
   
$
46,531
 
  
$
–
 
   
$
46,531
 
  
$
(32,293
) 
  
$
(5,783
) 
  
$
8,455
 
Securities purchased under resale agreements and securities borrowed
   
 
334,972
 
  
 
(131,964
) 
   
 
203,008
 
  
 
(16,221
) 
  
 
(184,376
) 
  
 
2,411
 
Total
   
$
381,503
 
  
$
(131,964
) 
   
$
249,539
 
  
$
(48,514
) 
  
$
(190,159
) 
  
$
10,866
 
Types of financial liabilities                                            
Derivative financial instruments
   
$
56,031
 
  
$
–
 
   
$
56,031
 
  
$
(32,293
) 
  
$
(13,976
) 
  
$
9,762
 
Obligations related to securities sold under repurchase agreements and securities lent
   
 
321,108
 
  
 
(131,964
) 
   
 
189,144
 
  
 
(16,221
) 
  
 
(168,607
) 
  
 
4,316
 
Total
   
$
377,139
 
  
$
(131,964
) 
   
$
245,175
 
  
$
(48,514
) 
  
$
(182,583
) 
  
$
14,078
 
As at October 31, 2024 ($ millions)                                            
Types of financial assets   
Gross amounts
of recognized
financial instruments
    
Gross amounts of
recognized financial
instruments offset in
the Consolidated
Statement of
Financial Position
     
Net amounts of
financial instruments
presented in the
Consolidated
Statement of
Financial Position
    
Related amounts not offset
in the Consolidated statement
of Financial Position
        
 
Impact of
master netting
arrangements
or similar
agreements
(1)
    
Collateral
(2)(4)
    
Net amount
(3)
  
Derivative financial instruments
    $ 44,379     $ –      $ 44,379     $ (29,949 )    $ (5,559 )    $ 8,871  
Securities purchased under resale agreements and securities borrowed
      318,531       (117,988 )       200,543       (19,551 )      (178,816 )      2,176  
Total
    $ 362,910     $ (117,988 )     $ 244,922     $ (49,500 )    $ (184,375 )    $ 11,047  
Types of financial liabilities                                            
Derivative financial instruments
    $ 51,260     $ –      $ 51,260     $ (29,949 )    $ (11,565 )    $ 9,746  
Obligations related to securities sold under repurchase agreements and securities lent
      308,437       (117,988 )       190,449       (19,551 )      (166,734 )      4,164  
Total
    $  359,697     $  (117,988 )     $  241,709     $  (49,500 )    $  (178,299 )    $  13,910  
 
(1)
Amounts that are subject to master netting arrangements or similar agreements but were not offset in the Consolidated Statement of Financial Position because they did not meet the net settlement/simultaneous settlement criteria; or because the rights of set off are conditional upon the default of the counterparty only.
(2)
Cash and financial instrument collateral amounts received or pledged in relation to the total amounts of financial assets and financial liabilities, including those that were not offset in the Consolidated Statement of Financial Position. These amounts are disclosed at fair value and the rights of set off are conditional upon the default of the counterparty.
(3)
Not intended to represent the Bank’s actual exposure to credit risk, as a variety of credit mitigation strategies are employed in addition to offsetting and collateral arrangements.
(4)
Derivative financial instruments assets include cash collateral of $4,774 million (2024 – $4,505 million) and
non-cash
collateral of $1,009 million (2024 – $1,054 million). Derivative financial instruments liabilities include cash collateral of $11,750 million (2024 – $10,847 million) and
non-cash
collateral of $2,226 million (2024 – $718 million).
 
184
 
|
 2025 Scotiabank Annual Report
Table of Contents
Consolidated Financial Statements
 
11
Investment Securities
The following table presents the carrying amounts of the Bank’s investment securities per measurement category.
 
As at October 31 ($ millions)  
2025
    
2024
  
Debt investment securities measured at FVOCI
  
$
123,732
 
   $ 118,226  
Debt investment securities measured at amortized cost
  
 
23,722
 
     29,412  
Equity investment securities designated at FVOCI
  
 
398
 
     3,162  
Equity investment securities measured at FVTPL
  
 
2,073
 
     2,004  
Debt investment securities measured at FVTPL
  
 
23
 
     28  
Total investment securities
  
$
 149,948
 
   $  152,832  
 
(a)
Debt investment securities measured at fair value through other comprehensive income (FVOCI)
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Cost
    
Gross
unrealized
gains
    
Gross
unrealized
losses
    
Fair value
    
Cost
    
Gross
unrealized
gains
    
Gross
unrealized
losses
    
Fair value
  
Canadian federal government issued or guaranteed debt
  
$
22,815
 
  
$
359
 
  
$
64
 
  
$
23,110
 
   $ 21,473     $ 219     $ 152     $ 21,540  
Canadian provincial and municipal debt
  
 
20,490
 
  
 
430
 
  
 
77
 
  
 
20,843
 
     17,500       234       209       17,525  
U.S. treasury and other U.S. agency debt
  
 
49,111
 
  
 
483
 
  
 
558
 
  
 
49,036
 
     47,156       214       994       46,376  
Other foreign government debt
  
 
27,570
 
  
 
358
 
  
 
202
 
  
 
27,726
 
     29,505       181       400       29,286  
Other debt
  
 
3,007
 
  
 
31
 
  
 
21
 
  
 
3,017
 
     3,514       22       37       3,499  
Total
  
$
 122,993
 
  
$
 1,661
 
  
$
 922
 
  
$
 123,732
 
   $  119,148     $  870     $  1,792     $  118,226  
 
(b)
Debt investment securities measured at amortized cost
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Fair Value
    
Carrying
value
(1)
    
Fair Value
    
Carrying
value
(1)
  
Canadian federal and provincial government issued or guaranteed debt
  
$
5,553
 
  
$
5,467
 
   $ 8,722     $ 8,721  
U.S. treasury and other U.S. agency debt
  
 
15,178
 
  
 
15,758
 
     17,440       18,440  
Other foreign government debt
  
 
2,285
 
  
 
2,281
 
     2,044       2,041  
Corporate debt
  
 
223
 
  
 
216
 
     216       210  
Total
  
$
 23,239
 
  
$
 23,722
 
   $  28,422     $  29,412  
 
(1)
Balances are net of allowances, which are $1 (2024 – $1).
 
(c)
Equity investment securities designated at fair value through other comprehensive income (FVOCI)
The Bank has designated certain equity securities at FVOCI shown in the following table as these investments are held for strategic purposes.
 
As at October 31, 2025 ($ millions)  
Cost
    
Gross
unrealized
gains
    
Gross
unrealized
losses
    
Fair value
  
Common shares
  
$
178
 
  
$
221
 
  
$
1
 
  
$
398
 
Total
  
$
 178
 
  
$
 221
 
  
$
 1
 
  
$
 398
 
As at October 31, 2024 ($ millions)  
Cost
    
Gross
unrealized
gains
    
Gross
unrealized
losses
    
Fair value
  
Common shares
   $ 2,522     $ 713     $ 73     $ 3,162  
Total
   $  2,522     $  713     $  73     $  3,162  
Dividend income on equity securities designated at FVOCI of $47 million for the year ended October 31, 2025 (2024 – $122 million) has been recognized in interest income.
During the year ended October 31, 2025, the Bank has disposed of certain equity securities designated at FVOCI with a fair value of $1,839 million (2024 – $938 million) for economic reasons and according to its investment strategy. These dispositions have resulted in a cumulative gain of $512 million (2024 – cumulative gain of $21 million) that remains in OCI.
 
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185
Consolidated Financial Statements
 
(d)
An analysis of the carrying value of investment securities is as follows:
 
    
Remaining term to maturity
         
As at October 31, 2025 ($ millions)  
Within
three
months
    
Three to
twelve
months
    
One to
five years
    
Five to
ten years
    
Over ten
years
    
No specific
maturity
    
Carrying
value
  
Fair value through other comprehensive income
              
Debt instruments
              
Canadian federal government issued or guaranteed debt
  
$
774
 
  
$
3,596
 
  
$
11,408
 
  
$
6,505
 
  
$
827
 
  
$
–
 
  
$
23,110
 
Yield
(1)
%
  
 
4.0
 
  
 
3.1
 
  
 
3.5
 
  
 
3.5
 
  
 
3.8
 
  
 
–
 
  
 
3.5
 
Canadian provincial and municipal debt
  
 
578
 
  
 
2,200
 
  
 
6,841
 
  
 
11,091
 
  
 
133
 
  
 
–
 
  
 
20,843
 
Yield
(1)
%
  
 
2.6
 
  
 
2.3
 
  
 
3.6
 
  
 
3.8
 
  
 
4.0
 
  
 
–
 
  
 
3.6
 
U.S. treasury and other U.S. agency debt
  
 
694
 
  
 
10,216
 
  
 
28,156
 
  
 
3,240
 
  
 
6,730
 
  
 
–
 
  
 
49,036
 
Yield
(1)
%
  
 
3.9
 
  
 
3.0
 
  
 
4.0
 
  
 
3.7
 
  
 
4.3
 
  
 
–
 
  
 
3.8
 
Other foreign government debt
  
 
3,884
 
  
 
5,054
 
  
 
14,192
 
  
 
4,312
 
  
 
284
 
  
 
–
 
  
 
27,726
 
Yield
(1)
%
  
 
2.8
 
  
 
4.2
 
  
 
4.9
 
  
 
5.2
 
  
 
3.9
 
  
 
–
 
  
 
4.5
 
Other debt
  
 
159
 
  
 
804
 
  
 
1,768
 
  
 
277
 
  
 
9
 
  
 
–
 
  
 
3,017
 
Yield
(1)
%
  
 
6.0
 
  
 
4.0
 
  
 
3.8
 
  
 
4.5
 
  
 
5.9
 
  
 
–
 
  
 
4.0
 
 
 
6,089
 
  
 
21,870
 
  
 
62,365
 
  
 
25,425
 
  
 
7,983
 
  
 
–
 
  
 
123,732
 
Equity instruments
              
Common shares
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
398
 
  
 
398
 
Total FVOCI
  
 
6,089
 
  
 
21,870
 
  
 
62,365
 
  
 
25,425
 
  
 
7,983
 
  
 
398
 
  
 
124,130
 
Amortized cost
              
Canadian federal and provincial government issued or guaranteed debt
  
 
294
 
  
 
1,110
 
  
 
3,853
 
  
 
210
 
  
 
–
 
  
 
–
 
  
 
5,467
 
Yield
(1)
%
  
 
1.2
 
  
 
2.6
 
  
 
4.1
 
  
 
4.9
 
  
 
–
 
  
 
–
 
  
 
3.7
 
U.S. treasury and other U.S. agency debt
  
 
–
 
  
 
31
 
  
 
88
 
  
 
27
 
  
 
15,612
 
  
 
–
 
  
 
15,758
 
Yield
(1)
%
  
 
–
 
  
 
3.9
 
  
 
3.7
 
  
 
3.5
 
  
 
4.4
 
  
 
–
 
  
 
4.4
 
Other foreign government debt
  
 
246
 
  
 
1,173
 
  
 
750
 
  
 
82
 
  
 
30
 
  
 
–
 
  
 
2,281
 
Yield
(1)
%
  
 
1.9
 
  
 
3.5
 
  
 
2.5
 
  
 
3.8
 
  
 
4.3
 
  
 
–
 
  
 
3.0
 
Corporate debt
  
 
–
 
  
 
1
 
  
 
69
 
  
 
–
 
  
 
146
 
  
 
–
 
  
 
216
 
Yield
(1)
%
  
 
–
 
  
 
6.8
 
  
 
5.4
 
  
 
–
 
  
 
5.5
 
  
 
–
 
  
 
5.5
 
 
 
540
 
  
 
2,315
 
  
 
4,760
 
  
 
319
 
  
 
15,788
 
  
 
–
 
  
 
23,722
 
Fair value through profit or loss
              
Equity instruments
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
2,073
 
  
 
2,073
 
Debt instruments
  
 
2
 
  
 
–
 
  
 
21
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
23
 
Total investment securities
  
$
6,631
 
  
$
24,185
 
  
$
67,146
 
  
$
25,744
 
  
$
23,771
 
  
$
2,471
 
  
$
149,948
 
Total by currency (in Canadian equivalent):
              
Canadian dollar
  
$
1,611
 
  
$
6,617
 
  
$
19,080
 
  
$
15,402
 
  
$
1,114
 
  
$
552
 
  
$
44,376
 
U.S. dollar
  
 
1,144
 
  
 
11,858
 
  
 
38,137
 
  
 
7,889
 
  
 
22,343
 
  
 
1,495
 
  
 
82,866
 
Mexican peso
  
 
234
 
  
 
1,131
 
  
 
3,052
 
  
 
838
 
  
 
–
 
  
 
106
 
  
 
5,361
 
Other currencies
  
 
3,642
 
  
 
4,579
 
  
 
6,877
 
  
 
1,615
 
  
 
314
 
  
 
318
 
  
 
17,345
 
Total investment securities
  
$
 6,631
 
  
$
 24,185
 
  
$
 67,146
 
  
$
 25,744
 
  
$
 23,771
 
  
$
 2,471
 
  
$
 149,948
 
 
(1)
Represents the weighted-average yield of fixed income securities.
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
    
Remaining term to maturity
         
As at October 31, 2024 ($ millions)  
Within
three
months
    
Three to
twelve
months
    
One to
five years
    
Five to
ten years
    
Over ten
years
    
No specific
maturity
    
Carrying
value
  
Fair value through other comprehensive income
              
Debt instruments
              
Canadian federal government issued or guaranteed debt
   $ 1,873     $ 4,054     $ 11,699     $ 3,072     $ 842     $ –     $ 21,540  
Yield
(1)
%
  
 
4.4
 
  
 
4.2
 
  
 
3.9
 
  
 
3.5
 
  
 
3.9
 
     –    
 
3.9
 
Canadian provincial and municipal debt
     213       1,882       8,190       6,811       429       –       17,525  
Yield
(1)
%
  
 
1.8
 
  
 
3.3
 
  
 
3.7
 
  
 
3.9
 
  
 
3.8
 
     –    
 
3.7
 
U.S. treasury and other U.S. agency debt
     2,308       2,209       30,098       5,387       6,374       –       46,376  
Yield
(1)
%
     2.3    
 
3.5
 
  
 
3.6
 
  
 
4.1
 
  
 
4.4
 
     –    
 
3.7
 
Other foreign government debt
     6,203       6,069       12,969       3,715       330       –       29,286  
Yield
(1)
%
  
 
2.6
 
  
 
3.6
 
  
 
5.4
 
  
 
5.0
 
  
 
4.4
 
     –    
 
4.4
 
Other debt
     1       452       2,768       268       10       –       3,499  
Yield
(1)
%
  
 
10.7
 
  
 
6.1
 
  
 
3.7
 
  
 
4.5
 
  
 
5.9
 
  
 
–
 
  
 
4.1
 
    10,598       14,666       65,724       19,253       7,985       –       118,226  
Equity instruments
              
Common shares
     –       –       –       –       –       3,162       3,162  
Total FVOCI
     10,598       14,666       65,724       19,253       7,985       3,162       121,388  
Amortized cost
              
Canadian federal and provincial government issued or guaranteed debt
     610       2,099       5,740       272       –       –       8,721  
Yield
(1)
%
  
 
4.6
 
  
 
2.1
 
  
 
4.0
 
  
 
4.7
 
  
 
–
 
     –    
 
3.6
 
U.S. treasury and other U.S. agency debt
     1       48       116       13       18,262       –       18,440  
Yield
(1)
%
  
 
4.8
 
  
 
4.5
 
  
 
4.2
 
  
 
4.0
 
  
 
4.6
 
     –    
 
4.6
 
Other foreign government debt
     324       689       858       139       31       –       2,041  
Yield
(1)
%
  
 
3.6
 
  
 
8.6
 
  
 
3.2
 
  
 
4.0
 
  
 
4.3
 
     –    
 
5.2
 
Corporate debt
     –       –       81       –       129       –       210  
Yield
(1)
%
  
 
–
 
  
 
–
 
  
 
6.4
 
  
 
–
 
  
 
5.5
 
  
 
–
 
  
 
5.8
 
    935       2,836       6,795       424       18,422       –       29,412  
Fair value through profit or loss
              
Equity instruments
     –       –       –       –       –       2,004       2,004  
Debt instruments
     2       –       26       –       –       –       28  
Total investment securities
   $ 11,535     $ 17,502     $ 72,545     $ 19,677     $ 26,407     $ 5,166     $ 152,832  
Total by currency (in Canadian equivalent):
              
Canadian dollar
   $ 2,725     $ 6,799     $ 23,034     $ 8,491     $ 1,409     $ 1,464     $ 43,922  
U.S. dollar
     2,696       3,894       40,362       8,471       24,636       3,333       83,392  
Mexican peso
     948       1,215       3,139       332       –       44       5,678  
Other currencies
     5,166       5,594       6,010       2,383       362       325       19,840  
Total investment securities
   $  11,535     $  17,502     $  72,545     $  19,677     $  26,407     $  5,166     $  152,832  
 
(1)
Represents the weighted-average yield of fixed income securities.
 
(e)
Net gain on sale of investment securities
The following table presents the net gain on sale of investment securities:
 
For the year ended October 31 ($ millions)  
2025
    
2024
  
Debt investment securities measured at amortized cost
  
$
–
 
   $ 1  
Debt investment securities measured at FVOCI
  
 
71
 
     47  
Net gain on sale of investment securities
  
$
 71
 
   $  48  
 
2025 Scotiabank Annual Report 
|
 
187
Table of Contents
Consolidated Financial Statements
 
12
Loans, Impaired Loans and Allowance for Credit Losses
 
(a)
Loans at amortized cost
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Gross
loans
    
Allowance
for credit
losses
    
Net
carrying
amount
    
Gross
loans
    
Allowance
for credit
losses
    
Net
carrying
amount
  
Residential mortgages
  
$
370,191
 
  
$
1,460
 
  
$
368,731
 
   $  350,941     $  1,208     $  349,733  
Personal loans
  
 
110,567
 
  
 
2,432
 
  
 
108,135
 
     106,379       2,319       104,060  
Credit cards
  
 
18,045
 
  
 
1,355
 
  
 
16,690
 
     17,374       1,160       16,214  
Business and government
  
 
279,705
 
  
 
2,216
 
  
 
277,489
 
     292,671       1,849       290,822  
Total
  
$
 778,508
 
  
$
 7,463
 
  
$
 771,045
 
   $ 767,365     $ 6,536     $ 760,829  
 
(b)
Loans and acceptances outstanding by geography
(1)
 
As at October 31 ($ millions)  
2025
    
2024
  
Canada:
    
Residential mortgages
  
$
 312,131
 
   $  297,677  
Personal loans
  
 
82,764
 
     82,892  
Credit cards
  
 
9,018
 
     8,982  
Business and government
  
 
128,086
 
     133,810  
 
 
531,999
 
     523,361  
United States:
    
Personal loans
  
 
5,965
 
     4,009  
Business and government
  
 
56,171
 
     55,237  
 
 
62,136
 
     59,246  
Mexico:
    
Residential mortgages
  
 
18,980
 
     16,749  
Personal loans
  
 
3,436
 
     2,615  
Credit cards
  
 
1,048
 
     832  
Business and government
  
 
22,232
 
     23,994  
 
 
45,696
 
     44,190  
Chile:
    
Residential mortgages
  
 
21,739
 
     20,410  
Personal loans
  
 
5,125
 
     4,868  
Credit cards
  
 
4,076
 
     3,551  
Business and government
  
 
20,171
 
     20,330  
 
 
51,111
 
     49,159  
Peru:
    
Residential mortgages
  
 
4,625
 
     4,113  
Personal loans
  
 
5,801
 
     5,623  
Credit cards
  
 
492
 
     757  
Business and government
  
 
11,125
 
     10,545  
 
 
22,043
 
     21,038  
Colombia:
    
Residential mortgages
  
 
2,384
 
     2,196  
Personal loans
  
 
2,885
 
     2,186  
Credit cards
  
 
1,540
 
     1,446  
Business and government
  
 
6,481
 
     5,518  
 
 
13,290
 
     11,346  
Other International:
    
Residential mortgages
  
 
10,332
 
     9,796  
Personal loans
  
 
4,591
 
     4,186  
Credit cards
  
 
1,871
 
     1,806  
Business and government
  
 
35,439
 
     43,237  
 
 
52,233
 
     59,025  
Total loans
  
 
778,508
 
     767,365  
Acceptances
(2)
  
 
177
 
     148  
Total loans and acceptances
(3)
  
 
778,685
 
     767,513  
Allowance for credit losses
  
 
(7,463
) 
     (6,537 ) 
Total loans and acceptances net of allowance for credit losses
  
$
771,222
 
   $ 760,976  
 
(1)
Geographic segmentation is based on the location of the property for residential mortgages; otherwise, the residence of the borrower.
(2)
98.8% of acceptances reside outside Canada (October 31, 2024 –
96.5
%).
(3)
Loans and acceptances denominated in U.S. dollars were $119,788 (2024 – $137,804), in Chilean pesos $10,885 (2024 – $39,425), Mexican pesos $12,754 (2024 – $31,522), and in other foreign currencies $24,665 (2024 – $54,549).
 
188
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
(c)
Loan maturities
 
As at October 31, 2025  
Remaining term to maturity
    
Rate sensitivity
  
($ millions)  
Within
one year
    
One to
five years
    
Five to
ten years
    
Over
ten years
    
No specific
maturity
    
Total
    
Floating
    
Fixed rate
    
Non-rate

sensitive
    
Total
  
Residential mortgages
  
$
92,485
 
  
$
228,818
 
  
$
18,398
 
  
$
25,699
 
  
$
4,791
 
  
$
370,191
 
  
$
111,631
 
  
$
253,782
 
  
$
4,778
 
  
$
370,191
 
Personal loans
  
 
21,114
 
  
 
37,982
 
  
 
5,341
 
  
 
1,269
 
  
 
44,861
 
  
 
110,567
 
  
 
50,887
 
  
 
58,258
 
  
 
1,422
 
  
 
110,567
 
Credit cards
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
18,045
 
  
 
18,045
 
  
 
–
 
  
 
18,045
 
  
 
–
 
  
 
18,045
 
Business and government
  
 
141,324
 
  
 
121,364
 
  
 
9,003
 
  
 
644
 
  
 
7,370
 
  
 
279,705
 
  
 
205,000
 
  
 
71,634
 
  
 
3,071
 
  
 
279,705
 
Total
  
$
 254,923
 
  
$
 388,164
 
  
$
 32,742
 
  
$
 27,612
 
  
$
 75,067
 
  
$
 778,508
 
  
$
 367,518
 
  
$
 401,719
 
  
$
 9,271
 
  
$
 778,508
 
Allowance for credit losses
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(7,463
) 
  
 
(7,463
) 
  
 
–
 
  
 
–
 
  
 
(7,463
) 
  
 
(7,463
) 
Total loans net of allowance for credit losses
  
$
254,923
 
  
$
388,164
 
  
$
32,742
 
  
$
27,612
 
  
$
67,604
 
  
$
771,045
 
  
$
367,518
 
  
$
401,719
 
  
$
1,808
 
  
$
771,045
 
As at October 31, 2024  
Remaining term to maturity
    
Rate sensitivity
  
($ millions)  
Within
one year
    
One to
five years
    
Five to
ten years
    
Over
ten years
    
No specific
maturity
    
Total
    
Floating
    
Fixed rate
    
Non-rate

sensitive
    
Total
  
Residential mortgages
   $ 72,883     $ 233,469     $ 15,456     $ 25,264     $ 3,869     $ 350,941     $ 93,626     $ 253,954     $ 3,361     $ 350,941  
Personal loans
     18,753       37,707       5,411       1,171       43,337       106,379       47,790       57,219       1,370       106,379  
Credit cards
     –       –       –       –       17,374       17,374       –       17,374       –       17,374  
Business and government
     142,536       135,474       7,340       405       6,916       292,671       216,334       73,596       2,741       292,671  
Total
   $  234,172     $  406,650     $  28,207     $  26,840     $  71,496     $  767,365     $  357,750     $  402,143     $  7,472     $  767,365  
Allowance for credit losses
     –       –       –       –       (6,536 )      (6,536 )      –       –       (6,536 )      (6,536 ) 
Total loans net of allowance for credit losses
   $ 234,172     $ 406,650     $ 28,207     $ 26,840     $ 64,960     $ 760,829     $ 357,750     $ 402,143     $ 936     $ 760,829  
 
(d)
Impaired loans
(1)
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Gross
impaired
loans
(1)
    
Allowance
for credit
losses
    
Net
    
Gross
impaired
loans
(1)
    
Allowance
for credit
losses
    
Net
  
Residential mortgages
  
$
2,903
 
  
$
840
 
  
$
2,063
 
   $ 2,372     $ 645     $ 1,727  
Personal loans
  
 
1,071
 
  
 
604
 
  
 
467
 
     1,117       621       496  
Credit cards
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –  
Business and government
  
 
3,270
 
  
 
897
 
  
 
2,373
 
     3,250       788       2,462  
Total
  
$
 7,244
 
  
$
 2,341
 
  
$
 4,903
 
   $ 6,739     $ 2,054     $ 4,685  
By geography:
            
Canada
  
$
2,416
 
  
$
683
 
  
$
1,733
 
   $ 2,158     $ 569     $ 1,589  
United States
  
 
–
 
  
 
–
 
  
 
–
 
     109       22       87  
Mexico
  
 
1,494
 
  
 
535
 
  
 
959
 
     1,343       424       919  
Peru
  
 
823
 
  
 
400
 
  
 
423
 
     715       385       330  
Chile
  
 
1,420
 
  
 
332
 
  
 
1,088
 
     1,249       281       968  
Colombia
  
 
364
 
  
 
132
 
  
 
232
 
     322       109       213  
Other International
  
 
727
 
  
 
259
 
  
 
468
 
     843       264       579  
Total
  
$
7,244
 
  
$
2,341
 
  
$
4,903
 
   $  6,739     $  2,054     $  4,685  
 
(1)
Interest income recognized on impaired loans during the year ended October 31, 2025 was $95 (2024 – $84).
 
2025 Scotiabank Annual Report 
|
 
189
Consolidated Financial Statements
 
(e)
Allowance for credit losses
(i)
Key inputs and assumptions
The Bank’s allowance for credit losses is measured using a three-stage approach based on the extent of credit deterioration since origination. The calculation of the Bank’s allowance for credit losses is an output of a set of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Some of the key drivers include the following:
 
  •  
Changes in risk ratings of the borrower or instrument reflecting changes in their credit quality;
  •  
Changes in the volumes of transactions;
  •  
Changes in the forward-looking macroeconomic environment reflected in the variables used in the models such as GDP growth, unemployment rates, commodity prices, interest rates and house price indices, which are closely related with credit losses in the relevant portfolio;
  •  
Changes in macroeconomic scenarios and the probability weights assigned to each scenario; and
  •  
Borrower migration between the three stages.
The Bank determines its allowance for credit losses using four probability-weighted forward-looking scenarios (base case, optimistic, pessimistic and very pessimistic).
The Bank considers both internal and external sources of information and data to achieve unbiased projections and forecasts in determining the allowance for credit losses. The Bank prepares the scenarios using forecasts generated by Scotiabank Economics (SE). The forecasts are generated using models whose outputs are modified by SE as necessary to formulate a ‘base case’ view of the most probable future direction of economic developments. The development of the base case and alternative scenarios is overseen by a governance committee that consists of internal stakeholders from across the Bank. The final base case and alternative scenarios reflect significant review and oversight, and incorporate judgment both in the determination of the scenarios’ forecasts and the probability weights that are assigned to them.
 
(ii)
Key macroeconomic variables
The inputs and models used for calculating expected credit losses may not always capture all characteristics of the market at the date of the financial statements. Qualitative adjustments or overlays may be made for certain portfolios or geographies as temporary adjustments in circumstances where, in the Bank’s view, the inputs, assumptions, and/or modelling techniques do not capture all relevant risk factors, including the emergence of economic or geopolitical events, up to the date of the financial statements. As required under IFRS 9, the allowance for credit losses at each reporting period must be based on inputs, assumptions and information available up to that date.
The Bank has generated a forward-looking base case scenario and three alternate forward-looking scenarios (one optimistic and two pessimistic) as key inputs into the expected credit loss provisioning models. Given the uncertainty surrounding U.S. trade policies and the direction of tariffs, the scenarios as at October 31, 2025 have varying assumptions of imposed tariffs. The base case scenario assumes tariffs announced and implemented, avoiding speculation on future announcements, including potential trade deals and tariff pauses. Differing assumptions are reflected in the alternate scenarios described below. As new information comes to light in the future, the scenarios and assumptions will be updated accordingly.
U.S. trade policies and related uncertainty have shaped the economic environment over the past year and weighed on the outlook. The Canadian and U.S. forecasts have been adjusted frequently as new developments emerged. In Canada, tariff-sensitive sectors and regions are showing earlier-than-expected weakness, resulting in a softer 2025 growth profile than expected last year. In contrast, the U.S. has shown surprising resilience, supported by strong AI-related activity despite signs of weakness elsewhere in the economy. As a result, the U.S. growth profile for 2025 is slightly stronger than forecast last year. Persistent upside surprises to U.S. growth, combined with stubborn inflation, delayed the start of monetary easing relative to last year’s expectations. With inflation in both countries now closer to target and economic activity softening, the Bank of Canada and the U.S. Federal Reserve have shifted their focus from inflation control toward supporting growth, though upside inflation risks remain. Economic activity in both countries is expected to improve somewhat in 2026 as tariff impacts fade and, in Canada, as stimulus measures and infrastructure plans from the federal budget take effect.
The optimistic scenario features somewhat stronger economic activity relative to the base case. The pessimistic scenario features a negative demand-type shock with globally tighter financial conditions, weaker growth and inflation, and lower monetary policy rates than in the base case scenario. It also assumes a combination of U.S. imposed tariffs on world economies, including an effective tariff of 7.5% on imports from Canada and Mexico, while facing no retaliation from these countries. The very pessimistic scenario features a strong stagflationary impulse that leads to a protracted period of financial market uncertainty. It also assumes U.S. imposed tariffs with a magnitude about three times that of the pessimistic scenario. Under this scenario, all countries retaliate. This results in higher inflation, requiring central banks to raise their policy rates to higher levels than in the base case in order to bring inflation under control, which is dampening economic activity.
 
190
 
|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
The following tables show certain key macroeconomic variables used to calculate the modelled estimate for the allowance for credit losses. Further changes in these variables up to the date of the financial statements are incorporated through expert credit judgment. For the base case, optimistic and pessimistic scenarios, the projections are provided for the next 12 months and for the remaining forecast period, which represents a medium-term view.
 
   
Base Case Scenario
          
Alternative Scenario – Optimistic
          
Alternative Scenario – Pessimistic
          
Alternative Scenario – Very
Pessimistic
  
October 31, 2025  
Next
12 Months
           
Remaining
Forecast Period
           
Next
12 Months
           
Remaining
Forecast Period
           
Next
12 Months
           
Remaining
Forecast Period
           
Next
12 Months
           
Remaining
Forecast Period
  
     
Canada
                              
Real GDP growth, y/y % change
  
 
1.2
 
    
 
2.2
 
    
 
2.4
 
    
 
3.1
 
    
 
-1.1
 
    
 
2.7
 
    
 
-4.4
 
    
 
3.4
 
Consumer price index, y/y %
  
 
1.9
 
    
 
2.2
 
    
 
2.1
 
    
 
2.7
 
    
 
1.4
 
    
 
2.0
 
    
 
5.0
 
    
 
2.4
 
Unemployment rate, average %
  
 
7.0
 
    
 
5.8
 
    
 
6.6
 
    
 
4.7
 
    
 
8.2
 
    
 
6.4
 
    
 
11.2
 
    
 
7.0
 
Bank of Canada overnight rate target, average %
  
 
2.3
 
    
 
2.8
 
    
 
2.8
 
    
 
3.7
 
    
 
2.1
 
    
 
2.4
 
    
 
3.1
 
    
 
3.3
 
HPI – Housing Price Index, y/y % change
  
 
1.9
 
    
 
6.2
 
    
 
2.6
 
    
 
7.7
 
    
 
-2.0
 
    
 
6.7
 
    
 
-5.1
 
    
 
6.2
 
USD/CAD exchange rate, average
  
 
1.32
 
    
 
1.30
 
    
 
1.31
 
    
 
1.29
 
    
 
1.37
 
    
 
1.29
 
    
 
1.45
 
    
 
1.30
 
     
U.S.
                              
Real GDP growth, y/y % change
  
 
1.4
 
    
 
2.3
 
    
 
1.9
 
    
 
3.2
 
    
 
-1.0
 
    
 
3.0
 
    
 
-3.7
 
    
 
3.5
 
Consumer price index, y/y %
  
 
2.6
 
    
 
2.5
 
    
 
2.7
 
    
 
2.8
 
    
 
2.7
 
    
 
2.4
 
    
 
6.0
 
    
 
2.7
 
Target federal funds rate, upper limit, average %
  
 
3.3
 
    
 
3.0
 
    
 
3.5
 
    
 
3.5
 
    
 
3.2
 
    
 
2.7
 
    
 
3.9
 
    
 
3.6
 
Unemployment rate, average %
  
 
4.5
 
    
 
4.3
 
    
 
4.4
 
    
 
4.0
 
    
 
5.8
 
    
 
4.8
 
    
 
8.1
 
    
 
5.2
 
     
Mexico
                              
Real GDP growth, y/y % change
  
 
-0.2
 
    
 
2.2
 
    
 
0.6
 
    
 
2.9
 
    
 
-2.4
 
    
 
2.6
 
    
 
-5.5
 
    
 
3.3
 
Unemployment rate, average %
  
 
3.3
 
    
 
3.7
 
    
 
3.2
 
    
 
3.1
 
    
 
3.9
 
    
 
3.8
 
    
 
6.1
 
    
 
4.6
 
     
Chile
                              
Real GDP growth, y/y % change
  
 
2.4
 
    
 
2.0
 
    
 
3.5
 
    
 
2.8
 
    
 
0.3
 
    
 
2.6
 
    
 
-3.7
 
    
 
3.5
 
Unemployment rate, average %
  
 
7.9
 
    
 
6.7
 
    
 
7.7
 
    
 
6.4
 
    
 
9.0
 
    
 
6.9
 
    
 
11.2
 
    
 
7.3
 
     
Peru
                              
Real GDP growth, y/y % change
  
 
2.9
 
    
 
3.1
 
    
 
4.1
 
    
 
4.0
 
    
 
0.6
 
    
 
3.6
 
    
 
-1.0
 
    
 
4.1
 
Unemployment rate, average %
  
 
5.7
 
    
 
6.1
 
    
 
5.3
 
    
 
5.2
 
    
 
6.7
 
    
 
6.5
 
    
 
10.5
 
    
 
7.6
 
     
Colombia
                              
Real GDP growth, y/y % change
  
 
2.9
 
    
 
2.5
 
    
 
4.0
 
    
 
3.4
 
    
 
0.7
 
    
 
3.0
 
    
 
-1.0
 
    
 
3.5
 
Unemployment rate, average %
  
 
10.3
 
    
 
9.9
 
    
 
10.0
 
    
 
9.1
 
    
 
12.0
 
    
 
10.5
 
    
 
18.9
 
    
 
12.5
 
     
Caribbean
                              
Real GDP growth, y/y % change
  
 
3.7
 
    
 
4.0
 
    
 
4.4
 
    
 
4.7
 
    
 
1.6
 
    
 
4.4
 
    
 
-0.6
 
    
 
4.9
 
     
Global
                              
WTI oil price, average USD/bbl
  
 
60
 
    
 
66
 
    
 
64
 
    
 
78
 
    
 
53
 
    
 
61
 
    
 
45
 
    
 
56
 
Copper price, average USD/lb
  
 
4.19
 
    
 
4.68
 
    
 
4.29
 
    
 
5.03
 
    
 
3.92
 
    
 
4.60
 
    
 
3.61
 
    
 
4.47
 
Global GDP, y/y % change
  
 
2.2
 
  
 
 
 
  
 
2.7
 
  
 
 
 
  
 
3.0
 
  
 
 
 
  
 
3.5
 
  
 
 
 
  
 
0.3
 
  
 
 
 
  
 
3.2
 
  
 
 
 
  
 
-2.2
 
  
 
 
 
  
 
3.7
 
 
2025 Scotiabank Annual Report 
|
 
191
Consolidated Financial Statements
 
   
Base Case Scenario
          
Alternative Scenario – Optimistic
          
Alternative Scenario – Pessimistic
          
Alternative Scenario – Very
Pessimistic
  
October 31, 2024  
Next
12 Months
           
Remaining
Forecast Period
           
Next
12 Months
           
Remaining
Forecast Period
           
Next
12 Months
           
Remaining
Forecast Period
           
Next
12 Months
           
Remaining
Forecast Period
  
     
Canada
                        
 
      
Real GDP growth, y/y % change
     1.8         2.2         2.8         3.1         -1.6         2.9    
 
     -4.4         3.4  
Consumer price index, y/y %
     2.2         2.0         2.4         2.5         1.6         1.7    
 
     5.8         2.2  
Unemployment rate, average %
     6.7         6.0         6.3         5.0         8.4         6.9    
 
     11.1         7.3  
Bank of Canada overnight rate target, average %
     3.3         2.6         3.5         3.6         2.9         2.0    
 
     4.0         3.2  
HPI – Housing Price Index, y/y % change
     1.6         4.2         2.4         5.5         -3.7         4.8    
 
     -5.8         4.1  
USD/CAD exchange rate, average
     1.34         1.30         1.33         1.28         1.43         1.28    
 
     1.49         1.30  
     
U.S.
                        
 
      
Real GDP growth, y/y % change
     1.6         2.2         2.3         3.1         -1.6         3.0    
 
     -4.0         3.4  
Consumer price index, y/y %
     2.4         2.3         2.6         2.7         1.3         2.0    
 
     6.2         2.5  
Target federal funds rate, upper limit, average %
     4.1         2.9         4.1         3.4         3.6         1.8    
 
     4.8         3.4  
Unemployment rate, average %
     4.3         4.3         4.2         3.9         6.0         4.9    
 
     8.1         5.2  
     
Mexico
                        
 
      
Real GDP growth, y/y % change
     1.3         2.1         2.6         2.9         -0.8         2.6    
 
     -2.9         3.2  
Unemployment rate, average %
     3.3         3.9         3.0         3.1         4.1         4.0    
 
     6.3         4.9  
     
Chile
                        
 
      
Real GDP growth, y/y % change
     3.0         2.2         4.6         3.2         0.1         3.0    
 
     -3.6         3.8  
Unemployment rate, average %
     7.9         6.7         7.6         6.0         9.5         7.0    
 
     11.5         7.4  
     
Peru
                        
 
      
Real GDP growth, y/y % change
     2.6         3.4         3.6         4.5         1.5         3.7    
 
     -0.5         4.3  
Unemployment rate, average %
     6.7         6.2         6.2         5.2         8.1         6.5    
 
     11.8         8.0  
     
Colombia
                        
 
      
Real GDP growth, y/y % change
     2.6         2.7         3.7         3.8         1.4         3.1    
 
     -0.5         3.6  
Unemployment rate, average %
     11.1         10.1         10.7         9.1         13.5         10.6    
 
     19.8         13.0  
     
Caribbean
                        
 
      
Real GDP growth, y/y % change
     3.6         3.8         4.2         4.5         2.5         4.2    
 
     0.6         4.7  
     
Global
                        
 
      
WTI oil price, average USD/bbl
     73         69         78         83         60         60    
 
     53         58  
Copper price, average USD/lb
     4.99         5.29         5.16         5.86         4.50         5.13    
 
     4.32         5.02  
Global GDP, y/y % change
     3.4    
 
 
 
     2.4    
 
 
 
     4.3    
 
 
 
     3.3    
 
 
 
     0.6    
 
 
 
     3.1    
 
 
 
     -1.5    
 
 
 
     3.5  
 
(iii)
Sensitivity
Relative to the base case scenario, the weighting of these multiple scenarios increased the reported allowance for credit losses for financial assets in Stage 1 and Stage 2 to $5,313 million (2024 – $4,682 million) from $5,018 million (2024 – $4,316 million).
The Bank enhanced certain of its IFRS 9 models in the current year, with the enhanced models exhibiting higher sensitivity to changes in the macroeconomic outlook. If the Bank was to apply a probability weighted average of its two pessimistic scenarios for the measurement of allowance for credit losses for such assets, the allowance for credit losses on performing financial instruments would be $786 million higher than the reported allowance for credit losses as at October 31, 2025 (October 31, 2024 – $942 million), excluding the consideration of changes in qualitative overlays or expert credit judgement. Actual results will differ as this does not consider the migration of exposures or incorporate changes that would occur in the portfolio due to risk mitigation actions and other factors.
Under our current probability-weighted scenarios, if all of our performing financial assets were in Stage 1, reflecting a 12 month expected loss period, the allowance for credit losses would be $801 million (2024 – $693 million) lower than the reported allowance for credit losses on performing financial assets.
 
192
 
|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
(iv)
Allowance for credit losses
 
($ millions)  
Balance as at
November 1,
2024
    
Provision for
credit losses
(1)
    
Net write-offs
    
Other, including
foreign
currency
adjustment
    
Balance as at
October 31,
2025
  
Residential mortgages
  
$
1,208
 
  
$
304
 
  
$
(110
) 
  
$
58
 
  
$
1,460
 
Personal loans
  
 
2,319
 
  
 
1,951
 
  
 
(1,814
) 
  
 
 (24
) 
  
 
2,432
 
Credit cards
  
 
1,160
 
  
 
1,399
 
  
 
(1,242
) 
  
 
38
 
  
 
1,355
 
Business and government
  
 
2,036
 
  
 
1,072
 
  
 
(642
) 
  
 
(74
) 
  
 
2,392
 
 
$
 6,723
 
  
$
 4,726
 
  
$
 (3,808
) 
  
$
(2
) 
  
$
 7,639
 
Presented as:
          
Allowance for credit losses on loans
  
$
6,536
 
        
$
7,463
 
Allowance for credit losses on acceptances
(2)
  
 
1
 
        
 
1
 
Allowance for credit losses on
off-balance
sheet exposures
(3)
  
 
186
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
175
 
 
(1)
Excludes amounts associated with other assets of $(12). The provision for credit losses, net of these amounts, is $4,714.
(2)
Allowance for credit losses on acceptances is recorded against the financial asset in the Consolidated Statement of Financial Position.
(3)
Allowance for credit losses on
off-balance
sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position.
 
($ millions)  
Balance as at
November 1,
2023
    
Provision for
credit losses
(1)
    
Net write-offs
    
Other, including
foreign
currency
adjustment
    
Balance as at
October 31,
2024
  
Residential mortgages
   $ 1,084     $ 257     $ (76 )    $ (57 )    $ 1,208  
Personal loans
     2,414       1,893       (1,857 )      (131 )      2,319  
Credit cards
     1,237       1,122       (1,166 )      (33 )      1,160  
Business and government
     1,876       790       (424 )      (206 )      2,036  
  $  6,611     $  4,062     $  (3,523 )    $  (427 )    $  6,723  
Presented as:
          
Allowance for credit losses on loans
   $ 6,372           $ 6,536  
Allowance for credit losses on acceptances
(2)
     90             1  
Allowance for credit losses on
off-balance
sheet exposures
(3)
     149    
 
 
 
  
 
 
 
  
 
 
 
     186  
 
(1)
Excludes amounts associated with other assets and reversal of impairment losses of $(11). The provision for credit losses, net of these amounts, is $4,051.
(2)
Allowance for credit losses on acceptances is recorded against the financial asset in the Consolidated Statement of Financial Position.
(3)
Allowance for credit losses on
off-balance
sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position.
Allowance for credit losses on loans
 
As at October 31, 2025 ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
    
Total
  
Residential mortgages
  
$
196
 
  
$
424
 
  
$
840
 
  
$
1,460
 
Personal loans
  
 
613
 
  
 
1,215
 
  
 
604
 
  
 
2,432
 
Credit cards
  
 
338
 
  
 
1,017
 
  
 
–
 
  
 
1,355
 
Business and government
  
 
713
 
  
 
606
 
  
 
897
 
  
 
2,216
 
Total
(1)
  
$
 1,860
 
  
$
 3,262
 
  
$
 2,341
 
  
$
 7,463
 
 
(1)
Excludes allowance for credit losses for other financial assets including acceptances, investment securities, deposits with banks,
off-balance
sheet credit risks and reverse repos which amounted to $191.
 
As at October 31, 2024 ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
    
Total
  
Residential mortgages
   $ 165     $ 398     $ 645     $ 1,208  
Personal loans
     544       1,154       621       2,319  
Credit cards
     288       872       –       1,160  
Business and government
     586       475       788       1,849  
Total
(1)
   $  1,583     $  2,899     $  2,054     $  6,536  
 
(1)
Excludes allowance for credit losses for other financial assets including acceptances, investment securities, deposits with banks,
off-balance
sheet credit risks and reverse repos which amounted to $200.
 
2025 Scotiabank Annual Report 
|
 
193
Consolidated Financial Statements
 
The following table presents the changes to the allowance for credit losses on loans.
 
   
As at October 31, 2025
    
As at October 31, 2024
  
($ millions)  
Stage 1
    
Stage 2
    
Stage 3
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
    
Total
  
Residential mortgages
                
Balance at beginning of the year
  
$
165
 
  
$
398
 
  
$
645
 
  
$
1,208
 
   $ 265     $ 321     $ 498     $ 1,084  
Provision for credit losses
                
Remeasurement
(1)
  
 
(235
) 
  
 
117
 
  
 
423
 
  
 
305
 
     (271 )      164       373       266  
Newly originated or purchased financial assets
  
 
47
 
  
 
–
 
  
 
–
 
  
 
47
 
     41       –       –       41  
Derecognition of financial assets and maturities
  
 
(8
) 
  
 
(33
)
  
 
–
 
  
 
(41
) 
     (9 )      (22 )      –       (31 ) 
Changes in models and methodologies
(7)
  
 
(2
) 
  
 
(14
) 
  
 
9
 
  
 
(7
) 
     (22 )      3       –       (19 ) 
Transfer to (from):
                
Stage 1
  
 
268
 
  
 
(216
) 
  
 
(52
) 
  
 
–
 
     215       (165 )      (50 )      –  
Stage 2
  
 
(44
) 
  
 
258
 
  
 
(214
) 
  
 
–
 
     (40 )      197       (157 )      –  
Stage 3
  
 
–
 
  
 
(101
)
  
 
101
 
  
 
–
 
     –       (84 )      84       –  
Gross write-offs  
 
–
 
  
 
–
 
  
 
(135
) 
  
 
(135
) 
     –       –       (100 )      (100 ) 
Recoveries  
 
–
 
  
 
–
 
  
 
25
 
  
 
25
 
     –       –       24       24  
Foreign exchange and other movements
(6)
  
 
5
 
  
 
15
 
  
 
38
 
  
 
58
 
     (14 )      (16 )      (27 )      (57 ) 
Balance at end of year
(2)
  
$
196
 
  
$
424
 
  
$
840
 
  
$
1,460
 
   $ 165     $ 398     $ 645     $ 1,208  
Personal loans
                
Balance at beginning of the year
  
$
544
 
  
$
1,154
 
  
$
621
 
  
$
2,319
 
   $ 647     $ 1,103     $ 664     $ 2,414  
Provision for credit losses
                
Remeasurement
(1)
  
 
(620
) 
  
 
997
 
  
 
1,445
 
  
 
1,822
 
     (686 )      976       1,497       1,787  
Newly originated or purchased financial assets
  
 
390
 
  
 
–
 
  
 
–
 
  
 
390
 
     365       –       –       365  
Derecognition of financial assets and maturities
  
 
(92
) 
  
 
(144
)
  
 
–
 
  
 
(236
) 
     (97 )      (190 )      –       (287 ) 
Changes in models and methodologies
(7)
  
 
3
 
  
 
(33
) 
  
 
5
 
  
 
(25
) 
     (68 )      96       –       28  
Transfer to (from):
                
Stage 1
  
 
620
 
  
 
(604
) 
  
 
(16
) 
  
 
–
 
     658       (642 )      (16 )      –  
Stage 2
  
 
(207
) 
  
 
326
 
  
 
(119
) 
  
 
–
 
     (231 )      344       (113 )      –  
Stage 3
  
 
(8
) 
  
 
(473
) 
  
 
481
 
  
 
–
 
     (13 )      (504 )      517       –  
Gross write-offs  
 
–
 
  
 
–
 
  
 
(2,127
) 
  
 
(2,127
) 
     –       –       (2,145 )      (2,145 ) 
Recoveries  
 
–
 
  
 
–
 
  
 
313
 
  
 
313
 
     –       –       288       288  
Foreign exchange and other movements
(6)
  
 
(17
) 
  
 
(8
) 
  
 
1
 
  
 
(24
) 
     (31 )      (29 )      (71 )      (131 ) 
Balance at end of year
(2)
  
$
613
 
  
$
1,215
 
  
$
604
 
  
$
2,432
 
   $ 544     $ 1,154     $ 621     $ 2,319  
Credit cards
                
Balance at beginning of the year
  
$
288
 
  
$
872
 
  
$
–
 
  
$
1,160
 
   $ 414     $ 823     $ –     $ 1,237  
Provision for credit losses
                
Remeasurement
(1)
  
 
(319
) 
  
 
820
 
  
 
853
 
  
 
1,354
 
     (361 )      643       835       1,117  
Newly originated or purchased financial assets
  
 
139
 
  
 
–
 
  
 
–
 
  
 
139
 
     136       –       –       136  
Derecognition of financial assets and maturities
  
 
(43
) 
  
 
(41
) 
  
 
–
 
  
 
(84
) 
     (53 )      (61 )      –       (114 ) 
Changes in models and methodologies
(7)
  
 
–
 
  
 
(10
) 
  
 
–
 
  
 
(10
) 
     (38 )      21       –       (17 ) 
Transfer to (from):
                
Stage 1
  
 
390
 
  
 
(390
) 
  
 
–
 
  
 
–
 
     335       (335 )      –       –  
Stage 2
  
 
(128
) 
  
 
128
 
  
 
–
 
  
 
–
 
     (135 )      135       –       –  
Stage 3
  
 
–
 
  
 
(380
)
  
 
380
 
  
 
–
 
     –       (330 )      330       –  
Gross write-offs
  
 
–
 
  
 
–
 
  
 
(1,466
) 
  
 
(1,466
) 
     –       –       (1,356 )      (1,356 ) 
Recoveries
  
 
–
 
  
 
–
 
  
 
224
 
  
 
224
 
     –       –       190       190  
Foreign exchange and other movements
(6)
  
 
11
 
  
 
18
 
  
 
9
 
  
 
38
 
     (10 )      (24 )      1       (33 ) 
Balance at end of year
(2)
  
$
338
 
  
$
1,017
 
  
$
–
 
  
$
1,355
 
   $ 288     $ 872     $ –     $ 1,160  
Total retail loans
                
Balance at beginning of the year
  
$
997
 
  
$
2,424
 
  
$
1,266
 
  
$
4,687
 
   $ 1,326     $ 2,247     $ 1,162     $ 4,735  
Provision for credit losses
                
Remeasurement
(1)
  
 
(1,174
) 
  
 
1,934
 
  
 
2,721
 
  
 
3,481
 
     (1,318 )      1,783       2,705       3,170  
Newly originated or purchased financial assets
  
 
576
 
  
 
–
 
  
 
–
 
  
 
576
 
     542       –       –       542  
Derecognition of financial assets and maturities
  
 
(143
) 
  
 
(218
)
  
 
–
 
  
 
(361
) 
     (159 )      (273 )      –       (432 ) 
Changes in models and methodologies
(7)
  
 
1
 
  
 
(57
) 
  
 
14
 
  
 
(42
) 
     (128 )      120       –       (8 ) 
Transfer to (from):
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –       –  
Stage 1
  
 
1,278
 
  
 
(1,210
) 
  
 
(68
) 
  
 
–
 
     1,208       (1,142 )      (66 )      –  
Stage 2
  
 
(379
) 
  
 
712
 
  
 
(333
) 
  
 
–
 
     (406 )      676       (270 )      –  
Stage 3
  
 
(8
) 
  
 
(954
) 
  
 
962
 
  
 
–
 
     (13 )      (918 )      931       –  
Gross write-offs
  
 
–
 
  
 
–
 
  
 
(3,728
) 
  
 
(3,728
) 
     –       –       (3,601 )      (3,601 ) 
Recoveries
  
 
–
 
  
 
–
 
  
 
562
 
  
 
562
 
     –       –       502       502  
Foreign exchange and other movements
(6)
  
 
(1
) 
  
 
25
 
  
 
48
 
  
 
72
 
     (55 )      (69 )      (97 )      (221 ) 
Balance at end of year
(2)
  
$
1,147
 
  
$
2,656
 
  
$
1,444
 
  
$
5,247
 
   $ 997     $ 2,424     $ 1,266     $ 4,687  
Business and government
                
Balance at beginning of the year
  
$
739
 
  
$
508
 
  
$
788
 
  
$
2,035
 
   $ 635     $ 403     $ 748     $ 1,786  
Provision for credit losses
                
Remeasurement
(1)
  
 
(66
) 
  
 
335
 
  
 
853
 
  
 
1,122
 
     (210 )      288       622       700  
Newly originated or purchased financial assets
  
 
1,311
 
  
 
–
 
  
 
–
 
  
 
1,311
 
     936       –       –       936  
Derecognition of financial assets and maturities
  
 
(1,170
) 
  
 
(145
) 
  
 
(47
) 
  
 
(1,362
) 
     (860 )      (126 )      (9 )      (995 ) 
Changes in models and methodologies
(7)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
     200       37       –       237  
Transfer to (from):
                
Stage 1
  
 
120
 
  
 
(120
) 
  
 
–
 
  
 
–
 
     154       (154 )      –       –  
Stage 2
  
 
(89
) 
  
 
94
 
  
 
(5
)
  
 
–
 
     (110 )      114       (4 )      –  
Stage 3
  
 
(3
) 
  
 
(33
) 
  
 
36
 
  
 
–
 
     –       (21 )      21       –  
Gross write-offs
  
 
–
 
  
 
–
 
  
 
(700
) 
  
 
(700
) 
     –       –       (484 )      (484 ) 
Recoveries
  
 
–
 
  
 
–
 
  
 
58
 
  
 
58
 
     –       –       60       60  
Foreign exchange and other movements
  
 
12
 
  
 
1
 
  
 
(86
) 
  
 
(73
) 
     (6 )      (33 )      (166 )      (205 ) 
Balance at end of period including
off-balance
sheet exposures
(2)
  
$
854
 
  
$
640
 
  
$
897
 
  
$
2,391
 
   $ 739     $ 508     $ 788     $ 2,035  
Less: Allowance for credits losses on
off-balance
sheet exposures
(2)(3)
  
 
(141
) 
  
 
(34
) 
  
 
–
 
  
 
(175
) 
     (153 )      (33 )      –       (186 ) 
Balance at end of year
(2)
  
$
713
 
  
$
606
 
  
$
897
 
  
$
2,216
 
   $ 586     $ 475     $ 788     $ 1,849  
 
(1)
Includes credit risk changes as a result of significant increases in credit risk, changes in credit risk that did not result in a transfer between stages, changes in model inputs and assumptions and changes due to drawdowns of undrawn commitments.
(2)
Interest income on impaired loans for residential mortgages, personal loans, credit cards, and business and government loans totaled $439 (2024 – $443).
(3)
Allowance for credit losses on
off-balance
sheet exposures is recorded in other liabilities in the Consolidated Statement of Financial Position.
(4)
Allowance for credit losses on acceptances are recorded against the financial asset in the Consolidated Statement of Financial Position.
(5)
During the year ended October 31, 2025, the contractual terms of certain financial assets were modified where the modification did not result in derecognition. The carrying value of such loans that were modified in Stage 2 and Stage 3 was $2,833 (2024 – $3,504) and $899 (2024 – $
726)
respectively, before the modification.
(6)
Divestitures are included in the foreign exchange and other movements.
(7)
Comprises changes due to enhanced IFRS 9 models, including changes to reflect previously established expert credit judgment overlays that are now incorporated in the model.
 
194
 
|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
(f)
Carrying value of exposures by risk rating
 
Residential mortgages
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
  
Very low
  
$
219,905
 
  
$
3,983
 
  
$
–
 
  
$
223,888
 
   $  211,165     $ 3,262     $ –     $  214,427  
Low
  
 
83,755
 
  
 
4,820
 
  
 
–
 
  
 
88,575
 
     78,344       3,625       –       81,969  
Medium
  
 
15,870
 
  
 
8,618
 
  
 
–
 
  
 
24,488
 
     19,205       2,072       –       21,277  
High
  
 
3,002
 
  
 
6,007
 
  
 
–
 
  
 
9,009
 
     2,561       5,280       –       7,841  
Very high
  
 
48
 
  
 
3,170
 
  
 
–
 
  
 
3,218
 
     13       2,814       –       2,827  
Loans not graded
(2)
  
 
16,937
 
  
 
1,173
 
  
 
–
 
  
 
18,110
 
     18,614       1,614       –       20,228  
Default
  
 
–
 
  
 
–
 
  
 
2,903
 
  
 
2,903
 
     –       –       2,372       2,372  
Total
  
 
339,517
 
  
 
27,771
 
  
 
2,903
 
  
 
370,191
 
     329,902        18,667        2,372       350,941  
Allowance for credit losses
  
 
196
 
  
 
424
 
  
 
840
 
  
 
1,460
 
     165       398       645       1,208  
Carrying value
  
$
 339,321
 
  
$
 27,347
 
  
$
 2,063
 
  
$
 368,731
 
   $ 329,737     $ 18,269     $ 1,727     $ 349,733  
 
(1)
Stage 3 includes purchased or originated credit-impaired loans.
(2)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
Personal loans
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
  
Very low
  
$
31,009
 
  
$
202
 
  
$
–
 
  
$
31,211
 
   $   30,865     $ –     $ –     $ 30,865  
Low
  
 
21,075
 
  
 
751
 
  
 
–
 
  
 
21,826
 
     20,686       12       –       20,698  
Medium
  
 
12,886
 
  
 
78
 
  
 
–
 
  
 
12,964
 
     13,053       38       –       13,091  
High
  
 
10,331
 
  
 
5,659
 
  
 
–
 
  
 
15,990
 
     10,535       4,843       –       15,378  
Very high
  
 
35
 
  
 
2,651
 
  
 
–
 
  
 
2,686
 
     76       2,743       –       2,819  
Loans not graded
(2)
  
 
22,465
 
  
 
2,354
 
  
 
–
 
  
 
24,819
 
     20,482       1,929       –       22,411  
Default
  
 
–
 
  
 
–
 
  
 
1,071
 
  
 
1,071
 
     –       –       1,117       1,117  
Total
  
 
97,801
 
  
 
11,695
 
  
 
 1,071
 
  
 
110,567
 
     95,697       9,565        1,117       106,379  
Allowance for credit losses
  
 
613
 
  
 
1,215
 
  
 
604
 
  
 
2,432
 
     544       1,154       621       2,319  
Carrying value
  
$
  97,188
 
  
$
 10,480
 
  
$
467
 
  
$
 108,135
 
   $ 95,153     $   8,411     $ 496     $  104,060  
 
(1)
Stage 3 includes purchased or originated credit-impaired loans.
(2)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
Credit cards
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
    
Total
  
Very low
  
$
2,646
 
  
$
2
 
  
$
     –
 
  
$
2,648
 
   $ 2,382     $ 3     $ –     $ 2,385  
Low
  
 
3,171
 
  
 
11
 
  
 
–
 
  
 
3,182
 
     2,872       25       –       2,897  
Medium
  
 
4,792
 
  
 
26
 
  
 
–
 
  
 
4,818
 
     4,631       55       –       4,686  
High
  
 
3,210
 
  
 
1,942
 
  
 
–
 
  
 
5,152
 
     3,069       1,880       –       4,949  
Very high
  
 
20
 
  
 
1,204
 
  
 
–
 
  
 
1,224
 
     16       1,028       –       1,044  
Loans not graded
(1)
  
 
582
 
  
 
439
 
  
 
–
 
  
 
1,021
 
     895       518       –       1,413  
Default
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –       –  
Total
  
 
14,421
 
  
 
3,624
 
  
 
–
 
  
 
18,045
 
       13,865       3,509       –         17,374  
Allowance for credit losses
  
 
338
 
  
 
1,017
 
  
 
–
 
  
 
1,355
 
     288       872       –       1,160  
Carrying value
  
$
  14,083
 
  
$
  2,607
 
  
$
–
 
  
$
  16,690
 
   $ 13,577     $   2,637     $      –     $ 16,214  
 
(1)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
Undrawn loan commitments –
Retail
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
    
Total
  
Very low
  
$
126,681
 
  
$
255
 
  
$
     –
 
  
$
126,936
 
   $  115,396     $ 2     $ –     $ 115,398  
Low
  
 
22,102
 
  
 
71
 
  
 
–
 
  
 
22,173
 
     17,947       26       –       17,973  
Medium
  
 
9,569
 
  
 
13
 
  
 
–
 
  
 
9,582
 
     8,128       22       –       8,150  
High
  
 
4,047
 
  
 
631
 
  
 
–
 
  
 
4,678
 
     3,490       505       –       3,995  
Very high
  
 
14
 
  
 
351
 
  
 
–
 
  
 
365
 
     10       305       –       315  
Loans not graded
(1)
  
 
9,039
 
  
 
2,049
 
  
 
–
 
  
 
11,088
 
     12,634       2,749       –       15,383  
Default
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
     –       –       –       –  
Carrying value
  
$
 171,452
 
  
$
  3,370
 
  
$
–
 
  
$
 174,822
 
   $ 157,605     $   3,609     $      –     $  161,214  
 
(1)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
2025 Scotiabank Annual Report 
|
 
195
Consolidated Financial Statements
 
Total retail loans
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
  
Very low
  
$
380,241
 
  
$
4,442
 
  
$
–
 
  
$
384,683
 
   $  359,808     $ 3,267     $ –     $ 363,075  
Low
  
 
130,103
 
  
 
5,653
 
  
 
–
 
  
 
135,756
 
     119,849       3,688       –       123,537  
Medium
  
 
43,117
 
  
 
8,735
 
  
 
–
 
  
 
51,852
 
     45,017       2,187       –       47,204  
High
  
 
20,590
 
  
 
14,239
 
  
 
–
 
  
 
34,829
 
     19,655       12,508       –       32,163  
Very high
  
 
117
 
  
 
7,376
 
  
 
–
 
  
 
7,493
 
     115       6,890       –       7,005  
Loans not graded
(2)
  
 
49,023
 
  
 
6,015
 
  
 
–
 
  
 
55,038
 
     52,625       6,810       –       59,435  
Default
  
 
–
 
  
 
–
 
  
 
3,974
 
  
 
3,974
 
     –       –       3,489       3,489  
Total
  
 
623,191
 
  
 
46,460
 
  
 
3,974
 
  
 
673,625
 
     597,069        35,350       3,489       635,908  
Allowance for credit losses
  
 
1,147
 
  
 
2,656
 
  
 
1,444
 
  
 
5,247
 
     997       2,424       1,266       4,687  
Carrying value
  
$
 622,044
 
  
$
 43,804
 
  
$
 2,530
 
  
$
 668,378
 
   $ 596,072     $ 32,926     $  2,223     $  631,221  
 
(1)
Stage 3 includes purchased or originated credit-impaired loans.
(2)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
Business and government loans
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
  
Investment grade
  
$
138,789
 
  
$
1,482
 
  
$
–
 
  
$
140,271
 
   $  146,999     $ 1,829     $ –     $ 148,828  
Non-Investment
grade
  
 
121,999
 
  
 
7,169
 
  
 
–
 
  
 
129,168
 
     124,749       8,800       –       133,549  
Watch list
  
 
7
 
  
 
4,468
 
  
 
–
 
  
 
4,475
 
     10       4,819       –       4,829  
Loans not graded
(2)
  
 
2,485
 
  
 
36
 
  
 
–
 
  
 
2,521
 
     2,190       25       –       2,215  
Default
  
 
–
 
  
 
–
 
  
 
3,270
 
  
 
3,270
 
     –       –       3,250       3,250  
Total
  
 
263,280
 
  
 
13,155
 
  
 
3,270
 
  
 
279,705
 
     273,948        15,473       3,250       292,671  
Allowance for credit losses
  
 
713
 
  
 
606
 
  
 
897
 
  
 
2,216
 
     586       475       788       1,849  
Carrying value
  
$
 262,567
 
  
$
 12,549
 
  
$
 2,373
 
  
$
 277,489
 
   $ 273,362     $ 14,998     $  2,462     $  290,822  
 
(1)
Stage 3 includes purchased or originated credit-impaired loans.
(2)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
Undrawn loan commitments –
Business and government
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
  
Investment grade
  
$
242,637
 
  
$
1,101
 
  
$
–
 
  
$
243,738
 
   $  243,635     $   1,124     $ –     $ 244,759  
Non-investment
grade
  
 
60,136
 
  
 
1,841
 
  
 
–
 
  
 
61,977
 
     59,572       2,894       –       62,466  
Watch list
  
 
–
 
  
 
1,007
 
  
 
–
 
  
 
1,007
 
     –       1,142       –       1,142  
Loans not graded
(2)
  
 
4,593
 
  
 
1
 
  
 
–
 
  
 
4,594
 
     3,921       –       –       3,921  
Default
  
 
–
 
  
 
–
 
  
 
31
 
  
 
31
 
     –       –       32       32  
Total
  
 
307,366
 
  
 
3,950
 
  
 
31
 
  
 
311,347
 
     307,128       5,160       32       312,320  
Allowance for credit losses
  
 
141
 
  
 
34
 
  
 
–
 
  
 
175
 
     153       33       –       186  
Carrying value
  
$
 307,225
 
  
$
 3,916
 
  
$
 31
 
  
$
 311,172
 
   $ 306,975     $ 5,127     $     32     $  312,134  
 
(1)
Stage 3 includes purchased or originated credit-impaired loans.
(2)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
Total
non-retail
loans
  
As at October 31, 2025
    
As at October 31, 2024
  
Category of PD grades ($ millions)  
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
    
Stage 1
    
Stage 2
    
Stage 3
(1)
    
Total
  
Investment grade
  
$
381,426
 
  
$
2,583
 
  
$
–
 
  
$
384,009
 
   $  390,634     $ 2,953     $ –     $ 393,587  
Non-investment
grade
  
 
182,135
 
  
 
9,010
 
  
 
–
 
  
 
191,145
 
     184,321       11,694       –       196,015  
Watch list
  
 
7
 
  
 
5,475
 
  
 
–
 
  
 
5,482
 
     10       5,961       –       5,971  
Loans not graded
(2)
  
 
7,078
 
  
 
37
 
  
 
–
 
  
 
7,115
 
     6,111       25       –       6,136  
Default
  
 
–
 
  
 
–
 
  
 
3,301
 
  
 
3,301
 
     –       –       3,282       3,282  
Total
  
 
570,646
 
  
 
17,105
 
  
 
3,301
 
  
 
591,052
 
     581,076        20,633       3,282       604,991  
Allowance for credit losses
  
 
854
 
  
 
640
 
  
 
897
 
  
 
2,391
 
     739       508       788       2,035  
Carrying value
  
$
 569,792
 
  
$
 16,465
 
  
$
 2,404
 
  
$
 588,661
 
   $ 580,337     $ 20,125     $  2,494     $  602,956  
 
(1)
Stage 3 includes purchased or originated credit-impaired loans.
(2)
Portfolios where the customer account level ‘Probability of Default’ has not been determined have been included in the ‘Loans not graded’ category.
 
196
 
|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
(g)
Loans past due but not impaired
(1)
A loan is considered past due when a counterparty has not made a payment by the contractual due date. The following table presents the carrying value of loans that are contractually past due but not classified as impaired. In cases where borrowers have opted to participate in payment deferral programs, deferral of payments is not considered past due and such loans are not aged further during the deferral period.
 
   
2025
(2)
    
2024
(2)
  
As at October 31 ($ millions)  
31 - 60
days
    
61 - 90
days
    
91 days
and
greater
(3)
    
Total
    
31 - 60
days
    
61 - 90
days
    
91 days
and
greater
(3)
    
Total
  
Residential mortgages
  
$
1,603
 
  
$
767
 
  
$
–
 
  
$
2,370
 
   $  1,418     $ 718     $ –     $ 2,136  
Personal loans
  
 
691
 
  
 
353
 
  
 
–
 
  
 
1,044
 
     647       343       –       990  
Credit cards
  
 
289
 
  
 
189
 
  
 
430
 
  
 
908
 
     242       172       398       812  
Business and government
  
 
238
 
  
 
104
 
  
 
–
 
  
 
342
 
     192       48       –       240  
Total
  
$
 2,821
 
  
$
 1,413
 
  
$
 430
 
  
$
 4,664
 
   $ 2,499     $  1,281     $  398     $  4,178  
 
(1)
Loans past due 30 days or less are not presented in this analysis as they are not administratively considered past due.
(2)
For loans where payment deferrals were granted, deferred payments are not considered past due and such loans are not aged further during the deferral period. Regular aging of the loans resumes, after the end of the deferral period.
(3)
All loans that are over 90 days past due are considered impaired with the exception of credit card receivables which are considered impaired when 180 days past due.
 
(h)
Purchased credit-impaired loans
Certain financial assets including loans are credit-impaired on initial recognition either through acquisition or origination. The following table provides details of such assets:
 
As at October 31 ($ millions)  
2025
    
2024
  
Unpaid principal balance
(1)
  
$
    224
 
   $     243  
Credit-related fair value adjustments
  
 
(24
) 
     (29 ) 
Carrying value
  
 
200
 
     214  
Stage 3 allowance
  
 
(1
) 
     (1 ) 
Carrying value net of related allowance
  
$
199
 
   $ 213  
 
(1)
Represents principal amount owed net of write-offs.
 
13
Derecognition of Financial Assets
Securitization of residential mortgage loans
The Bank securitizes fully insured residential mortgage loans, Bank originated and others, through the creation of mortgage-backed securities (MBS) under the National Housing Act (NHA) MBS program, sponsored by Canada Mortgage and Housing Corporation (CMHC). MBS created under the program are primarily sold to Canada Housing Trust (the Trust), a government sponsored entity, under the Canada Mortgage Bond (CMB) program, and/or third-party investors. The Trust issues securities to third-party investors.
Under the mortgage sale programs described above, certain transactions did not meet the derecognition requirements, as the Bank retains the
pre-payment
and interest rate risk associated with the mortgages. These risks represent substantially all of the risks and rewards associated with the transferred assets, and accordingly, the mortgages continue to be recognized on the Bank’s balance sheet.
However, certain mortgage transactions qualified for derecognition, as substantially all risks and rewards of ownership were transferred to third parties. During the year ended October 31, 2025, the Bank sold and derecognized $4,550 million (2024 – $8,486 million) of these mortgages. The Bank retains residual interests in the derecognized mortgages, representing its continuing involvement. As at October 31, 2025, the carrying value of these retained interests was $365 million (2024 – $491 million).
The transferred mortgages continue to be recognized on the Consolidated Statement of Financial Position as residential mortgage loans. Cash proceeds received from the transfer are treated as secured borrowings and included in Deposits – Business and government on the Consolidated Statement of Financial Position.
The following table provides the carrying amount of transferred assets that do not qualify for derecognition and the associated liabilities:
 
As at October 31 ($ millions)  
2025
(1)
    
2024
(1)
  
Assets
    
Carrying value of residential mortgage loans
  
$
8,759
 
   $  11,190  
Other related assets
(2)
  
 
6,868
 
     7,202  
Liabilities
    
Carrying value of associated liabilities
  
 
 15,531
 
     17,923  
 
(1)
The fair value of the transferred assets is $15,298 (2024 – $18,092) and the fair value of the associated liabilities is $15,593 (2024 – $17,692), for a net position of $(295) (2024 – $400).
(2)
These include cash held in trust and trust permitted investment assets, including repurchase style transactions of mortgage-backed securities, acquired as part of principal reinvestment account that the Bank is required to maintain in order to participate in the programs.
Securitization of credit card receivables and auto loans
The Bank securitizes a portion of its unsecured credit card and auto loan receivables through consolidated structured entities. These receivables continue to be recognized on the Consolidated Statement of Financial Position as credit card loans and personal loans. For further details, refer to Note 14.
 
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Consolidated Financial Statements
 
Securities sold under repurchase agreements and securities lent
The Bank enters into transactions, such as repurchase agreements and securities lending agreements, where the Bank transfers assets under agreements to repurchase them on a future date and retains all the substantial risks and rewards associated with the assets. The transferred assets remain on the Consolidated Statement of Financial Position.
The following table provides the carrying amount of the transferred assets and the associated liabilities:
 
As at October 31 ($ millions)  
2025
(1)
    
2024
(1)
  
Carrying value of assets associated with:
    
Repurchase agreements
(2)
  
$
 174,010
 
   $  174,334  
Securities lending agreements
  
 
78,548
 
     58,477  
Total
  
 
252,558
 
     232,811  
Carrying value of associated liabilities
(3)
  
$
189,144
 
   $ 190,449  
 
(1)
The fair value of transferred assets is $252,558 (2024 – $232,811) and the fair value of the associated liabilities is $189,144 (2024 – $190,449), for a net position of $63,414 (2024 – $42,362).
(2)
Does not include over-collateralization of assets pledged.
(3)
Liabilities for securities lending arrangements only include amounts related to cash collateral received. For securities received as collateral, refer to Note 34(a)(iv).
Other
off-balance
sheet arrangements
The Bank uses a capital vehicle to transfer credit exposure to security holders of the vehicle. While credit exposures are transferred, the related assets are not derecognized from the balance sheet. For further details, refer to Note 14.
 
14
Structured Entities
 
(a)
Consolidated structured entities
U.S. multi-seller conduit
The Bank-sponsored U.S. multi-seller conduit purchases high-quality financial assets from independent third parties (the sellers) funded by the issuance of highly rated asset-backed commercial paper. The sellers continue to service the financial assets and provide credit enhancements through overcollateralization protection and cash reserves.
Each asset purchased by the conduit has a deal-specific liquidity facility provided by the Bank in the form of a Liquidity Asset Purchase Agreement (LAPA). The primary purpose of the LAPA is to provide an alternative source of financing in the event the conduit is unable to access the asset-backed commercial paper market. The administration agent can require the Bank in its capacity as liquidity provider to purchase an interest in the related assets owned by the conduit. The Bank is not obligated to perform under the LAPA agreements in the event the conduit itself is insolvent.
The Bank’s liquidity agreements with the conduit call for the Bank to fund full par value of the assets, including defaulted assets, if any, of the conduit. This facility is available to absorb the losses on defaulted assets, if any, in excess of losses absorbed by deal-specific seller credit enhancements. Further, the Bank holds the subordinated note issued by the conduit.
The Bank’s exposure from the U.S. conduit through the LAPA, including the obligation to purchase defaulted assets and investment in the conduit’s subordinated note, give the Bank the obligation to absorb losses that could potentially be significant to the conduit, which in conjunction with power to direct the conduit’s activities, result in the Bank consolidating the U.S. multi-seller conduit.
The conduit’s assets of $14 billion (2024 – $11 billion) are primarily included in Business and government loans on the Bank’s Consolidated Statement of Financial Position.
There are contractual restrictions on the ability of the Bank’s consolidated U.S. multi-seller conduit to transfer funds to the Bank. The Bank is restricted from accessing the conduit’s assets under the relevant arrangements. The Bank has no rights to the assets owned by the conduit. In the normal course of business, the assets of the conduit can only be used to settle the obligations of the conduit.
Bank funding vehicles and capital vehicles
The Bank uses funding and capital vehicles to facilitate cost-efficient financing of its own operations, including the issuance of covered bonds and notes. Activities of funding structured entities are generally limited to holding an interest in a pool of assets or receivables generated by the Bank. Capital vehicles include Scotiabank LRCN Trust which was established in connection with the Bank’s issuance of qualifying regulatory capital instruments. These structured entities are consolidated due to the Bank’s decision-making power and ability to use that power to affect the returns.
Covered bonds
The Bank has a registered covered bond program through which it issues debt that is guaranteed by Scotiabank Covered Bond Guarantor Limited Partnership (the “LP”). Under this program, the LP purchases uninsured residential mortgages from the Bank, which it acquires with funding provided by the Bank.
As at October 31, 2025, $46.7 billion (2024 – $47.0 billion) covered bonds were outstanding and included in Deposits – Business and government on the Consolidated Statement of Financial Position. The Bank’s outstanding covered bonds are denominated in U.S. dollars, British pounds, Swiss francs, Euros, Canadian Dollars, and Norwegian Kroner. As at October 31, 2025, assets pledged in relation to these covered bonds were uninsured residential mortgages denominated in Canadian dollars of $44.8 billion (2024 – $48.0 billion). These figures exclude activities in connection with covered bonds held by the Bank and that are eliminated upon consolidation.
Credit card receivables securitization trust
The Bank securitizes a portion of its Canadian credit card receivables through a Bank-sponsored structured entity. This entity issues senior and subordinated notes to third-party investors and the proceeds of such issuance are used to purchase
co-ownership
interests in credit card receivables originated by the Bank. Recourse of the note holders is limited to the purchased interest.
The Bank is responsible for servicing the transferred credit card receivables as well as performing administrative functions for this entity. As at October 31, 2025, U.S.$2.3 billion ($3.2 billion Canadian dollar equivalent) (2024 – U.S.$2.4 billion, $3.3 billion Canadian dollar equivalent) Class A
 
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Consolidated Financial Statements
 
notes; and U.S.$196 million ($274 million Canadian dollar equivalent) (2024 – U.S.$209 million, $291 
million Canadian dollar equivalent) subordinated Class B and Class C notes were outstanding and included in Deposits – Business and government on the Consolidated Statement of Financial Position. As at October 31, 2025, assets pledged in relation to the offered and retained notes were credit card receivables, denominated in Canadian dollars, of $
3.6 billion (2024 – $3.8 billion).
Auto loan receivables securitization trusts
The Bank securitizes a portion of its Canadian auto loan receivables through its Securitized Term Auto Receivables Trust program (SSTRT) and Securitized Term Auto Loan Receivables Trust
2025-A
(START
2025-
A), Bank sponsored consolidated structured entities. The structured entities issue offered notes to third-party investors and retained notes to the Bank. Recourse of the noteholders is limited to the receivables and a cash reserve account.
As at October 31, 2025, U.S. $301 million ($423 million Canadian dollar equivalent) (
October 31, 2024 – nil)
offered notes that were issued to third party investors were outstanding and included in Deposits – Business and government on the Consolidated Statement of Financial Position.
The sale of such receivables does not qualify for derecognition, and the receivables continue to be recognized on the Bank’s Consolidated Statement of Financial Position. As at October 31, 2025, assets pledged in relation to the offered and retained notes were Canadian auto loan receivables, denominated in Canadian dollars of $
4,488 million (2024 – nil). 
Scotiabank LRCN Trust
The Bank sponsors the Scotiabank LRCN Trust established in connection with the issuance of limited recourse capital notes. As at October 31, 2025, $8.4 billion (2024 – $5.5 billion)
of externally-issued limited recourse capital notes were outstanding and included in Preferred shares and other equity instruments on the Consolidated Statement of Financial Position. Refer to Note 23(b) – Preferred shares and other equity instruments for further information. 
Other
Assets of other consolidated structured entities are comprised of securities, deposits with banks and other assets to meet the Bank’s and customer needs.
 
(b)
Unconsolidated structured entities
The following table provides information about other structured entities which the Bank does not control and therefore does not consolidate.
 
 
 
As at October 31, 2025
 
($ millions)
 
Canadian multi-seller

conduits that the
Bank administers
 
 
Structured
finance
entities
 
 
Other
funding
vehicles
 
 
Total
 
Total assets on structured entity’s financial statements
  
$
6,971
 
  
$
22,746
 
  
$
2,575
 
  
$
32,292
 
Assets recognized on the Bank’s financial statements:
        
Trading assets
  
 
26
 
  
 
709
 
  
 
–
 
  
 
735
 
Investment securities
  
 
–
 
  
 
786
 
  
 
–
 
  
 
786
 
Loans
(1)
  
 
–
 
  
 
8,546
 
  
 
–
 
  
 
8,546
 
Other
  
 
–
 
  
 
52
 
  
 
99
 
  
 
151
 
 
 
26
 
  
 
10,093
 
  
 
99
 
  
 
10,218
 
Liabilities recognized on the Bank’s financial statements:
        
Deposits – Business and government
  
 
–
 
  
 
–
 
  
 
2,533
 
  
 
2,533
 
Other
  
 
–
 
  
 
–
 
  
 
43
 
  
 
43
 
 
 
–
 
  
 
–
 
  
 
2,576
 
  
 
2,576
 
Bank’s maximum exposure to loss
  
$
6,997
(2)
 
  
$
22,670
 
  
$
71
 
  
$
29,738
 
   
As at October 31, 2024
  
($ millions)  
Canadian multi-seller
conduits that the
Bank administers
    
Structured
finance
entities
    
Other
funding
vehicles
    
Total
  
Total assets (on structured entity’s financial statements)
   $  6,299     $  13,695     $  1,870     $  21,864  
Assets recognized on the Bank’s financial statements:
        
Trading assets
     8       306       –       314  
Investment securities
     –       842       –       842  
Loans
(1)
     –       4,757       –       4,757  
Other
     –       35       93       128  
    8       5,940       93       6,041  
Liabilities recognized on the Bank’s financial statements:
        
Deposits – Business and government
     –       –       1,842       1,842  
Derivative financial instruments
     –       –       28       28  
    –       –       1,870       1,870  
Bank’s maximum exposure to loss
   $ 6,307
(2)
 		   $ 11,469     $ 76     $ 17,852  
 
(1)
Loan balances are presented net of allowance for credit losses.
(2)
Excludes up to a maximum amount of $1.6 billion (2024 – $1.4 billion) relating to backstop liquidity facilities provided by the Bank to these multi-seller conduits based on future asset purchases by these conduits.
 
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Consolidated Financial Statements
 
The Bank’s maximum exposure to loss represents the notional amounts of guarantees, liquidity facilities, and other credit support relationships with the structured entities, the credit risk amount for certain derivative contracts with the entities and the amount invested where the Bank holds an ownership interest in the structured entities. Of the aggregate amount of maximum exposure to loss as at October 31, 2025, the Bank has recorded $10.2 billion (2024 – $6.1 billion), primarily loans issued to structured entities, on the Consolidated Statement of Financial Position.
Canadian multi-seller conduits that the Bank administers
In 2025, the Bank established Temperance Street Funding Trust, a Canadian multi-seller conduit. The Bank sponsors a total of three Canadian multi-seller conduits. The conduits purchase assets from independent third parties (the sellers) funded by the issuance of asset-backed commercial paper. The sellers continue to service the assets and provide credit enhancements through overcollateralization protection and cash reserves. The Bank has no rights to these assets as they are available to support the obligations of the respective programs but manages the commercial paper selling programs for a fee. To ensure timely repayment of the commercial paper, each asset pool financed by the multi-seller conduits has a deal-specific LAPA or liquidity agreement (LA) with the Bank. Pursuant to the terms of the LAPA or LA, the Bank as the liquidity provider is obligated to purchase
non-defaulted
assets, transferred by the conduit at the conduit’s original cost as reflected in the table above. In most cases, the liquidity agreements do not require the Bank to purchase defaulted assets. Additionally, the Bank has not provided any program-wide credit enhancement to these conduits.
Although the Bank has power over the relevant activities of the conduits, it has limited exposure to variability in returns, which results in the Bank not consolidating the three Canadian conduits.
Structured finance entities
The Bank has interests in structured entities used to assist corporate clients in accessing cost-efficient financing through their securitization structures. The Bank may act as an administrator, an investor or a combination of both in these types of structures.
The Bank provides senior credit facilities to unaffiliated structured entities that are established by third parties to acquire and/or originate loans for the purposes of issuing collateralized loan obligations (CLOs). These credit facilities benefit from subordinated capital provided by either the collateral manager or third-party investors via subordinated financing, capital injection or asset contribution. Subordinated capital represents the first loss tranche which absorbs losses prior to the Bank’s senior exposure. The Bank’s broker-dealer affiliate acts as the arranger and placement agent for the CLOs. Proceeds from the sale of the CLOs are used to repay the senior credit facilities. The Bank does not consolidate these entities as it does not have decision making power over their relevant activities, which include the acquisition and/or origination of loans and overall management of the underlying portfolio. As at October 31, 2025, the Bank has funded $8,114 million of the credit facilities provided to these structured entities (October 31, 2024 – $4,243 million).
Other
off-balance
sheet arrangements
The Bank uses a funding vehicle to transfer credit exposure on certain loan assets and purchases credit protection against eligible credit events from this vehicle. The vehicle collateralizes its obligation using cash proceeds received through the issuance of guarantee-linked notes. Loan assets are not sold or assigned to the vehicle and remain on the Bank’s Consolidated Statement of Financial Position. The total principal balance of guarantee-linked notes issued by this vehicle and outstanding was $1,697 million as at October 31, 2025 (October 31, 2024 – $1,002 million). These are included in Deposits – Business and government on the Bank’s Consolidated Statement of Financial Position.
Although the Bank has power over the relevant activities of these vehicles, it has limited exposure to variability in returns, which results in the Bank not consolidating these vehicles.
 
(c)
Other unconsolidated Bank-sponsored entities
The Bank sponsors unconsolidated structured entities including mutual funds, in which it has insignificant or no interest at the reporting date. The Bank is a sponsor when it is significantly involved in the design and formation at inception of the structured entities, and the Bank’s name is used by the structured entities to create an awareness of the instruments being backed by the Bank’s reputation and obligation. The Bank also considers other factors, such as its continuing involvement and obligations to determine if, in substance, the Bank is a sponsor.
As at October 31, 2025, the Bank earned $2,851 million (2024 – $2,547 million) in revenue from unconsolidated Bank-sponsored mutual fund entities.
 
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Table of Contents
Consolidated Financial Statements
 
15
Property and Equipment
 
($ millions)  
Land &
Building
    
Equipment
    
Technology
Assets
    
Leasehold
Improvements
    
Right-of-use

Assets
    
Total
  
Cost
            
Balance as at October 31, 2023
   $  1,813     $  1,809     $  705     $  1,854     $  4,336     $  10,517  
Additions
     120       232       73       134       125       684  
Disposals/Retirements
     (149 )      (183 )      (155 )      (67 )      (77 )      (631 ) 
Foreign currency adjustments and other
     (48 )      (78 )      10       (44 )      (43 )      (203 ) 
Balance as at October 31, 2024
  
$
1,736
 
  
$
1,780
 
  
$
633
 
  
$
1,877
 
  
$
4,341
 
  
$
10,367
 
Additions
  
 
194
 
  
 
144
 
  
 
88
 
  
 
117
 
  
 
210
 
  
 
753
 
Disposals/Retirements
(1)
  
 
(481
)
  
 
(82
)
  
 
(25
)
  
 
(92
)
  
 
(118
)
  
 
(798
)
Foreign currency adjustments and other
  
 
(129
)
  
 
44
 
  
 
126
 
  
 
112
 
  
 
80
 
  
 
233
Balance as at October 31, 2025
  
$
1,320
 
  
$
1,886
 
  
$
822
 
  
$
2,014
 
  
$
4,513
 
  
$
10,555
 
Accumulated depreciation
            
Balance as at October 31, 2023
   $ 686     $ 1,268     $ 381     $ 1,152     $ 1,388     $ 4,875  
Depreciation
     49       94       140       116       331       730  
Disposals/Retirements
     (50 )      (75 )      (145 )      (40 )      (62 )      (372 ) 
Foreign currency adjustments and other
     (22 )      (26 )      (14 )      (40 )      (16 )      (118 ) 
Balance as at October 31, 2024
  
$
663
 
  
$
1,261
 
  
$
362
 
  
$
1,188
 
  
$
1,641
 
  
$
5,115
 
Depreciation
  
 
36
 
  
 
83
 
  
 
133
 
  
 
113
 
  
 
318
 
  
 
683
 
Disposals/Retirements
  
 
(44
)
  
 
(67
)
  
 
(17
)
  
 
(71
)
  
 
(107
)
  
 
(306
)
Foreign currency adjustments and other
  
 
28
 
  
 
1
 
  
 
77
 
  
 
40
 
  
 
36
 
  
 
182
 
Balance as at October 31, 2025
  
$
683
 
  
$
1,278
 
  
$
555
 
  
$
1,270
 
  
$
1,888
 
  
$
5,674
 
Net book value
            
Balance as at October 31, 2024
   $ 1,073     $ 519     $ 271     $ 689     $ 2,700     $ 5,252
(2)
 
Balance as at October 31, 2025
  
$
637
 
  
$
608
 
  
$
267
 
  
$
744
 
  
$
2,625
 
  
$
4,881
(2)
 
 
(1)
Includes a net impairment loss recorded in Q1 2025 related to the agreement to sell the banking operations in Colombia, Costa Rica and Panama. Refer to Note 35 for details.
(2)
Includes $39 (2024 – $36) of investment property.
 
16
Investments in Associates
The Bank had significant investments in the following associates:
 
                 
2025
           
2024
  
As at October 31 ($ millions)  
Country of
incorporation
    
Nature of
business
    
Ownership
percentage
    
Date of financial
statements
(1)
    
Carrying
value
    
Carrying
value
  
KeyCorp
(2)
  
 
United States
 
  
 
Banking
 
  
 
14.9
% 
  
 
September 30, 2025
 
  
$
 4,379
 
   $ –  
Bank of Xi’an Co. Ltd.
(3)
  
 
China
 
  
 
Banking
 
  
 
18.1
% 
  
 
September 30, 2025
 
  
 
729
 
      658  
Maduro & Curiel’s Bank N.V.
(4)
  
 
Curacao
 
  
 
Banking
 
  
 
48.1
% 
  
 
September 30, 2025
 
  
 
570
 
     527  
 
(1)
Represents the date of the most recent financial statements.
(2)
On December 27, 2024, the Bank completed the acquisition of an additional 10% ownership interest, bringing the total ownership interest in KeyCorp to 14.9% (refer to Note 35 for further details). The Bank has significant influence over KeyCorp through a combination of its ownership interest and board representation. Based on the quoted price on the New York Stock Exchange, the market value of the Bank’s investment in KeyCorp was $
4,018
as at Oct 31, 2025. During the year, dividends received from KeyCorp of $140 were recognized as a reduction in the carrying value of the investment in associate.
(3)
Based on the quoted price on the Shanghai Stock Exchange, the market value of the Bank’s Investment in Bank of Xi’an Co. Ltd. was $617 (October 31, 2024 – $570). The Bank has significant influence over the Bank of Xi’an Co. Ltd. through a combination of its ownership interest and board representation.
(4)
The local regulator requires financial institutions to set aside reserves for general banking risks. These reserves are not required under IFRS, and represent undistributed retained earnings related to a foreign associated corporation, which are subject to local regulatory restrictions. As of October 31, 2025
,
these reserves amounted to $76 (2024 – $74).
Impairment testing of Bank of Xi’an Co. Ltd.
As at October 31, 2025, the market value of the Bank’s investment in Bank of Xi’an Co. Ltd. based on the quoted price on the Shanghai Stock Exchange continues to be below its carrying value. The Bank has been performing quarterly impairment testing on this investment due to the prolonged period in which its market value has remained below the carrying amount. The impairment test involves comparing the carrying value of the investment to its recoverable amount based on value in use (VIU). In estimating VIU, the Bank uses a discounted cash flows valuation model which incorporates key assumptions, including a
5-year
forecast of
after-tax
cash flows for the underlying entity, the estimated terminal growth rate beyond 5 years, and the applicable discount rate. As at October 31, 2025, the estimate of VIU was determined using a terminal growth rate of 2% (2024 – 2%) and an
after-tax
discount rate of 11% (2024 –12%).
Based on impairment testing performed using the VIU methodology, no impairment was determined to exist as at October 31, 2025. In the prior year, an impairment charge of $343 million ($309 million after-tax) was recorded in non-interest expenses – other in the Other operating segment, driven primarily by the continued weakening of the economic outlook in China.
 
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Consolidated Financial Statements
 
Summarized financial information
Summarized financial information of the Bank’s significant associates are as follows.
 
   
For the twelve months ended
(1)
    
As at October 31, 2025
  
($ millions)  
Revenue
     
Net
income
    
Total assets
    
Total liabilities
  
KeyCorp
  
$
 8,873
 
   
$
 1,305
 
  
$
 262,850
 
  
$
 234,656
 
Bank of Xi’an Co. Ltd.
  
 
2,009
 
   
 
517
 
  
 
108,567
 
  
 
100,773
 
Maduro & Curiel’s Bank N.V.
  
 
487
 
   
 
183
 
  
 
8,598
 
  
 
7,430
 
   
For the twelve months ended
(1)
    
As at October 31, 2024
  
($ millions)  
Revenue
     
Net
income
    
Total assets
    
Total liabilities
  
Bank of Xi’an Co. Ltd.
   $  1,457      $  471     $  87,974     $  81,577  
Maduro & Curiel’s Bank N.V.
     457        170       8,057       6,959  
 
(1)
Based on the most recent available financial statements.
 
17
Goodwill and Other Intangible Assets
Goodwill
The changes in the carrying amounts of goodwill by groups of cash-generating units (CGU) are as follows:
 
($ millions)  
Canadian
Banking
    
Global
Wealth
Management
    
Global
Banking and
Markets
    
Latin
America
    
Caribbean
and
Central
America
    
Total
  
Balance as at October 31, 2023
   $ 1,690     $ 3,610     $ 246     $ 2,630     $ 1,005     $ 9,181  
Acquisitions
     –       –       –       –       –       –  
Dispositions
(1)
     –       –       –       (92 )      –       (92 ) 
Foreign currency adjustments and other
     –       4       –       (138 )      6       (128 ) 
Balance as at October 31, 2024
     1,690       3,614       246       2,400        1,011       8,961  
Acquisitions
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
Dispositions
(2)
  
 
–
 
  
 
–
 
  
 
–
 
  
 
(195
)
  
 
(394
)
  
 
(589
)
Foreign currency adjustments and other
  
 
–
 
  
 
27
 
  
 
1
 
  
 
180
 
  
 
5
 
  
 
213
 
Balance as at October 31, 2025
  
$
 1,690
 
  
$
 3,641
 
  
$
 247
 
  
$
 2,385
 
  
$
622
 
  
$
 8,585
 
 
(1)
In fiscal 2024, the Bank recorded a goodwill write-down of $92 million
pre-tax
within the Latin America CGU in relation to its agreement to sell CrediScotia Financiera, a subsidiary in Peru. Refer to Note 35 for details.
(2)
In the current year, the Bank recorded a goodwill write-down of $589 million
pre-tax
within the Latin America and Caribbean & Central America CGUs in relation to its agreement to sell banking operations in Colombia, Costa Rica and Panama. Refer to Note 35 for details.
Impairment testing of goodwill
Goodwill acquired in business combinations is allocated to each of the Bank’s groups of CGUs that are expected to benefit from the synergies of the particular acquisition. Goodwill is assessed for impairment annually or more frequently if events or circumstances occur that may indicate impairment.
The Bank determines the carrying values of its CGUs using a regulatory capital approach based on credit, market, operational risks and leverage, consistent with the Bank’s capital attribution for business line performance measurement. Corporate capital that is not directly attributable is allocated to each CGU on a proportional basis, based on the relative attributed capital prior to the corporate capital allocation. The resulting carrying amount determined for the CGU is then compared to its respective recoverable amount to identify any impairment.
Annual impairment testing for goodwill was performed as at July 31, 2025 and 2024, and no impairment was determined to exist. As of October 31, 2025 and 2024, there were no significant changes to this assessment.
Fair value less costs of disposal
For all CGUs, the recoverable amount was determined using the fair value less costs of disposal (FVLCD) method. In arriving at FVLCD, the Bank estimates the fair value of the CGU using price earnings (P/E) multiples applied to normalized net income for the last four quarters as of the test date, applies a control premium based on a weighted average of acquisition premiums paid globally in the banking industry over the past five years for comparable companies, and deducts the estimated costs of disposal. The fair value measurement is categorized as Level 3 due to significant inputs being unobservable. For the 2025 annual impairment test, P/E multiples ranging from 9.5 to 13 times (2024 – 11 to 11.5 times) were used.
The Bank has performed sensitivity analysis on the key assumptions used in estimating FVLCD. The estimate of reasonably possible changes to the key assumptions are based on available evidence in respect of each input, such as risks associated with the normalized net income projections, and range of P/E multiples observed externally. Reasonable negative changes in the net income outlook (decrease of 5%) or P/E multiples (decrease of 1x), each in isolation, holding other factors constant, would not result in impairment for all CGUs using the FVLCD method.
Value in use
In the prior year, the Latin America CGU’s recoverable amount was determined using the value in use (VIU) method. In estimating VIU, the Bank used a discounted cash flow valuation model based on a
5-year
forecast of
after-tax
cash flows, the estimated terminal growth rate beyond 5 years, and the applicable discount rate. The
5-year
cash flow forecast was based on management approved budgets and plans which consider market trends, macroeconomic conditions, forecasted earnings and the business strategy for the CGU. The terminal growth rate was based on long-term growth expectations in Latin America, and the discount rate was based on the cost of capital of comparable companies. For the 2024 annual impairment test, a terminal growth rate of 3% and a discount rate of 12% were used.
 
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Consolidated Financial Statements
 
The Bank performed sensitivity analysis on the key assumptions used in estimating the Latin America CGU’s VIU in the prior year. The estimate of reasonably possible changes to the key assumptions was based on available evidence in respect of each input such as historical performance against forecasts, risks associated with the underlying cash flow projections, and range of discount rates observed externally. Reasonable negative changes in any one key assumption, holding other factors constant, would not result in impairment for the Latin America CGU.
Intangible assets
Intangible assets consist of assets with indefinite and finite useful lives. Indefinite life intangible assets consist substantially of fund management contracts. The fund management contracts are for the management of open-ended funds. Finite life intangible assets include assets such as computer software, customer relationships and core deposit intangibles.
 
   
Finite life
         
Indefinite life
         
($ millions)  
Computer
software
    
Other
intangibles
         
Fund management
contracts
(1)
    
Other
intangibles
    
Total
  
Cost
      
 
      
Balance as at October 31, 2023
   $ 5,639     $ 1,815    
 
   $ 4,415     $ 163     $ 12,032  
Acquisitions
     –       –    
 
     –       –       –  
Additions
     840       1    
 
     –       –       841  
Impairment
     (188 )      –    
 
     –       –       (188 ) 
Disposals/Retirements
     (538 )      –    
 
     –       –       (538 ) 
Foreign currency adjustments and other
     24       (22 )   
 
     –       –       2  
Balance as at October 31, 2024
   $ 5,777     $ 1,794    
 
   $ 4,415     $ 163     $ 12,149  
Acquisitions
  
 
–
 
  
 
–
 
  
 
  
 
–
 
  
 
–
 
  
 
–
 
Additions
  
 
637
 
  
 
–
 
  
 
  
 
–
 
  
 
–
 
  
 
637
 
Impairment
(2)
  
 
(199
)
  
 
–
 
  
 
  
 
–
 
  
 
–
 
  
 
(199
)
Disposals/Retirements
  
 
(170
) 
  
 
(36
) 
  
 
  
 
–
 
  
 
–
 
  
 
(206
) 
Foreign currency adjustments and other
  
 
390
 
  
 
20
 
  
 
  
 
–
 
  
 
–
 
  
 
410
 
Balance as at October 31, 2025
  
$
 6,435
 
  
$
 1,778
 
  
 
  
$
 4,415
 
  
$
 163
 
  
$
 12,791
 
Accumulated amortization
      
 
      
Balance as at October 31, 2023
   $ 2,566     $ 1,454    
 
   $ –     $ –     $ 4,020  
Amortization
     958       72    
 
     –       –       1,030  
Impairment
     (91 )      –    
 
     –       –       (91 ) 
Disposals/Retirements
     (614 )      –    
 
     –       –       (614 ) 
Foreign currency adjustments and other
     (75 )      (13 )   
 
     –       –       (88 ) 
Balance as at October 31, 2024
   $ 2,744     $ 1,513    
 
   $ –     $ –     $ 4,257  
Amortization
  
 
828
 
  
 
68
 
  
 
  
 
–
 
  
 
–
 
  
 
896
 
Impairment
(2)
  
 
(9
) 
  
 
–
 
  
 
  
 
–
 
  
 
–
 
  
 
(9
) 
Disposals/Retirements
  
 
(32
) 
  
 
(36
) 
  
 
  
 
–
 
  
 
–
 
  
 
(68
) 
Foreign currency adjustments and other
  
 
113
 
  
 
18
 
  
 
  
 
–
 
  
 
–
 
  
 
131
 
Balance as at October 31, 2025
  
$
3,644
 
  
$
1,563
 
  
 
  
$
–
 
  
$
–
 
  
$
5,207
 
Net book value
      
 
      
As at October 31, 2024
   $ 3,033
(3)
 		   $ 281    
 
   $ 4,415     $ 163     $ 7,892  
As at October 31, 2025
  
$
2,791
(3)
 
  
$
215
 
  
 
  
$
4,415
 
  
$
163
 
  
$
7,584
 
 
(1)
Fund management contracts are attributable to the previously acquired Dynamic Funds business (formerly DundeeWealth Inc.), MD Financial Management Inc., and Jarislowsky Fraser Limited.
(2)
In the current year, the Bank recognized an impairment loss of $
165
 
million pre-tax in relation to its agreement to sell banking operations in Colombia, Costa Rica and Panama. Refer to Note 35 for details. 
(3)
Computer software comprises purchased software of $262 (2024 – $194), internally generated software of $1,633 (2024 – $1,939), and in process software not subject to amortization of $896 (2024 – $900).
Impairment testing of intangible assets
Indefinite life intangible assets are not amortized and are assessed for impairment annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. Impairment is assessed by comparing the carrying value of the indefinite life intangible asset to its recoverable amount. The recoverable amount of fund management contracts is based on a VIU approach using the multi-period excess earnings method. This approach uses cash flow projections from management-approved financial budgets, which include key assumptions related to market appreciation, net sales of funds, and operating margins, taking into consideration past experience and market expectations. The forecast cash flows cover a
5-year
period, with a terminal growth rate of 4.5% (2024 – 4.5%) applied thereafter. These cash flows have been discounted at 10% (2024 – 10%). Fund management contracts were assessed for annual impairment using data as at July 31, 2025 and 2024, and no impairment was determined to exist. As of October 31, 2025 and 2024, there were no significant changes to this assessment. In addition, reasonable negative changes in any one key assumption, holding other factors constant, would not result in impairment.
Finite life intangible assets are only assessed for impairment if events or circumstances indicate that the asset may be impaired. When required, impairment is assessed by comparing the carrying value of the finite life intangible asset to its recoverable amount, which is generally determined using a VIU approach. In fiscal 2024, computer software with a net book value of $97 million was assessed as impaired.
 
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Table of Contents
Consolidated Financial Statements
 
18
Other Assets
 
As at October 31 ($ millions)  
2025
    
2024
  
Accrued interest
  
$
4,969
 
   $ 5,352  
Accounts receivable and prepaids
  
 
2,750
 
     2,118  
Current tax assets
  
 
2,649
 
     2,374  
Margin deposits on derivatives
  
 
13,304
 
     9,976  
Segregated fund assets
  
 
1,006
 
     1,231  
Pension assets (Note 27)
  
 
1,036
 
     684  
Receivable from brokers, dealers and clients
  
 
4,597
 
     3,244  
Other
  
 
5,056
 
     5,322  
Total
  
$
35,367
 
   $  30,301  
 
19
Deposits
 
    
2025
    
2024
  
   
Payable on demand
(1)
                          
As at October 31 ($ millions)  
Interest-
bearing
    
Non-interest-

bearing
    
Payable after
notice
(2)
    
Payable on a
fixed date
(3)
    
Total
         
Personal
  
$
38,089
 
  
$
10,892
 
  
$
124,057
 
  
$
128,680
 
  
$
301,718
 
   $ 298,821  
Business and government
  
 
197,177
 
  
 
33,094
 
  
 
68,673
 
  
 
328,723
 
  
 
627,667
 
     600,114  
Financial institutions
  
 
10,754
 
  
 
967
 
  
 
4,068
 
  
 
21,105
 
  
 
36,894
 
     44,914  
Total
  
$
246,020
 
  
$
44,953
 
  
$
196,798
 
  
$
478,508
 
  
$
966,279
 
   $ 943,849  
Recorded in:
            
Canada
  
$
160,504
 
  
$
23,892
 
  
$
180,349
 
  
$
327,855
 
  
$
692,600
 
   $ 686,817  
United States
  
 
47,431
 
  
 
101
 
  
 
4,563
 
  
 
49,400
 
  
 
101,495
 
     90,442  
United Kingdom
  
 
–
 
  
 
–
 
  
 
367
 
  
 
33,679
 
  
 
34,046
 
     27,091  
Mexico
  
 
13,893
 
  
 
7,339
 
  
 
–
 
  
 
17,859
 
  
 
39,091
 
     36,751  
Peru
  
 
11,159
 
  
 
7
 
  
 
1,908
 
  
 
6,843
 
  
 
19,917
 
     17,710  
Chile
  
 
1,310
 
  
 
5,347
 
  
 
142
 
  
 
16,336
 
  
 
23,135
 
     23,232  
Colombia
  
 
3,140
 
  
 
552
 
  
 
548
 
  
 
6,168
 
  
 
10,408
 
     8,102  
Other International
  
 
8,583
 
  
 
7,715
 
  
 
8,921
 
  
 
20,368
 
  
 
45,587
 
     53,704  
Total
(4)
  
$
246,020
 
  
$
44,953
 
  
$
196,798
 
  
$
478,508
 
  
$
966,279
 
   $  943,849  
 
(1)
Deposits payable on demand include deposits for which the Bank may not have the right to notice of withdrawal, generally chequing accounts.
(2)
Deposits payable after notice include deposits for which the Bank may require notice of withdrawal, generally savings accounts.
(3)
All deposits that mature on a specified date, generally term deposits, guaranteed investments certificates and similar instruments.
(4)
Deposits denominated in U.S. dollars amount to $297,065 (2024 – $295,316), deposits denominated in Chilean pesos amount to $20,053 (2024 – $19,271), deposits denominated in Mexican pesos amount to $35,941 (2024 – $34,416) and deposits denominated in other foreign currencies amount to $117,530 (2024 – $109,683).
The following table presents the maturity schedule for term deposits in Canada greater than $100,000
(1)
.
 
($ millions)  
Within three
months
    
Three to six
months
    
Six to
twelve months
    
One to
five years
    
Over
five years
    
Total
  
As at October 31, 2025
  
$
54,287
 
  
$
37,607
 
  
$
57,519
 
  
$
109,573
 
  
$
15,165
 
  
$
274,151
 
As at October 31, 2024
   $  64,521     $  37,062     $  59,273     $  115,757     $  18,820     $  295,433  
 
(1)
The majority of foreign term deposits are in excess of $100,000.
 
20
Subordinated Debentures
These debentures are direct, unsecured obligations of the Bank and are subordinate to the claims of the Bank’s depositors and other creditors. The Bank, where appropriate, enters into interest rate and cross-currency swaps to hedge the related risks.
 
As at October 31 ($ millions)  
2025
    
2024
  
Maturity date  
Interest
rate (%)
    
Terms
(1)
  
Carrying
value
(2)
    
Carrying
value
(2)
  
June 2025
     8.900     On June 20, 2025, all $250 million of outstanding 8.900% subordinated debentures matured. The principal plus accrued interest were paid to noteholders on the maturity date.  
$
–
 
   $ 251  
December 2025
(3)
     4.500     U.S.$1,250 million. Interest will be payable semi-annually in arrears on June 16 and December 16 of each year, until maturity in
December 2025
.		  
 
1,753
 
     1,740  
May 2032
(3)
     3.934     Redeemable on or after May 3, 2027. After May 3, 2027, interest will be payable quarterly at the then prevailing three-month bankers’ acceptance rate plus 1.520
% subject to applicable benchmark fallback considerations.
  
 
1,744
 
     1,713  
December 2032
(3)
     1.800     JPY 33,000 million. Redeemable on December 20, 2027. After December 20, 2027, interest will be payable semi-annually at the reference Japanese Government Bond rate plus 1.681% on the reset date.  
 
300
 
     301  
August 2033
(3)
     5.679     Redeemable on or after August 2, 2028. After August 2, 2028, interest will be payable at an annual rate equal to Daily Compounded CORRA plus 2.100%.  
 
1,026
 
     1,016  
December 2033
(3)
     1.830     JPY 12,000 million. Redeemable on December 1, 2028. After December 1, 2028, interest rate on the debentures will be reset to the prevailing yield of Japanese Government Bond rate plus 1.477% on the reset date.  
 
109
 
     110  
August 2034
(3)
     4.959     Redeemable on or after August 1, 2029. After August 1, 2029, interest will be payable at Daily Compounded CORRA plus 1.550%.  
 
1,034
 
     998  
May 2037
(3)
     4.588     U.S.$1,250 million. Redeemable between April 12, 2027, and May 4, 2032. On May 4, 2032, interest will reset at the then prevailing 5-year U.S. treasury rate plus 2.050%.  
 
1,726
 
     1,704  
 
  
 
 
 
  
 
  
$
7,692
 
   $  7,833  
 
(1)
In accordance with the provisions of the Capital Adequacy Guideline of the Superintendent, all redemptions are subject to regulatory approval and subject to the terms in the relevant prospectus.
(2)
The carrying value of subordinated debentures may differ from par value due to the impact of fair value hedges used for managing interest rate risk and subordinated debentures held for market-making purposes.
(3)
These debentures contain
non-viability
contingent capital (NVCC) provisions. Under such NVCC provisions, outstanding debentures are convertible into a variable number of common shares if OSFI announces that the Bank has ceased, or is about to cease, to be viable, or if a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent thereof without which the Bank would have been determined by OSFI to be
non-viable.
If such a conversion were to occur, the debentures would be converted into common shares pursuant to an automatic conversion formula defined as 150% of the par value plus accrued and unpaid interest divided by the conversion price and, where applicable, subject to translation at foreign exchange rates in effect at the time of conversion. The conversion price is based on the greater of: (i) a floor price of $5.00 (subject to adjustments in certain events as set out in the respective prospectus supplements), and (ii) the current market price of the Bank’s common shares at the time of the trigger event
(10-day
weighted average).
 
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Consolidated Financial Statements
 
21
Other Liabilities
 
As at October 31 ($ millions)  
2025
    
2024
  
Accrued interest
  
$
6,856
 
   $ 7,840  
Lease liabilities
(1)
  
 
2,955
 
     2,982  
Accounts payable and accrued expenses
  
 
9,151
 
     8,133  
Current tax liabilities
  
 
942
 
     1,070  
Deferred tax liabilities (Note 26)
  
 
1,414
 
     1,397  
Gold and silver certificates and bullion
  
 
757
 
     578  
Margin and collateral accounts
  
 
8,883
 
     8,186  
Segregated fund liabilities
  
 
1,007
 
     1,231  
Payables to brokers, dealers and clients
  
 
1,843
 
     798  
Provisions (Note 22)
  
 
668
 
     411  
Allowance for credit losses on
off-balance
sheet exposures
(Note 12)
  
 
175
 
     186  
Pension liabilities (Note 27)
  
 
535
 
     523  
Other liabilities of subsidiaries and structured entities
  
 
22,665
 
     22,104  
Other
  
 
9,011
 
     7,589  
Total
  
$
 66,862
 
   $  63,028  
 
(1)
Represents discounted value of lease liabilities.
The table below sets out a maturity analysis of undiscounted lease liabilities showing the lease payments to be made after the reporting date:
 
As at October 31 ($ millions)  
2025
    
2024
  
Within 1 year
  
$
393
 
   $ 410  
1 to 2 years
  
 
405
 
     404  
2 to 3 years
  
 
390
 
     401  
3 to 4 years
  
 
387
 
     381  
4 to 5 years
  
 
376
 
     358  
After 5 years
  
 
2,023
 
     1,677  
Total
  
$
3,974
 
   $   3,631  
 
22
Provisions
 
($ millions)       
As at November 1, 2023
   $     573  
Provisions made during the year
     203  
Provisions utilized / released during the year
     (365 ) 
Balance as at October 31, 2024
   $ 411  
Provisions made during the year
  
 
422
 
Provisions utilized / released during the year
  
 
(165
) 
Balance as at October 31, 2025
  
$
668
 
Restructuring Charge
In Q4 2025, the Bank recorded a restructuring charge and severance provisions as well as other related charges of $
373 million ($270 million after-tax) primarily related to workforce reductions across its global operations. 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. Of these amounts, which were all recorded in the Other operating segment, $272 million was included in other liabilities – provisions as at October 31, 2025.
Legal
In the ordinary course of business, the Bank and its subsidiaries are and have been subject to a variety of pending and threatened legal proceedings, including civil claims and lawsuits, regulatory examinations, investigations, audits, and requests for information by various governmental regulatory agencies and law enforcement authorities in various jurisdictions. Some of these matters may involve novel legal theories and interpretations and may be advanced under criminal as well as civil statutes, and some proceedings could result in the imposition of civil, regulatory enforcement or criminal penalties. The Bank reviews the status of all proceedings on an ongoing basis and will exercise judgment in resolving them in such manner as the Bank believes to be in its best interest. In view of the inherent difficulty of predicting the outcome of such matters, the Bank cannot state what the eventual outcome of such matters will be. However, based on current knowledge, management does not believe that liabilities, if any, arising from pending litigation or regulatory proceedings will have a material adverse effect on the consolidated financial statements for the year ended October 31, 2025 or results of operations of the Bank.
Legal provisions are established when it becomes probable that the Bank will incur an expense related to a legal action or regulatory proceeding and the amount can be reliably estimated. Such provisions are recorded at the best estimate of the amount required to settle any obligation related to these legal actions as at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Management and internal and external experts are involved in estimating any amounts that may be required. The actual costs of resolving these claims may vary significantly from the amount of the legal provisions. The Bank’s estimate involves significant judgement, given the varying stages of the proceedings, the fact that the Bank’s liability, if any, has yet to be determined and the fact that the underlying matters will change from time to
 
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Consolidated Financial Statements
 
time. As such, there is a possibility that the ultimate resolution of those legal actions may be material to the Bank’s consolidated results of operations for any particular reporting period.
The Bank, through its Peruvian subsidiary, is engaged in a legal action related to certain value-added tax assessed amounts and associated interest totaling $176 million, which arose from certain client transactions that occurred prior to the Bank’s acquisition of the subsidiary. The legal action in Peru relating to the original assessed amount was concluded in favour of the Government of Peru in May 2024. Accordingly, the Bank paid $34 million representing the principal and associated reasonable interest, which was recorded in
non-interest
expenses – other. In November 2021, the Peruvian Constitutional Court dismissed the matter relating to the accrued default interest for procedural reasons. With respect to this default interest component, and in relation to the Constitutional Court of Peru’s treatment of Scotiabank Peru, in October 2022, the Bank filed a request for arbitration against the Republic of Peru before the International Centre for the Settlement of Investment Disputes (ICSID), pursuant to the provisions of the Canada-Peru Free Trade Agreement. This case is currently proceeding through the arbitration process. In Q3 2024, the Bank recorded a legal provision of $142 million in other liabilities – provisions, representing the amount at issue in the arbitration. The Bank intends to continue to vigorously advance its position.
 
23
Common shares, preferred shares and other equity instruments
 
(a)
Common shares
Authorized:
An unlimited number of common shares without nominal or par value.
Issued and fully paid:
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Number of shares
    
Amount
    
Number of shares
    
Amount
  
Outstanding at beginning of year
  
 
1,244,435,686
 
  
$
22,054
 
     1,214,044,420     $ 20,109  
Issued in relation to share-based payments, net (Note 25)
  
 
2,709,942
 
  
 
210
 
     497,930       37  
Issued in relation to the Shareholder Dividend and Share Purchase Plan
(1)
  
 
–
 
  
 
–
 
     29,893,336       1,908  
Repurchased for cancellation under the Normal Course Issuer Bid
  
 
(10,839,890
) 
  
 
(197
) 
     –       –  
Outstanding at end of year
  
 
1,236,305,738
(2)
 
  
$
22,067
 
     1,244,435,686
(2)
 		   $  22,054  
 
(1)
Effective November 1, 2024, and until such time as the Bank elects otherwise, the Bank has suspended the discount to the Average Market Price (as defined in the Plan) for dividend reinvestments and stock dividends under the Plan and has discontinued issuances of common shares from treasury under the Plan. Additionally, effective November 1, 2024, and until such time as the Bank elects otherwise, purchases of common shares under the Plan will be made in the secondary market in accordance with the provisions of the Plan.
(2)
In the normal course of business, the Bank’s regulated Dealer subsidiary purchases and sells the Bank’s common shares to facilitate trading/institutional client activity. During fiscal 2025, the number of such shares bought was 30,855,084 and sold was 30,855,333 (2024 – 26,564,849 bought and 26,566,901 sold).
Dividend
The dividends paid on common shares in fiscal 2025 and 2024 were $5,369 million ($4.32 per share) and $5,198 million ($4.24 per share), respectively. The Board of Directors approved a quarterly dividend of $1.10 per common share at its meeting on December 1, 2025. This quarterly dividend applies to shareholders of record at the close of business on January 6, 2026, and is payable January 28, 2026. Refer to Note 23(c) – Restriction on payment of dividends and retirement of shares.
Normal Course Issuer Bid
On May 28, 2025, the Bank announced that OSFI and the Toronto Stock Exchange approved a normal course issuer bid (the “2025 NCIB”)
pursuant to which it may repurchase for cancellation up to 20 million of the Bank’s common shares. Purchases under the 2025 NCIB commenced on May 30, 2025, and will terminate upon the earlier of: (i) the Bank purchasing the maximum number of common shares under the 2025 NCIB, (ii) the Bank providing a notice of termination, or (iii) May 29, 2026.
During the year ended October 31, 2025, the
B
ank repurchased and cancelled approximately 10.8 million common shares at an average price of $82.57 per share for a total amount of $913 million, including
t
ax.
Non-viability
Contingent Capital
The maximum number of common shares issuable on conversion of NVCC subordinated debentures, NVCC subordinated additional tier 1 capital notes, including those issued to Scotiabank LRCN Trust as recourse assets in respect of NVCC limited recourse capital notes, and NVCC preferred shares as at October 31, 2025 would be 4,863 million common shares (2024 – 4,582 million common shares) based on the floor price and excluding the impact of any accrued and unpaid interest and any declared but unpaid dividends (refer to Note 20 – Subordinated debentures and Note 23(b) – Preferred shares and other equity instruments for further details).
 
(b)
Preferred shares and other equity instruments
Preferred shares
Authorized:
An unlimited number of preferred shares without nominal or par value. There are currently no preferred shares outstanding.
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
Other equity instruments
Other equity instruments are comprised of NVCC additional Tier 1 qualifying regulatory capital notes:
 
                                       
2025
    
2024
  
First issue date/
Series number
  
Notional
Amount
(millions)
    
Next reset
date
    
Interest
rate
    
Interest
rate after
reset
    
Next
redemption
date
    
Redemption
frequency
after reset
(1)
   
Amount
(millions)
    
Distributions
paid per
Note
(2)
    
Amount
(millions)
    
Distributions
paid per
Note
(2)
  
Subordinated Additional Tier 1 Capital Notes
(3)(4)
 
              
October 12, 2017
(5)
   U.S.$  1,250      
January 12,
202
6
  
 
     6.821 %     
SOFR
+2.90961
(5)
 
% 
    
January 12,
202
6
  
 
     Quarterly    
$
1,560
 
  
U.S.$
 73.88
 
   $ 1,560     U.S.$  83.86  
June 4, 2020
(6)
  
 
 –
 
  
 
 
 
     4.900 %   
 
 
 
  
 
 
 
  
 
 
 
  
$
–
 
  
U.S.$
36.75
 
   $ 1,689     U.S.$ 49.00  
Limited Recourse Capital Notes
(3)(7)
 
              
Series 1
(8)
   $ 1,250      
July 27,
2026
  
 
     3.700 %     
GOC
+2.761
(9)
 
% 
    
June 27,
2026
  
 
    
Every five
years
 		 
 
  
$
1,250
 
  
$
37.00
 
   $ 1,250     $ 37.00  
Series 2
(10)
   U.S.$ 600      
October 27,
2026
  
 
     3.625 %     
UST
+2.613
(11)
 
% 
    
October 27,
2026
  
 
     Quarterly    
$
753
 
  
U.S.$
36.25
 
   $ 753     U.S.$ 36.25  
Series 3
(12)
   $ 1,500      
July 27,
2027
  
 
     7.023 %     
GOC
+3.950
(9)
 
% 
    
June 27,
2027
  
 
    
Every five
years
 		 
 
  
$
1,500
 
  
$
70.23
 
   $ 1,500     $ 70.23  
Series 4
(13)
   U.S.$ 750      
October 27,
2027
  
 
     8.625 %     
UST
+4.389
(11)
 
% 
    
October 27,
2027
  
 
     Quarterly    
$
1,023
 
  
U.S.$
86.25
 
   $ 1,023     U.S.$ 86.25  
Series 5
(14)
   U.S.$ 750       January 27,
2029		  
 		     8.000 %     
UST
+4.017
(11)
 
% 
     January 27,
2029		  
 		     Quarterly    
$
1,004
 
  
U.S.$
80.00
 
   $ 1,004     U.S.$ 63.33  
Series 6
(15)
   U.S.$ 1,000      
April 27,
2030
  
 
     7.350 %     
UST
+2.903
(11)
 
% 
    
April 27,
2030
  
 
     Quarterly    
$
1,453
 
  
U.S.$
54.51
 
   $ –     $ –  
Series 7
(16)
   U.S.$ 1,000       October 27,
2035		  
 		     6.875 %     
UST
+2.734
(11)
 
% 
     October 27,
2035		  
 		     Quarterly    
$
1,396
 
  
U.S.$
–
 
   $ –     $ –  
Total other equity instruments
 
  
 
 
 
  
 
 
 
  
 
 
 
  
$
9,939
 
  
 
 
 
   $  8,779    
 
 
 
 
(1)
Each security is redeemable at the sole discretion of the Bank on the first reset date and every quarter or five years, as applicable, thereafter. Limited Recourse Capital Notes (LRCN) Series 1 and Series 3 are also redeemable in the one month period preceding each reset date. The securities are also redeemable following a regulatory or tax event, as described in the offering documents. All redemptions are subject to regulatory consent and occur at a redemption price of par plus accrued and unpaid interest (unless canceled, where applicable).
(2)
Distributions paid from November 1 to October 31 in the relevant fiscal year per face amount of $1,000 or U.S.$1,000, as applicable.
(3)
The securities rank pari passu to each other and are the Bank’s direct unsecured obligations, ranking subordinate to Bank’s other subordinated indebtedness.
(4)
While interest is payable on the securities when it becomes due, the Bank may, at its sole discretion and with notice, cancel interest payments. Refer to Note 23(c) – Restriction on payment of dividends and retirement of shares.
(5)
CME 3-month Term SOFR.
(6)
On June 4, 2025, the Bank redeemed US $1,250 million 4.900% Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes at 100% of their principal amount plus accrued and unpaid interest. The redemption of these AT1 Notes resulted in a foreign currency loss of $22 million recorded in Retained Earnings.
(7)
Interest on LRCN is
non-deferrable,
however,
non-payment
of interest that is not cured within
five business days
results in a Recourse Event. A Recourse Event of the respective Series occurs if (a) there is
non-payment
in cash by the Bank of the principal amount, together with any accrued and unpaid interest, on the maturity date, (b) there is
non-payment
in cash of interest which is not cured within 5 business days, (c) there is
non-payment
in cash of the redemption price in connection with the redemption of the LRCNs, (d) an event of default occurs (i.e. bankruptcy, insolvency, or liquidation of the Bank), or (e) there is an NVCC Trigger Event. Upon the occurrence of a Recourse Event, the noteholder’s sole recourse will be limited to their proportionate share of the Series’ respective assets held in Scotiabank LRCN Trust, a consolidated entity, which consist initially of the respective AT1 Notes or, following an NVCC Trigger Event, common shares. Refer to Note 23(c) – Restriction on payment of dividends and retirement of shares.
(8)
On June 15, 2021, the Bank issued $1,250 million 3.70% Fixed Rate Resetting Limited Recourse Capital Notes Series 1 (NVCC) (“LRCN Series 1”). In connection with the issuance of LRCN Series 1, the Bank issued $1,250 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (“the Series 1 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
(9)
The then-prevailing five-year Government of Canada yield.
(10)
On October 7, 2021, the Bank issued U.S.$600 million 3.625% Fixed Rate Resetting Limited Recourse Capital Notes Series 2 (NVCC) (“LRCN Series 2”). In connection with the issuance of LRCN Series 2, the Bank issued U.S.$600 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (“the Series 2 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
(11)
The then-prevailing five-year U.S. Treasury Rate.
(12)
On June 16, 2022, the Bank issued $1,500 million 7.023% Fixed Rate Resetting Limited Recourse Capital Notes Series 3 (NVCC) (“LRCN Series 3”). In connection with the issuance of LRCN Series 3, the Bank issued $1,500 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (“the Series 3 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
(13)
On October 25, 2022, the Bank issued U.S.$750 million 8.625% Fixed Rate Resetting Limited Recourse Capital Notes Series 4 (NVCC) (“LRCN Series 4”). In connection with the issuance of LRCN Series 4, the Bank issued U.S.$750 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (“the Series 4 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
(14)
On January 12, 2024, the Bank issued U.S.$750 million 8.000% Fixed Rate Resetting Limited Recourse Capital Notes Series 5 (NVCC) (“LRCN Series 5”). In connection with the issuance of LRCN Series 5, the Bank issued U.S.$750 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC) (“the Series 5 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
(15)
On January 31, 2025, the Bank issued USD$1,000 million of 7.350% Fixed Rate Resetting Limited Recourse Capital Notes Series
6 (NVCC) (“LRCN Series 6”).
In connection with the issuance of LRCN Series 6, the Bank issued U.S.$1,000 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC)
 
(“the Series 6 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
(16)
On September 29, 2025, the Bank issued USD$1,000 million of 6.875% Fixed Rate Resetting Limited Recourse Capital Notes Series
7 (NVCC) (“LRCN Series 7”).
In connection with the issuance of LRCN Series 7, the Bank issued U.S.$1,000 million of Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital Notes (NVCC)
 
(“the Series 7 AT1 Notes”) to Scotiabank LRCN Trust to be held as trust assets in connection with the LRCN structure.
Contractual NVCC provisions contained in the Bank’s Subordinated Additional Tier 1 Capital Notes, including those issued to Scotiabank LRCN Trust as recourse assets in respect of the LRCNs, trigger conversion of these securities into a variable number of common shares if OSFI announces that the Bank has ceased, or is about to cease, to be viable, or if a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent thereof without which the Bank would have been determined by OSFI to be
non-viable.
If such a conversion were to occur, outstanding Subordinated Additional Tier 1 Capital Notes (NVCC), would be converted into common shares pursuant to an automatic conversion formula defined as 125% of the par value plus accrued and unpaid interest divided by the conversion price. The conversion price is based on the greater of: (i) $5.00 (subject to adjustments in certain events and converted to U.S. dollar-equivalent, where applicable, each as set out in their respective prospectus supplements), and (ii) the current market price of the Bank’s common shares at the time of the trigger event
(10-day
weighted average and converted to U.S. dollar-equivalent, where applicable). U.S. dollar equivalents of the floor price and the current market price, where applicable, are based on the CAD/USD exchange rate on the day prior to the trigger event.
The notes above have been determined to be compound instruments that have both equity and liability features. At inception, the fair value of the liability component is initially measured with any residual amount assigned to the equity component. On the respective dates of issuance, the
 
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207
Consolidated Financial Statements
 
Bank has assigned an insignificant value to each liability component of the notes and, as a result, the proceeds received upon issuance of the notes have been presented as equity. The Bank will continue to monitor events that could impact the value of the liability component.
During the year ended October 31, 2025, the Bank paid aggregate distributions on these notes of $506 million (2024 – $469 million), net of income taxes of $120 million (2024 – $93 million), based on exchange rates in effect on the payment dates, where applicable.
 
(c)
Restrictions on payment of dividends and retirement of shares
Under the Bank Act, the Bank is prohibited from declaring or paying any dividends on its common or preferred shares or redeeming, purchasing or otherwise retiring such shares when the Bank is, or would be placed by such a declaration or retirement, in contravention of the capital adequacy, liquidity or any other regulatory directives issued under the Bank Act.
In the event that applicable cash distributions on any of the Scotiabank Trust Securities are not paid on a regular distribution date, the Bank has undertaken not to pay dividends of any kind on its preferred or common shares until such distributions are made in full or the twelfth month following the
non-payment
of such distributions. Similarly, should the Bank fail to declare regular dividends on any of its directly issued and outstanding preferred or common shares, cash distributions will also not be made on any of the Scotiabank Trust Securities.
In the event that distributions are not paid in full on the Bank’s Subordinated Additional Tier 1 Capital Notes (NVCC), including those issued as recourse assets in respect of LRCNs to Scotiabank LRCN Trust where the trustee has not waived such distributions or no longer holds the respective AT1 Notes, the Bank has undertaken not to declare dividends on its common or preferred shares or redeem, purchase or otherwise retire such shares until the month commencing after such distributions have been made in full.
In the event that dividends to which preferred shareholders are then entitled have not been paid or sufficient funds have not been set aside to do so, the Bank has undertaken not to declare dividends on its common shares or redeem, purchase or otherwise retire its common shares.
Currently, the above limitations do not restrict the payment of dividends on or retirement of preferred or common shares.
 
24
Capital Management
The primary regulator over the Bank’s consolidated capital adequacy is the Office of the Superintendent of Financial Institutions, Canada (OSFI). The capital adequacy regulations in Canada are largely consistent with international standards set by the Basel Committee on Banking Supervision (BCBS). OSFI requires Canadian deposit-taking institutions to fully implement the Basel III reforms and achieve minimums of 7%, 8.5% and 10.5% for CET1, Tier 1 and Total Capital, respectively. OSFI has also designated the Bank as a domestic systemically important bank
(D-SIB),
increasing its minimum capital ratio requirements by 1% across all tiers of capital, in line with the requirements for global systemically important banks.
In addition, OSFI expects
D-SIBs
to hold a Domestic Stability Buffer (DSB). In December 2022
,
OSFI announced that the DSB will increase to 3.0% of total risk-weighted assets (RWA), effective February 1, 2023, and has increased the DSB’s range from 0% to 4.0%. In June 2023, OSFI announced that the DSB will increase to 3.5% of total RWA, effective November 1, 2023. In addition, in June 2025, OSFI maintained the DSB at 3.5% of RWA. OSFI’s minimum regulatory capital ratio requirements, including the
D-SIB
1.0% surcharge and its DSB are: 11.5%, 13.0% and 15.0% for Common Equity Tier 1 (CET1), Tier 1 and Total capital ratios, respectively. In addition, the Bank is presently subject to a BCBS countercyclical buffer requirement of approximately eight basis points.
In addition to risk-based capital requirements, the Basel III reforms introduced a simpler, non risk-based Leverage ratio requirement to act as a supplementary measure to its risk-based capital requirements. Institutions are expected to maintain an operating buffer above the 3.5% minimum, including the
D-SIB
surcharge of 0.5%, effective Q2 2023.
The Bank’s regulatory capital ratios were as follows:
 
As at October 31 ($ millions)  
2025
    
2024
  
Capital
(1)
    
Common Equity Tier 1 capital
  
$
62,752
 
   $ 60,631  
Net Tier 1 capital
  
 
72,790
 
     69,499  
Total regulatory capital
  
 
80,908
 
     77,708  
Total loss absorbing capacity (TLAC)
(2)
  
 
138,049
 
     137,752  
Risk-weighted assets/exposures used in calculation of capital ratios
    
Risk-weighted assets
(1)
  
$
474,453
 
   $ 463,992  
Leverage exposures
(3)
  
 
 1,622,415
 
      1,563,140  
Regulatory ratios
(1)
    
Common Equity Tier 1 capital ratio
  
 
13.2
% 
     13.1 % 
Tier 1 capital ratio
  
 
15.3
% 
     15.0 % 
Total capital ratio
  
 
17.1
% 
     16.7 % 
Total loss absorbing capacity ratio
(2)
  
 
29.1
% 
     29.7 % 
Leverage ratio
(3)
  
 
4.5
% 
     4.4 % 
Total loss absorbing capacity leverage ratio
(2)
  
 
8.5
% 
     8.8 % 
 
(1)
The regulatory capital ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Capital Adequacy Requirements (November 2023).
(2)
This measure has been disclosed in this document in accordance with OSFI Guideline – Total Loss Absorbing Capacity (September 2018).
(3)
The leverage ratios are based on Basel III requirements as determined in accordance with OSFI Guideline – Leverage Requirements (February 2023).
The Bank exceeded the OSFI regulatory minimum capital ratios as at October 31, 2025.
 
25
Share-Based Payments
 
(a)
Stock option plans
The Bank grants stock options as part of the Employee Stock Option Plan as well as stand-alone stock appreciation rights (SARs). Options to purchase common shares and/or to receive an equivalent cash payment, as applicable, may be granted to select employees at an exercise price of the higher of the closing price of the Bank’s common shares on the TSX on the trading day prior to the grant date or the volume weighted average trading price for the five trading days immediately preceding the grant date.
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
Stock options granted vest 50% at the end of the third year and 50% at the end of the fourth year. Stock options are exercisable no later than 10 years after the grant date. In the event that the expiry date falls within an insider trading blackout period, the expiry date will be extended for 10 business days after the end of the blackout period. There is a total of 141 million common shares which have been reserved for issuance under the Bank’s Employee Stock Option Plan of which 120 million common shares have been issued as a result of the exercise of options and 11 million common shares are committed under outstanding options, leaving 11 million common shares available for issuance as options. Outstanding options expire on dates ranging from December 3, 2025 to December 12, 2034.
The cost of these options is recognized on a graded vesting basis except where the employee is eligible to retire prior to a tranche’s vesting date, in which case the cost is recognized between the grant date and the date the employee is eligible to retire.
The Stock Option Plan includes:
 
•
Stock options
Employee stock options granted are equity-classified stock options which call for settlement in shares.
The amount recorded in equity – other reserves for vested stock options as at October 31, 2025 was $124 million (2024 – $124 million).
In 2025, an expense of $15 million (2024 – $13 million) was recorded in salaries and employee benefits in the Consolidated Statement of Income. As at October 31, 2025, future unrecognized compensation cost for
non-vested
stock options was $8 million (2024 – $10 million) which is to be recognized over a weighted-average period of 1.84 years (2024 – 2.03 years).
 
•
Stock appreciation rights
Stand-alone SARs are granted instead of stock options to select employees in countries where local laws may restrict the Bank from issuing shares. When a SAR is exercised, the Bank pays the appreciation amount in cash equal to the rise in the market price of the Bank’s common shares since the grant date.
During fiscal 2025, 119,316 SARs were granted (2024 – 81,414) and as at October 31, 2025, 485,684 SARs were outstanding (2024 – 570,156), of which 481,880 SARs were vested (2024 – 566,349).
The impact to the Bank’s consolidated financial statements of vested and outstanding SARs was not material.
Determination of fair values
The share-based payment expense for stock options was quantified using the Black-Scholes option pricing model on the date of grant. The fiscal 2025 and 2024 stock option grants were fair valued using the following weighted-average assumptions and resulting fair value per award:
 
    
2025 Grant
    
2024 Grant
  
Assumptions
    
Risk-free interest rate %
  
 
2.77%
 
     3.26%  
Expected dividend yield
  
 
4.88%
 
     4.47%  
Expected price volatility
  
 
 19.33%
 
     19.76%  
Expected life of option
  
 
6.84
 
Years
 
     6.90 Years  
Fair value
    
Weighted-average fair value
  
$
8.07
 
   $ 7.68  
The risk-free rate is based on Canadian treasury bond rates interpolated for the maturity equal to the expected life until exercise of the options. Expected dividend yield is based on historical dividend payout. Expected price volatility is determined based on the historical volatility for compensation. For accounting purposes, an average of the market consensus implied volatility for traded options on our common shares and the historical volatility is used.
Details of the Bank’s Employee Stock Option Plan are as follows
(1)
:
 
   
2025
    
2024
  
As at October 31  
Number of stock
options (000’s)
    
Weighted average
exercise price
    
Number of stock
options (000’s)
    
Weighted average
exercise price
  
Outstanding at beginning of year
  
 
   11,456
 
  
$
 70.75
 
     11,558     $ 72.74  
Granted
  
 
1,587
 
  
 
79.13
 
     2,676       59.99  
Exercised as options
  
 
(2,710
) 
  
 
72.21
 
     (498 )      66.04  
Forfeited
  
 
(85
) 
  
 
70.66
 
     (600 )      70.34  
Expired
  
 
(161
) 
  
 
72.62
 
     (1,680 )      68.84  
Outstanding at end of year
  
 
10,087
 
  
$
71.65
 
     11,456     $  70.75  
Exercisable at end of year
  
 
3,333
 
  
$
75.39
 
     4,737     $ 73.10  
Available for grant
  
 
10,562
 
  
 
 
 
     11,902    
 
 
 
 
   
Options Outstanding
           
Options Exercisable
  
As at October 31, 2025  
Number of stock
options (000’s)
    
Weighted
average remaining
contractual life (years)
    
Weighted average
exercise price
    
Number of stock
options (000’s)
    
Weighted average
exercise price
  
Range of exercise prices
          
$55.63 to $68.32
  
 
2,363
 
  
 
8.02
 
  
$
 59.99
 
  
 
–
 
  
$
–
 
$68.33 to $74.34
  
 
4,423
 
  
 
5.43
 
  
$
70.17
 
  
 
2,313
 
  
$
 71.62
 
$74.35 to $85.46
  
 
3,301
 
  
 
6.96
 
  
$
81.98
 
  
 
1,020
 
  
$
83.95
 
 
  
 
10,087
 
  
 
6.54
 
  
$
71.65
 
  
 
3,333
 
  
$
75.39
 
 
(1)
Excludes SARs.
 
2025 Scotiabank Annual Report 
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209
Consolidated Financial Statements
 
(b)
Employee share ownership plans
Eligible employees can contribute up to a specified percentage of salary towards the purchase of common shares of the Bank. In general, the Bank matches
50-60%
of eligible contributions, depending on the region, up to a maximum dollar amount, which is expensed in salaries and employee benefits. During 2025, the Bank’s contributions totalled $94 million (2024 – $94 million). Contributions, which are used to purchase common shares in the open market, do not result in a subsequent expense to the Bank from share price appreciation.
As at October 31, 2025, an aggregate of 21 million common shares were held under the employee share ownership plans (2024 – 21 million). The shares in the employee share ownership plans are considered outstanding for computing the Bank’s basic and diluted earnings per share.
 
(c)
Other share-based payment plans
Other share-based payment plans use notional units that are valued based on the Bank’s common share price on the TSX. Most grants of units accumulate dividend equivalents in the form of additional units based on the dividends paid on the Bank’s common shares. These plans are settled in cash and, as a result, are liability-classified. Fluctuations in the Bank’s share price change the value of the units, which affects the Bank’s share-based payment expense. As described below, the value of the Performance Share Units also varies based on Bank performance. Upon exercise or redemption, payments are made to the employees with a corresponding reduction in the accrued liability.
In 2025, an aggregate expense of $394 million (2024 – $357 million) was recorded in salaries and employee benefits in the Consolidated Statement of Income for these plans. This expense includes gains from derivatives used to manage the volatility of share-based payments of $345 million (2024 – $196 million
gains
).
As at October 31, 2025, the share-based payment liability recognized for vested awards under these plans was $1,446 million (2024 – $1,010 million).
Details of these other share-based payment plans are as follows:
Deferred Stock Unit Plan (DSU)
Under the DSU Plan, senior executives may elect to receive all or a portion of their cash bonus under the Annual Incentive Plan (which is expensed for the year awarded in salaries and employee benefits in the Consolidated Statement of Income) in the form of deferred stock units which vest immediately. In addition the DSU plan allows for eligible executives of the Bank to participate in grants that are not allocated from the Annual Incentive Plan election. These grants are subject to specific vesting schedules. Units are redeemable in cash only when an executive ceases to be a Bank employee, and must be redeemed by December 31 of the year following that event. As at October 31, 2025, there were 3,040,333 units (2024 – 2,732,877) awarded and outstanding of which 2,179,058 units were vested (2024 – 1,893,903).
Directors’ Deferred Stock Unit Plan (DDSU)
Under the DDSU Plan,
non-officer
directors of the Bank may elect to receive all or a portion of their fee for that fiscal year (which is expensed by the Bank in other expenses in the Consolidated Statement of Income) in the form of deferred stock units which vest immediately. Units are redeemable in cash, only following resignation or retirement, and must be redeemed by December 31 of the year following that event. As at October 31, 2025, there were 436,880 units outstanding (2024 – 420,889).
Restricted Share Unit Plan (RSU)
Under the RSU Plan, select employees receive an award of restricted share units which, for the majority of grants, vest at the end of three years. There are certain grants that provide for a graduated vesting schedule. Upon vesting, all RSU units are paid in cash to the employee. The share-based payment expense is recognized evenly over the vesting period except where the employee is eligible to retire prior to the vesting date in which case, the expense is recognized between the grant date and the date the employee is eligible to retire. As at October 31, 2025, there were 9,438,970 units (2024 – 8,478,453) awarded and outstanding of which 6,888,296 units were vested (2024 – 5,665,778).
Performance Share Unit Plan (PSU)
Eligible executives receive an award of performance share units which, for the majority of grants, vest at the end of three years. Certain grants provide for a graduated vesting schedule which includes a specific performance factor calculation. PSU awards are subject to performance criteria measured over a three-year period whereby a multiplier factor is applied which impacts the incremental number of units due to employees. The three-year performance measures include return on equity compared to target and total shareholder return relative to a comparator group selected prior to the granting of the award. The Bank uses a probability-weighted-average of potential outcomes to estimate the multiplier impact. The share-based payment expense is recognized over the vesting period except where the employee is eligible to retire prior to the vesting date; in which case, the expense is recognized between the grant date and the date the employee is eligible to retire. This expense varies based on changes in the Bank’s share price and the Bank’s performance compared to the performance measures. Upon vesting, the units are paid in cash to the employee. As at October 31, 2025, there were 7,026,302 units (2024 – 6,766,501) outstanding subject to performance criteria, of which 6,010,837 units were vested (2024 – 4,843,892).
 
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Table of Contents
Consolidated Financial Statements
 
26
Corporate Income Taxes
Corporate income taxes recorded in the Bank’s consolidated financial statements for the years ended October 31 are as follows:
 
(a)
Components of income tax provision
 
For the year ended October 31 ($ millions)  
2025
    
2024
  
Provision for income taxes in the Consolidated Statement of Income:
    
Current income taxes:
    
Domestic:
    
Federal
  
$
 1,088
 
   $ 138  
Provincial
  
 
786
 
     275  
Adjustments related to prior periods
  
 
23
 
     (40 ) 
Foreign
  
 
1,418
 
     1,219  
Adjustments related to prior periods
  
 
(15
) 
     2  
 
 
3,300
 
     1,594  
Deferred income taxes:
    
Domestic:
    
Federal
  
 
(261
) 
     388  
Provincial
  
 
(154
) 
     181  
Foreign
  
 
(134
)
     (131 ) 
 
 
(549
)
     438  
Total provision for income taxes in the Consolidated Statement of Income
  
$
2,751
 
   $  2,032  
Provision for income taxes in the Consolidated Statement of Changes in Equity:
    
Current income taxes
  
$
(162
)
   $ 1,019  
Deferred income taxes
  
 
224
 
     41  
 
 
62
 
     1,060  
Reported in:
    
Other Comprehensive Income
  
 
187
 
     1,156  
Retained earnings
  
 
(125
)
     (96 ) 
Other reserves
  
 
–
 
     –  
Total provision for income taxes in the Consolidated Statement of Changes in Equity
  
 
62
 
     1,060  
Total provision for income taxes
  
$
2,813
 
   $ 3,092  
Provision for income taxes in the Consolidated Statement of Income includes:
    
Deferred tax expense (benefit) relating to origination/reversal of temporary differences
  
$
(549
)
   $ 438  
Deferred tax expense (benefit) of tax rate changes
  
 
–
 
     –  
 
  
$
(549
)
   $ 438  
 
(b)
Reconciliation to statutory rate
Income taxes in the Consolidated Statement of Income vary from the amounts that would be computed by applying the composite federal and provincial statutory income tax rate for the following reasons:
 
   
2025
    
2024
  
For the year ended October 31 ($ millions)  
Amount
    
Percent
of pre-tax

income
    
Amount
    
Percent
of pre-tax

income
  
Income taxes at Canadian statutory rate
  
$
 2,919
 
  
 
27.8
% 
   $ 2,755       27.8 % 
Increase (decrease) in income taxes resulting from:
        
Lower average tax rate applicable to subsidiaries and foreign branches
(1)
  
 
(177
) 
  
 
(1.7
) 
     (746 )      (7.5 ) 
Tax-exempt
income from securities
  
 
–
 
  
 
–
 
     (28 )      (0.3 ) 
Other, net
  
 
9
 
  
 
0.1
 
     51       0.5  
Total income taxes and effective tax rate
  
$
2,751
 
  
 
26.2
% 
   $  2,032       20.5 % 
 
(1)
Lower average tax rate applicable to subsidiaries and foreign branches includes the impact of the GMT which increased the effective tax rate by 0.8%.
 
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211
Consolidated Financial Statements
 
(c)
Deferred taxes
Significant components of the Bank’s deferred tax assets and liabilities are as follows:
 
   
Statement of Income
    
Statement of Financial Position
  
   
For the year ended
    
 As at
  
October 31 ($ millions)  
2025
    
2024
    
2025
    
2024
  
Deferred tax assets:
        
Loss carryforwards
  
$
60
 
   $ 29    
$
623
 
   $ 930  
Allowance for credit losses
  
 
(272
)
     54    
 
1,357
 
     1,076  
Deferred compensation
  
 
(109
)
     (100 )   
 
388
 
     317  
Deferred income
  
 
(150
)
     (137 )   
 
404
 
     255  
Property and equipment
  
 
(101
)
     (10 )   
 
422
 
     262  
Pension and other post-retirement benefits
  
 
(22
)
     (48 )   
 
314
 
     387  
Securities
  
 
(26
)
     (17 )   
 
284
 
     260  
Lease liabilities
  
 
3
 
     28    
 
910
 
     891  
Own credit risk
  
 
–
 
     –    
 
447
 
     250  
Other
  
 
(22
)
     (57 )   
 
757
 
     673  
Total deferred tax assets
  
$
 (639
)
   $ (258 )   
$
5,906
 
   $ 5,301  
Deferred tax liabilities:
        
Cash flow hedges
  
$
–
 
   $ –    
$
39
 
   $ 57  
Deferred compensation
  
 
(11
)
     (24 )   
 
209
 
     187  
Deferred income
  
 
(14
)
     (20 )   
 
65
 
     50  
Property and equipment
  
 
(39
)
     (243 )   
 
805
 
     684  
Pension and other post-retirement benefits
  
 
(1
)
     1    
 
73
 
     82  
Securities
  
 
34
 
     (14 )   
 
398
 
     354  
Investment in subsidiaries and associates
  
 
(26
)
     52    
 
86
 
     29  
Intangible assets
  
 
57
 
     (344 )   
 
1,746
 
     1,809  
Other
  
 
(90
)
     (104 )   
 
646
 
     504  
Total deferred tax liabilities
  
$
(90
)
   $ (696 )   
$
4,067
 
   $ 3,756  
Net deferred tax assets (liabilities)
(1)
  
$
 (549
)
   $   438    
$
 1,839
 
   $  1,545  
 
(1)
For Consolidated Statement of Financial Position presentation, deferred tax assets and liabilities are assessed by legal entity. As a result, the net deferred tax assets of $1,839 (2024 – $1,545) are represented by deferred tax assets of $3,253 (2024 – $2,942), and deferred tax liabilities of $1,414 (2024 – $1,397) on the Consolidated Statement of Financial Position.
The major changes to net deferred taxes were as follows:
 
For the year ended October 31 ($ millions)
 
2025
 
 
2024
 
Balance at beginning of year
  
$
1,545
 
   $ 2,095  
Deferred tax benefit (expense) for the year recorded in income
  
 
549
 
     (438 ) 
Deferred tax benefit (expense) for the year recorded in equity
  
 
(224
)
     (41 ) 
Disposed in divestitures
  
 
(35
)
     –  
Other
  
 
4
 
     (71 ) 
Balance at end of year
  
$
   1,839
 
   $
 
 
  1,545  
The tax related to temporary differences, unused tax losses and unused tax credits for which no deferred tax asset is recognized in the Consolidated Statement of Financial Position amounts to $10 million (October 31, 2024 – $18 million). The amount related to unrecognized losses is $10 million, which have no expiry.
Included in the net deferred tax asset are tax benefits of $56 million (2024 – $73 million) that have been recognized in the Canadian bank and certain Canadian and foreign subsidiaries that have incurred losses in either the current or the preceding year. In determining if it is appropriate to recognize these tax benefits, the Bank relied on projections of future taxable profits which are expected to generate sufficient taxable income to utilize the deferred tax assets.
The amount of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures for which deferred tax liabilities have not been recognized at October 31, 2025 is approximately $59 billion (2024 – $57 billion).
Tax Assessments
The Bank received reassessments totaling $1,808 
million of tax and interest as a result of the Canada Revenue Agency (CRA) denying the tax deductibility of certain Canadian dividends received during the 2011-2020 taxation years. The dividends subject to these reassessments are similar to those prospectively addressed by tax rules introduced in 2015 and 2018. The Bank has filed Notices of Appeal with the Tax Court of Canada against the federal reassessment in respect of its 2011 and 2012 taxation years. In addition, a subsidiary of the Bank received reassessments on the same matter in respect of its 2018-2020 taxation years totaling $
4 million of tax and interest.
A subsidiary of the Bank received withholding tax assessments from the CRA in respect of certain of its securities lending transactions for its
2014-2019
taxation years totaling $637 million of tax, penalties and interest. The subsidiary has filed a Notice of Appeal with the Tax Court of Canada against the federal assessment in respect of its 2014-2019 taxation years.
 
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Consolidated Financial Statements
 
In respect of both matters, the Bank is confident that its tax filing position was appropriate and in accordance with the relevant provisions of the Income Tax Act (Canada) and intends to vigorously defend its position.
Global Minimum Tax
The Organisation for Economic
Co-operation
and Development published Pillar Two model rules in December 2021 as part of its efforts toward international tax reform. The rules aim to have large multinational enterprises, with consolidated revenues in excess of
€
750 million, pay a minimum effective tax of 15%. These rules apply to the Bank effective November 1, 2024, and have been enacted or substantively enacted in certain jurisdictions in which the Bank operates, including Canada, whose Global Minimum Tax (GMT) Act was enacted in June 2024.
The IASB previously issued amendments to IAS 12 Income Taxes for a temporary mandatory exception from the recognition and disclosure of deferred taxes related to the implementation of Pillar Two GMT rules, which the Bank has applied.
For the
t
welve
 months ended October 31, 2025, the impact of the GMT on the Bank’s effective tax rate was approximately 0.8%, and was primarily related to its operations in certain Caribbean jurisdictions and Ireland.
 
27
Employee Benefits
The Bank sponsors a number of employee benefit plans, including pensions (defined benefit and defined contribution) and other benefit plans (post-retirement benefits and other long-term employee benefits) for most of its employees globally. The information presented below relates to the Bank’s principal plans; other plans operated by certain subsidiaries of the Bank are not considered material and are not included in these disclosures.
Global pension plans
The principal pension plans include plans in Canada, U.S., Mexico, UK, Ireland, Jamaica, Trinidad & Tobago and other countries in the Caribbean in which the Bank operates. The most significant pension plans provided by the Bank are in Canada. The Bank has a strong and well-defined governance structure to manage these global obligations. The investment policy for each principal plan is reviewed periodically and all plans are in good standing with respect to legislation and local regulations.
Actuarial valuations for funding purposes for the Bank’s funded pension plans are conducted as required by applicable legislation. The purpose of the actuarial valuation is to determine the funded status of the plans on a going-concern and statutory basis and to determine the required contributions. The plans are funded in accordance with applicable pension legislation and the Bank’s funding policies such that future benefit promises based on plan provisions are well secured. The assumptions used for the funding valuations are set by independent plan actuaries on the basis of the requirements of the local actuarial standards of practice and statutes.
Scotiabank Pension Plan (Canada)
The most significant pension plan is the Scotiabank Pension Plan (SPP), which includes a closed defined benefit (DB) component. Employees hired in Canada on or after May 1, 2018, participate in a defined contribution (DC) component only. As the administrator of the SPP, the Bank has established a well-defined governance structure and policies to maintain compliance with legislative and regulatory requirements under OSFI and the Canada Revenue Agency. The Bank appoints a number of committees to oversee and make decisions related to the administration of the SPP. Certain committees are also responsible for the investment of the assets of the SPP Fund and for monitoring the investment managers and performance.
 
  •  
The Human Capital and Compensation Committee (HCOB) of the Board approves the charter of the Pension Administration and Investment Committee (PAIC), reviews reports, and approves the investment policy. The HCOB also reviews and recommends any amendments to the SPP to the Board of Directors.
  •  
PAIC is responsible for recommending the investment policy to the HCOB, for appointing and monitoring investment managers, and for reviewing auditor and actuary reports. PAIC also monitors the administration of member pension benefits.
  •  
The Scotiabank Master Trust Committee (MTC) invests assets in accordance with the investment policy and all applicable legislation. The MTC assigns specific mandates to investment managers.
  •  
The Capital Accumulation Plans (CAP) Committee is responsible for the administration and investment of the DC component of the SPP including the selection and monitoring of investment options available to DC participants.
Actuarial valuations for funding purposes for the SPP are conducted on an annual basis. The most recent funding valuation was conducted as of November 1, 2024. Contributions are being made to the SPP in accordance with this valuation and are shown in the table in b) below. The assumptions used for the funding valuation are set by independent plan actuaries on the basis of the requirements of the Canadian Institute of Actuaries and applicable regulation.
Other benefit plans
The principal other benefit plans include plans in Canada, U.S., Mexico, Uruguay, UK, Jamaica, Trinidad & Tobago, Colombia and other countries in the Caribbean in which the Bank operates. The most significant other benefit plans provided by the Bank are in Canada.
Key assumptions
The financial information reported below in respect of pension and other benefit plans is based on a number of assumptions. The most significant assumption is the discount rate used to determine the defined benefit obligation, which is set by reference to the yields on high quality corporate bonds that have durations that match the terms of the Bank’s obligations. Separate discount rates are used to determine the annual benefit expense in Canada and the U.S. These rates are determined with reference to the yields on high quality corporate bonds with durations that match the various components of the annual benefit expense. The discount rate used to determine the annual benefit expense for all other plans continues to be the same as the rate used to determine the defined benefit obligation. Other assumptions set by management are determined in reference to market conditions, plan-level experience, best practices and future expectations. The key weighted-average assumptions used by the Bank for the measurement of the benefit obligation and benefit expense for all of the Bank’s principal plans are summarized in the table in f) below.
 
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213
Consolidated Financial Statements
 
Risk management
The Bank’s defined benefit pension plans and other benefit plans expose the Bank to a number of risks. Some of the more significant risks include interest rate risk, investment risk, longevity risk and health care cost increases, among others. These risks could result in higher defined benefit expense and a higher defined benefit obligation to the extent that:
 
  •  
there is a decline in discount rates; and/or
  •  
plan assets returns are less than expected; and/or
  •  
plan members live longer than expected; and/or
  •  
health care costs are higher than assumed.
In addition to the governance structure and policies in place, the Bank manages risks by regularly monitoring market developments and asset investment performance. The Bank also monitors regulatory and legislative changes along with demographic trends and revisits the investment strategy and/or plan design as warranted.
 
a)
Relative size of plan obligations and assets
 
   
Pension plans
    
Other benefit plans
  
   
Canada
                    
For the year ended October 31, 2025  
SPP
    
Other
    
International
    
Canada
    
International
  
Percentage of total benefit obligations
  
 
72
% 
  
 
16
% 
  
 
12
% 
  
 
50
% 
  
 
50
% 
Percentage of total plan assets
  
 
74
% 
  
 
11
% 
  
 
15
% 
  
 
–
 
  
 
100
% 
Percentage of total benefit expense
(1)
  
 
74
% 
  
 
23
% 
  
 
3
% 
  
 
42
% 
  
 
58
% 
 
   
Pension plans
    
Other benefit plans
  
   
Canada
                    
For the year ended October 31, 2024  
SPP
    
Other
    
International
    
Canada
    
International
  
Percentage of total benefit obligations
     72 %      15 %      13 %      50 %      50 % 
Percentage of total plan assets
     74 %      11 %      15 %      –       100 % 
Percentage of total benefit expense
(1)
     73 %      27 %      –       46 %      54 % 
 
(1)
Excludes
non-routine
benefit expense items such as past service costs, curtailment charges and settlement charges.
 
b)
Cash contributions and payments
The table below shows the cash contributions and payments made by the Bank to its principal plans in 2025, and the prior year.
 
Contributions to the principal plans for the year ended October 31 ($ millions)  
2025
    
2024
  
Defined benefit pension plans (cash contributions to fund the plans, including paying beneficiaries under the unfunded pension arrangements)
    
SPP (excluding defined contribution provision)
  
$
158
 
   $ 69  
All other plans
  
 
64
 
     47  
Other benefit plans (cash contributions mainly in the form of benefit payments to beneficiaries)
  
 
61
 
     62  
Defined contribution pension and other benefit plans (cash contributions)
  
 
206
 
     184  
Defined contribution pension contributions funded from pension plan surplus
  
 
–
 
     (54 ) 
Total contributions
(1)
  
$
 489
 
   $  308  
 
(1)
Based on preliminary estimates, the Bank expects to make contributions of $158 million to the SPP (excluding the
defined contribution
provision), $79 million to all other defined benefit pension plans, $66 million to other benefit plans and $217 million to all defined contribution plans for the year ending October 31, 2026.
 
c)
Funded and unfunded plans
The excess (deficit) of the fair value of assets over the benefit obligation at the end of the year includes the following amounts for plans that are wholly unfunded and plans that are wholly or partly funded.
 
   
Pension plans
    
Other benefit plans
  
As at October 31 ($ millions)  
2025
    
2024
    
2025
    
2024
  
Benefit obligation
        
Benefit obligation of plans that are wholly unfunded
  
$
346
 
   $ 362    
$
890
 
   $ 930  
Benefit obligation of plans that are wholly or partly funded
  
 
8,886
 
     8,529    
 
264
 
     217  
Funded status
        
Benefit obligation of plans that are wholly or partly funded
  
$
 8,886
 
   $  8,529    
$
264
 
   $ 217  
Fair value of assets
  
 
9,956
 
     9,260    
 
63
 
     84  
Excess (deficit) of fair value of assets over benefit obligation of wholly or partly funded plans
  
$
1,070
 
   $ 731    
$
(201
) 
   $ (133 ) 
Benefit obligation of plans that are wholly unfunded
  
 
346
 
     362    
 
890
 
     930  
Excess (deficit) of fair value of assets over total benefit obligation
  
$
724
 
   $ 369    
$
 (1,091
) 
   $  (1,063 ) 
Effect of asset limitation and minimum funding requirement
  
 
(223
) 
     (208 )   
 
–
 
     –  
Net asset (liability) at end of year
  
$
501
 
   $ 161    
$
(1,091
) 
   $ (1,063 ) 
 
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Consolidated Financial Statements
 
d)
Financial information
The following tables present financial information related to the Bank’s principal plans.
 
   
Pension plans
    
Other benefit plans
  
For the year ended October 31 ($ millions)  
2025
    
2024
    
2025
    
2024
  
Change in benefit obligation
        
Benefit obligation at beginning of year
  
$
8,891
 
   $ 7,669    
$
  1,147
 
   $ 1,114  
Current service cost
  
 
244
 
     205    
 
22
 
     20  
Interest cost on benefit obligation
  
 
432
 
     456    
 
70
 
     77  
Employee contributions
  
 
26
 
     27    
 
–
 
     –  
Benefits paid
  
 
(438
) 
     (404 )   
 
(94
)
     (101 ) 
Actuarial loss (gain)
  
 
8
 
     959    
 
55
 
     59  
Past service cost
(1)
  
 
32
 
     –    
 
(63
)
     (1 ) 
Business acquisition
  
 
–
 
     –    
 
(2
)
     –  
Settlements
  
 
–
 
     (2 )   
 
–
 
     –  
Foreign exchange
  
 
37
 
     (19 )   
 
19
 
     (21 ) 
Benefit obligation at end of year
  
$
9,232
 
   $ 8,891    
$
1,154
 
   $ 1,147  
Change in fair value of assets
        
Fair value of assets at beginning of year
  
 
9,260
 
     8,139    
 
84
 
     113  
Interest income on fair value of assets
  
 
467
 
     494    
 
8
 
     9  
Return on plan assets in excess of (less than) interest income on fair value of assets
  
 
421
 
     955    
 
(1
) 
     8  
Employer contributions
  
 
222
 
     62    
 
61
 
     62  
Employee contributions
  
 
26
 
     27    
 
–
 
     –  
Benefits paid
  
 
(438
) 
     (404 )   
 
(94
)
     (101 ) 
Administrative expenses
  
 
(12
) 
     (13 )   
 
–
 
     –  
Business acquisition
  
 
–
 
     –    
 
–
 
     –  
Settlements
  
 
–
 
     (3 )   
 
–
 
     –  
Foreign exchange
  
 
10
 
     3    
 
5
 
     (7 ) 
Fair value of assets at end of year
  
$
 9,956
 
   $ 9,260    
$
63
 
   $ 84  
Funded status
        
Excess (deficit) of fair value of assets over benefit obligation at end of year
  
 
724
 
     369    
 
(1,091
) 
     (1,063 ) 
Effect of asset limitation and minimum funding requirement
(2)
  
 
(223
) 
     (208 )   
 
–
 
     –  
Net asset (liability) at end of year
  
$
501
 
   $ 161    
$
(1,091
) 
   $ (1,063 ) 
Recorded in:
        
Other assets in the Bank’s Consolidated Statement of Financial Position
  
 
1,036
 
     684    
 
1
 
     1  
Other liabilities in the Bank’s Consolidated Statement of Financial Position
  
 
(535
) 
     (523 )   
 
(1,092
) 
     (1,064 ) 
Net asset (liability) at end of year
  
$
501
 
   $ 161    
$
(1,091
) 
   $  (1,063 ) 
Annual benefit expense
        
Current service cost
  
 
244
 
     205    
 
22
 
     20  
Net interest expense (income)
  
 
(13
) 
     (32 )   
 
62
 
     68  
Administrative expenses
  
 
12
 
     12    
 
–
 
     –  
Past service costs
(1)
  
 
32
 
     –    
 
(63
) 
     (1 ) 
Amount of settlement (gain) loss recognized
  
 
–
 
     1    
 
–
 
     –  
Remeasurement of other long-term benefits
  
 
–
 
     –    
 
2
 
     6  
Benefit expense (income) recorded in the Consolidated Statement of Income (A)
  
$
275
 
   $ 186    
$
23
 
   $ 93  
Defined contribution benefit expense (B)
  
$
205
 
   $ 183    
$
1
 
   $ 1  
Remeasurements
        
Return on plan assets in excess of interest income on fair value of assets
  
 
421
 
     955    
 
(1
) 
     8  
Actuarial (loss) gain on benefit obligation
  
 
(8
) 
     (959 )   
 
(53
) 
     (53 ) 
Change in the asset limitation
  
 
6
 
     (146 )   
 
–
 
     –  
Gains (losses) recorded in OCI (C)
  
$
419
 
   $ (150 )   
$
(54
) 
   $ (45 ) 
Total benefit cost (A + B - C)
  
$
61
 
   $ 519    
$
78
 
   $ 139  
Additional details on actual return on assets and actuarial gains and (losses)
        
Actual (return) on assets (net of administrative expenses)
  
$
(876
) 
   $  (1,436 )   
$
(7
) 
   $ (19 ) 
Actuarial gains and (losses) from changes in demographic assumptions
  
 
4
 
     7    
 
(11
) 
     –  
Actuarial gains and (losses) from changes in financial assumptions
  
 
(16
) 
     (952 )   
 
(47
) 
     (53 ) 
Actuarial gains and (losses) from changes in experience
  
 
4
 
     (14 )   
 
3
 
     (6 ) 
Additional details on fair value of pension plan assets invested
        
In Scotiabank securities (stock, bonds)
  
 
54
 
     67    
 
–
 
     –  
In property occupied by Scotiabank
  
 
3
 
     4    
 
–
 
     –  
Change in asset ceiling/(onerous liability)
        
Asset ceiling /onerous liability at end of prior year
  
 
208
 
     55    
 
–
 
     –  
Interest expense
  
 
22
 
     6    
 
–
 
     –  
Remeasurements
  
 
(6
) 
     146    
 
–
 
     –  
Foreign exchange
  
 
(1
) 
     1    
 
–
 
     –  
Asset ceiling /onerous liability at end of year
  
$
223
 
   $ 208    
$
–
 
   $ –  
 
(1)
Other benefit plans past service costs relate to certain post-retirement plan amendments.
(2)
The recognized asset is limited by the present value of economic benefits available from a reduction in future contributions to a plan and from the ability to pay plan expenses from the fund.
 
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Consolidated Financial Statements
 
e)
Maturity profile of the defined benefit obligation
The weighted average duration of the total benefit obligation at October 31, 2025 is 13.4 years (2024 – 13.6 years).
 
   
Pension plans
    
Other benefit plans
  
For the year ended October 31  
2025
    
2024
    
2025
    
2024
  
Disaggregation of the benefit obligation (%)
        
Canada
        
Active members
  
 
51
% 
     51 %   
 
3
% 
     3 % 
Inactive and retired members
  
 
49
% 
     49 %   
 
97
% 
     97 % 
Total
  
 
100
% 
     100 %   
 
100
% 
     100 % 
Mexico
        
Active members
  
 
28
% 
     28 %   
 
28
% 
     32 % 
Inactive and retired members
  
 
72
% 
     72 %   
 
72
% 
     68 % 
Total
  
 
100
% 
     100 %   
 
100
% 
     100 % 
United States
        
Active members
  
 
28
% 
     31 %   
 
32
% 
     43 % 
Inactive and retired members
  
 
72
% 
     69 %   
 
68
% 
     57 % 
Total
  
 
 100
% 
      100 %   
 
 100
% 
      100 % 
 
f)
Key assumptions (%)
The key weighted-average assumptions used by the Bank for the measurement of the benefit obligation and benefit expense for all of the Bank’s principal plans are summarized as follows:
 
   
Pension plans
    
Other benefit plans
  
For the year ended October 31  
2025
    
2024
    
2025
    
2024
  
Benefit obligation at end of year
        
Discount rate – all plans
  
 
5.17
% 
     5.22 %   
 
6.34
% 
     6.51 % 
Discount rate – Canadian plans only
  
 
4.80
% 
     4.80 %   
 
4.49
% 
     4.69 % 
Rate of increase in future compensation
(1)
  
 
3.85
% 
     3.85 %   
 
4.48
% 
     4.37 % 
Benefit expense (income) for the year
        
Discount rate – All plans
        
Discount rate for defined benefit obligations
  
 
5.22
% 
     6.13 %   
 
6.51
% 
     7.36 % 
Discount rate for net interest cost
  
 
4.96
% 
     6.13 %   
 
6.35
% 
     7.36 % 
Discount rate for service cost
  
 
5.28
% 
     6.06 %   
 
6.62
% 
     7.31 % 
Discount rate for interest on service cost
  
 
5.10
% 
     6.07 %   
 
6.53
% 
     7.27 % 
Discount rate – Canadian plans only
        
Discount rate for defined benefit obligations
  
 
4.80
% 
     5.70 %   
 
4.69
% 
     5.80 % 
Discount rate for net interest cost
  
 
4.51
% 
     5.70 %   
 
4.42
% 
     5.80 % 
Discount rate for service cost
  
 
4.90
% 
     5.60 %   
 
4.87
% 
     5.62 % 
Discount rate for interest on service cost
  
 
4.70
% 
     5.61 %   
 
4.69
% 
     5.53 % 
Rate of increase in future compensation
(1)
  
 
3.85
% 
     3.96 %   
 
4.37
% 
     4.61 % 
Health care cost trend rates at end of year
        
Initial rate
  
 
n/a
 
     n/a    
 
5.62
% 
     5.72 % 
Ultimate rate
  
 
n/a
 
     n/a    
 
4.76
% 
     4.71 % 
Year ultimate rate reached
  
 
n/a
 
     n/a    
 
2041
 
     2041  
Assumed life expectancy in Canada (years)
        
Life expectancy at 65 for current pensioners – male
  
 
23.6
 
     23.6    
 
23.6
 
     23.6  
Life expectancy at 65 for current pensioners – female
  
 
24.7
 
     24.7    
 
24.7
 
     24.7  
Life expectancy at 65, for future pensioners currently aged 45 – male
  
 
24.5
 
     24.5    
 
24.5
 
     24.5  
Life expectancy at 65, for future pensioners currently aged 45 – female
  
 
25.6
 
     25.6    
 
25.6
 
     25.6  
Assumed life expectancy in Mexico (years)
        
Life expectancy at 65 for current pensioners – male
  
 
21.6
 
     21.6    
 
21.6
 
     21.6  
Life expectancy at 65 for current pensioners – female
  
 
24.0
 
     24.0    
 
24.0
 
     24.0  
Life expectancy at 65, for future pensioners currently aged 45 – male
  
 
21.7
 
     21.7    
 
21.7
 
     21.7  
Life expectancy at 65, for future pensioners currently aged 45 – female
  
 
24.0
 
     24.0    
 
24.0
 
     24.0  
Assumed life expectancy in United States (years)
        
Life expectancy at 65 for current pensioners – male
  
 
22.1
 
     22.0    
 
22.1
 
     22.0  
Life expectancy at 65 for current pensioners – female
  
 
23.5
 
     23.5    
 
23.5
 
     23.5  
Life expectancy at 65, for future pensioners currently aged 45 – male
  
 
23.5
 
     23.4    
 
23.5
 
     23.4  
Life expectancy at 65, for future pensioners currently aged 45 – female
  
 
24.9
 
     24.8    
 
24.9
 
     24.8  
 
(1)
The weighted-average rates of increase in future compensation shown for other benefit plans do not include Canadian flexible post-retirement benefits plans established in fiscal 2005, as they are not impacted by future compensation increases.
 
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Consolidated Financial Statements
 
g)
Sensitivity analysis
The sensitivity analysis represents the impact of a change in a single assumption with other assumptions left unchanged. For purposes of the sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation recognized in the statement of financial position.
 
   
Pension plans
    
Other benefit plans
  
For the year ended October 31, 2025 ($ millions)  
Benefit
obligation
    
Benefit
expense
    
Benefit
obligation
    
Benefit
expense
  
Impact of the following changes:
        
1% decrease in discount rate
  
$
 1,382
 
  
$
 88
 
  
$
 124
 
  
$
  5
 
0.25% increase in rate of increase in future compensation
  
 
73
 
  
 
5
 
  
 
–
 
  
 
–
 
1% increase in health care cost trend rate
  
 
n/a
 
  
 
n/a
 
  
 
97
 
  
 
13
 
1% decrease in health care cost trend rate
  
 
n/a
 
  
 
n/a
 
  
 
(81
) 
  
 
(10
) 
1 year increase in Canadian life expectancy
  
 
160
 
  
 
10
 
  
 
18
 
  
 
1
 
1 year increase in Mexican life expectancy
  
 
3
 
  
 
–
 
  
 
3
 
  
 
–
 
1 year increase in the United States life expectancy
  
 
2
 
  
 
–
 
  
 
1
 
  
 
–
 
 
h)
Assets
The Bank’s principal pension plans’ assets are generally invested with the long-term objective of maximizing overall expected returns, at an acceptable level of risk relative to the benefit obligation. A key factor in managing long-term investment risk is asset mix. Investing the pension assets across different asset classes and geographic regions helps to mitigate risk and to minimize the impact of declines in any single asset class, particular region or type of investment. Investment managers – including related-party managers – are typically hired and assigned specific mandates within each asset class.
Pension plan asset mix guidelines are set for the long term and are documented in each plan’s investment policy. Asset mix policy typically also reflects the nature of the plan’s benefit obligations. Legislation places certain restrictions on asset mix – for example, there are usually limits on concentration in any one investment. Other concentration and quality limits are also set forth in the investment policies. Derivatives cannot be used without specific authorization; currently, the main uses of derivatives are for duration management and currency hedging. Asset mix guidelines are reviewed at least once each year, and adjusted, where appropriate, based on market conditions and opportunities. However, large asset class shifts are not common, and typically reflect a change in the pension plan’s situation (e.g. plan amendments) and/or in the investment strategy. Actual asset mix is reviewed regularly and rebalancing back to target asset mix is considered – as needed – generally on a quarterly basis. The Bank’s other benefit plans are generally not funded, with the exception of certain programs in Mexico.
The tables below show the weighted-average actual and target asset allocations for the Bank’s principal plans at October 31, by asset category.
 
   
Pension plans
    
Other benefit plans
  
Asset category %  
Actual
2025
    
Actual
2024
    
Actual
2025
    
Actual
2024
  
Cash and cash equivalents
  
 
1
% 
     2 %   
 
–
% 
     – % 
Equity investments
        
Quoted in an active market
  
 
44
% 
     43 %   
 
15
% 
     12 % 
Non quoted
  
 
5
% 
     5 %   
 
–
% 
     – % 
 
 
49
% 
     48 %   
 
15
% 
     12 % 
Fixed income investments
        
Quoted in an active market
  
 
6
% 
     10 %   
 
83
% 
     87 % 
Non quoted
  
 
33
% 
     29 %   
 
–
% 
     – % 
 
 
39
% 
     39 %   
 
83
% 
     87 % 
Property
        
Quoted in an active market
  
 
–
% 
     – %   
 
2
% 
     1 % 
Non quoted
  
 
1
% 
     1 %   
 
–
% 
     – % 
 
 
1
% 
     1 %   
 
2
% 
     1 % 
Other
        
Quoted in an active market
  
 
–
% 
     – %   
 
–
% 
     – % 
Non quoted
  
 
10
% 
     10 %   
 
–
% 
     – % 
 
 
10
% 
     10 %   
 
–
% 
     – % 
Total
  
 
100
% 
     100 %   
 
100
% 
     100 % 
 
Target asset allocation at October 31, 2025
Asset category %
  
Pension plans
    
Other benefit plans
  
Cash and cash equivalents
  
 
–
% 
  
 
–
% 
Equity investments
  
 
41
% 
  
 
15
% 
Fixed income investments
  
 
44
% 
  
 
83
% 
Property
  
 
1
% 
  
 
2
% 
Other
  
 
14
% 
  
 
–
% 
Total
  
 
100
% 
  
 
100
% 
 
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Table of Contents
Consolidated Financial Statements
 
28
Operating Segments
The Bank’s businesses are grouped into four business lines: Canadian Banking, International Banking, Global Wealth Management and Global Banking and Markets. The Bank’s other smaller business segments and corporate adjustments are included in the Other segment. The accounting policies used in these segments are generally consistent with those followed in the preparation of the consolidated financial statements as disclosed in Note 3.
The Bank analyzes revenue on a taxable equivalent basis (TEB) for business lines. This methodology grosses up
tax-exempt
income earned on certain securities reported in either net interest income or
non-interest
income to an equivalent before tax basis. It also grosses up net income from associated corporations to normalize the effective tax rate in the business lines. Corresponding increases are made to the income tax expense; hence, there is no impact on the segment’s net income. The elimination of the TEB
gross-up
is recorded in the Other segment; hence, there is no impact on the consolidated results.
Effective January 1, 2024, in line with the provisions of Bill C-59, the Bank no longer claims the dividend received deduction on Canadian shares that are mark-to-market property, which resulted in a lower TEB gross-up.
Changes in business line allocation methodology
Effective the first quarter of 2025, the Bank made voluntary changes to its allocation methodology impacting business segment presentation. The new methodology includes updates related to the Bank’s funds transfer pricing, head office expense allocations, and allocations between business segments. Prior period results for each segment have been revised to conform with the current period’s methodology. Further details on the changes are as follows:
 
1.
Funds transfer pricing methodology was updated, primarily related to the allocation of substantially all liquidity costs to the business lines, reflecting the Bank’s strategic objective to maintain higher liquidity ratios.
 
2.
Periodically, the Bank updates its allocation methodologies. This includes a comprehensive update to the allocation of head office expenses across countries within International Banking, updates to the allocation of clients and associated revenue, expenses, and balances between International Banking, Global Banking and Markets, and Global Wealth Management to align with the strategy, as well as updates to the allocation of head office expenses and income taxes from the Other segment to the business segments.
 
3.
To be consistent with the reporting of Scotiabank’s recent minority investment in KeyCorp, the Bank has also made changes to the reporting of certain minority investments in International Banking (Bank of Xi’an) and Global Wealth Management (Bank of Beijing Scotia Asset Management) which
are
now reported in the Other segment.
Scotiabank’s results, and average assets and liabilities, allocated by these operating segments, are as follows:
 
For the year ended October 31, 2025                                          
Taxable equivalent basis ($ millions)  
Canadian
Banking
    
International
Banking
    
Global Wealth
Management
    
Global Banking
and Markets
    
Other
(1)
    
Total
  
Net interest income
(
2
)
  
$
 10,484
 
  
$
  8,866
 
  
$
 1,025
 
  
$
 1,400
 
  
$
(253
) 
  
$
 21,522
 
Non-interest
income
(
3
)(
4
)
  
 
2,941
 
  
 
3,177
 
  
 
5,403
 
  
 
4,766
 
  
 
(68
) 
  
 
16,219
 
Total revenues
  
 
13,425
 
  
 
12,043
 
  
 
6,428
 
  
 
6,166
 
  
 
(321
) 
  
 
37,741
 
Provision for credit losses
  
 
2,293
 
  
 
2,309
 
  
 
14
 
  
 
97
 
  
 
1
 
  
 
4,714
 
Depreciation and amortization
  
 
552
 
  
 
483
 
  
 
189
 
  
 
259
 
  
 
121
 
  
 
1,604
 
Other
non-interest
expenses
  
 
5,853
 
  
 
5,681
 
  
 
3,955
 
  
 
3,304
 
  
 
2,121
 
  
 
20,914
 
Income tax expense
  
 
1,302
 
  
 
781
 
  
 
590
 
  
 
585
 
  
 
(507
) 
  
 
2,751
 
Net income
  
$
3,425
 
  
$
2,789
 
  
$
1,680
 
  
$
1,921
 
  
$
 (2,057
) 
  
$
7,758
 
Net income attributable to
non-controlling
interests in subsidiaries
  
 
–
 
  
 
158
 
  
 
10
 
  
 
(1
) 
  
 
(198
) 
  
 
(31
) 
Net income attributable to equity holders of the Bank
  
$
3,425
 
  
$
2,631
 
  
$
1,670
 
  
$
1,922
 
  
$
(1,859
) 
  
$
7,789
 
Average assets ($ billions)
  
 
463
 
  
 
227
 
  
 
38
 
  
 
509
 
  
 
228
 
  
 
1,465
 
Average liabilities ($ billions)
  
 
382
 
  
 
175
 
  
 
48
 
  
 
520
 
  
 
254
 
  
 
1,379
 
 
(1)
Includes all other smaller operating segments and corporate adjustments.
(2)
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure.
(3)
Card revenues and Banking services fees are mainly earned in Canadian and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets.
(
4
)
Includes net income (on a taxable equivalent basis) from investments in associated corporations for Canadian Banking – $19; International Banking – $152; Global Banking and Markets – $1; and Other – $436.
 
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 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
For the year ended October 31, 2024                                          
Taxable equivalent basis ($ millions)  
Canadian
Banking
(1)
    
International
Banking
(1)
    
Global Wealth
Management
(1)
    
Global Banking
and Markets
(1)
    
Other
(1)(2)
    
Total
  
Net interest income
(3)
   $ 10,185     $ 8,867     $ 786     $ 1,102     $ (1,688 )    $ 19,252  
Non-interest
income
(4)(5)
     2,848       2,999       4,803       3,959       (191 )      14,418  
Total revenues
      13,033        11,866        5,589        5,061        (1,879 )       33,670  
Provision for credit losses
     1,691       2,285       27       47       1       4,051  
Depreciation and amortization
(6)
     568       568       187       258       179       1,760  
Other
non-interest
expenses
     5,557       5,602       3,468       2,864       444       17,935  
Income tax expense
     1,440       705       479       414       (1,006 )      2,032  
Net income
   $ 3,777     $ 2,706     $ 1,428     $ 1,478     $ (1,497 )    $ 7,892  
Net income attributable to
non-controlling
interests in subsidiaries
     –       125       10       –       (1 )      134  
Net income attributable to equity holders of the Bank
   $ 3,777     $ 2,581     $ 1,418     $ 1,478     $ (1,496 )    $ 7,758  
Average assets ($ billions)
     449       231       35       495       209       1,419  
Average liabilities ($ billions)
     389       179       41       475       254       1,338  
 
(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.
(2)
Includes all other smaller operating segments and corporate adjustments, such as the elimination of the
tax-exempt
income
gross-up
reported in net interest income and
non-interest
income and provision for income taxes for the year ended October 31, 2024 amounting to $55 to arrive at the amounts reported in the Consolidated Statement of Income, differences in the actual amount of costs incurred and charged to the operating segments.
(
3
)
Interest income is reported net of interest expense as management relies primarily on net interest income as a performance measure.
(
4
)
Card revenues and Banking services fees are mainly earned in Canadian and International Banking. Mutual fund, Brokerage fees and Investment management and trust fees are primarily earned in Global Wealth Management. Underwriting and other advisory fees are predominantly earned in Global Banking and Markets.
(
5
)
Includes net income (on a taxable equivalent basis) from investments in associated corporations for Canadian Banking – $(9); International Banking – $130; and Other – $77.
(
6
)
Includes impairment charge on software and other intangible assets in the Other segment.
Geographical segmentation
The following table summarizes the Bank’s financial results by geographic region.
 
For the year ended October 31, 2025
($ millions)		  
Canada
    
United
States
    
Mexico
    
Peru
    
Chile
    
Colombia
    
Caribbean and
Central America
    
Other
International
    
Total
  
Net interest income
  
$
 11,378
 
  
$
799
 
  
$
 2,405
 
  
$
 1,334
 
  
$
 1,993
 
  
$
717
 
  
$
1,931
 
  
$
965
 
  
$
21,522
 
Non-interest
income
(1)
  
 
9,352
 
  
 
2,165
 
  
 
1,014
 
  
 
588
 
  
 
571
 
  
 
479
 
  
 
1,295
 
  
 
755
 
  
 
16,219
 
Total revenues
(2)
  
 
20,730
 
  
 
2,964
 
  
 
3,419
 
  
 
1,922
 
  
 
2,564
 
  
 
 1,196
 
  
 
 3,226
 
  
 
 1,720
 
  
 
 37,741
 
Provision for credit losses
  
 
2,338
 
  
 
67
 
  
 
552
 
  
 
368
 
  
 
748
 
  
 
378
 
  
 
196
 
  
 
67
 
  
 
4,714
 
Non-interest
expenses
  
 
13,660
 
  
 
1,591
 
  
 
1,822
 
  
 
885
 
  
 
1,168
 
  
 
750
 
  
 
1,508
 
  
 
1,134
 
  
 
22,518
 
Income tax expense
  
 
1,532
 
  
 
189
 
  
 
264
 
  
 
126
 
  
 
79
 
  
 
38
 
  
 
450
 
  
 
73
 
  
 
2,751
 
Net income
  
 
3,200
 
  
 
1,117
 
  
 
781
 
  
 
543
 
  
 
569
 
  
 
30
 
  
 
1,072
 
  
 
446
 
  
 
7,758
 
Net income attributable to
non-controlling
interests in subsidiaries
  
 
(200
) 
  
 
–
 
  
 
23
 
  
 
7
 
  
 
7
 
  
 
9
 
  
 
123
 
  
 
–
 
  
 
(31
) 
Net income attributable to equity holders of the Bank
  
$
3,400
 
  
$
 1,117
 
  
$
758
 
  
$
536
 
  
$
562
 
  
$
21
 
  
$
949
 
  
$
446
 
  
$
7,789
 
Total average assets ($ billions)
  
$
899
 
  
$
237
 
  
$
60
 
  
$
29
 
  
$
55
 
  
$
14
 
  
$
38
 
  
$
133
 
  
$
1,465
 
Total average liabilities ($billions)
  
$
889
 
  
$
187
 
  
$
55
 
  
$
22
 
  
$
50
 
  
$
14
 
  
$
35
 
  
$
127
 
  
$
1,379
 
 
(1)
Includes net income from investments in associated corporations for Canada – $(12), United States – $362, Mexico – $9, Peru – $4, Chile – $7, Caribbean and Central America – $132, and Other International – $106.
(2)
Revenues are attributed to countries based on where services are performed or assets are recorded.
 
2025 Scotiabank Annual Report 
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219
Consolidated Financial Statements
 
For the year ended October 31, 2024
(1)

($ millions)		  
Canada
    
United
States
    
Mexico
    
Peru
    
Chile
    
Colombia
    
Caribbean and
Central America
    
Other
International
    
Total
  
Net interest income
   $ 9,207     $ 664     $ 2,397     $ 1,422     $ 2,020     $ 690     $ 1,842     $ 1,010     $ 19,252  
Non-interest
income
(2)
     8,535       1,578       1,032       546       455       486       1,180       606       14,418  
Total revenues
(3)
      17,742        2,242        3,429        1,968        2,475        1,176        3,022        1,616        33,670  
Provision for credit losses
     1,701       28       380       501       626       561       150       104       4,051  
Non-interest
expenses
     11,207       1,309       1,867       869       1,143       794       1,454       1,052       19,695  
Income tax expense
     1,002       146       280       140       119       (49 )      303       91       2,032  
Net income
     3,832       759       902       458       587       (130 )      1,115       369       7,892  
Net income attributable to
non-controlling
interests in subsidiaries
     –       –       24       3       42       (50 )      115       –       134  
Net income attributable to equity holders of the Bank
   $ 3,832     $ 759     $  878     $ 455     $ 545     $ (80 )    $ 1,000     $ 369     $ 7,758  
Total average assets ($ billions)
   $ 874     $ 218     $ 64     $ 27     $ 56     $ 14     $ 35     $ 131     $ 1,419  
Total average liabilities ($billions)
   $ 854     $ 189     $ 59     $ 21     $ 53     $ 14     $ 32     $ 116     $ 1,338  
 
(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.
(2)
Includes net income from investments in associated corporations for Canada – $(68), Mexico – $11, Peru – $4, Chile – $6, Caribbean and Central America – $109, and Other International – $136.
(3)
Revenues are attributed to countries based on where services are performed or assets are recorded.
 
29
Related Party Transactions
Compensation of key management personnel of the Bank
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Bank, directly or indirectly, and comprise the directors of the Bank, the President and Chief Executive Officer, certain direct reports of the President and Chief Executive Officer and Group Heads.
 
For the year ended October 31 ($ millions)  
2025
    
2024
  
Salaries and cash incentives
(1)
  
$
28
 
   $ 25  
Equity-based payment
(2)
  
 
  36
 
     29  
Pension and other benefits
(1)
  
 
2
 
     2  
Total
  
$
  66
 
   $   56  
 
(1)
Represents amounts expensed during the year.
(2)
Represents equity-based awards granted during the year.
Directors can use some or all of their director fees earned to buy common shares of the Bank at market rates through the Director’s Share Purchase Plan.
Non-officer
directors may elect to receive all or a portion of their fees in the form of deferred stock units which vest immediately. Refer to Note 25 for further details of these plans.
Loans and deposits of key management personnel
Loans are currently granted to key management personnel at market terms and conditions.
 
As at October 31 ($ millions)  
2025
    
2024
  
Loans
  
$
7
 
   $   10  
Deposits
  
 
 
  2
 
     5  
The Bank’s committed credit exposure to companies controlled by directors totaled $263 million as at October 31, 2025 (October 31, 2024 – $267 million), while actual utilized amounts were $186 million (October 31, 2024 – $199 million).
Transactions with associates and joint ventures
In the ordinary course of business, the Bank provides normal banking services and enters into transactions with its associated and other related corporations on terms similar to those offered to
non-related
parties. If these transactions are eliminated on consolidation, they are not disclosed as related party transactions. Transactions between the Bank and its associated companies and joint ventures also qualify as related party transactions and were recorded as follows:
 
As at and for the year ended October 31 ($ millions)  
2025
    
2024
  
Net income / (loss)
  
$
(21
) 
   $ (15 ) 
Loans
  
 
 140
 
      209  
Deposits
  
 
282
 
     253  
Guarantees and commitments
  
 
57
 
     46  
Scotiabank principal pension plan
The Bank manages assets of $6.4 billion (October 31, 2024 – $6.0 billion) which is a portion of the Scotiabank principal pension plan assets and earned $7.0 million in fees (October 31, 2024 – $6.7 million).
 
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30
Principal Subsidiaries and
Non-Controlling
Interests in Subsidiaries
 
(a)
Principal subsidiaries
(1)
The following table presents certain operating subsidiaries the Bank owns, directly or indirectly. All of these subsidiaries are included in the Bank’s consolidated financial statements.
 
        
Carrying value of shares
  
As at October 31 ($ millions)  
Principal office
  
2025
    
2024
  
Canadian
      
Scotia Capital Inc.
   Toronto, Ontario  
$
4,694
 
   $ 4,160  
BNS Investments Inc.
   Toronto, Ontario  
 
 22,545
 
      23,860  
1832 Asset Management L.P.
   Toronto, Ontario    
Montreal Trust Company of Canada
   Montreal, Quebec    
MD Financial Management Inc.
   Ottawa, Ontario  
 
2,939
 
     2,826  
Jarislowsky, Fraser Limited
   Montreal, Quebec  
 
974
 
     956  
Scotia Securities Inc.
   Toronto, Ontario  
 
69
 
     73  
Tangerine Bank
   Toronto, Ontario  
 
3,711
 
     4,154  
The Bank of Nova Scotia Trust Company
   Toronto, Ontario  
 
764
 
     704  
Scotia Mortgage Corporation
   Toronto, Ontario  
 
606
 
     843  
National Trust Company
   Stratford, Ontario  
 
499
 
     408  
Roynat Inc.
   Calgary, Alberta  
 
785
 
     741  
Scotia Dealer Advantage Inc.
   Hamilton, Ontario  
 
977
 
     924  
International
      
Scotia Holdings (USA) LLC
   New York, New York  
 
7,698
 
     7,654  
Scotia Capital (USA) Inc.
   New York, New York    
Scotia Financing (USA) LLC
   New York, New York    
Nova Scotia Inversiones Limitada
   Santiago, Chile  
 
7,370
 
     7,489  
Scotiabank Chile S.A. (99.79%)
   Santiago, Chile    
Grupo Financiero Scotiabank Inverlat, S.A. de C.V. (97.39%)
   Mexico City, Mexico  
 
8,821
 
     6,966  
Scotiabank Inverlat, S.A.
   Mexico City, Mexico    
Scotia Peru Holdings S.A.
   Lima, Peru  
 
6,920
 
     5,779  
Scotiabank Peru S.A.A. (99.31%)
   Lima, Peru    
Multiacciones S.A.S.
(2)
   Bogota, Colombia  
 
424
 
     973  
Scotiabank Colpatria, S.A.
(56.00%)
(2)(3)
   Bogota, Colombia    
Scotiabank Brasil S.A. Banco Multiplo
   Sao Paulo, Brazil  
 
1,142
 
     796  
Scotia Uruguay Holdings S.A.
   Montevideo, Uruguay  
 
757
 
     681  
Scotiabank Uruguay S.A.
   Montevideo, Uruguay    
Scotiabank Republica Dominicana, S.A. – Banco Multiple (99.80%)
   Santo Domingo, Dominican Republic  
 
823
 
     943  
Scotiabank Caribbean Holdings Ltd.
   Bridgetown, Barbados  
 
1,966
 
     1,608  
Scotia Group Jamaica Limited (71.78%)
   Kingston, Jamaica    
Scotiabank Trinidad and Tobago Limited (50.90%)
   Port of Spain, Trinidad and Tobago    
Scotiabank (Barbados) Limited
   Bridgetown, Barbados  
 
286
 
     237  
BNS International (Bahamas) Limited
   Nassau, Bahamas  
 
10,612
 
     11,180  
The Bank of Nova Scotia Trust Company (Bahamas) Limited
   Nassau, Bahamas    
Scotiabank (Bahamas) Limited
   Nassau, Bahamas    
Scotiabank & Trust (Cayman) Ltd.
   Grand Cayman, Cayman Islands    
Grupo BNS de Costa Rica, S.A.
(2)
   San Jose, Costa Rica    
Scotiabank (Ireland) Designated Activity Company
   Dublin, Ireland  
 
 
 
  
 
 
 
 
(1)
The Bank (or immediate parent of an entity) owns 100% of the outstanding voting shares of each subsidiary unless otherwise noted.
(2)
In Q1 2025, the Bank entered into an agreement to sell its banking operations in Colombia, Costa Rica and Panama to Davivienda. The transaction was completed on December 1, 2025. Refer to Note 35 for details.
(3)
The Bank made a capital contribution to Scotiabank Colpatria S.A. in May 2025 which increased its ownership interest to 56.00% following the subsequent issuance of additional shares.
Subsidiaries may have a different reporting date from that of the Bank of October 31. Dates may differ for a variety of reasons including local reporting requirements or tax laws. In accordance with the Bank’s accounting policies, for the purpose of inclusion in the consolidated financial statements of the Bank, adjustments are made where significant for subsidiaries with different reporting dates.
 
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221
Consolidated Financial Statements
 
(b)
Non-controlling
interests in subsidiaries
The Bank’s significant
non-controlling
interests in subsidiaries are comprised of the following entities:
 
   
As at and for the year ended
  
           
2025
    
2024
  
    
Non-controlling

interest %
    
Non-controlling

interests in
subsidiaries
    
Dividends
paid to
non-controlling

interest
    
Non-controlling

interests in
subsidiaries
    
Dividends paid to
non-controlling

interest
  
Scotiabank Chile S.A.
  
 
0.20% – 49.10
% 
  
$
262
 
  
$
8
 
   $ 256     $ 24  
Scotiabank Colpatria S.A.
(1)
  
 
44.00% – 47.00
% 
  
 
323
 
  
 
–
 
     405       –  
Scotia Group Jamaica Limited
  
 
28.22
% 
  
 
379
 
  
 
14
 
     350       13  
Scotiabank Trinidad and Tobago Limited
  
 
49.10
% 
  
 
491
 
  
 
51
 
     464       49  
Other
  
 
0.0005% – 49.35
%
(2)
 
  
 
266
 
  
 
9
 
     232       2  
Total
  
 
 
 
  
$
 1,721
 
  
$
 82
 
   $  1,707     $  88  
 
(1)
Non-controlling
interest holders for Scotiabank Colpatria S.A. have a right to sell their holding to the Bank after the end of the 7th anniversary (January 17, 2019) and at subsequent
pre-agreed
intervals, into the future, at fair market value that can be settled at the Bank’s discretion, by issuance of common shares or cash.
(2)
Range of
non-controlling
interest % for other subsidiaries.
Summarized financial information of the Bank’s subsidiaries with significant
non-controlling
interests are as follows:
 
   
As at and for the year ended October 31, 2025
    
As at and for the year ended October 31, 2024
  
($ millions)  
Revenue
    
Total
comprehensive
income (loss)
    
Total assets
    
Total
liabilities
    
Revenue
    
Total
comprehensive
income (loss)
    
Total assets
    
Total
liabilities
  
Total
  
$
 4,522
 
  
$
 602
 
  
$
 95,993
 
  
$
 84,493
 
   $  4,455     $  226     $  93,051     $  82,223  
 
31
Interest Income and Expense
 
For the year ended October 31 ($ millions)  
2025
    
2024
  
    
Interest
income
    
Interest
expense
    
Interest
income
    
Interest
expense
  
Measured at amortized cost
(1)
  
$
50,819
 
  
$
35,831
 
   $ 53,966     $ 42,177  
Measured at FVOCI
(1)
  
 
5,585
 
  
 
–
 
     5,905       –  
 
 
56,404
 
  
 
35,831
 
     59,871       42,177  
Other
  
 
1,198
(2)
 
  
 
249
(3)
 
     1,788
(2)
 		     230
(3)
 
Total
  
$
 57,602
 
  
$
 36,080
 
   $  61,659     $  42,407  
 
(1)
The interest income/expense on financial assets/liabilities are calculated using the effective interest method.
(2)
Includes dividend income on equity securities.
(3)
Includes interest on lease liabilities of $125 (2024 – $119) and insurance finance expense of $33 (2024 – $30).
 
32
Earnings Per Share
 
For the year ended October 31 ($ millions)  
2025
    
2024
  
Basic earnings per common share
    
Net income attributable to common shareholders
  
$
7,283
 
   $
 
    7,286  
Foreign currency loss on redemption of Subordinated Additional Tier 1 Capital Notes
(1)
  
 
(22
) 
     –  
Net income attributable to common shareholders used to calculate basic earnings per common share
  
 
7,261
 
     7,286  
Weighted average number of common shares outstanding (millions)
  
 
1,244
 
     1,226  
Basic earnings per common share
(2)
(in dollars)
  
$
 
    5.84
 
   $ 5.94  
Diluted earnings per common share
    
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
(3)
  
 
(181
) 
     (49 ) 
Net income attributable to common shareholders (diluted)
  
$
7,080
 
   $ 7,237  
Weighted average number of common shares outstanding (millions)
  
 
1,244
 
     1,226  
Dilutive impact of share-based payment options and others
(3)
(millions)
  
 
4
 
     6  
Weighted average number of diluted common shares outstanding (millions)
  
 
1,248
 
     1,232  
Diluted earnings per common share
(2)
(in dollars)
  
$
5.67
 
   $ 5.87  
 
(1)
Refer to Note 23 (b) for further details on the redemption of the equity instrument.
(2)
Earnings per share calculations are based on full dollar and share amounts.
(3)
Certain options were not included in the calculation of diluted earnings per share as they were anti-dilutive.
 
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Consolidated Financial Statements
 
33
Guarantees, Commitments and Pledged Assets
 
(a)
Guarantees
The Bank enters into various types of guarantees and indemnifications in the normal course of business. Guarantees represent an undertaking to another party to make a payment to that party when certain specified events occur. The various guarantees and indemnifications that the Bank provides with respect to its customers and other third parties are presented below:
 
   
2025
    
2024
  
As at October 31 ($ millions)  
Maximum potential
amount of future
payments
(1)
    
Maximum potential
amount of future
payments
(1)
  
Standby letters of credit and letters of guarantee
  
$
 86,016
 
   $  62,966  
Liquidity facilities
  
 
8,611
 
     7,665  
Indemnifications
  
 
95
 
     791  
 
(1)
The maximum potential amount of future payments represents those guarantees that can be quantified and excludes other guarantees that cannot be quantified. As many of these guarantees will not be drawn upon and the maximum potential amount of future payments listed above does not consider the possibility of recovery under recourse or collateral provisions, the above amounts are not indicative of future cash requirements, credit risk, or the Bank’s expected losses from these arrangements.
 
(i)
Standby letters of credit and letters of guarantee
Standby letters of credit and letters of guarantee are irrevocable undertakings by the Bank on behalf of a customer, to make payments to a third party in the event that the customer is unable to meet its obligations to the third party. Generally, the term of these guarantees does not exceed four years. The types and amounts of collateral security held by the Bank for these guarantees are generally the same as for loans.
 
(ii)
Liquidity facilities
The Bank’s backstop liquidity facilities are committed liquidity and provided to asset-backed commercial paper conduits, administered by the Bank. These facilities generally provide an alternative source of financing in the event market disruption prevents the conduit from issuing commercial paper or, in some cases, when certain specified conditions or performance measures are not met. These facilities generally have a term of up to three years.
 
(iii)
Indemnifications
In the ordinary course of business, the Bank enters into many contracts which contain indemnification provisions, such as purchase contracts, service agreements, trademark licensing agreements, director / officer contracts, escrow arrangements, sales of assets or businesses, outsourcing agreements, leasing arrangements, clearing system arrangements, securities lending agency agreements and structured transactions. The Bank cannot estimate the maximum potential future amount that may be payable. The Bank has not made any significant payments under such indemnifications.
 
(b)
Other indirect commitments
In the normal course of business, various other indirect commitments are outstanding which are not reflected on the Consolidated Statement of Financial Position. These may include:
 
  •  
Commercial letters of credit which require the Bank to honour drafts presented by a third-party when specific activities are completed;
  •  
Commitments to extend credit which represent undertakings to make credit available in the form of loans or other financings for specific amounts and maturities, subject to specific conditions;
  •  
Securities lending transactions under which the Bank, acting as principal or agent, agrees to lend securities to a borrower. The borrower must fully collateralize the security loan at all times. The market value of the collateral is monitored relative to the amounts due under the agreements, and where necessary, additional collateral is obtained; and
  •  
Security purchase commitments which require the Bank to fund future investments.
These financial instruments are subject to normal credit standards, financial controls and monitoring procedures.
The table below provides a detailed breakdown of the Bank’s other indirect commitments expressed in terms of the contractual amounts of the related commitment or contract which are not reflected on the Consolidated Statement of Financial Position.
 
As at October 31 ($ millions)  
2025
    
2024
  
Commercial letters of credit
  
$
836
 
   $ 1,049  
Commitments to extend credit
(1)
  
 
 275,504
 
     272,793  
Securities lending
  
 
78,548
 
     58,477  
Securities purchase and other commitments
  
 
821
 
     844  
Total
  
$
355,709
 
   $  333,163  
 
(1)
Includes liquidity facilities, and excludes commitments which are unconditionally cancellable at the Bank’s discretion at any time.
 
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223
Consolidated Financial Statements
 
(c)
Assets pledged and repurchase agreements
In the ordinary course of business, securities and other assets are pledged against liabilities. As well, securities are sold under repurchase agreements. The carrying value of pledged assets and details of related activities are shown below.
 
As at October 31 ($ millions)  
2025
    
2024
  
Assets pledged to:
    
Bank of Canada
(1)
  
$
274
 
   $ 229  
Foreign governments and central banks
(1)
  
 
2,066
 
     2,020  
Clearing systems, payment systems and depositories
(1)
  
 
2,200
 
     2,460  
Assets pledged in relation to exchange-traded derivative transactions
  
 
5,715
 
     5,334  
Assets pledged in relation to
over-the-counter
derivative transactions
  
 
33,785
 
     25,487  
Assets pledged as collateral related to securities borrowing and lending
  
 
 195,208
 
     149,669  
Assets pledged in relation to covered bond program (Note 14)
(2)
  
 
44,832
 
     47,560  
Assets pledged in relation to other securitization programs (Note 14)
  
 
8,045
 
     4,022  
Assets pledged under CMHC programs (Note 13)
  
 
15,627
 
     18,392  
Other
  
 
424
 
     228  
Total assets pledged
  
$
308,176
 
   $ 255,401  
Obligations related to securities sold under repurchase agreements
  
 
174,010
 
     174,335  
Total
(3)
  
$
482,186
 
   $  429,736  
 
(1)
Includes assets pledged in order to participate in clearing and payment systems and depositories, or pledged to have access to the facilities of central banks in foreign jurisdictions.
(2)
Excludes mortgages related to covered bonds held by the Bank or used for securities lending transactions.
(3)
Includes assets that have been received from counterparties through normal course of business in securities financing and derivative transactions.
 
(d)
Other executory contracts
Effective July 2018, the Bank has entered into an $800 million contract for naming rights of an arena for 20 years.
The Bank and its subsidiaries have also entered into other long-term executory contracts, relating to outsourced services. The significant outsourcing arrangements have variable pricing based on utilization and are cancellable with notice.
 
34
Financial Instruments – Risk Management
The Bank’s risk management framework to monitor, evaluate, measure and manage risks is disclosed in Management’s Discussion and Analysis (MD&A). These disclosures are incorporated by cross-reference in the Consolidated Financial Statements as permitted under IFRS 7, Financial Instruments: Disclosures. The grey shaded text and tables marked with an asterisk (*) in the “Group Financial Condition” and “Risk Management” sections of the MD&A form an integral part of the 2025 Consolidated Financial Statements.
The Bank’s principal business activities result in a balance sheet that consists primarily of financial instruments. In addition, the Bank uses derivative financial instruments for both trading and hedging purposes. The principal financial risks that arise from transacting financial instruments include credit risk, liquidity risk and market risk. The Bank’s framework to monitor, evaluate and manage these risks is consistent with that in place as at October 31, 2025:
 
  •  
extensive risk management policies define the Bank’s risk appetite, set the limits and controls within which the Bank and its subsidiaries can operate, and reflect the requirements of regulatory authorities. Risk appetite is approved by the Bank’s Board of Directors, either directly or through the Risk Committee of the Board (the Board);
  •  
guidelines are developed to clarify risk limits and conditions under which the Bank’s risk policies are implemented;
  •  
processes are implemented to identify, evaluate, document, report and control risk. Standards define the breadth and quality of information required to make a decision; and
  •  
compliance with risk policies, limits and guidelines is measured, monitored and reported to ensure consistency against defined goals.
Further details on the fair value of financial instruments and how these amounts were determined are provided in Note 6. Note 9 provides details on the terms and conditions of the Bank’s derivative financial instruments including notional amounts, remaining term to maturity, credit risk, and fair values of derivatives used in trading and hedging activities.
 
(a)
Credit risk
Credit risk is the risk of loss resulting from the failure of a borrower or counterparty to honour its financial or contractual obligations to the Bank. The Bank’s Credit Risk Appetite and Credit Risk Policy are developed by its Global Risk Management (GRM) department and limits are reviewed and approved by the Board on an annual and biennial basis, respectively. The Credit Risk Appetite defines target markets and risk tolerances that are developed at an
all-Bank
level, and then further refined at the business line level. The objectives of the Credit Risk Appetite are to ensure that, for the Bank, including the individual business lines:
 
  •  
target markets and product offerings are well defined;
  •  
the risk parameters for new underwritings and for the portfolios as a whole are clearly specified; and
  •  
transactions, including origination, syndication, loan sales and hedging, are managed in a manner to ensure the goals for the overall portfolio are met.
The Credit Risk Policy sets out, among other things, the credit risk rating systems and associated parameter estimates, the delegation of authority for granting credit, and the calculation of allowance for credit losses. It forms an integral part of enterprise-wide policies and procedures that encompass governance, risk management and control structure.
The Bank’s credit risk rating systems are designed to support the determination of key credit risk parameter estimates which measure credit and transaction risk. For
non-retail
exposures, parameters are associated with each credit facility through the assignment of borrower and facility ratings. Borrower risk is evaluated using methodologies that are specific to particular industry sectors and/or business lines. The risk associated with facilities of a given borrower is assessed by considering the facilities’ structural and collateral-related elements. For retail portfolios, product specific models assign accounts into homogeneous segments using internal and external borrower/facility-level credit experience. This process provides for a meaningful differentiation of risk and allows for appropriate and consistent estimation of loss characteristics at the model and segment level. Further details on credit risk relating to derivatives are provided in Note 9(c).
 
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Consolidated Financial Statements
 
(i)
Credit risk exposures
Credit risk exposures disclosed below are presented based on the Basel framework utilized by the Bank i.e., exposures subject to credit risk capital. The Bank uses the Internal Ratings Based approach (IRB) for all material Canadian, U.S., European portfolios, and for a significant portion of all international corporate and commercial portfolios. Under the Advanced Internal Ratings Based (AIRB) approach, the Bank uses internal risk parameter estimates, based on historical experience and appropriate margin of conservatism, for probability of default (PD), loss given default (LGD) and exposure at default (EAD). Under Basel III rules, there are IRB requirements for internally developed model parameters under AIRB, including scope restrictions which limit certain asset classes to only the Foundation Internal Ratings Based (FIRB) approach. For those asset classes (e.g. Large Corporates, Banks, etc.) the FIRB approach utilizes the Bank’s internally modeled PD parameters combined with internationally prescribed LGD and EAD parameters. The remaining portfolios, including other individual portfolios, are treated under the standardized approach.
Under the standardized approach, credit risk is estimated using the risk weights as prescribed by the Basel framework either based on credit assessments by external rating agencies or based on the counterparty/exposure type for
non-retail
exposures and product type for retail exposures. The external ratings the Bank uses are issued by S&P, Fitch and/or DBRS specifically for the Bank’s exposures (i.e. issue specific ratings) if available, otherwise issuer ratings are used following OSFI’s CAR guidelines requirements. Standardized risk weights also take into account other factors such as specific provisions for defaulted exposures, eligible collateral, and
loan-to-value
for real estate secured retail exposures.
 
As at October 31 ($ millions)  
2025
    
2024
  
   
Exposure at default
(1)
  
Category  
Drawn
(2)
    
Undrawn
commitments
    
Other
exposures
(3)
    
Total
    
Total
  
By counterparty type
          
Non-retail
          
IRB portfolio
          
Corporate
  
$
189,918
 
  
$
71,341
 
  
$
113,508
 
  
$
374,767
 
   $ 357,600  
Bank
  
 
12,924
 
  
 
12,253
 
  
 
23,194
 
  
 
48,371
 
     56,648  
Sovereign
  
 
240,416
 
  
 
3,487
 
  
 
11,086
 
  
 
254,989
 
     258,858  
 
 
443,258
 
  
 
87,081
 
  
 
147,788
 
  
 
678,127
 
     673,106  
Standardized portfolio
          
Corporate
  
 
49,395
 
  
 
4,901
 
  
 
23,786
 
  
 
78,082
 
     65,375  
Bank
  
 
1,609
 
  
 
69
 
  
 
141
 
  
 
1,819
 
     3,213  
Sovereign
  
 
24,372
 
  
 
523
 
  
 
243
 
  
 
25,138
 
     24,320  
 
 
75,376
 
  
 
5,493
 
  
 
24,170
 
  
 
105,039
 
     92,908  
Total
non-retail
  
$
518,634
 
  
$
92,574
 
  
$
171,958
 
  
$
783,166
 
   $ 766,014  
Retail
          
IRB portfolio
          
Real estate secured
  
$
267,856
 
  
$
60,485
 
  
$
–
 
  
$
328,341
 
   $ 306,395  
Qualifying revolving
  
 
18,710
 
  
 
63,595
 
  
 
–
 
  
 
82,305
 
     67,585  
Other retail
  
 
27,670
 
  
 
4,624
 
  
 
–
 
  
 
32,294
 
     38,665  
 
 
314,236
 
  
 
128,704
 
  
 
–
 
  
 
442,940
 
     412,645  
Standardized portfolio
          
Real estate secured
  
 
67,179
 
  
 
102
 
  
 
–
 
  
 
67,281
 
     63,572  
Other retail
  
 
52,552
 
  
 
10,313
 
  
 
76
 
  
 
62,941
 
     63,214  
 
 
119,731
 
  
 
10,415
 
  
 
76
 
  
 
130,222
 
     126,786  
Total retail
  
$
433,967
 
  
$
139,119
 
  
$
76
 
  
$
573,162
 
   $ 539,431  
Total
  
$
952,601
 
  
$
231,693
 
  
$
172,034
 
  
$
1,356,328
 
   $ 1,305,445  
By geography
(4)
          
Canada
  
$
587,309
 
  
$
175,314
 
  
$
49,503
 
  
$
812,126
 
   $ 783,178  
United States
  
 
137,005
 
  
 
31,646
 
  
 
83,209
 
  
 
251,860
 
     238,201  
Chile
  
 
54,340
 
  
 
4,645
 
  
 
3,588
 
  
 
62,573
 
     60,179  
Mexico
  
 
52,283
 
  
 
3,901
 
  
 
3,183
 
  
 
59,367
 
     58,439  
Peru
  
 
29,386
 
  
 
2,187
 
  
 
2,194
 
  
 
33,767
 
     32,609  
Colombia
  
 
15,435
 
  
 
1,777
 
  
 
941
 
  
 
18,153
 
     15,015  
Other International
          
Europe
  
 
17,423
 
  
 
6,241
 
  
 
22,195
 
  
 
45,859
 
     38,776  
Caribbean
  
 
32,841
 
  
 
2,152
 
  
 
1,250
 
  
 
36,243
 
     36,170  
Latin America (other)
  
 
15,218
 
  
 
948
 
  
 
1,080
 
  
 
17,246
 
     17,742  
All other
  
 
11,361
 
  
 
2,882
 
  
 
4,891
 
  
 
19,134
 
     25,136  
Total
  
$
 952,601
 
  
$
 231,693
 
  
$
 172,034
 
  
$
 1,356,328
 
   $  1,305,445  
 
(1)
Exposure at default is presented after credit risk mitigation. Exposures exclude equity securities and other assets. Portfolios under the Standardized Approach are reported net of specific allowances for credit losses and net of collateral amounts treated under the Comprehensive Approach.
(2)
Non-retail
drawn includes loans, acceptances, deposits with financial institutions and FVOCI debt securities. Retail drawn includes residential mortgages, credit cards, lines of credit, other personal loans and small business treated as other regulatory retail.
(3)
Other exposures include
off-balance
sheet lending instruments such as letters of credit, letters of guarantees, securitizations, derivatives and repo-style transactions (reverse repurchase agreements, repurchase agreements, securities lending and securities borrowing), net of related collateral.
(4)
Geographic segmentation is based upon the location of the ultimate risk of the credit exposure.
 
2025 Scotiabank Annual Report 
|
 
225
Consolidated Financial Statements
 
Consolidated Statement of Financial Position asset categories cross-referenced to credit risk exposures
The table below provides mapping of
on-balance
sheet asset categories that are included in the various Basel III exposure categories as presented in the credit ris
k
 exposure summary table of these consolidated financial statements. In addition, it also provides other exposures which are subject to market risk and/or other assets which are not subject to market and credit risk with a reconciliation to the Consolidated Statement of Financial Position. The Bank calculates market risk capital based on the Standardized Approach under the Fundamental Review of the Trading Book (FRTB) framework, including its Trading vs. Banking boundary requirements. The credit risk exposures on certain assets such as cash, precious metals, investment securities (equities) and other assets are not included in the credit risk exposure summary table. Also excluded from the credit risk exposures are certain trading assets and all assets of the Bank’s insurance subsidiaries.
 
   
Credit Risk Exposures
          
Other Exposures
        
   
Drawn
          
Other Exposures
          
Market Risk Exposures
              
As at October 31, 2025 ($ millions)  
Non-retail
    
Retail
           
Securitization
    
Repo-style
Transactions
    
Derivative
Financial
Instruments
    
Equity
           
Also
subject to
Credit Risk
           
All Other
(1)
    
Total
  
Cash and deposits with financial institutions
  
$
62,171
 
  
$
–
 
    
$
–
 
  
$
–
 
  
$
–
 
  
$
–
 
    
$
–
 
  
$
–
 
  
$
3,796
 
  
$
65,967
 
Precious metals
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
5,156
 
  
 
–
 
  
 
5,156
 
Trading assets
                        
Securities
  
 
103
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
140,741
 
  
 
–
 
  
 
140,844
 
Loans
  
 
1,641
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
744
 
  
 
6,846
 
  
 
–
 
  
 
8,487
 
Other
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
2,892
 
  
 
–
 
  
 
2,892
 
Financial assets designated at fair value through profit or loss
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
Securities purchased under resale agreements and securities borrowed
  
 
–
 
  
 
–
 
    
 
–
 
  
 
203,008
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
203,008
 
Derivative financial instruments
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
46,531
 
  
 
–
 
    
 
42,120
 
  
 
–
 
  
 
–
 
  
 
46,531
 
Investment securities
  
 
146,457
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
2,258
 
    
 
–
 
  
 
–
 
  
 
1,233
 
  
 
149,948
 
Loans:
                        
Residential mortgages
(2)
  
 
58,663
 
  
 
311,413
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
115
 
  
 
370,191
 
Personal loans
  
 
5,940
 
  
 
95,171
 
    
 
9,456
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
110,567
 
Credit cards
  
 
–
 
  
 
14,585
 
    
 
313
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
3,147
 
  
 
18,045
 
Business & government
  
 
239,898
 
  
 
13,170
 
    
 
25,846
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
791
 
  
 
279,705
 
Allowances for credit losses
(3)
  
 
(465
) 
  
 
(1,234
) 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
(5,764
) 
  
 
(7,463
) 
Customers’ liability under acceptances
  
 
177
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
177
 
Property and equipment
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
4,881
 
  
 
4,881
 
Investment in associates
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
65
 
    
 
–
 
  
 
–
 
  
 
6,252
 
  
 
6,317
 
Goodwill and other intangibles assets
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
–
 
  
 
–
 
    
 
–
 
  
 
–
 
  
 
16,169
 
  
 
16,169
 
Other (including Deferred tax assets)
  
 
6,210
 
  
 
1,154
 
          
 
–
 
  
 
436
 
  
 
–
 
  
 
–
 
          
 
–
 
  
 
403
 
  
 
30,417
 
  
 
38,620
 
Total
  
$
 520,795
 
  
$
 434,259
 
          
$
 35,615
 
  
$
 203,444
 
  
$
 46,531
 
  
$
 2,323
 
          
$
 42,864
 
  
$
 156,038
 
  
$
 61,037
 
  
$
 1,460,042
 
 
(1)
Includes the Bank’s insurance subsidiaries’ assets and all other assets which are not subject to credit and market risks.
(2)
Includes $52.8 billion in mortgages guaranteed by Canada Mortgage Housing Corporation and federally backed privately insured mortgages.
(3)
Amounts for IRB exposures are reported gross of allowances and amounts for standardized exposures are reported net of allowances.
 
   
Credit Risk Exposures
          
Other Exposures
        
   
Drawn
          
Other Exposures
          
Market Risk Exposures
              
As at October 31, 2024 ($ millions)  
Non-retail
    
Retail
           
Securitization
    
Repo-style
Transactions
    
Derivative
Financial
Instruments
    
Equity
           
Also
subject to
Credit Risk
           
All Other
(1)
    
Total
  
Cash and deposits with financial institutions
   $ 60,501     $ –       $ –     $ –     $ –     $ –       $ –     $ –     $ 3,359     $ 63,860  
Precious metals
     –       –         –       –       –       –         –       2,540       –       2,540  
Trading assets
                        
Securities
     331       –         –       –       –       –         –       119,581       –       119,912  
Loans
     933       –         –       –       –       –         569       6,716       –       7,649  
Other
     –       –         –       –       –       –         –       2,166       –       2,166  
Financial assets designated at fair value through profit or loss
     –       –         –       –       –       –         –       –       –       –  
Securities purchased under resale agreements and securities borrowed
     –       –         –       200,543       –       –         –       –       –       200,543  
Derivative financial instruments
     –       –         –       –       44,379       –         39,736       –       –       44,379  
Investment securities
     147,607       –         –       –       –       5,008         –       –       217       152,832  
Loans:
                        
Residential mortgages
(2)
     61,467       289,358         –       –       –       –         –       –       116       350,941  
Personal loans
     711       101,821         3,847       –       –       –         –       –       –       106,379  
Credit cards
     –       13,892         162       –       –       –         –       –       3,320       17,374  
Business & government
     261,903       12,904         17,627       –       –       –         –       –       237       292,671  
Allowances for credit losses
(3)
     (363 )      (1,170 )        –       –       –       –         –       –       (5,003 )      (6,536 ) 
Customers’ liability under acceptances
     149       –         –       –       –       –         –       –       (1 )      148  
Property and equipment
     –       –         –       –       –       –         –       –       5,252       5,252  
Investment in associates
     –       –         –       –       –       62         –       –       1,759       1,821  
Goodwill and other intangibles assets
     –       –         –       –       –       –         –       –       16,853       16,853  
Other (including Deferred tax assets)
     5,968       1,220               –       343       –       –               –       448       25,264       33,243  
Total
   $  539,207     $  418,025             $  21,636     $  200,886     $  44,379     $  5,070             $  40,305     $  131,451     $  51,373     $  1,412,027  
 
(1)
Includes the Bank’s insurance subsidiaries’ assets and all other assets which are not subject to credit and market risks.
(2)
Includes $56.3 billion in mortgages guaranteed by Canada Mortgage Housing Corporation and federally backed privately insured mortgages.
(3)
Amounts for IRB exposures are reported gross of allowances and amounts for standardized exposures are reported net of allowances.
 
226
 
|
 2025 Scotiabank Annual Report
Consolidated Financial Statements
 
(ii)
Credit quality of
non-retail
exposures
Credit decisions are made based upon an assessment of the credit risk of the individual borrower or counterparty. Key factors considered in the assessment include: the borrower’s management; the borrower’s current and projected financial results and credit statistics; the industry in which the borrower operates; economic trends; and geopolitical risk. Banking units and Global Risk Management also review the credit quality of the credit portfolio across the organization on a regular basis to assess whether economic trends or specific events may affect the performance of the portfolio.
The Bank’s
non-retail
portfolio is well diversified by industry. As at October 31, 2025, and October 31, 2024, a significant portion of the authorized corporate and commercial lending portfolio was internally assessed at a grade that would generally equate to an investment grade rating by external rating agencies. There has not been a significant change in concentrations of credit risk since October 31, 2024.
Internal grades (IG) are used to differentiate the risk of default of a borrower. The following table cross references the Bank’s internal borrower grades with equivalent ratings categories utilized by external rating agencies:
 
Cross referencing of internal ratings to external ratings
(1)
Equivalent External Rating
              
S&P and Fitch
  
Moody’s
  
Morningstar DBRS
  
Internal Grade
  
Internal Grade Code
    
PD Range
(2)
AAA to AA+
 		  Aaa to Aa1   AAA to AA (high)      
99
 – 
98
    
0.0000
% –
0.0565
%
AA to A+
 		  Aa2 to A1   AA to A (high)       95    
0.0565
% – 
0.0693
%
A to A-
 		  A2 to A3   A to A (low)   Investment grade     90    
0.0693
% – 
0.0833
%
BBB+
 		  Baa1   BBB (high)       87    
0.0833
% – 
0.1243
%
BBB
 		  Baa2   BBB       85    
0.1243
% – 
0.1976
%
BBB-
 		  Baa3   BBB (low)  
 
     83    
0.1976
% – 
0.2743
%
BB+
 		  Ba1   BB (high)       80    
0.2743
% – 
0.3806
%
BB
 		  Ba2   BB       77    
0.3806
% – 
0.7061
%
BB-
 		  Ba3   BB (low)  
Non-Investment grade
     75    
0.7061
% – 
1.4290
%
B+
 		  B1   B (high)       73    
1.4290
% – 
2.4715
%
B to B-
 		  B2 to B3   B to B (low)  
 
     70    
2.4715
% – 
6.2065
%
CCC+
 		  Caa1   –        65    
6.2065
% – 
15.9382
%
CCC
 		  Caa2   –    Watch list     60    
15.9382
% – 
28.5499
%
CCC-
to CC
 		  Caa3 to Ca   –        40    
28.5499
% – 
48.3748
%
–
   –    –        30    
48.3748
% – 
100.0000
%
Default
 		 
 
  
 
   Default     21     100%
 
(1)
Applies to
non-retail
portfolio.
(2)
PD Ranges as at October 31, 2025. The Range does not include the upper boundary for the row.
Non-retail
IRB portfolio
The credit quality of the
non-retail
IRB portfolio, expressed in terms of risk categories of borrower internal grades is shown in the table below:
 
          
2025
    
2024
  
          
Exposure at Default
(1)
  
As at October 31 ($ millions) Category of internal grades  
IG Code
    
Drawn
    
Undrawn
commitments
    
Other
exposures
(2)
    
Total
    
Total
  
Investment grade
  
 
99
 – 
98
 
  
$
144,086
 
  
$
1,557
 
  
$
39,788
 
  
$
185,431
 
   $ 174,122  
 
 
95
 
  
 
36,203
 
  
 
13,422
 
  
 
30,882
 
  
 
80,507
 
     71,282  
 
 
90
 
  
 
15,314
 
  
 
12,067
 
  
 
28,875
 
  
 
56,256
 
     49,596  
 
 
87
 
  
 
26,472
 
  
 
13,771
 
  
 
16,458
 
  
 
56,701
 
     63,699  
 
 
85
 
  
 
25,166
 
  
 
10,987
 
  
 
8,758
 
  
 
44,911
 
     49,980  
 
 
83
 
  
 
43,384
 
  
 
11,155
 
  
 
5,924
 
  
 
60,463
 
     69,342  
Non-Investment
grade
  
 
80
 
  
 
39,476
 
  
 
10,262
 
  
 
5,810
 
  
 
55,548
 
     54,770  
 
 
77
 
  
 
25,637
 
  
 
6,542
 
  
 
4,824
 
  
 
37,003
 
     40,729  
 
 
75
 
  
 
20,174
 
  
 
4,373
 
  
 
4,556
 
  
 
29,103
 
     27,324  
 
 
73
 
  
 
7,913
 
  
 
1,464
 
  
 
756
 
  
 
10,133
 
     10,140  
 
 
70
 
  
 
4,137
 
  
 
1,216
 
  
 
707
 
  
 
6,060
 
     3,791  
Watch list
  
 
65
 
  
 
907
 
  
 
60
 
  
 
43
 
  
 
1,010
 
     1,592  
 
 
60
 
  
 
876
 
  
 
109
 
  
 
171
 
  
 
1,156
 
     986  
 
 
40
 
  
 
910
 
  
 
75
 
  
 
134
 
  
 
1,119
 
     889  
 
 
30
 
  
 
276
 
  
 
9
 
  
 
2
 
  
 
287
 
     232  
Default
  
 
21
 
  
 
1,482
 
  
 
12
 
  
 
100
 
  
 
1,594
 
     1,313  
Total
    
$
392,413
 
  
$
87,081
 
  
$
147,788
 
  
$
627,282
 
   $ 619,787  
Government guaranteed residential mortgages
(3)
  
 
 
 
  
 
50,845
 
  
 
–
 
  
 
–
 
  
 
50,845
 
     53,319  
Total
  
 
 
 
  
$
 443,258
 
  
$
 87,081
 
  
$
 147,788
 
  
$
 678,127
 
   $  673,106  
 
(1)
After credit risk mitigation.
(2)
Includes
off-balance
sheet lending instruments such as letters of credit, letters of guarantees, securitizations, derivatives and repo-style transactions (reverse repurchase agreements, repurchase agreements and securities lending and borrowing), net of related collateral.
(3)
These exposures are classified as sovereign exposures and are included in the
non-retail
category.
 
2025 Scotiabank Annual Report 
|
 
227
Consolidated Financial Statements
 
Non-retail
standardized portfolio
The
non-retail
standardized portfolio relies on external credit ratings (e.g. S&P, Fitch, Morningstar DBRS, etc.) of the borrower, if available, to compute regulatory capital for credit risk. Exposures are risk weighted based on prescribed percentages and a mapping process as defined within OSFI’s Capital Adequacy Requirements Guideline.
Non-retail
standardized portfolio as at October 31, 2025 comprised of drawn, undrawn and other exposures to corporate, bank and sovereign counterparties amounted to $105 billion (October 31, 2024 – $93 billion). Within this portfolio, the majority of Corporate/Commercial exposures are to unrated counterparties, mainly in Canada, U.S., Mexico, Chile, Peru and Colombia.
 
(iii)
Credit quality of retail exposures
The Bank’s retail portfolios consist of a number of relatively small loans to a large number of borrowers. The portfolios are distributed across Canada and a wide range of countries. As such, the portfolios inherently have a high degree of diversification. In addition, as of October 31, 2025, 23% of the Canadian banking residential mortgage portfolio is insured and the average
loan-to-value
ratio of the uninsured portion of the portfolio is 54%.
Retail AIRB portfolio
The data in the table below provides a distribution of the retail AIRB exposures within each PD range by asset class:
 
As at October 31 ($ millions)  
2025
    
2024
  
   
Exposure at default
(1)
  
          
Real estate secured
                              
Category of (PD) grades  
PD range
    
Mortgages
    
HELOC
    
Qualifying
revolving
    
Other retail
    
Total
    
Total
  
Exceptionally Low
  
 
0.0000
% – 
0.0500
%
 
  
$
89,983
 
  
$
57,130
 
  
$
15,921
 
  
$
792
 
  
$
163,826
 
   $ 145,243  
Very Low
  
 
0.0501
% – 
0.1999
%
 
  
 
95,370
 
  
 
19,900
 
  
 
36,811
 
  
 
5,792
 
  
 
157,873
 
     148,919  
Low
  
 
0.2000
% – 
0.9999
%
 
  
 
43,971
 
  
 
–
 
  
 
14,536
 
  
 
16,932
 
  
 
75,439
 
     79,011  
Medium Low
  
 
1.0000
% – 
2.9999
%
 
  
 
11,436
 
  
 
5,509
 
  
 
9,715
 
  
 
4,803
 
  
 
31,463
 
     25,478  
Medium
  
 
3.0000
% – 
9.9999
%
 
  
 
7
 
  
 
–
 
  
 
2,719
 
  
 
2,683
 
  
 
5,409
 
     7,524  
High
  
 
10.0000
% – 
19.9999
%
 
  
 
3,177
 
  
 
938
 
  
 
1,690
 
  
 
614
 
  
 
6,419
 
     3,232  
Extremely High
  
 
20.0000
% – 
99.9999
%
 
  
 
2
 
  
 
–
 
  
 
785
 
  
 
511
 
  
 
1,298
 
     2,263  
Default
  
 
100
%
 
  
 
791
 
  
 
127
 
  
 
128
 
  
 
167
 
  
 
1,213
 
     975  
Total
  
 
 
 
  
$
 244,737
 
  
$
 83,604
 
  
$
 82,305
 
  
$
 32,294
 
  
$
 442,940
 
   $  412,645  
 
(1)
After credit risk mitigation.
Retail standardized portfolio
The retail standardized portfolio of $130 billion as at October 31, 2025 (2024 – $127 billion) was comprised of residential mortgages, personal loans, credit cards and lines of credit to individuals, mainly in the Latin American and Caribbean region. Of the total retail standardized exposures, $67 billion (2024 – $64 billion) was represented by mortgages and loans secured by residential real estate, mostly with a
loan-to-value
ratio of below 80%.
 
(iv)
Collateral
Collateral held
In the normal course of business, to reduce its exposure to counterparty credit risk, the Bank receives collateral for capital markets related activities. The following are examples of the terms and conditions customary to collateral for these types of transactions:
 
  •  
The risks and rewards of the pledged assets reside with the pledgor.
  •  
Additional collateral is required when the market value of the transaction exceeds thresholds agreed upon with the pledgor.
  •  
The Bank is normally permitted to sell or repledge the collateral it receives, although this right is specific to each agreement under which the collateral is pledged.
  •  
Upon satisfaction of the obligation, the Bank must return the pledged assets, unless the Bank has the right to sell or repledge the collateral it receives, in which case the Bank must return comparable collateral to the pledgor.
As at October 31, 2025, the approximate market value of cash and securities collateral accepted that may be sold or repledged by the Bank was $409 billion (2024 – $359 billion). This collateral is held primarily in connection with reverse repurchase agreements, margin loans, securities lending and derivative transactions. The Bank also borrows securities under standard securities borrowing agreements that it is able to
re-pledge.
Including these borrowed securities, the approximate market value of securities collateral accepted that may be sold or
re-pledged
was $350 billion (2024 – $300 billion), of which approximately $67 billion was not sold or
re-pledged
(2024 – $60 billion).
Collateral pledged
In the normal course of business, securities and other assets are pledged to secure an obligation, participate in clearing or settlement systems, or operate in a foreign jurisdiction. Note 33(c) details the nature and extent of the Bank’s asset pledging activities. Asset pledging transactions are conducted under terms that are common and customary to standard derivative, securities financing, and other borrowing activities. Standard risk management controls are applied with respect to asset pledging.
Assets acquired in exchange for loans
The carrying value of assets acquired in exchange for loans as at October 31, 2025 was $221 million (2024 – $312 million) mainly comprised of real estate and was classified as either held for sale or held for use as appropriate.
 
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(b)
Liquidity risk
Liquidity risk is the risk that the Bank is unable to meet its financial obligations in a timely manner at reasonable prices. Our liquidity risk management framework and key risk measures are disclosed in the gray-shaded text and tables marked with an asterisk (*) in the “Risk Management” section of the MD&A.
 
(c)
Market risk
Market risk arises from changes in market prices and rates (including interest rates, credit spreads, equity prices, foreign exchange rates and commodity prices), the correlations between them, and their levels of volatility. Our market risk management framework and
k
ey risk measures are disclosed in the gray-shaded text and tables marked with an asterisk (*) in the “Risk Management” section of the MD&A.
 
35
Acquisitions and Divestitures
Acquisitions
Acquisition completed impacting the current year
KeyCorp
On December 27, 2024, the Bank completed its acquisition of an approximate ownership interest of 14.9% or 163 million shares in KeyCorp. The acquisition was completed in two stages – an initial investment of 4.9% (Initial Investment) on August 30, 2024, and an additional investment of approximately 10% (Additional Investment) on December 27, 2024. The acquisition was completed through
all-cash
purchases of newly issued voting common shares, at a fixed price of U.S.$17.17 per share, resulting in total cash consideration paid of approximately U.S.$2.8 billion
 
($4.1 billion). Following completion of the Additional Investment, the Bank designated two individuals to serve on KeyCorp’s Board of Directors. 
Effective December 27, 2024, the combined 14.9% investment was accounted for as an investment in associate as the Bank has significant influence over KeyCorp as defined under IFRS, given its board representation and ownership interest. The Initial Investment of 4.9% previously accounted for at fair value through other comprehensive income was derecognized and included in the cost base of the investment in associate. The difference between the fixed transaction price and the quoted share price of KeyCorp on the date of Additional Investment (U.S.$17.20) was recognized as a gain in
non-interest
income – other, with a corresponding increase in the carrying value of the investment in associate. The carrying amount of the investment in associate upon closing was U.S.$2.8 billion ($4.1 billion), and represents the Bank’s share of KeyCorp’s net assets, adjusted for goodwill and other intangibles. The total impact to the Bank’s common equity Tier 1 (CET1) ratio from the transaction was a decrease of approximately 49 basis points.
For the three and twelve months ended October 31, 2025, $117 million ($111 million
after-tax)
and $362 million ($338 million
after-tax),
respectively, was recorded in net income from investments in associated corporations, representing the Bank’s share of KeyCorp’s financial results.
Divestitures
Divestiture announced that is expected to close in a future period
Sale of banking operations in Colombia, Costa Rica and Panama
On January 6, 2025, the Bank entered into an agreement with Davivienda to sell
it
s banking operations in Colombia, Costa Rica and Panama in exchange for an approximately 20% ownership stake in the newly combined entity of Davivienda. The Bank’s ownership will consist of 14.99% voting common shares and the remainder in
non-voting
preferred shares. At the closing date, the Bank will have the right to designate individuals to serve on the Board of Directors of Davivienda’s combined operations commensurate with its ownership stake. This investment will be accounted for as an investment in associate, as the Bank will have significant influence.
On the date of the agreement, the Bank’s operations that are part of this transaction were classified as held for sale in accordance with IFRS 5 and an impairment loss of $1,362 million ($1,355 million
after-tax) 
was recorded in
non-interest
expenses – other within the Other operating segment, representing the write-down of goodwill ($589 million), intangibles ($151 million), property and equipment ($290 million) and the remaining in other assets.
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). The loss was recorded in Other operating segment. The held for sale operations included total assets of $
24 billion and total liabilities of $22 billion, consisting primarily of loans and deposits, and the
total
cumulative foreign currency translation losses, net of hedges was $249 million. Upon closing, total assets and liabilities will be derecognized. Any resulting gains/loss and the total cumulative foreign currency translation reserve, net of hedges at the closing date related to these operations will be recorded in the
C
onsolidated
S
tatement of
I
ncome.
The total impact of the transaction to the Bank’s CET1 capital ratio was a decrease of approximately 13 basis points as of October 31, 2025.
Closed divestitures impacting the current fiscal year
CrediScotia Financiera
On February 28, 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), upon receiving regulatory approvals and satisfying closing conditions.
Upon closing, assets and liabilities of $985 million and $726 million, respectively, in relation to this business were derecognized. A total loss of $102 million
after-tax
has been recognized and recorded in the Other Segment for this transaction, of which $12 million
after-tax
was recorded in 2025 and $90 million was recorded in 2024. The amount recognized in 2025 was recognized in
non-interest
income – other. The closing of the transaction increased the Bank’s CET1 capital ratio by approximately three basis points.
 
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Consolidated Financial Statements
 
36
Event
s
after the Consolidated Statement of Financial Position date
Sale of banking operations in Colombia, Costa Rica and Panama
On December 1, 2025, the Bank completed the sale of
it
s banking operations in Colombia, Costa Rica and Panama to Davivienda Group in exchange for an approximately 20% ownership stake in the newly combined entity of Davivienda, upon receiving all regulatory approvals and satisfying all customary closing conditions.
Following this date, the investment in Davivienda Group will be accounted for as an investment in associate as the Bank has significant influence. Additionally, all assets and liabilities in relation to the Bank’s operations will be
derecognized
and the Bank is expected to record a loss in Q1 2026 of approximately $300 million after-tax in the Other segment, primarily relating to the release of cumulative foreign currency translation losses, net of hedges.
 
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