Rising loan-loss provisions and a $373 million reset test Scotiabank’s growth story into 2026
Bank of Nova Scotia delivered a fourth-quarter earnings beat on the back of strong capital markets and wealth results, while absorbing a sizable restructuring charge and higher credit losses, according to Financial Post.
Adjusted earnings came in at $1.93 per share on net income of $2.6bn, ahead of analyst expectations of about $1.84–$1.85 per share.
Headline net income for the quarter was $2.2bn, up from $1.7bn a year earlier.
Capital-light businesses did the heavy lifting.
Net income in Global Banking and Markets reached $519m versus a $457m analyst forecast, while Global Wealth Management delivered $450m against expectations of $440m, according to Bloomberg.
Financial Post reported that Global Wealth Management and Global Banking and Markets grew earnings by 17 percent and 50 percent, respectively, supported by higher mutual fund fees, brokerage revenues, capital markets and business banking.
The bank took a $373m “restructuring charge and severance provisions” and other related costs, mainly from workforce reductions across its global operations.
Bloomberg said the charge was primarily tied to job cuts in Canadian banking and Asian operations in Global Banking and Markets.
According to Financial Post, the bank said the measures aim to simplify Canadian Banking, “right-size” Asia in Global Banking and Markets and regionalize activities across its international footprint, while freeing up capacity to invest in “technology and revenue-generating sales staff.”
Credit costs remain a key watchpoint.
Provisions for credit losses rose to $1.11bn in the quarter, up from $1.03bn a year earlier and $1.04bn in the third quarter, according to Financial Post, and slightly above the $1.08bn average forecast cited by Bloomberg.
Reuters reported that Scotiabank expects its impaired loans ratio in 2025 to sit in the high-40s to mid-50s basis-point range, compared with 49 basis points excluding divestitures.
On full-year numbers, Financial Post said Scotiabank’s net income was $7.78bn, down slightly from $7.9bn a year earlier, with earnings per share of $5.67.
Adjusted net income rose to $9.5bn from $8.63bn, with adjusted earnings per share of $7.09.
Analysts framed the quarter as a solid, but not flawless, step forward.
Jefferies analyst John Aiken said Scotiabank “kicked off the Canadian bank earnings with a solid beat that centred on strength from both wealth and capital markets,” as reported by the Financial Post.
He noted that retail banking faced headwinds from higher provisions and expenses, though international lending growth turned positive.
Canaccord Genuity analyst Matthew Lee said the bank’s strong finish to the year showed its “improving earnings power.”
RBC Securities analyst Darko Mihelic said he has “a mildly positive view,” but flagged that international banking results were weaker than expected due to higher loan losses that “may persist for the foreseeable future,” according to Reuters.
On the macro front, chief risk officer Phil Thomas said the bank expects to operate under “elevated global macroeconomic uncertainty” in fiscal 2026, citing the absence of a trade deal with the United States, elevated unemployment and a sluggish housing market.
He added that Scotiabank is cautiously optimistic the federal budget will support stronger growth and better consumer and business sentiment later in the year.
According to Financial Post, chief executive Scott Thomson said Canada’s “renewed focus” on natural resource development should “improve national prosperity” over the medium term.
He called the recent energy deal between the federal government and Alberta a “significant development” that shows “Canada truly is on a new economic” trajectory.
Reuters reported that he described Prime Minister Mark Carney’s first budget as centred on growth in infrastructure, pipelines and natural resources, an area where he said Scotiabank is well placed to advise.
Financial Post also quoted Thomson saying this focus aligns with the bank’s strengths in providing capital advice to mining, energy and critical infrastructure, and in supporting large-scale infrastructure projects through the major projects office.
Bloomberg reported that Scotiabank is two years into a strategic overhaul under Thomson, with the international division tracking ahead of plan and domestic earnings growth lagging.
Reuters said the bank expects loan and deposit growth to support double-digit profit growth as loan-loss provisions moderate in fiscal 2026.
