Bank of Nova Scotia reported record third-quarter results for fiscal 2026, driven by stronger earnings across its major businesses, improved returns in Canadian Banking and continued growth in wealth management and capital markets.
The Canadian bank posted quarterly net income of C$3 billion and diluted earnings per share of C$2.28, representing a 21% increase from the previous year. Adjusted return on equity reached 14.2%, surpassing the bank’s medium-term target earlier than expected.
CEO Scott Thomson described the quarter as a record performance, citing favorable market conditions, strategic repositioning, improved capital allocation and a stronger business mix as key contributors.
Revenue Growth and Capital Strength
Revenue increased 16% year over year, supported by a 12% rise in net interest income and a 21% increase in non-interest income. Growth was driven by stronger banking and wealth management revenue, higher underwriting and advisory fees, increased commissions and income from associated corporations.
Net interest margin improved 18 basis points compared with the prior year, although it remained unchanged from the previous quarter. Higher margins in Canadian Banking and Global Banking and Markets offset weaker margins in International Banking.
Expenses increased 14%, reflecting higher performance-based compensation, share-based compensation and continued technology investments. Technology spending rose 16% to C$1.5 billion during the quarter. Despite higher costs, Scotiabank achieved positive operating leverage for the 10th consecutive quarter, improving its productivity ratio to 52.5%.
The bank ended the quarter with a CET1 capital ratio of 13.1%. Scotiabank repurchased 8.6 million shares during the period and returned C$8.3 billion to shareholders through dividends and buybacks over the past 12 months.
Canadian Banking Drives Improved Returns
Canadian Banking reported earnings of C$1.1 billion, up 12% from the previous year. Return on equity reached 19.4%, improving 160 basis points from the previous quarter.
The segment recorded 3% loan growth year over year, including 4% mortgage growth and 3% growth in commercial and small-business lending. Net interest income increased 7%, while non-interest income rose 11%, supported by mutual fund distribution fees, credit card revenue and insurance income.
Scotiabank also highlighted growth in its mid-market business, adding nearly 700 mid-market clients year to date. The bank said it is focusing on higher-margin lending relationships and deposit growth, while small-business lending continued to deliver double-digit loan growth.
Retail deposits and wealth referrals also improved. More than 90% of retail guaranteed investment certificate maturities were retained during the year, either within Canadian Banking or retail mutual funds. Retail mutual fund net sales reached C$4 billion year to date.
Wealth Management and Capital Markets Expand
Global Wealth Management earnings increased 23% to C$515 million. Assets under management rose 16%, while assets under administration increased 13% due to market appreciation and continued customer inflows.
The business recorded quarterly net sales of C$3 billion, marking its strongest third quarter on record and its eighth consecutive quarter of positive flows.
Global Banking and Markets generated earnings of C$647 million, up 37% year over year. Revenue increased 32%, supported by a 33% increase in capital markets revenue and 30% growth in business banking revenue.
The segment also reported strong lending and deposit activity, with loans increasing 7% sequentially and deposits rising 9% sequentially.
International Banking Continues Strategic Focus
International Banking earned C$725 million, representing a 6% increase from the previous year on a constant-currency basis and excluding divested operations.
Revenue grew 7%, while retail loans increased 5% and non-retail loans declined 7% as the bank continued reducing exposure in selected portfolios. Deposits increased 6% year over year.
The division is focusing on building deeper customer relationships through integrated banking services, including transaction accounts, cards, lending, insurance and investment products. Management expects revenue growth of 6% to 8% from 2027 onward.
Credit Quality Improves
Scotiabank reported improving credit conditions, with total provisions for credit losses declining to C$1.1 billion, or 56 basis points, down from the previous quarter.
Impaired provisions fell to C$1 billion as performance improved in Canadian retail banking and International Banking experienced lower credit losses compared with the previous quarter.
Canadian Banking provisions declined to C$498 million, supported by lower write-offs in unsecured credit products, reduced auto impairments and improved collection results.
The bank continues monitoring trade policies, inflation, energy costs and geopolitical risks. Management said recent tariff measures represented less than 1% of total loans and identified opportunities in areas including infrastructure, natural resources, artificial intelligence and defense.
About Bank of Nova Scotia
Bank of Nova Scotia, also known as Scotiabank, is a Canadian multinational financial services company founded in 1832 and headquartered in Toronto, Ontario.
The bank provides retail banking, commercial banking, wealth management, corporate banking, investment banking and capital markets services across Canada and international markets.
