Q3 FY2026
Filed Aug 25, 2026Scotiabank reports third quarter net income of $2,953 million and diluted EPS of $2.27, with all operating business lines reporting higher year-over-year earnings.
Reported net income increased to $2,953 million from $2,527 million, reported diluted EPS increased to $2.27 from $1.84, and each of Canadian Banking, International Banking, Global Wealth Management, and Global Banking and Markets reported higher year-over-year earnings. Adjusted ROE reached 14.2%, above the Bank's stated 14% ROE target.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest incomeother | $5,866 million | – | – |
| Non-interest incomeother | $4,669 million | – | – |
| Total revenueother | $10,535 million | – | – |
| Provision for credit lossesother | $1,079 million | a decrease of $138 million | an increase of $38 million |
| Provision for credit losses ratioother | 56 basis points | decreased by 10 basis points | increased by one basis point |
| Provision for credit losses on performing loansother | $61 million | a decrease of $27 million | a decrease of $5 million |
| Provision for credit losses on impaired loansother | $1,018 million | a decrease of $111 million | an increase of $43 million |
| Non-interest expensesother | $5,556 million | – | – |
| Income before taxesother | $3,900 million | – | – |
| Income tax expenseother | $947 million | – | – |
| Net incomeother | $2,953 million | – | – |
| Net income attributable to equity holders of the Bankother | $2,908 million | – | – |
| Net income attributable to common shareholdersother | $2,778 million | – | – |
| Basic earnings per common shareother | $2.27 | – | – |
| Diluted earnings per common shareother | $2.27 | – | – |
| Return on equityother | 14.1% | – | – |
| Adjusted total revenuenon-GAAP | $10,543 million | – | – |
| Adjusted non-interest expensesnon-GAAP | $5,540 million | – | – |
| Adjusted net incomenon-GAAP | $2,973 million | – | – |
| Adjusted net income attributable to equity holdersnon-GAAP | $2,928 million | – | – |
| Adjusted diluted earnings per common sharenon-GAAP | $2.28 | – | – |
| Adjusted return on equitynon-GAAP | 14.2% | – | – |
| Assets under managementother | $474 billion | – | increased 16% year-over-year |
| Total allowance for credit lossesother | $7,551 million | – | – |
| Allowance for credit losses ratioother | 97 basis points | an increase of one basis point | – |
| Gross impaired loansother | $7,801 million | – | – |
| Gross impaired loan ratioother | 100 basis points | increased one basis point | – |
| Net impaired loans as a percentage of loans and acceptancesother | 0.68% | remaining unchanged from the prior quarter | – |
| Common Equity Tier 1 capital ratioother | 13.1% | down 20 basis points | – |
| Tier 1 capital ratioother | 15.1% | a decrease of 30 basis points | – |
| Total capital ratioother | 16.9% | a decrease of 10 basis points | – |
| Leverage ratioother | 4.3% | unchanged from the prior quarter | – |
| TLAC ratioother | 28.6% | – | – |
| TLAC Leverage ratioother | 8.2% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Canadian BankingHigher revenues, including record revenue supported by a fifth consecutive quarter of margin expansion and strong fee income growth, partly offset by higher non-interest expenses and provision for credit losses. | Not reported | an increase of $136 million or 14% | up 12% from the prior year |
| International BankingThe reported year-over-year increase reflected the positive impact of foreign currency translation, lower non-interest expenses, lower provision for credit losses and lower income taxes, partly offset by lower revenues. On a constant dollar basis, net income attributable to equity holders decreased by $8 million or 1% year-over-year, driven primarily by lower revenues. | Not reported | an increase of $24 million or 3% | up 8% year-over-year |
| Global Wealth ManagementHigher mutual fund fees, brokerage revenues and net interest income across the Canadian wealth business, partly offset by higher volume-related non-interest expenses. | Not reported | an increase of $41 million or 9% | up 23% year-over-year |
| Global Banking and MarketsHigher revenues, with strong capital markets performance and record underwriting and advisory fees, partly offset by higher non-interest expenses, income tax expense and provision for credit losses. | Not reported | an increase of $190 million or 41% | up 37% year-over-year |
| OtherThe year-over-year lower loss was driven primarily by higher net interest income, partly offset by higher non-interest expenses. The sequential decrease was driven primarily by lower non-interest income due mainly to lower investment gains. | Not reported | Net loss attributable to equity holders decreased by $78 million | Net loss attributable to equity holders improved by $21 million |
Capital returns
- Repurchased 8.6 million shares in the quarter.
- For the year to date, returned $6.3 billion of capital to shareholders through a combination of buybacks and dividends.
What drove it
- Total revenue was $10,535 million, compared to $9,486 million in Q3 2025 and $9,837 million in Q2 2026.
- Canadian Banking recorded its fifth consecutive quarter of margin expansion and its fourth consecutive quarter of positive operating leverage.
- Global Wealth Management earnings benefited from higher mutual fund fees, brokerage revenues and net interest income, while assets under management increased 16% year-over-year to $474 billion.
- Global Banking and Markets delivered strong capital markets revenue and record underwriting and advisory fees.
- International Banking's reported earnings growth included a positive foreign currency translation impact; constant-dollar net income attributable to equity holders declined by $8 million or 1% year-over-year.
Concerns
- Provision for credit losses increased by $38 million year-over-year to $1,079 million, while the provision for credit losses ratio increased by one basis point to 56 basis points.
- Provision for credit losses on impaired loans increased by $43 million year-over-year to $1,018 million, due primarily to higher provisions in corporate and Canadian retail portfolios.
- The provision for credit losses on performing loans reflected an unfavourable macroeconomic outlook affecting the corporate and commercial portfolio and portfolio growth in Canadian and International Banking.
- Gross impaired loans increased to $7,801 million from $7,608 million last quarter, and the gross impaired loan ratio increased one basis point to 100 basis points.
- The CET1 capital ratio declined 20 basis points sequentially, reflecting RWA increases from business growth, the recall of a synthetic risk transfer securitization and share repurchases.
What to watch
- Whether Canadian Banking can sustain margin expansion, strong fee income growth and positive operating leverage.
- Credit-loss trends in corporate, Canadian retail and International retail portfolios, including the effect of the macroeconomic outlook.
- International Banking revenue performance on a constant dollar basis.
- The durability of Global Banking and Markets capital-markets revenue and underwriting and advisory fees.
- The CET1 capital ratio following business-growth RWA increases, the synthetic risk transfer securitization recall, dividends and further share repurchases.
Balance sheet and cash flow
- The Common Equity Tier 1 capital ratio was 13.1% as at July 31, 2026, down 20 basis points from the prior quarter.
- The total allowance for credit losses was $7,551 million as at July 31, 2026, compared to $7,344 million in the prior quarter.
- Gross impaired loans were $7,801 million as at July 31, 2026, compared to $7,608 million last quarter.
- The allowance for credit losses for loans was $7,329 million, compared to $7,150 million in the prior quarter.
- Cash, debt, operating cash flow and free cash flow were not reported in the filing text.
Analysis
Scotiabank reported a broad-based Q3 2026 improvement under IFRS. Total revenue was $10,535 million, compared with $9,486 million in Q3 2025 and $9,837 million in Q2 2026. Net income was $2,953 million, compared with $2,527 million a year earlier, while diluted EPS was $2.27 compared with $1.84. Adjusted net income was $2,973 million and adjusted diluted EPS was $2.28. Reported ROE was 14.1% and adjusted ROE was 14.2%, compared with 12.2% and 12.4%, respectively, in Q3 2025.
The domestic and fee-led franchises were notable contributors. Canadian Banking generated earnings of $1,071 million, up 12% from the prior year, supported by record revenue, a fifth consecutive quarter of margin expansion, strong fee income growth and disciplined expense management. Global Wealth Management generated earnings of $518 million, up 23% year-over-year, driven by higher mutual fund fees, brokerage revenues and net interest income. Assets under management increased 16% year-over-year to $474 billion. Global Banking and Markets produced record earnings of $647 million, up 37% year-over-year, as strong capital markets revenue and record underwriting and advisory fees offset higher expenses, tax expense and credit losses.
International Banking reported earnings of $766 million, up 8% year-over-year on a reported basis, but the filing identifies foreign currency translation as a contributor. On a constant dollar basis, net income attributable to equity holders was $725 million compared with $733 million, a decrease of $8 million or 1%, driven primarily by lower revenues. This makes the underlying revenue trajectory in the international business an important distinction from the reported earnings growth.
Credit results improved sequentially but remained a key area of attention. Provision for credit losses was $1,079 million, down from $1,217 million in Q2 2026, but up from $1,041 million in Q3 2025. The PCL ratio was 56 basis points, up one basis point year-over-year and down 10 basis points sequentially. Gross impaired loans increased to $7,801 million from $7,608 million last quarter and the gross impaired loan ratio increased one basis point to 100 basis points. Management attributed performing-loan provisions to an unfavourable macroeconomic outlook in corporate and commercial portfolios and portfolio growth in Canadian and International Banking.
Capital returns continued alongside a sequential decline in regulatory capital. The Bank repurchased 8.6 million shares during the quarter and returned $6.3 billion of capital through buybacks and dividends year to date. CET1 was 13.1%, down 20 basis points from the prior quarter, reflecting RWA growth, the recall of a synthetic risk transfer securitization and repurchases, partly offset by earnings less dividends. The filing did not provide quantitative forward financial guidance, but management stated that the Bank exceeded its 14% ROE target in the quarter.
Management, verbatim
Q3 was a record quarter for the Bank, as all business lines reported strong results and we exceeded our medium-term objectives in the period.
Scott Thomson, President and CEO of Scotiabank
In particular, we exceeded our 14% return on equity target this quarter, highlighting the improvements that we have made across the bank to increase margins and fee income.
Scott Thomson, President and CEO of Scotiabank
Not in the filing
stated, not guessed- Quantitative forward financial guidance, including revenue, expense, tax-rate and credit-loss guidance.
- Previous-release outlook for comparison against actual results.
- Segment revenue for Canadian Banking, International Banking, Global Wealth Management, Global Banking and Markets, and Other.
- Gross margin.
- Operating cash flow.
- Free cash flow.
- Cash balance.
- Debt balance.
- Quarterly dividend amount.
- Total dividend amount paid during the quarter.
- Total repurchase dollar value during the quarter.
- Prior-year and prior-quarter percentage changes for total revenue, net interest income, non-interest income, non-interest expenses, net income and EPS, where no percentage change was printed for the specific line item.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.