Bank of Nova Scotia

The stable outlook reflects S&P Global Ratings' expectation that over the two-year outlook horizon, BNS will continue to post strong operating performance and manageable credit quality metrics. We expect the S&P Global Ratings' forecast RAC ratio will be close to 8% (7.4% at second-quarter 2022) reflecting strong operating performance, slower risk-weighted assets (RWA) growth, and more modest share repurchases and dividend payouts than recent trends. Offsetting the positives somewhat will be normalizing provisions for loan losses. We believe BNS is vulnerable to a sharp decline in home prices, given its modestly higher exposure than the peer average to consumer loans. We could lower our rating if: Credit losses were to rise substantially; We expected the RAC ratio to fall below

...A strong domestic retail and commercial franchise and a diversified international banking business focused on the Americas and certain Pacific Alliance countries underpin the rating. The Bank of Nova Scotia (BNS) benefits from a longstanding and well-established Canadian retail and commercial franchise that provides stability to its operating performance. BNS has scaled back its international footprint over many years by exiting noncore countries and operations, which has reduced its risk profile and earnings volatility. Forecast risk-adjusted capital ratio (RAC) to be at the lower end of our adequate range. We forecast that in the next two years, the bank's RAC ratio will be close to 8% (at the lower end of our adequate range of 7%-10%), reflecting strong operating performance offset in part by rising provisions for loan losses beginning in 2023 as credit quality deteriorates somewhat due to slower economic activity. BNS' exposure to residential mortgages and other consumer loans is slightly...

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