The 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 solid operating performance despite pressure from rising provisions for loan losses. We expect that credit quality metrics will weaken, but remain manageable, and that the bank will maintain conservative underwriting standards. We also expect the S&P Global Ratings forecast RAC ratio (8.7% at second-quarter 2024) will be at the middle of our adequate 7%-10% range over the next two years. Our stable outlook also reflects our expectation that BNS' largely new management team will execute on its strategy. We could lower our rating if: Credit losses were to rise substantially; We expected the RAC ratio to fall below 7% on a

...The Bank of Nova Scotia's (BNS) strategic refresh will see the bank prioritize growth in Canada, the U.S., and Mexico. To improve its earnings return profile, BNS initiated a strategic refresh that, among other initiatives, identified geographies and businesses where it will prioritize incremental capital investments. BNS intends to invest 90% of its incremental capital in Canada, the U.S., Mexico, and the English Caribbean, while managing growth in its other key jurisdictions, namely Chile and Peru. Expansion into the U.S. will be a key strategic focus. On Aug. 12, 2024, BNS announced the acquisition of an approximate 14.9% stake in KeyCorp. We view the deal as neutral to the credit rating, but we are monitoring the bank's expansion in the U.S. The forecast risk-adjusted capital ratio likely will remain below the peer average. We forecast that the bank's risk-adjusted capital (RAC) ratio will stay in the middle of the adequate 7%-10% range over the next two years, while...

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