Bank of Nova Scotia at RBC Capital Markets Canadian Bank CEO Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : So we've had broad-ranging discussions all day, and a lot of it going to ROE. Maybe we'll touch on your ROE aspirations as well. But one of the things that separates your bank, I think, from the others is you came in as a CEO, you had a big investor day, you laid out a plan, and this year, you can pick this up from a lot of different places, but this year you can really, if you read the annual report, you'll pick up on what seems to be like a pivot to growth for 2026. And I want to just start there and maybe just ask you, where do you expect the growth to come from? And as you pivot to growth, one of the things that I'm really interested in is one of the big differentiating factors is your international banking business. What are your expectations for growth there as well for 2026? So unlike ROE, we're going to focus on growth for Scotiabank here with the first question.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : We will for sure. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 5:40PM, BNS.TO - Bank of Nova Scotia at RBC Capital Markets Canadian Bank CEO Conference

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : So you mentioned you started off with the commentary, it's a good place to start. So you exceeded your targets in 2025. You had a lot of growth. What was it that surprised you in 2025?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And then we'll talk about kind of how that's going to work out in '26.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : So let's step back then and just think about the IB segment because that's the one where if I think about, I mean, it's fair to have modest growth expectations from GBM because a lot of things can happen. You say record fourth quarter, but you have higher expectations in wealth and in Canada versus IB. So maybe flesh out for us the growth expectations from IB in 2026, and should we see it accelerating into 2027? And what's -- maybe I'll leave it open-ended, maybe I'll just --

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And maybe just before we leave the international banking segment, we've had some recent events in Venezuela. I don't think you have direct exposure to Venezuela but maybe you can give us a sense of what the feeling is on the ground with your operations in LatAm and sort of what the client feedback has been and what does it possibly mean for your business?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : In shorter term, just to FX spreads, volatility in the marketplace, are we seeing any kind of?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, so maybe we can now shift gears and think about Canada because I think you're targeting double-digit growth in this segment, and it's a tough competitive environment from what I understand. So maybe you can just chat a little bit about the way you see it sort of progressing in a world where we have less immigration in Canada, fairly competitive marketplace, low growth, housing doesn't seem to be reviving anytime soon. How do you -- what do you see in 2026 that gives you so much confidence in a high growth rate for Canada?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And so there's a lot to unpack there. You rattled off a lot, trying to write it all down. So thank you for that. It's really always helpful to the mosaic. I picked up on a couple of things there. I just wanted to sort of go back and revisit. One of the things you mentioned was strong deposits in the red bank. So I'm assuming that excludes the orange bank, Tangerine. So maybe can you talk about that a little bit? I mean, you've had a lot of success in the red bank. What about the orange?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And then you gave us a lot of little data points there on the sales of funds all the way up to second as you exited the year. What's driving that momentum?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, and then maybe we'll just go back to the GBM total, and then there, too, what we're hearing consistently all morning long is a couple of things. One, constructive markets for 2026. Two, strengthen the US, and three, strengthen deposits. And I know deposit gathering is important to you and your US cash management platform. Can you talk about that a little bit? And do you see it as the same sort of construct?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And just to just go back to the GTB and the increased investment in the offering into the US, is that going to be ready for the end of '26?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, great. And so what is the end goal? I mean, like, the US is growing well. You've made some investments there. To 50% of earnings, where does it go? Do you think that that's reasonable to expect it to be bigger than Canada?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, so you touched on ROE. Let's go back to ROE and talk about it. What's driving it from here? I mean, you did 14% in GBM. The overall target is 14%-plus, I guess. And you mentioned it wasn't really leverage so let's --

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Yeah, so let's talk about that. We've seen one bank with an ROA target that's out there. So, A, are you interested in upping your ROE target because your ROA is improving, your return on assets is improving? And then, B, where do you see this ultimately going? What can we do without pushing the common equity Tier-1 ratio down? Is it possible to see 15%, 16% sort of ROEs? And I think a lot of people are saying '27 is the year where you're going to see a real lift. So over to you.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : So I guess that leads to the next question, which is -- there's actually sort of two questions embedded in the next part, so maybe we can talk about this, and we'll do it piecemeal. Every bank says that they prefer organic deployment of capital to buybacks or even inorganic. How do you determine the right balance and what kind of RWA growth are you contemplating, and should we be thinking about Scotia being in a position to really create a lot of capital in '26 and into '27 or really deploying and pushing out the RWA growth?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And so what about inorganic deployment? We know you've purchased Key, and you know the question I've been getting from some people is, there's a lot of things going on at Key now, and potentially they're acquiring or -- So how do you view your position and what do you do if you can buy more or what if Key decides to make an acquisition? What is your initial stance on that?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, I think we're going to take a look at these questions that are coming in or hopefully they haven't. I may have to switch this. I'm sorry about that.

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Yeah, well, yeah. Okay, so, well, there's lots here, so maybe we'll just go in order. Scotia took restructuring charges but full benefits won't accelerate, won't accrete to earnings due to product frontline investments. Can you elaborate on the investments?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, I think I got time to ask one more of these questions. The fiscal '26 impaired PCO ratio is mostly similar to '25. What is needed for more significant credit normalization or a drop in credit losses? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. JANUARY 06, 2026 / 5:40PM, BNS.TO - Bank of Nova Scotia at RBC Capital Markets Canadian Bank CEO Conference

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : And those issues in Chile and Mexico, you think we just grind through it in '26?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Any chance they go down in '27?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Okay, Scott, we're at the time where I hand the floor over for some final remarks and key messages. So what would you like to leave?

Question: Darko Mihelic - RBC Capital Markets Inc - Analyst : Excellent. So thank you very much for joining.