Bank of Nova Scotia at RBC Capital Markets Global Financial Institutions Conference (Virtual) Transcript

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

Question: Darko Mihelic - RBC Capital Markets - Analyst : And it's great to have you here so shortly after your first-quarter conference call. And during that conference call, one of the things I think I want to lead off with here is the international segment. You had mentioned in the call that Scotia Bank expects to achieve international segment quarterly earnings of around $500 million by Q4. So, I think we'll start with some questions around that. First, let's talk with the expectations that loans would grow by about 6% from Q1 to Q4. Now that sounds a little bullish, so I was wondering if you could maybe provide a little color on the loan categories that you are seeing growing right now. And what gives you confidence that you'll achieve such loan growth this year?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Great, thank you for that. And the other thing you mentioned on the call was there was about an $80 million gap in fees and commissions that you expect to close. I was wondering if you could provide some color on the kinds of fees that we're talking about. And why are you so confident it will move in the right direction? And maybe -- is this tied to capital markets? Or maybe just provide some color on the gap in fees, please.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, great, thank you. And the one thing that was talked about quite a bit, and we're hearing this from a lot of banks, is -- and particularly in this segment. I mean, we actually saw a sequential decrease in expenses. And from where I sit, I think to myself, isn't now the time to be spending in anticipation of a stronger economy. I think about things like hiring more frontline staff, advertising, promotion, travel, technology, you name it. All of these things are likely to increase and maybe now you could get ready for this real explosion of economic growth. So, why is cost control something that you're so focused on still? And could we maybe think that you should be thinking about spending instead of saving? So, over to you on the expense side.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, fair enough, okay. And maybe we could -- we should probably touch on credit quality. And -- one of the things we did see in the quarter was a rather large increase in past-due loans, especially credit cards for the international segment. So, I wonder if you could talk a little bit about these impairments that you are expecting and the timing and the losses for the IV segment and how we should think about -- I think you guys have used the word pig in a Python. But how should we think about that? And is there anything you could help us better understand in terms of the timing? Is it really next quarter, the quarter after? Especially because, again, that rather large increase in past-due loans but not impaired.

Question: Darko Mihelic - RBC Capital Markets - Analyst : I guess it's a little bit tougher with the commercial loans because it's lumpy. We look at watchlists and other indicators, but it still doesn't seem like there is a very big increase. So, we always wonder why there's so much conviction in the call, that it's Q2 and Q3 as the peak. And I guess it must be related to the retail loans.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, perfect. Maybe in the interest of time I'm going to switch over to Canada. And maybe just real quick you can give us an idea on some of the thoughts there on Canada. One of the things that I entertain quite a bit a lot of questions from investors is, hey, the housing market seems to defy gravity. And especially in Canada house prices have gone up. And is there (technical difficulty) or is it really all just everything looks really good and robust right now? So, maybe you can talk about vaccination rate or house prices or is there anything that gives you any red flags on the Canadian environment?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, that's a strong market. So, maybe switching gears a little bit more just again in the interest of time. One of the areas that I get hit quite a bit with in terms of questions is the repositioning of your capital markets business. And we are seeing a higher run rate of earnings and -- maybe can you touch on what you've accomplished here? And what should investors expect from this business as a normal run rate of earnings going forward? And this will also help me with my modeling. So, maybe we can touch on the capital markets business and what you've done there.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And of course when we are talking about $500 million, you're only speaking to the part that's not in the Latin American business as well. So, in totality we're actually looking at a fairly large business. And it sounds like we should be more excited about the growth opportunity in LatAm. Would that be a fair --?

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, I'm just going to quickly scan down below to see if we have any questions from the audience. And if not, I think I want to sort of end the session, so I do want to try and get us back on time here. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2021 / 1:40PM, BNS.TO - Bank of Nova Scotia at RBC Capital Markets Global Financial Institutions Conference (Virtual) I guess maybe I'm going to sneak this one question in, because it's sort of been on -- it's quite topical. On capital we get a little bit of questions on -- not -- certainly not anything I'm going to ask you about the regulator or anything like that. But we do get the question, and I do have one that ask about capital. So, maybe we can fit the question in the following way. Is the Bank carrying too much capital? And how do we get to an ROE? Does it require a lot of buybacks? Or what's your vision of the ROE given our starting point of what seems to be very strong capital and, at the moment, you cannot deploy any of the capital with buybacks or dividend increases? So, maybe talk about how capital works into your future ROE plans.

Question: Darko Mihelic - RBC Capital Markets - Analyst : We've got about 3 minutes left. And you touched on wealth. So, why don't we just finish off on wealth? You mentioned there was a very strong growth rate. Now there was a lot of investments, a lot of integration. So, maybe give us a bit of an update here and the run rate earnings, what should we expect? What are the next steps for this business? And maybe you can just sort of finish off the session here with your thoughts on key takeaways for investors. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2021 / 1:40PM, BNS.TO - Bank of Nova Scotia at RBC Capital Markets Global Financial Institutions Conference (Virtual)

Question: Darko Mihelic - RBC Capital Markets - Analyst : Excellent. Well, thank you so much for your time this morning. It's been a good chat and all the best, Raj, and stay healthy.