new investor presentation · 2020. 10. 2. · bank may include forward-looking statements orally to...

Investor PresentationAugust 2020

2

Caution Regarding Forward-Looking Statements

From time to time, our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may beincluded in other filings with Canadian securities regulators or the U.S. Securities andExchange Commission, or in other communications. In addition, representatives of theBank may include forward-looking statements orally to analysts, investors, the mediaand others. All such statements are made pursuant to the “safe harbor” provisions ofthe U.S. Private Securities Litigation Reform Act of 1995 and any applicable Canadiansecurities legislation. Forward-looking statements may include, but are not limited to,statements made in this document, the Management’s Discussion and Analysis in theBank’s 2019 Annual Report under the headings “Outlook” and in other statementsregarding the Bank’s objectives, strategies to achieve those objectives, the regulatoryenvironment in which the Bank operates, anticipated financial results, and the outlookfor the Bank’s businesses and for the Canadian, U.S. and global economies. Suchstatements are typically identified by words or phrases such as “believe,” “expect,”“foresee,” “forecast,” “anticipate,” “intend,” “estimate,” “plan,” “goal,” “project,” andsimilar expressions of future or conditional verbs, such as “will,” “may,” “should,”“would” and “could.”

By their very nature, forward-looking statements require us to make assumptions andare subject to inherent risks and uncertainties, which give rise to the possibility that ourpredictions, forecasts, projections, expectations or conclusions will not prove to beaccurate, that our assumptions may not be correct and that our financial performanceobjectives, vision and strategic goals will not be achieved.

We caution readers not to place undue reliance on these statements as a number ofrisk factors, many of which are beyond our control and effects of which can be difficultto predict, could cause our actual results to differ materially from the expectations,targets, estimates or intentions expressed in such forward-looking statements.

The future outcomes that relate to forward-looking statements may be influenced bymany factors, including but not limited to: general economic and market conditions inthe countries in which we operate; changes in currency and interest rates; increasedfunding costs and market volatility due to market illiquidity and competition forfunding; the failure of third parties to comply with their obligations to the Bank and itsaffiliates; changes in monetary, fiscal, or economic policy and tax legislation andinterpretation; changes in laws and regulations or in supervisory expectations orrequirements, including capital, interest rate and liquidity requirements and guidance,and the effect of such changes on funding costs; changes to our credit ratings;operational and infrastructure risks; reputational risks; the accuracy and completenessof information the Bank receives on customers and counterparties; the timelydevelopment and introduction of new products and services; our ability to execute ourstrategic plans, including the successful completion of acquisitions and dispositions,including obtaining regulatory approvals; critical accounting estimates and the effect of

changes to accounting standards, rules and interpretations on these estimates; globalcapital markets activity; the Bank’s ability to attract, develop and retain key executives;the evolution of various types of fraud or other criminal behaviour to which the Bank isexposed; disruptions in or attacks (including cyber-attacks) on the Bank’s informationtechnology, internet, network access, or other voice or data communications systemsor services; increased competition in the geographic and in business areas in which weoperate, including through internet and mobile banking and non-traditionalcompetitors; exposure related to significant litigation and regulatory matters; theoccurrence of natural and unnatural catastrophic events and claims resulting from suchevents; the emergence of widespread health emergencies or pandemics, including themagnitude and duration of the COVID-19 pandemic and its impact on the globaleconomy and financial market conditions and the Bank’s business, results ofoperations, financial condition and prospects; and the Bank’s anticipation of andsuccess in managing the risks implied by the foregoing. A substantial amount of theBank’s business involves making loans or otherwise committing resources to specificcompanies, industries or countries. Unforeseen events affecting such borrowers,industries or countries could have a material adverse effect on the Bank’s financialresults, businesses, financial condition or liquidity. These and other factors may causethe Bank’s actual performance to differ materially from that contemplated by forward-looking statements. The Bank cautions that the preceding list is not exhaustive of allpossible risk factors and other factors could also adversely affect the Bank’s results, formore information, please see the “Risk Management” section of the Bank’s 2019 AnnualReport, as may be updated by quarterly reports.Material economic assumptions underlying the forward-looking statements containedin this document are set out in the 2019 Annual Report under the headings “Outlook”,as updated by quarterly reports. The “Outlook” sections are based on the Bank’s viewsand the actual outcome is uncertain. Readers should consider the above-noted factorswhen reviewing these sections. When relying on forward-looking statements to makedecisions with respect to the Bank and its securities, investors and others shouldcarefully consider the preceding factors, other uncertainties and potential events. Anyforward-looking statements contained in this document represent the views ofmanagement only as of the date hereof and are presented for the purpose of assistingthe Bank’s shareholders and analysts in understanding the Bank’s financial position,objectives and priorities, and anticipated financial performance as at and for theperiods ended on the dates presented, and may not be appropriate for other purposes.Except as required by law, the Bank does not undertake to update any forward-lookingstatements, whether written or oral, that may be made from time to time by or on itsbehalf.

Additional information relating to the Bank, including the Bank’s Annual InformationForm, can be located on the SEDAR website at www.sedar.com and on the EDGARsection of the SEC’s website at www.sec.gov.

3

TABLE OF CONTENTSScotiabank Overview 4

• Leading Bank in the Americas 5• Well-Diversified Business with Strong Returns 6• Business Lines 7• Why Invest in Scotiabank? 8• Focused on Higher Return Markets 9• Increasing Banking Penetration 10• Economic Outlook in Core Markets 11• COVID-19: Pacific Alliance 12• Scotiabank Customer Activity 13• Customer Assistance Programs 14• Q3 2020 Financial Performance 15• Earnings and Dividend Growth 16• Strong Capital Position 17• Digital Progress 18• Technology Strategy 19• Fintech 20• Environmental, Social & Governance (ESG) 21

Business Line Overview: Canadian Banking 23Business Line Overview: International Banking 31Business Line Overview: Global Wealth Management 42Business Line Overview: Global Banking and Markets 46Risk Overview 50

• Well Provisioned 51• Risk Snapshot 52• Risk Density 53• Historical PCL Ratios on Impaired Loans 54• Retail Loans and Provisions 55• Sectors Most Impacted by COVID-19 57• Energy - E&P and Oilfield Services Exposure 58

Treasury and Funding 59• Pandemic Response 60• Funding Strategy 61• Wholesale Funding 62• Deposit Overview 63• Wholesale Funding Utilization 64• Liquidity Metrics 65

Appendix 1: Core Markets: Economic Profiles 66Appendix 2: Canadian Housing Market 72Appendix 3: Bail-in and TLAC 79Appendix 4: Covered Bonds 83Appendix 5: Additional Information 87Contact Information 91

4

ScotiabankOverview

• Leading bank in the Americas with competitive scale in high return markets

• Greater geographic focus, increased scale in core markets, and improved business mix

• Improved capital and liquidity ratios

• Repositioning of business substantially complete

• Strong credit quality. Well provisioned.

• Near-term earnings impact from COVID-19

5

64%10%

16%3%7%

Peru(BBB+)

#3 Bank

United States (AA+)Top 15 FBO

Canada (AAA)#3 Bank

Leading Bank in the Americas1Core markets: Canada, US, Mexico, Peru, Chile and Colombia

Full-Service,Universal Bank

CanadaMexicoPeruChile Colombia CaribbeanUruguay

Wholesale Operations

USAUKSingaporeAustraliaIrelandHong Kong SARChina BrazilSouth KoreaMalaysia IndiaJapan

7th largest bank by assets1 in the Americas

1 Ranking by asset as at August 20, 2020, Bloomberg; 2 Adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and impairment charge on software asset. Operating Leverage excludes divested operations; 3 Ranking based on market share in loans as of June 2020 for PAC (incl. M&A), as of May 2020 in Canada for publically traded banks; 4 Adjusted net income attributable to equity holders of the Bank for the 9 months ended July 31, 2020

Earnings by Market2,4

Scotiabank2Q3 2020

YTDChange

YTD/YTD

Revenue $23,634MM +2%Net Income $5,023MM -28%Return on Equity 10.2% (370 bps)Operating Leverage +1.1% n.a.Productivity Ratio 52.9% +20 bpsTotal Assets $1.2T +10%

Ranking by Market Share3

Canada #3

USMCA USA Top 15 FBO

Mexico #5Peru #3Chile #4Colombia #6

Canada

U.S.A

PAC

C&CA

PAC

Other

Colombia (BBB-)#6 Bank

Chile(A+)#4 Bank

Mexico(BBB)

#5 Bank

6

Canadian Banking

P&C

35%

International Banking P&C

17%

Global Banking and

Markets

30%

Global

Wealth Management

18%

Canada64%

U.S.10%

Mexico5%

Peru7%

Chile4%

C&CA3%

Other7%

14.5%

5.8%

13.9% 15.6%10.2%

CanadianBanking

InternationalBanking

Global WealthManagement

Global Bankingand Markets

All Bank

Well-Diversified Business with Strong Returns

Earnings by Business Line1,2,3 Earnings by Market1,2

1 Net income attributable to equity holdersor for the 9 months ended July 31, 2020; 2 Adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and impairment charge on software asset; 3 Excluding Other segment and Colombia (loss)

Caribbean and Central America

Q3 2020 YTDEARNINGS MIX

$5.2B3Q3 2020 YTD

EARNINGS MIX

$5.2B3Per

Personal & Commercial Banking

52%WholesaleBanking

30%

WealthManagement

18%Europe, Asia, Brazil, Australia

7

Personal & Commercial Banking

Business Lines

Business Line

Wealth Management Capital MarketsActivity

Global Wealth Management

Global Banking and Markets

Canadian Banking

International Banking

NIAEH1 ($MM)

% All-Bank1

ProductivityRatio1

ROE1

Products • Mortgages• Auto Loans• Commercial

Loans• Personal Loans• Credit Cards

• Mortgages• Auto Loans• Commercial

Loans• Personal Loans• Credit Cards

• Corporate Banking• Advisory• Equities• Fixed Income• Foreign Exchange• Commodities

• Asset Management• Private Banking• Private Investment

Counsel• Brokerage• Trust

Employees2

$1,822 $865 $964 $1,574

35% 17% 18% 30%

35-40% 25-30% ~15% 15-20%% Target

46.7% 52.6% 61.6% 44.2%

14.5% 5.8% 13.9% 15.6%

18,409 50,403 7,148 2,408

1 Adjusted figures for the 9 months ended July 31, 20202 As at July 31, 2020

8

Why Invest in Scotiabank?

Leading bank in the Americas

Diversified exposure to high quality growth markets

Increasing scale and market share in core markets

• Unique Americas footprint provides diversified exposure to higher growth, high ROE banking markets

• 225 million people in the Pacific Alliance countries comprise the 6thlargest economy in the world

• Competitive scale and increasing market share in core markets• Competitive advantages in technology, risk management, and funding

versus competitors• Increased scale in Wealth Management and P&C businesses via M&A

• Six core markets: Canada, US, Mexico, Chile, Peru and Colombia• ~90% of earnings from six core markets

• ~70% of earnings from stable P&C banking and wealth businesses • Simplified footprint lowers operational risk and regulatory costs• Strong Canadian risk management culture with strong capabilities in AML

and cybersecurity

Improved earnings quality, lower risk profile

• High levels of technology investment supports digital banking strategy to increase digital sales and adoption

• Named “Bank of the Year” in Canada (2019)• Named “Best Bank in North America for Innovation in Digital Banking (2020)

Strengthening competitive advantages in technology and talent

9

12.5%

8.0%10.1%

7.8%

2.4%

0%

5%

10%

15%

20%

Focused on Higher Return Markets

Banking: Average ROE by Market (Latest Reporting Period)

Return on equity in latest reporting period for the leading bank by market share for loans in each country.Canada and US figures are average for five largest and 10 largest market share banks in each country, respectively Sources: Bloomberg LLP, Company Financial Reports.

Canada Latam USAsia Europe

~80% of all-bank earnings

10

Increasing Banking Penetration

Brazil Chile

Canada

MexicoPeru

Colombia

Spain

U.S.

U.K.

PAC4

Mature Markets

Bubble size represents nominal GDP

Growth Markets

Czech Republic

Cambodia

C&CAPAC

Scotia P&C Markets

Scotia Americas Wholesale Markets

Other Markets

1 Source: World Bank Open Data 2018. Banking Penetration is defined as account ownership at a financial institution or with a mobile-money-service provider (% of population ages 15+)2 Source: World Bank Open Data 2018. GDP per capita is nominal gross domestic product divided by mid year population

$0 $10,000 $20,000 $70,000$60,000$50,000$40,000$30,000

GDP per Capita (US$)2

150

100

50

0

Bank

ing

Pene

trat

ion

(%)1

11

Real GDP (Annual % Change)

Country 2010–18Average 2019Previous1 Current2 Previous1 Current2

Canada 2.2 1.7 -9.1 -6.6 6.5 5.4

U.S. 2.3 2.3 -6.3 -4.7 7.0 5.4

Mexico 3.0 -0.3 -8.4 -9.1 1.1 3.1

Peru 4.8 2.2 -9.0 -11.5 7.0 8.7

Chile 3.6 1.1 -4.5 -6.0 2.9 4.4

Colombia 3.8 3.3 -2.9 -7.5 3.6 5.0

PAC Average 3.8 1.6 -6.2 -8.5 3.7 5.3

Economic Outlook in Core Markets

Real GDP Growth Forecast (2019 – 2021)

Source: Scotiabank Economics. 1 Forecasts as of April 17, 2020 for Canada; Forecasts as of May 16, 2020 for U.S., Mexico, Peru, Chile, and Colombia 2 Forecasts as of August 4, 2020 for Canada; Forecasts as of August 8, 2020 for U.S., Mexico, Peru, Chile, and Colombia

Forecast2020F 2021F

12Legend: Comprehensive Partial Minor/None

COVID-19: Pacific Alliance

Mexico

Colombia

Peru

Chile

Economic Outlook GDP Growth – Current Forecast (Previous Forecast)• 2020: -9.1% (-8.4%). 2021: +3.1% (+1.1%)

COVID-19 New Case Trend: COVID-19 Restrictions:

Fiscal & Financial Support: 0.8% of GDPKey Measures: Liquidity programs, customer assistance programs, small business and sector-specific programs.

Travel Restrictions:

No

Event Restrictions:

Some

School Closures:

Yes

QuarantineMeasures:

No

Curfew Restrictions:

Some



Fiscal & Financial Support: 7.0% of GDPKey Measures: Liquidity programs, retirement savings withdrawals, loan guarantees, customer assistance programs, tax holidays.



Fiscal & Financial Support: 19.3% of GDPKey Measures: Liquidity programs, customer assistance programs, loan guarantees, tax holidays, employment programs.



Fiscal & Financial Support: 3.9% of GDPKey Measures: Liquidity programs, customer assistance programs, loan guarantees, tax holidays, small business programs.


Yes

Event Restrictions:

Yes

School Closures:

Yes

QuarantineMeasures:

Yes


Some


Yes

Event Restrictions:

Yes

School Closures:

Yes

QuarantineMeasures:

Yes


Yes


Yes

Event Restrictions:

Yes

School Closures:

Yes

QuarantineMeasures:

Yes


Some

Source: Scotiabank Economics.

13

Scotiabank Customer Activity

-

2,000

4,000

6,000

8,000

Nov Dec Jan Feb Mar Apr May Jun Jul

2020 2019

Canada: Daily Debit and Credit Card Transaction Volumes ($MM)

Canada: New Mortgage and Auto Originations ($MM)

1,335

3,0552,045

4,2425,092

317

152

493

658

937

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Customer DCM/ECM Activity ($MM)1

30% 30% 29% 28% 29% 30% 30%

39%36%

33% 31% 30%

Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20

Business Banking Revolving Facilities Utilization Rate

DCM ECM

-

100

200

300

400

500

Nov Dec Jan Feb Mar Apr May Jun Jul

2020 2019

Start of COVID-19 Lockdown

1 Canadian debt and equity capital markets issuance activity

14

Customer Assistance Programs

Weekly Deferral Requests Granted ($B) 1 Deferral Expiry Schedule ($B) 1

1 As at July 31, 20202 Canadian payments % includes accounts that have not yet completed first billing cycle since expiring

41.5

23.3

11.93.9

Jul-20 Aug-20 Sep-20 Oct-20 Post -Oct-20

2.4

18.1 11.13.7 1.4 1.9

Jul-20 Aug-20 Sep-20 Oct-20 Post -Oct-20

Canadian Banking International Banking

Product TypesActive Deferral

Requests 1Active

Total Exposure1 % Deferral ExposureExpired 1

Expiring Deferral Exposure in Q4/201 % Current following

Deferral Expiry1,2#(’000s) % ($B) % ($B) %

CanadaMortgages 137 58.1% $39.0 94.0% 10.8% $35.3 90.6% 99.4%Credit Cards 33 13.9% $0.2 0.4% 66.9% $0.2 100.0% 94.4%Personal Loans 66 28.0% $2.3 5.6% 57.4% $2.1 91.2% 93.2%Total/Average 236 100.0% $41.5 100.0% 16.5% $37.6 90.7% 96.3%

InternationalMortgages 99 4.3% $9.4 52.0% 24.1% $8.0 85.3% 90.6%Credit Cards 1,504 64.5% $3.5 19.5% 16.9% $3.2 90.2% 86.8%Personal Loans 727 31.2% $5.2 28.5% 37.3% $5.0 97.0% 89.5%Total/Average 2,330 100.0% $18.1 100.0% 27.3% $16.2 89.6% 88.8%

-

4

8

12

Mar-20 Apr-20 May-20 Jun-20 Jul-20

International Canada

15

914 761312 374433 53 332 600

CB IB GWM GBM

Q3/19 Q3/20

Q3 2020 Financial Performance

$MM, except EPS Q3/20 Y/Y Q/QReported

Net Income $1,304 (34%) (2%)Pre-Tax, Pre Provision Profit $3,716 +8% +3%

Diluted EPS $1.04 (31%) +4%Revenue $7,734 1% (3%)

Expenses $4,018 (5%) (8%)Productivity Ratio 52.0% (300 bps) (280 bps)

Core Banking Margin 2.10% (35 bps) (25 bps)PCL Ratio1 136 bps +88 bps +17 bps

PCL Ratio on Impaired Loans1 58 bps +6 bps +2 bps

Adjusted2

Net Income $1,308 (47%) (5%)Pre-Tax, Pre Provision Profit $3,738 (3%) +2%

Diluted EPS $1.04 (45%) -Revenue $7,689 (3%) (3%)

Expenses $3,951 (4%) (8%)Productivity Ratio 51.4% (30 bps) (260 bps)

• Adjusted EPS down 45%2

• Pre-tax, pre-provision profit (PTPP) down 3%2, up 2% excluding divestitures

• Adjusted Revenue down 3%2 or flat excluding impact of divestitures

• Core banking NIM down 35 basis points o Excess balance sheet liquidity and margin

compression in business lines

• Adjusted Expenses declined 4%2 or -1.6% excluding impact of divestitures

• YTD PTPP up 7%2 ex. divestitures• Adjusted YTD operating leverage of -0.5%2 , +1.1%2

excluding divestitures

YEAR-OVER-YEAR HIGHLIGHTS

ADJUSTED NET INCOME3 BY BUSINESS SEGMENT ($MM)

1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures2 Refer to Non-GAAP Measures on slide 45 for adjusted results3 After non-controlling interests4 Y/Y growth rate is on a constant dollars basis

-53%Y/Y

-93%Y/Y4

+60%Y/Y+6%Y/Y

16

$1.96

$3.49

$2.70

09 10 11 12 13 14 15 16 17 18 19 20YTD

1 Reflects adoption of IFRS in Fiscal 2011. 2 Excludes notable items for years prior to 2016. For 2016 onwards, results adjusted for acquisition and divestiture-related amounts, impact of additional pessimistic scenario in ACLs, Derivative Valuation Adjustment, and impairment charge on software asset. 3 As of July 31, 2020

Earnings per share (C$)1,2

$3.31

$7.14

$3.91

09 10 11 12 13 14 15 16 17 18 19

20Y

TD

Dividend per share (C$)

+8%CAGR

+6%CAGR

Total shareholder return3

1.9%

5.2%

9.8%

6.3%

8.4%10.0%

5 Year 10 Year 20 Year

Scotiabank Big 5 Peers (ex. Scotiabank)

Earnings and Dividend GrowthStrong track record of stable and predictable earnings and growing dividends

17

CET1 Ratio

Strong Capital Levels

11.2% 11.1% 11.4% 10.9% 11.3%

1.1% 1.1% 1.1% 1.0% 1.5%2.5% 2.0% 2.1% 2.1% 2.1%

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

CET1 Tier 1 Tier 2

14.0% 14.9%14.2% 14.6%14.8%

Strong Capital Position

1 Net Income Available to Equity Holders

+17 bps -7 bps

10.9%+31 bps -26 bps +28 bps

11.3%

Q2/20Reported

Earnings Dividends Lower RWA ECL TransitionalCapital Relief

Pension Q3/20Reported

(1)

Internal capital generation

18

Goal>50%

Digital Progress

1 By the Banker magazine, a Financial Times publication2 Canada: F2017 22%, F2018 26%, F2019 26% PACs: F2017 13%, F2018 19%, F2019 29%3 Canada: F2017 36%, F2018 38%, F2019 42% PACs: F2017 20%, F2018 26%, F2019 35%4 Based on weighted-average Apple Store and Google Play ratings (August 23, 2020)

Digital Retail Sales2 Digital Adoption3

Goal>70%

+2,700 bps +2,000 bps

1115

2228

38

20172016 20192018 Q3/20

26 2933

3946

20182016 20192017 Q3/20

Winner of The Banker “Innovation in Digital Banking North America1“ award #1 ranking in Canada Online Banking Satisfaction Study (J.D. Power 2020) Leading mobile banking app in Canada4

Digital account opening and sales capabilities that reduces processing time by up to 75% in PAC Implemented various digital solutions to provide financial support and advisory to our customers

during COVID-19

19

Technology Strategy

● Build a strong and scalable platform foundation

● Rebalance core technology spending towards modernization

● Cloud-first strategy for automation and speed

● Common systems● Software re-use, best practice-sharing● Consistent software design● Customer-focused micro-services● Analytics on real-time data● Strong cyber-security foundation

Technology Investment Growth Rate (YoY Change)

2014 2015 2016 2017 2018 2019

14%

9%7%

Technology Investment ~11% of revenue ($3.6B)

Moderating to steady-state growth

rate11%

21%

12%

$● Maintain consistent

investment in technology

20

Fintech

Partnerships Proof of Concepts1Focus Areas

• Credit adjudication

• Accessibility

• Natural language processing

• Personal financial management

• Customer experience and self-service

• Machine-learning modelling

• Data collaboration

• Cybersecurity1 Selected proof of concepts with fintech partners

21

Environmental, Social & Governance (ESG)

Scotiabank’s Climate Commitments include:

Mobilize $100 billion by 2025 to reduce the impacts of climate change.

Memberships, Associations and Partnerships

22

• Committed to mobilize $100 billion by 2025 to reduce the impacts of climate change

• Issued USD$500 million Green Bond. Proceeds fund assets under the Scotiabank Green Bond Framework, including clean transportation and green buildings

• Launched Sustainable Finance Group within the Global Banking and Markets (GBM) division

• Achieved 17% greenhouse gas (GHG) reduction from a 2016 baseline, achieving our 10% target two years early; set new target of 25% by 2025

• Increased internal price on carbon from $15 to $30/tonne for investments in GHG reduction initiatives; will rise to $60/tonne by 2022

• Implemented a Climate Change Risk Assessment tool in corporate & commercial lending to assess clients’ physical & transition climate risks

• COVID-19 response includes various relief measures for customers, added personal days and wellness expense allocations for employees, and a commitment of $15 million to support communities most at-risk, including our partner programs and our ongoing support of hospitals and healthcare professionals

• Nearly $100 million invested globally in communities where we operate as part of our global philanthropy program

• $3 billion in funding committed over the first three years of The Scotiabank Women InitiativeTMto advance women-led businesses in Canada

• Signed the UN Women’s Empowerment Principles and UN LGBTI Codes for Business Conduct

• $250 million committed over 10 years to help employees adapt to the digital economy

• CEO signed the BlackNorth Initiative CEO Pledge and was named to the Board of Directors

• Top 1% of global financial institutions for Corporate Governance in Dow Jones Sustainability Index

• 38% of our directors are female. We first established a Board diversity policy in 2013

• Appointed third independent Chairman in 2019. Separate CEO and Chairman roles since 2004

• Dedicated significant Board time to cybersecurity, anti-money laundering, conduct and culture issues, keeping the Bank safe

• Named Best Bank in North America for Innovation in Digital Banking by The Banker Magazine

Environmental, Social & Governance (ESG)Highlights from 2019 / 2020

23

Business Line Overview

Canadian Banking

24

Canadian BankingTop 3 bank in personal & commercial banking in Canada

75%

25%

62%

19%17%

2%

• Improve Sustained Business Performance: Invest to grow our higher ROE businesses, including Business Banking, to deliver consistent and stable long-term earnings growth

• Instill a Winning team Culture: Engage employees through a RESULTS (Revenue, Earnings, Simplify, Urgency, Listen, Trust, Support) focused culture

• Superior Customer Experience: Develop deeper household relationships for our customers across Canada by providing differentiated focus and service to those who are most loyal and engaged

• Scale our unique partnerships and assets: Leverage our long-term partnerships and assets like MLSE, Scene and Wealth businesses to generate growth across our division

• Canadian Banking provides a full suite of financial advice and banking solutions, supported by an excellent customer experience, to Retail, Small Business, Commercial Banking customers. Canadian Banking also provides an alternative self-directed banking solution to over 2 million Tangerine Bank customers.

STRATEGIC OUTLOOK

REVENUE MIX1, 2

Retail

Commercial

Personal Loans

Business and Government Loans

AVERAGE LOAN MIX1

$2.5B $356B

Residential Mortgages

1 For the three months ended July 31, 2020; 2 Reflects the adoption new leases accounting standards, IFRS16; 3 3-5 year target from 2020 Investor Day; 4 Adjusted Net income attributed to equity shareholders

Credit Cards

MEDIUM-TERM FINANCIAL OBJECTIVES

Target3

NIAT Growth4 5%+

Productivity Ratio

25

914 902 908481 433

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Canadian Banking

$MM Q3/20 Y/Y Q/QReported

Net Income1 $429 (53%) (10%)Pre-Tax, Pre Provision Profit $1,328 (10%) +2%

Revenue $2,500 (6%) (1%)Expenses $1,172 (2%) (4%)

PCLs $752 +212% +12%Productivity Ratio 46.9% +210 bps (140 bps)

Net Interest Margin 2.26% (18 bps) (7 bps)PCL Ratio2 0.85% +57 bps +8 bps

PCL Ratio Impaired Loans2 0.36% +6 bps 0 bpsAdjusted3

Net Income1 $433 (53%) (10%)Pre-Tax, Pre Provision Profit $1,333 (10%) +2%

Expenses $1,167 (2%) (4%)PCLs $752 +212% +12%

Productivity Ratio 46.7% +210 bps (140 bps)PCL Ratio2 0.85% +57 bps +8 bps

PCL Ratio Impaired Loans2 0.36% +6 bps 0 bps


1 Attributable to equity holders of the Bank2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures3 Refer to Non-GAAP Measures on slide 45 for adjusted results

• Adjusted Net Income down 53%3o PCLs up 212%; mainly from performing loan PCLso Adjusted expenses down 2%3

o Strong volume growth and lower expenses offset by lower net interest income and non-interest income

• Revenue down 6%o Net interest income down 4%; margin compressiono Non-interest income down 13%; lower economic

activity• Loan growth of 5%

o Residential mortgages up 6%; credit card loans down 13%

o Business loans up 10%• Deposit growth of 10% • NIM down 18 bps

2.44% 2.41% 2.36% 2.33% 2.26%

ADJUSTED NET INCOME1,3 ($MM) AND NIM (%)

26

Canadian Banking: Financial PerformanceHigh quality retail loan portfolio: ~93% secured

1 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data2 Spot Balance as of July 31, 2020

DOMESTIC RETAIL LOAN BOOK2

81%

2%Credit Cards

5%Unsecured

12%Automotive

Real Estate Secured Lending

$303.6B

• High quality residential mortgage portfolioo 39% insured; remaining 61% uninsured has an LTV of 53%1

• Market leader in auto loanso $37.9 billion retail auto loan portfolio with 7 OEM relationships (3 exclusive)

o Prime Auto and Leases (~91%)

o Stable lending tenor with contractual terms for new originations averaging 77 months (6.5 years) with projected effective terms of 53 months (4.5 years)

• Prudent growth in credit cardso $6.6 billion credit card portfolio represents ~2% of domestic retail loan book

and 1.0% of the Bank’s total loan book

o Organic growth strategy focused on payments and deepening customer relationships

o Strong risk management culture with specialized credit card teams, customer analytics and collections focus

o Prudent growth of Card portfolio given elevated unemployment across Canada and additional pressure on loan obligations: derisking policies remain in place to ensure borrowers’ debt capacity and credit profile are within the Bank’s controlled risk appetite under crisis

27

Canadian Banking: Residential MortgagesHigh quality, diversified portfolio

$108.7

$33.4 $27.3$14.6 $10.8 $8.9

$15.9

$11.7$3.7

Ontario BC & Territories Alberta Quebec Atlantic Provinces Manitoba &Saskatchewan

1 Includes Wealth Management2 LTV calculated based on the total outstanding balance secured by the property. Property values indexed using Teranet HPI data3 New originations defined as newly originated uninsured residential mortgages and have equity lines of credit, which include mortgages for purchases

refinances with a request for additional funds and transfer from other financial institutions

CANADIAN MORTGAGE PORTFOLIO1: $238B (SPOT BALANCES AS AT Q3/20, $B)

% ofportfolio 52.3% 19.0% 13.1% 7.0% 4.6% 4.0%

$2.0$0.2 $0.7

Freehold - $204B Condos - $34B$124.6

$45.1

$31.0$16.6 $11.0 $9.6

39%

61%Uninsured

Total Portfolio1:

$238 billion

Insured

• Residential mortgage portfolio1 of $238 billion: 39% insured; LTV 53% on the uninsured book2o Mortgage business model is “originate to hold”

o New originations3 in Q3/20 had average LTV of 64%

o Majority is freehold properties; condominiums represent approximately 14% of the portfolio

• Four distinct distribution channels: all adjudicated under the same standards o 1. Broker (~60%); 2. Branch (~18%); 3. Mobile Salesforce (~21%) and 4. eHOME (~1%)

o Scotiabank eHOME is our fully digital 4th distribution channel for pre-approvals and standard applications. Since the launch of eHOME, we have processed more than 15,000 mortgage applications. In September, we will be launching eHOME in Quebec, to support the Grow Quebec Strategy

28

FICO is a registered trademark of Fair Isaac Corporation2 FICO ® distribution for Canadian uninsured portfolio based on score ranges at origination 3 Percentage is based on Total Mortgages

Canadian Residential Mortgages – LTVs*Credit fundamentals remain strong

4%10% 10%

14%

62%

< 635 636 - 706 707 - 747 748 - 788 > 788

Q3/19 Q2/20 Q3/20

CanadaTotal Originations ($B) 14.0 10.5 13.0

Uninsured LTV 64% 64% 64%

GTATotal Originations ($B) 4.5 3.3 3.7


GVATotal Originations ($B) 1.6 1.4 1.5


Average FICO® ScoreCanada 788

GTA 790GVA 789

• Only

29

Client Experience

Maintain industry-leading position in Client Experience

through best-in-class onboarding

and servicing.

Product Innovation

Broaden asset and payments portfolios to deepen Client

relationships anddrive earnings growth

Strategic Partnerships

Leverage partnerships with Raptors, MLSE and FinTechs to

broaden our reach, deliver innovative solutions and drive

client growth.

TangerineCanada’s Leading Digital Bank

No.1Client Satisfaction among Mid-Sized

Banks in 2020 for the 9th year in a row

+15%Earnings

CAGRDeposits

CAGRMaintain #1 Client

Experience Position

+6% #1Medium Term Objectives

Results

Our Approach

1Tangerine received the highest score among midsize retail banks in the J.D. Power 2012-2020 Canada Retail Banking Satisfaction Studies of customers’ satisfaction with their primary bank. Visit jdpower.com/awards.

Digital Bank in Canada

#1

+13% Deposit

Growth Y/Y

+29% New Client

Growth Y/Y

Tangerine continues to see momentum as it evolves from being a Savings Bank to an Everyday Bank

+14% Digital Transaction

Growth Y/Y

+15% Digital Client Engagement

Y/Y

+39% New Client Onboarding via Mobile

YTD

30

Automotive FinanceCanada’s leader in automotive finance

• Provide personal and commercial dealer financing solutions, in partnership with seven leading global automotive manufacturers in Canada

• Portfolio remained flat year-over-year1o Personal up 1.4%, Commercial down 7.6%

1 For the three months ended July 31, 2020; 2 CBA data as of April 2020, includes RBC, CIBC, Canadian Western Bank, National Bank, TD, Scotiabank, Laurentian Bank; 3 DealerTrack Portal data, includes all Near-Prime Retail providers on DealerTrack Portal, data for July 2020 originations; 4 Includes BMO, CIBC, RBC, Scotiabank, TD, HSBC, Canadian Western Bank, Laurentian Bank, data as of March 2020

37%

63%

Market Share

22%

78%

27%

73%

Prime Retail Market Share2 Near-Prime Retail Market Share3 Commercial Floorplan Market Share4

Exclusive Relationships

Semi-Exclusive Relationships*

* 1 to 2 other financial institutions comprise Semi-Exclusive relationships

MAZDA VOLVO JAGUAR/LAND ROVER

HYUNDAI CHRYSLER TESLAGM79%

8%

14%

AVERAGE ASSET MIX

$44.0B1100% Secured

Commercial

Near-Prime Retail

Prime Retail

31



32

International BankingLeading P&C bank focused on high quality growth markets in Latin America and the Caribbean

• International Banking operates primarily in Latin America and the Caribbean with a full range of personal and commercial financial services. Core markets are the Pacific Alliance countries of Mexico, Peru, Chile and Colombia

STRATEGIC OUTLOOK


77%

21%

2%

REVENUE1

$2.6B

Asia

C&CA

Latin America

25%Mexico

26%Peru

26%Chile15%

Colombia

8%Other Latin

America

57%

24%

13%

6%LOAN MIX1

$157BCredit Cards

Personal Loans

Residential Mortgages

Business Loans

• Optimize Footprint: Continue executing with discipline announced acquisitions and divestitures to enhance the risk profile of our portfolio and improve quality of our earnings

• Lead in Customer Experience and Digital: Continue accelerating our digital transformation to amplify business impact and continue deploying digital solutions to other channels to optimize our distribution model

• Accelerate Growth Drivers: Leverage new strategic partnership to accelerate insurance growth, scale our Capital Markets business in the Pacific Alliance and build our Wealth business with focus in affluent customer segment

1 For the 3 months ended July 31, 2020; 2 3-5 year target from 2020 Investor Day; 3 Excluding divestitures impact

92%PAC

Target2

NIAT Growth3 9%+

Productivity Ratio

33

4.51% 4.51% 4.51% 4.28%3.99%

614 567 556

197 52

147 15859

1

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

761 725615

19753


$MM1 Q3/20 Y/Y Q/QReported

Net Income2 $26 (96%) (85%)Pre-Tax, Pre Provision Profit $1,180 (21%) (4%)

Revenue $2,570 (16%) (4%)Expenses $1,390 (11%) (4%)

PCLs $1,278 189% 27%Productivity Ratio 54.1% +260 bps -

Net Interest Margin3 3.99% (52 bps) (29 bps)PCL Ratio4 3.33% +208 bps +55 bps

PCL Ratio Impaired Loans4 1.49% +12 bps +4 bpsAdjusted5

Net Income2 $53 (93%) (73%)Net Income – Ex Divested Ops.2 $52 (91%) (73%)

Pre-Tax, Pre Provision Profit $1,226 (21%) (4%)Expenses $1,344 (11%) (4%)

PCLs $1,278 189% 27%Productivity Ratio 52.3% +250 bps (20 bps)

PCL Ratio4 3.33% +208 bps +55 bpsPCL Ratio Impaired Loans4 1.49% +12 bps +4 bps

YEAR-OVER-YEAR HIGHLIGHTS1• Adjusted Net Income ex. divestitures down 91%2,5.

Excluding divested operations:o PCLs up 187%; mainly from performing loan PCLso Strong loan growth of 13% and deposits growth 11%

• Revenues ex. divestitures down 8%o Margin compression and lower non-interest incomeo PAC revenues down 5%

• NIM down 52 bps3o Mainly driven by excess balance sheet liquidity,

business mix changes and central bank rate cuts• Adjusted Expenses ex. divestitures down 6%5

o Acquisition synergies and good cost control• Adjusted YTD operating leverage of -0.8%5 ex.

divestitures

ADJUSTED NET INCOME2,5 ($MM) AND NIM3 (%)

1 Y/Y and Q/Q growth rates (%) are on a constant dollars basis, while metrics and change in bps are on a reported basis 2 Attributable to equity holders of the Bank3 Net Interest Margin is on a reported basis4 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures 5 Refer to Non-GAAP Measures on slide 45 for adjusted results Ex. Divested Ops Divested Ops

34

The Bank of the Pacific Alliance (PAC)

1 10 million customers in PAC including affiliates

Only universal bank with full presence in all Pacific Alliance countries

Well-established bank with 30+ years of experience in the region

8 million1 Retail and ~30,000 Corporate & Commercial customers>100 multi-national corporate customers within the Pacific Alliance

Competitive scale in each market

35

PAC Fundamentals Driving Growth

Strong Governance

Sound Macro Environment

Favourable Demographics

● Democratic countries with open economies

● Independent central banks with inflation targets

● Free trade agreements and free-floating currencies

● Business-friendly environments

● Diversified economieswith strong GDP growth

● Resilience to economic and political cycles

● Investment Grade-rated

● Low Debt/GDP ratios with lower fiscal deficits compared to G7

● Increasing adoption of banking services

● 225 million people with median age of 30 years

● Strong domestic consumption

● Much lower banking penetration compared to Canada

● Among the fastest growing smartphone markets in the world

● Considerable growth in middle class

36

Resilience of the Pacific Alliance

+2.9% +3.0% +2.7%+1.8%

+3.1%

+1.6%

201920172014 2015 2016 2018

Social Unrest

Election& Trade Dispute

Notable Events (by country)

Average AnnualGDP Growth

Election Low Oil PricesElection & Odebrecht

International Banking Earnings

(C$B)$1.7 $1.9 $2.1

$2.4 $2.8$3.2

No events

+13% CAGR

Approximate GDP Impact on country

-2.2%1 -1.5%4-2.6%2 -1.5%3

NOTE: Pacific Alliance GDP growth calculated based on mean average of the four PAC countries1 2013 GDP growth rate vs. 2014 – 2017 average; 2 2014 vs. 2015 – 2017 average; 3 2016 vs. 2017; 4 2016 vs. 2017 – 2019 average; 5 Estimated impact in 2020F due to social unrest;Source: Past GDP data from IMF; forecast from Scotiabank Economics

-1.8%5

37

337465

666 579

All figures in CAD$Constant currency 1 Includes bank and wealth branches; does not include 177 Credito Familiar branches2 Adjusted; for the LTM ended July 31, 2020 not adjusted for currency3 Adjusted; for the LTM ended July 31, 20204 Source: CNBV as of June 20205 After NCI on an adjusted basis

23.1%

13.8% 13.4% 12.5%

7.8% 7.4%4.4% 3.3%

1.9%

BBVA Banorte Santander Banamex HSBCScotiabank Inbursa Bajio Regio

2016 2017 2018

NIAT5

+20%CAGR

Footprint

Balance and Market Position

Financial Performance

~3.5million

Customers Employees

~12,900

Branches1

~592

Average LoansLoan Market Share4Average Deposits

7.8% $33billion

$26billion

ROE3Total NIAT2, 5 Productivity3

$371million

11.2% 53.9%

Productivity Ratio

2017 20182016 2019

63.0%

58.6%

55.0%55.4%

2019

Market Position by Loans4

Operating Leverage

2017 20182016 2019

1.5%

7.5% 6.9%

-0.9%

2019

Scotiabank in MexicoIncluding all Business Segments

38

572 604688

810

All figures in CAD$Constant currency 1 Including subsidiaries2 Adjusted; for the LTM ended July 31, 2020 not adjusted for currency3 Adjusted; for the LTM ended July 31, 20204 Market share as of June 2020. Scotiabank includes SBP, CSF and Caja CAT5 After NCI on an adjusted basis

NIAT5+12%CAGR

Footprint



4.0million

Customers1 Employees1

12,000

Branches1

314


17.6% $22billion

$19billion

ROE 3Total NIAT2,5 Productivity3

$554million

16.2% 35.4%

Productivity Ratio

2017 20182016 2019

40.0%39.3%

37.5%

35.2%

Operating Leverage

7.9%

1.8%

5.0%

6.8%

2017 20182016 2019

2016 2017 2018 2019

Scotiabank in PeruIncluding all Business Segments

Market Position by Loans433.1%

19.7% 17.6%12.0%

BCP BBVA InterbankScotia

39

339 381515

718

All figures in CAD$Constant currency 1 Includes affiliates & consumer microfinance2 Adjusted; for the LTM ended July 31, 2020 not adjusted for currency 3 Adjusted; for the LTM ended July 31, 20204 Market share as of June 2020. Local view, exclude offshore loans. Source: CMF5 NIAT Before NCI

NIAT5

+28%CAGR

Footprint



>3million

Customers1 Employees

~9,000

Branches1

162


14.0% $44billion

$23billion


$367million

6.2% 43.2%

Productivity Ratio

53.6%

49.5%

44.7% 43.4%


18.6%16.3%

14.3% 14.0% 14.0%

9.8%

Santander Chile EstadoBCI ItaúScotiabank

Operating Leverage

2017 20182016 20192017 20182016 2019

-2.3%

8.5%

13.3%

4.3%

2016 2017 2018 2019

Scotiabank in ChileIncluding all Business Segments

40

3873 85

139

All figures in CAD$Constant currency 1 As of November 20192 Adjusted; for the LTM ended July 31, 2020 not adjusted for currency 3 Adjusted; for the LTM ended July 31, 20204 Market share as of June 20205 Members of AVAL Group: Banco de Bogotá, Banco de Occidente, Banco Popular and Banco AV Villas. AVAL is 2nd in market share in terms of Loans (25%) and 1st in Deposits (27%)6 After NCI on an adjusted basis

NIAT6

+53%CAGR

Footprint



Customers1 Employees1

~9,000

Branches1

188


5.8% $12billion

$11billion


-$2million

-0.3% 58.5%


3.1million

26.1%

16.7%12.1% 10.3%

6.2% 5.8%4.2%

Bancolombia ScotiabankColpatria

Davivienda Bogotá5 BBVA Occidente5 Popular

Productivity Ratio

50.3%52.6% 53.4%

54.5%

Operating Leverage

1.6%

-6.4%

-1.8% -2.4%

2017 20182016 20192017 20182016 2019

2016 2017 2018 2019

Scotiabank in ColombiaIncluding all Business Segments

41

Thailand: 6% interest in TMB Bank

• Reduced investment in Thailand in Q1/20 resulting ~6% minority interest in TMB Bank

China: ~18% interest in Bank of Xi’an

• CAD $877MM carrying value as of July 31, 2020

• CAD $496MM of net income for twelve months ended October 31, 2019

Other RegionsLeading Caribbean & Central American franchise

• Leading bank serving retail, commercial, and corporate customers

• Major markets include the Dominican Republic, Jamaica, Trinidad & Tobago, Costa Rica, Panama and The Bahamas

• Sharpened geographic footprint by exiting higher risk, low growth jurisdictions including Haiti, El Salvador, Puerto Rico, US Virgin Islands, British Virgin Islands and 7 of the Leeward Islands

Dominican Republic: #4 bank

• Acquired Banco Dominicano del Progreso in 2019

AsiaCaribbean & Central America

42


Global Wealth Management

43

Global Wealth ManagementProfitable, High Growth, Strong Momentum

• Global Wealth Management is focused on delivering comprehensive wealth management advice and solutions to clients across Scotiabank’s footprint

1 Figures as of July 31, 2020 or for the 3 months ended July 31, 2020 2Adjusted for Acquisition-related costs and impact of additional pessimistic scenario33-5 year target from 2020 Investor Day


Competitive Advantages

Asset Management: Proprietary and 3rd Party Fund DistributionAdvisory: Fully-integrated advice model, including Private Banking

~7,200 14

Assets Under Management1Assets Under Administration1

$503 $293

Productivity Ratio1,2Return on Equity1,2 Operating Leverage1,2

14.3% 60.3% 3.0%

billionbillion

Target3

Earnings Growth 8%+

Productivity Ratio

44

13.5% 13.6% 13.7% 13.8% 14.3%

Global Wealth Management$MM, except AUM/AUA Q3/20 Y/Y Q/Q

ReportedNet Income1 $321 +6% +6%

Pre-Tax, Pre Provision Profit $435 +5% +6%Revenue $1,135 - +1%

Expenses $700 (3%) (2%)PCLs $1 N/A N/A

Productivity Ratio 61.7% (170 bps) (170 bps)AUM ($B) $293 (1%) +6%AUA($B) $503 +2% +5%

Adjusted2

Net Income1 $332 +6% +6%Pre-Tax, Pre Provision Profit $450 +5% +5%

Expenses $685 (3%) (2%)PCLs $1 N/A N/A

Productivity Ratio 60.3% (190 bps) (160 bps)


1 Attributable to equity holders of the Bank2 Refer to Non-GAAP Measures on slide 45 for adjusted results

• Adjusted Net Income up 6%2 • Revenue up 2% excluding divestitures

o Higher brokerage fees from strong iTRADEvolumes

o Strong retail mutual fund net sales• Adjusted Expenses down 3%2 • Adjusted YTD operating leverage of +2.4%2,

excluding divestitureso Third consecutive quarter with positive operating

leverage• Adjusted productivity ratio2 improved 190bps• Excluding divestitures, AUM up 4% and AUA up 6%

o Driven by market recovery from prior quarter and strong net sales

ADJUSTED NET INCOME1,2 ($MM) AND ROE2 (%)

311 312 318 314332

1 2312 314 318 314

332

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20Ex. Divested Ops Divested Ops

45

Award-Winning Investment Management

AUMInvestment Performance Highlights

79%

75%

of assets in the top two quartiles over five-year period –

of core funds in the top two quartiles over five-year period –

193302

2016 2019

+16%CAGR

AUA

404497

2016 2019

+7%CAGR

Award-Winning Advisory

#2 in MoneySense Magazine’s 2020 Best Online Brokers in Canada (Scotia iTrade)

#2 bank-owned brokerage firm in the 2020 Investment Executive Brokerage Report Card (ScotiaMcLeod)

#2 in Canadian retail mutual fund net sales Over 100 mutual fund industry performance awards since 2017 (ScotiaFunds & Dynamic)“Straight A” scorecard in the 2020 Principles for Responsible Investment report (Jarislowsky Fraser)

Global Wealth ManagementStrong investment performance, increasing scale

46


Global Bankingand Markets

47

Global Banking and MarketsSecond-largest Canadian wholesale banking and capital markets business

54%

36%

6%4%

GEOGRAPHICREVENUE1

$1.5B

• Full-service wholesale bank the Americas, with operations in 21 countries, serving clients across Canada, the United States, Latin America, Europe and Asia-Pacific

STRATEGIC OUTLOOK

Europe

Canada

US

Asia

43%

42%

15% REVENUE BY BUSINESS LINE1

$1.5B

Business Banking

FICC

Global Equities

• Client Focus: Increase our relevance to our corporate clients and drive alignment of resources with the most significant revenue opportunities, to capture more of the non-lending wallet

• Strengthen our capital markets offering: Enhance distribution and product capabilities and deepen institutional relationships• Build on our presence in the Americas: Enhance our franchise in Canada, continue to pursue targeted, phased growth in the U.S., create a

top-tier local and cross-border Pacific Alliance business, and leverage Europe and Asia for distribution of our Americas product in support of our corporate clients

1 For the 3 months ended July 31, 2020; 2 3-5 year target from 2020 Investor Day


Target2

NIAT Growth ~5%

Productivity Ratio ~50%

Operating Leverage Positive

48

12.8% 13.8% 14.0%15.4%

17.5%

Global Banking and Markets YEAR-OVER-YEAR HIGHLIGHTS

1 Attributable to equity holders of the Bank2 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures3 Refer to Non-GAAP Measures on slide 45 for adjusted results

• Net Income up 60%o Continued strong trading and investment banking

revenues

• Revenue up 43%o Non-interest income up 57%

o Net Interest income up 11%

• Loans grew 18% and Deposits up 46%• Expenses up 5%• Improved productivity ratio by 1,460 bps• Positive YTD operating leverage of 26%• PCL ratio2 of 50 bps

374 405 451523 600

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

$MM Q3/20 Y/Y Q/QReported

Net Income1 $600 +60% +15%

Pre-Tax, Pre Provision Profit $925 +88% +10%

Revenue $1,545 +43% +6%

Expenses $620 +5% 1%

PCLs $149 N/A (4%)

Productivity Ratio 40.1% (1,460 bps) (210 bps)

PCL Ratio2 0.50% +51 bps -4 bps

PCL Ratio Impaired Loans2 0.13% +14 bps +4 bps

ADJUSTED NET INCOME1,3 ($MM) AND ROE3 (%)

49

Scotiabank in the U.S.

• Client focus is on S&P 500, investment grade corporates• Current sectors of strength include: Power & Utilities and Energy. Focus areas for growth include

Consumer/Industrial/Retail (CIR), Technology, and Healthcare

• Wholesale bank in the US: Corporate & Investment Banking, Capital Markets, Cash Management and Trade Finance

• Top 15 foreign bank organization (FBO) in the US

>4,000

Clients1 Employees1

~700

Offices1

5

Average Loans1Revenue1 Average Deposits1

$43 $57

ROE1Total NIAT1 Productivity1

$777 18.7% 46.2%

$1,896billionmillion billion

million

1 As presented in the 2020 Investor Day; figures for fiscal 2019

50

Risk Overview

51

3,524 3,482 3,4884,362

5,445

1,749 1,663 1,607

1,717

1,958

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Total ACLs ($MM)

+45%

3,524 3,482 3,4884,362

5,445

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

753 771

Total Performing ACLs ($MM)

+56%

1 Includes allowances for credit losses on Off-Balance Sheet exposures and acceptances, debt securities and deposits with financial institutions

1,749 1,663 1,607 1,717 1,958

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Total Impaired ACLs ($MM)1

+22%

Performing ACLs Impaired ACLs

• $7.4 billion in total ACLs• 56% increase ($2 billion) in performing

ACLs over the past 2 quarters.

• Adequate coverage for future net write-offs

5,273 5,145 5,0956,079

7,403

Well Provisioned

52

94%

6%Secured

Unsecured

64%

8%7%5%

5%5%4%2%

Canada

Chile

U.S.

C&CA

Other International

Mexico

Peru

Colombia

0.3%

0.4%

0.5%

0.9%

0.9%

1.0%

1.2%

1.5%

1.7%

2.3%

2.3%

2.3%

2.8%

2.8%

2.9%

4.4%

5.1%

5.9%

Chemicals

Metals

Forest Products

Sovereign

Hospitality and Leisure

Health Care

Mining

Food and Beverage

Transportation

Agriculture

Automotive

Utilities

Technology and Media

Other

Energy

Wholesale and Retail

Financial Services

Real Estate and Construction

Risk Snapshot

1 As at July 31, 20202 % of total loans and acceptances3 As at October 31, 2019

RWA Breakdown1 Credit Exposure by Country2,3 Credit Exposure by Sector1,2

Canadian Banking1,2 International Banking1,2

87%11%

2%Credit Risk

Operational Risk

Market Risk

67%

33%

Secured

Unsecured

$431B $611B1

$318B $68B

Personal & Commercial Lending

53

35.3%

32.7%

30%

32%

34%

36%

38%

40%

Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Risk Density

• Risk density has declined over the past 5 years• Major acquisitions have been successfully integrated with no adverse impact on risk density

Credit RWA Density (Credit Risk-Weighted Assets/Credit Exposure at Default)

54

Historical PCL Ratios on Impaired Loans

ALL BANK1,2

CANADIAN BANKING1

INTERNATIONAL BANKING1

1 Provision for credit losses on certain assets – loans, acceptances and off-balance sheet exposures2 2002: Included $454 million related to the Bank’s exposure to Argentina; 2009: Higher PCLs driven by economic conditions, event distributed across business lines. Higher general allowance and sectoral allowance (automotive related)

0.31% 0.30% 0.27% 0.28% 0.22% 0.20% 0.19% 0.23%0.37% 0.35% 0.28% 0.23% 0.18% 0.23% 0.23% 0.28% 0.29% 0.24% 0.28%

0.34%

0.00%0.25%0.50%0.75%1.00%1.25%1.50%1.75%

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Q32

0Y

TD

0.92%

1.27%

0.57%

0.25% 0.14% 0.11% 0.12%0.24%

0.59%0.47%

0.34% 0.36% 0.32% 0.40% 0.42%0.50% 0.45% 0.43% 0.49%

0.56%

0.00%0.25%0.50%0.75%1.00%1.25%1.50%1.75%

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Q32

0YT

D

0.77%

1.41%

0.23% 0.23% 0.23% 0.18% 0.25%0.44%

0.90% 1.00%0.75% 0.75%

0.86%

1.27% 1.24% 1.26% 1.21% 1.29% 1.29%1.44%

0.00%0.25%0.50%0.75%1.00%1.25%1.50%1.75%

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Q32

0YT

D

55

78 84 94 99 10585 85 96

216 224

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Canadian Retail: Loans and Provisions1

1 Includes Wealth Management. PCL excludes impact of additional pessimistic scenario2 Includes Home Equity Lines of Credit and Unsecured Lines of Credit3 Includes Tangerine balances of $6 billion and other smaller portfolios4 81% secured by real estate; 13% secured by automotive

MORTGAGES AUTO LOANS

LINES OF CREDIT2 CREDIT CARDS

1 1 0 1 21 1 0 44

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

96 72 80

87 7473 70 73

164 169

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

402

379 377 445 401339

381 385

896 1002

Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

PCL as a % of avg. net loans (bps) PCLs on Impaired Loans as a % of avg. net loans (bps)

Loan Balances Q3/20 Mortgages Auto Loans Lines of Credit2 Credit Cards Total

Spot ($B) $238 $39 $33 $7 $3183

% Secured 100% 100% 63% 3% 94%4

56

218 208

163

251 250 267

231 203

246

228

550 591

Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/201

COLOMBIA

549 531 471

406579 542455

377 420

439

939

1552

Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/201

148 150 154

191

190 238159 155 160

175

279 321

Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/201

156 138 165 170231 221

157 141 187 178

457

556

Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/201

MEXICO

372545 473 471

395 361402 491 424 470

970

1290

Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/201

1 PCL excludes impact of additional pessimistic scenario2 Total includes other smaller portfolios3 Excludes impact of divested operations

CHILE

PERU

Loan Balances Q3/20 Mexico Peru Chile Colombia Caribbean & CA Total2

Secured ($B) $10 $4 $20 $2 $10 $46

Unsecured ($B) $2 $6 $6 $5 $3 $22

Spot Total ($B) $12 $10 $26 $7 $13 $68

PCL as a % of avg. net loans (bps) PCLs on Impaired Loans as a % of avg. net loans (bps)

Caribbean & CA

Markets with Greater Weighting to Unsecured

Markets with Greater Weighting to Secured

216 5702.6x

157 3001.9x

1993 50732.5x3

447 11272.5x

416 12423.0x

International Retail: Loans and Provisions

57

Sectors Most Impacted by COVID-191

Real Estate – Office and Retail: 1.3%$636.5B

Total Loans ($B)

Hospitality & Leisure: 0.8%

Energy - E&P and Oilfield Services: 1.5%

Transportation – Air Travel: 0.5%

Total COVID-19 High Impact: 4.1%

Hospitality & Leisure

55%

12%1%

7%

11%

3%

11%

$8.5B

Real Estate: Office and Retail

Office REIT $1.0 69%

Office Real Estate $3.3 44%

Retail REIT $1.3 97%

Retail Real Estate $2.9 56%

Total2 $8.5 59%

23%

16%

4%

8%40%

9%

$5.4B(0.8%)

Hotels $4.2 26%

Cruise Lines $0.3 0%

Gaming $0.9 1%

Total2 $5.4 20%

(1.3%)

%IG

Other

U.S.Mexico

Latin America

C&CA

CanadaC&CA

Mexico

Latin America

U.S.

%IG$B

$B

1 Sectors which have experienced the greatest disruption in normal business activities and impact to revenue due to the COVID-19 pandemic (including, but not limited to, government-mandated closures) relative to other sectors2 May not add due to rounding

Transportation: Air Travel18%

54%

12%

6%

4%6%

$3.0B(0.5%)

Aircraft Finance $1.4 99%

Airlines $0.4 3%

Airports $1.2 76%

Total $3.0 76%

CanadaLatin

America

Mexico

C&CA

Other

Europe

%IG$B

Canada

Other

Europe

58

Energy - E&P and OFS Exposure1

1 As of July 31, 2020. Excludes Midstream and Downstream 2 May not add due to rounding

Loans and Acceptances Outstanding ($B)

% of Total E&Pand OFS

% of Total Loans and Acceptances Outstanding

% Investment Grade

Total Exploration & Production (E&P) 8.3 85% 1.3% 47%Canadian E&P* 3.6 37% 0.6% 63%U.S. E&P 1.2 12% 0.2% 15%

Oilfield Services (OFS) 1.5 15% 0.2% 6%

Total E&P and Oilfield Services Exposure2 9.82 100% 1.5% 41%

• Total Loans and Acceptances Outstanding reduced by $1.2Bn (11%) vs. Q2• 41% is rated investment Grade. 49% of Total Energy (including

Midstream and Downstream) exposure is Investment Grade

• Outlook has improved due to the recent increase in oil prices• Exploration & Production

• Majority of non-investment grade exposure is to secured reserve-based loans or sovereign owned/controlled entities

• Oilfield Services • Majority of non-investment grade exposure is secured. Focused on

companies with stronger liquidity and balance sheets

• ACL coverage in E&P and OFS beyond Stage 3• Added substantially to Stage 1&2 ECL in Q2 and Q3 through expert

credit judgement. US exposure has material subordinated debt as a first loss tranche and is largely secured

0.6

4.8

0.2 0.4

2.5

1.3

E&P and OFS Exposure by Geography2

$9.8B(%IG)

Canada (49%)

Latin America

(35%)

U.S.(13%)

Asia(93%)

Europe(0%)

C&CA(0%)

*Decline in Canadian E&P Investment Grade vs. Q2 2020 related to downward rating migration of the portfolio

59

Treasury and Funding

60

COVID-19 ResponseMaintained elevated liquidity and access to funding markets

• Maintained elevated levels of liquidity, well in excess of regulatory requirements o LCR of 141%, +9% Q/Q and +18% Y/Y

o Pacific Alliance countries ended Q3 with LCRs of 160-180%

o HQLA of $227B, +$40B Q/Q and +$67B Y/Y, is substantially comprised of Level 1 assets

• Reduced wholesale funding and market sourced funding utilizing excess liquidityo Discontinued incremental participation in central bank funding programs

o Deposit growth reduced need for wholesale funding

• Q3 term issuance activity included TLAC and covered bond issueso $1.7B of bail-inable senior and $0.6B of bail-inable structured notes to support TLAC build

o US$ 1.25B Fixed Rate Resetting Perpetual Subordinated Additional Tier 1 Capital notes

o Self-issued $7.5B of covered bonds to be available to pledge to the Bank of Canada term repo facility

611 In addition to the programs listed, there are also CD programs in the following currencies: Yankee/USD, EUR, GBP, AUD, HKD

Funding StrategyDiversified funding sources

• Increase contribution from customer deposits

• Continue to reduce wholesale funding utilization while building TLAC

• Maintain balance between efficiency, stability of funding and pricing relative to peers

• Diversify funding by type, currency, program, tenor and source/market

• Utilize a centralized (head office managed) funding and associated risk management approach

Funding Programs1US Debt & Equity Shelf (senior / subordinated debt, preferred and common shares)Limit – USD 40 billion

Global Registered Covered Bond Program(uninsured Canadian mortgages)Limit – CAD 100 billion

CAD Debt & Equity Shelf (senior / subordinated debt, preferred and common shares)Limit – CAD 15 billion

EMTN ShelfLimit – USD 20 billion

START ABS program (indirect auto loans)Limit – CAD 15 billion

Australian MTN programLimit – AUD 8 billion

Singapore MTN programLimit – USD 7.5 billion

Halifax ABS shelf (unsecured lines of credit)Limit – CAD 7 billion

Principal at Risk (PAR) Note shelfLimit – CAD 6 billion

Trillium ABS shelf (credit cards)Limit – CAD 5 billion

USD Bank CP ProgramLimit – USD 35 billion

62

2%Asset-Backed

Securities

Wholesale FundingWholesale funding diversity by instrument and maturity1,6,7

1 Excludes repo transactions and bankers acceptances, which are disclosed in the contractual maturities table in the MD&A of the Interim Consolidated Financial Statements. Amounts are based on remaining term to maturity.2 Only includes commercial bank deposits raised by Group Treasury.3 Excludes asset-backed commercial paper (ABCP) issued by certain ABCP conduits that are not consolidated for financial reporting purposes.4 Represents residential mortgages funded through Canadian Federal Government agency sponsored programs. Funding accessed through such programs does not impact the funding capacity of the Bank in its own name.5 Although subordinated debentures are a component of regulatory capital, they are included in this table in accordance with EDTF recommended disclosures.6 As per Wholesale Funding Sources Table in MD&A, as of Q3/20.7 May not add to 100% due to rounding.

27%

12% Mortgage

Securitization4

Bearer Deposit Notes,Commercial Paper &

Short-Term Certificate of Deposits

2%Asset-Backed

Commercial Paper3

26%Senior Notes

14%Covered Bonds

4%Subordinated

Debt5

19

11

20

8 8

18

3 1

3

8

7

54

4

< 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years >

TERM FUNDING MATURITY TABLE(EXCLUDING SUB DEBT AND MORTGAGE SECURITIZATION)(CANADIAN DOLLAR EQUIVALENT, $B)

Senior Debt ABS Covered Bonds

$25

$20

$28

$13$11

$22

1

12%Bail-inable Notes

1%Deposits from Banks2

$221B

63

$172

$174

$170

$…

$179

$197

$197

$211

$221

$223

$227 $263

$270

Q3/

17

Q4/

17

Q1/

18

Q2/

18

Q3/

18

Q4/

18

Q1/

19

Q2/

19

Q3/

19

Q4/

19

Q1/

20

Q2/

20

Q3/

20

Deposit OverviewStrong growth in personal & business and government deposits

PERSONAL DEPOSITS (SPOT, CANADIAN DOLLAR EQUIVALENT, $B)

PERSONAL DEPOSITS

$198

$200

$201

$204

$211

$215

$222

$225

$223

$225

$224

$235

$244

Q3/

17

Q4/

17

Q1/

18

Q2/

18

Q3/

18

Q4/

18

Q1/

19

Q2/

19

Q3/

19

Q4/

19

Q1/

20

Q2/

20

Q3/

20

• All Q/Q growth from Canada• Impacted by liquidity injected into the

system by central banks and government relief programs

• Important for both relationship purposes and regulatory value

BUSINESS & GOVERNMENT DEPOSITS1(SPOT, CANADIAN DOLLAR EQUIVALENT, $B)

1 Calculated as business & government deposits less wholesale funding as per Wholesale Funding Sources table in the MD&A, adjusted for Sub Debt

BUSINESS & GOVERNMENT• Continuing to leverage relationships to

grow deposits

• Focusing on operational, regulatory friendly deposits

• Impact from government relief programs

3Y CAGR – 7.1%

3Y CAGR – 16.4%

64

Wholesale Funding UtilizationDeclining reliance on wholesale funding, particularly short-term

WHOLESALE FUNDING / TOTAL ASSETS REDUCTION IN WHOLESALE FUNDING DRIVEN BY SYSTEM LIQUIDITY

• Ended incremental participation in central bank wholesale funding programs as system liquidity drove deposit growth o Continued access to term senior and capital wholesale

funding markets

MONEY MARKET WHOLESALE FUNDING / TOTAL WHOLESALE FUNDING

REDUCTION IN MONEY MARKET FUNDING

• Absorbing central bank system liquidity via lower short term funding balanceso Primarily driven by lower certificate of deposits

37.4%35.6%

39.7%

29.8%

Q3/

17

Q4/

17

Q1/

18

Q2/

18

Q3/

18

Q4/

18

Q1/

19

Q2/

19

Q3/

19

Q4/

19

Q1/

20

Q2/

20

Q3/

20

23.7% 24.2% 23.1%

18.9%

Q3/

17

Q4/

17

Q1/

18

Q2/

18

Q3/

18

Q4/

18

Q1/

19

Q2/

19

Q3/

19

Q4/

19

Q1/

20

Q2/

20

Q3/

20

65

Liquidity MetricsWell funded Bank with very strong liquidity

• Liquidity Coverage Ratio (LCR)o Maintained elevated levels of liquidity, well in excess of regulatory requirementso Supported by central bank liquidity related to pandemic responseo LCR of 150-200% in Pacific Alliance countries

125% 124% 128% 125% 123% 125% 127%132%

141%

Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

• High Quality Liquid Assets (HQLA)o Substantially comprised of Level 1 assets

o Strong growth: +$40B Q/Q and +$67B Y/Y

$138 $144$158 $158 $160 $165 $168

$188

$227

Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q3/20

Core Markets:Economic Profiles

Appendix 1

67

Canadian EconomyDiverse sources of growth with a strong balance sheet

-1

0

1

2

3

U.S. Canada Eurozone U.K. Japan

(10.7)(12.7) (12.7) (13.6)

(14.7) (15.9) (16.6)

(23.8)-25

-20

-15

-10

-5

0

GE UK IT FR JN CA* Adv. Econ.

US

AN

NU

AL

% C

HA

NG

E

% OF GDP49.0 49.285.9 94.2

106.7 107.0142.7

168.9

Canada* Germany U.K. OECD France U.S. Italy Japan

Sources: Scotiabank Economics, Haver Analytics, Statistics Canada.Forecasts as of August 4, 2020.

GENERAL GOVERNMENT NET DEBT

% O

F G

DP

REAL GDP GROWTH

2010–2018 2019–2021f

GOVERNMENT FINANCIAL DEFICITS

CANADIAN GDP BY INDUSTRY

(May 2020)3.6%

12.0%22.4%

7.6%

7.3%7.2%

6.4%

14.4% 10.1%

8.9%

Finance, Insurance, & Real Estate

Health & Education

Wholesale & Retail Trade

Manufacturing

Mining and Oil & Gas Extraction

ConstructionPublic Administration

Professional, Scientific,

& Technical Services

Transportation & Warehousing

Other

* Canadian federal deficit reflects Scotiabank Economics’ forecast as of Aug. 4, 2020.Sources: Scotiabank Economics, IMF WEO (June 2020 estimates), CBO.

* Canadian government net debt obtained from Scotiabank Economics’ Federal Economic and Fiscal Snapshot (July 8, 2020).Sources: Scotiabank Economics, IMF Fiscal Monitor (April 2020).

68

Mexican EconomyDiverse economy

Top 5 Trading Partners*

* Trade data updated as of Q1-2020

MEXICAN GDP BY INDUSTRY*

(Q1 2020)

6.5%

16.3%

6.4%

6.5%4.1%1.9%

16.0%17.4%

15.7%


Health & Education

Wholesale & Retail Trade

Manufacturing


ConstructionPublic

Administration




Other

3.3%Natural

Resources

• The Mexican economy reflects a solid mix of commodities, goods production, and services

• Trade remains dominated by the U.S., but Mexico’s diversification agenda is underpinned by 13 free-trade agreements with 47 countries that account for 40% of global GDP and include all G7 countries

United States 60%

Others 21%

Germany 3%South Korea 3%

Canada 4%

China 10%

5.9%

* Q2-2020 real GDP growth -18.9% y/y. Industry GDP breakdown not yet available for Q2-2020.

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

17 18 19 20

Other* Net Exports InventoriesInvestment Government ConsumptionReal GDP

Contributions to Mexican GDP Growthy/y % change

*Statistical discrepancy, subject to revision.Sources: Scotiabank Economics, Haver Analytics.

69

Peruvian EconomyResilient economic fundamentals

PERUVIAN GDP BY INDUSTRY

(Q1 2020)

10.4%

2.0%

53.0%

12.7%

4.7%Wholesale and

Retail Trade

Mining, Oil, & Gas

Construction

Electricity & Water

Other

11.5%Manufacturing

5.8%Natural

Resources


United States 16%

Others43%

Brazil 4%

Canada 4% South Korea

5%

China 28%

• Peru’s important resource sectors are increasingly balanced by stronger service-sector activity and solid economic fundamentals

• Peru has 16 free-trade agreements with 49 countries that account for 66% of global GDP

• Investment is making a consistently strong contribution to GDP, which should make solid growth rates more sustainable in the future

-8

-6

-4

-2

0

2

4

6

8

17 18 19 20

Net Exports Inventories

Investment Government

Consumption Real GDP

Contributions to Peruvian GDP Growthy/y % change

Sources: Scotiabank Economics, Haver Analytics.


70

Chilean EconomyAdvanced economy with wide-ranging trade links

CHILEAN GDP BY

INDUSTRY (Q1 2020)1.8%

9.0%15.6%

6.6%

4.7%19.2%8.2%

8.6% 10.3%

12.7%

Finance, Insurance, & Real Estate Wholesale & Retail Trade

Manufacturing


Construction

Public AdministrationHousing & Personal

Services


Restaurants & Hotels

Other

3.3%Natural Resources


United States

17%

Others 36%

Brazil 6%

Japan 6%

South Korea 3%

China 31%

• Chile’s mix of economic activities reflects its status as an advanced market economy

• Chile’s diversified trading relationships are supported by 23 free-trade agreements with 60 countries that account for 73% of global GDP

• Investment has been a strong contributor to growth in Chile, which should underpin future productivity gains as the economy rebounds from recent social difficulties

-6

-4

-2

0

2

4

6

8

17 18 19 20

Net Exports Inventories

Investment Government

Consumption Real GDP

Contributions to Chilean GDP Growthy/y % change

Sources: Scotiabank Economics, Haver Analytics.


71

Colombian EconomyStrong underlying momentum

COLOMBIAN GDP BY

INDUSTRY(Q1 2020)

6.6%

17.2%13.9%

6.0%

15.2%7.1%

2.9%

9.1% 11.6%

8.0%


Wholesale, Retail Trade, Accommodation & Food Services

Manufacturing

Construction


Public Administration



Information & Communication

Natural Resources

Other

2.4%Arts &

Entertainment


Germany3%

United States

28%Others 42%

Brazil 5%

Mexico 6%

China 18%

• Services account for a rising share of Colombian GDP compared with traditional strengths in extractive industries

• Colombia continues to build on its 11 free-trade agreements with 46 countries that account for 41% of global GDP

• Rising consumption, supported by public spending, reflects an expanding middle class as growth gains momentum and converges toward the economy’s underlying potential

-4

-2

0

2

4

6

8

17 18 19 20

Other* Net Exports Investment

Government Consumption Real GDP

Contributions to Colombian GDP Growth

y/y % change

*Statistical discrepancy, subject to revision.Sources: Scotiabank Economics, Haver Analytics.


Canadian Housing Market

Appendix 2

73

Canada: Strong Post-COVID ReboundThough pandemic has caused widespread damage

• COVID-19 led to sharp drop in economic activity in 1H20

• Massive government support set the stage for a sharp rebound in the economy in 2H20 as economy re-opened.

• Population growth remains a key differentiator in Canada relative to other countries

0

1,000

2,000

3,000

4,000

Bottom Middle Top Bottom Middle Top

Mortgage holder Renter

Sources: Scotiabank Economics, Bank of Canada.

CAD monthly

Core Expenses Across Households

unemployment benefit

total core expensescore expenses with mortgage deferral

70

75

80

85

90

95

100

105

110

19Q4 20Q1 20Q2 20Q3 20Q4 21Q1 21Q2 21Q3 21Q4

The Lasting Impact of COVID-19 on Canadian GDP

Index, 2019Q4 = 100

Source: Scotiabank Economics.

Current forecast

January 13 forecast

60

65

70

75

80

85

90

95

100

105

Jun-19 Sep-19 Dec-19 Mar-20 Jun-20

Canada Real Retail Sales

Sources: Scotiabank Economics, Statistics Canada.

Feb 2020=100

74

Population Growth: A Canadian Differentiator

Population Growth: A Canadian Differentiator

G7 Population Growth

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

08 09 10 11 12 13 14 15 16 17 18 19 20

Canada United States Euro Area

United Kingdom Japan

Sources: Scotiabank Economics.

annual % change

75

Canadian Housing Market StrengthStrong demand continues to confront insufficient supply

Canada’s Five Largest Metropolitan Areas*

Housing Market is Historically Undersupplied

Policy Support Providing Large Assistance to Households

Listings Falling More Rapidly than Sales

0.0

0.5

1.0

1.5

2.0

2.5

20 21 22

%

Sources: Scotiabank Economics, Bank of Canada Financial System Review.

Arrears without existing household support measures

Arrears with existing support measures

% Hypothetical arrears rate on mortgages simulated by BoC for 19% fall in GDP in 2020

0.3

0.4

0.5

0.6

0.7

0.8

0.9

84 87 90 93 96 99 02 05 08 11 14 17 20

Sources: Scotiabank Economics, Statistics Canada.

1982–pres. avg.

Ratio of total home completions on 18-month rolling basis relative to population change

30

40

50

60

70

80

90

04 06 08 10 12 14 16 18 20

sa sales-to-new listings ratio, %

Sellers' Market

Buyers' Market

Sources: Scotiabank Economics, CREA.

-5-3-1

13579

1113

GTA GVA Montreal Calgary EdmontonSources: Scotiabank Economics, CREA. Data reflects June 2020*Actual - not seasonally adjusted;

MLS Home Price Index Benchmark Price Y/Y Percentage Change

8.18

3.46

11.81

-2.83 -2.03

Average3.72

8.18

76

Canadian Consumer Indebtedness

• Total household credit grew at 3.1% in annual nominal terms in Q2/20 vs the 2008 peak of 12.2% annually

• Consumer loans excluding mortgages (i.e., cards, HELOCs, unsecured lines, auto loans, etc.) fell by 3.0% annually in Q2/20 vs growth of > 5% in late 2017

• Mortgage credit grew at 5.6% annually in Q2/20 vs 2008 peak of 13%. Lower five-year rates are driving a rebound in the pace of growth, as is strength of underlying demand

HOUSEHOLD CREDIT GROWTH CONSUMER LOAN GROWTH RESIDENTIAL MORTGAGE GROWTH

-5

0

5

10

15

20

25

00 02 04 06 08 10 12 14 16 18 20

%, 3-month moving average

y/y % change


m/m % change,

SA

-25

-20

-15

-10

-5

0

5

10

15

20

25

00 02 04 06 08 10 12 14 16 18 20


m/m % change, SA


y/y % change

-5

0

5

10

15

20

25

00 02 04 06 08 10 12 14 16 18 20


y/y % change


m/m % change,

SA

77

Housing Market Differences vs U.S.Canada’s housing market features distinct practices and policies

Canada U.S.

Regulation and Taxation

• Mortgage interest not tax-deductible• Full recourse against borrowers in most provinces • Foreclosure on non-performing mortgages, no stay periodsInsurance

• Mandatory default insurance mortgages with LTV > 80%o CMHC backed by Government of Canada (AAA). Private insurers

are 90% government backedo Insurance available for homes up to CAD 1MMo Premium is payable upfronto Covers full amount for life of mortgage

• Homebuyers must qualify for mortgage insurance at interest rate equal to greater of five-year average posted mortgage rate or actual mortgage rate

• Re-financing cap of 80% LTV on non-insured mortgagesAmortization

• Maximum 25-year amortization on mortgages with LTV > 80%• Maximum 30-year amortization on conventional mortgages• Down payment of > 20% required for non-owner

occupied properties

• Tax-deductible mortgage interest creates incentive to borrow and delay repayment

• Lenders have limited recourse in most states

• 90-day to 1-year stay period to foreclose on non-performing mortgages

• No regulatory LTV limit• Private insurers are not

government backed

Product

• Conservative product offerings, fixed or variable rate options• Much less reliance upon securitization and wholesale funding• Asset-backed securities not subjected to US-style off-balance sheet

leverage via special purpose vehicles

• Can include exotic products (e.g. adjustable rate mortgages, interest only)

Underwriting• Terms usually three or five years, renewable at maturity• Extensive documentation and strong standards

• 30-year term most common• Wide range of documentation

and underwriting requirements

78

Housing Policy Developments in CanadaConsistent policy initiatives to maintain a balanced and sustainable market

2018

• Canada: OSFI imposes more stringent stress tests for uninsured mortgages, including a minimum qualifying rate at the greater of the five-year fixed posted rate or the contractual rate plus 200 bps, effective January 1, 2018

• Ontario: Elimination of rent control on new rental units first occupied on or before November 1, 2018

• British Columbia: Extension of the Property Transfer Tax on non-resident buyers. Investment of more than C$1.6B through FY2021 toward the goal of building 114,000 affordable housing units in the next 10 years

2017

• Ontario: 16 measures aimed to slow rate of house price appreciation

Key aspects include:o 15% non-resident

speculation tax o Expanded rent control to all

private rental units in Ontario

o Vacant home taxo C$125MM five-year program

to encourage construction of new renta

new investor presentation · 2020. 10. 2. · bank may include forward-looking statements orally to...

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