PCL Ratios and Provision for Credit Losses Review
CANADIAN BANKING
Strong loan growth, margin expansion, positive operating leverage and improved credit
FINANCIAL PERFORMANCE AND METRICS ($MM)¹
Y/Y
Q3/18
Q/Q
Reported
Revenue
$3,373
+3%
+4%
Expenses
$1,661
+2%
+1%
PCLS
$181
(19%) (12%)
Net Income
$1,130
Productivity Ratio
49.2%
+8% +11%
(80bps) (160bps)
·
Net Interest Margin
2.46%
+5bps +3bps
PCL Ratio 2, 3
0.21%
(7bps) (4bps)
PCL Ratio on Impaired Loans², 3
0.21%
(7bps) (4bps)
Adjusted4
Expenses
$1,646
Net Income
Productivity Ratio
$1,141
48.8%
+1% +1%
+9% +12%
(100bps) (180bps)
1.
ADJUSTED NET INCOME 14 ($MM) AND NIM (%)
2.41%
2.41%
2.41%
2.43%
2.46%
•
1,050
1,072
1,107
1,022
1,141
•
YEAR-OVER-YEAR HIGHLIGHTS
Reported Net Income up 8% or up 9%4
adjusted
。 Lower real estate gains impacted growth by 3%
。 Asset and deposit growth, margin expansion
o Lower provision for credit losses
Revenue up 3%
。 Net interest income up 8%
。 Lower real estate gains impacted growth by 2%
Loan growth of 6%
o Residential mortgages up 5%; credit cards up 6%
o Business loans up 14%
NIM up 5 bps
。 Rising rate environment and improved business mix
Expenses up 1%4
。 Higher investments in technology and regulatory
initiatives, Jarislowsky acquisition
。 YTD productivity ratio improved 120 bps4
Positive YTD operating leverage of 2.4%4
PCL ratio², 3 on impaired loans improved
by 7 bps due to lower PCLs in retail
Q3/17
Q4/17
Q1/18
Q2/18
Q3/18
1 Attributable to equity holders of the Bank
2 2018 amounts are based on IFRS 9. Prior period amounts were based on IAS 39
3 Provision for credit losses on certain assets - loans, acceptances and off-balance sheet exposures
4 Adjusted for Acquisition-related costs, including integration and amortization costs related to current acquisitions, and amortization of intangibles related to current and past acquisitions
Scotiabank
9View entire presentation