Scotiabank First Quarter Press Release 2023
Non-GAAP Measures
The Bank uses a number of financial measures to assess its performance, as well as the performance of its operating
segments. Some of these financial measures are presented on a non-GAAP basis and are not calculated in accordance with
Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB), are not defined by GAAP and do not have standardized
meanings and therefore might not be comparable to similar financial measures disclosed by other issuers. The Bank believes
that non-GAAP measures are useful as they provide readers with a better understanding of how management assesses
performance. These non-GAAP measures are used throughout this press release and defined below.
Adjusted results and diluted earnings per share
The following tables present a reconciliation of GAAP reported financial results to non-GAAP adjusted financial results.
Management considers both reported and adjusted results and measures useful in assessing underlying ongoing business
performance. Adjusted results and measures remove certain specified items from revenue, non-interest expenses, income
taxes and non-controlling interest. Presenting results on both a reported basis and adjusted basis allows readers to assess the
impact of certain items on results for the periods presented, and to better assess results and trends excluding those items that
may not be reflective of ongoing business performance. Net income and diluted earnings per share have been adjusted for the
following:
Adjustments impacting current and prior periods:
Amortization of acquisition-related intangible assets: These costs relate to the amortization of intangibles recognized upon
the acquisition of businesses, excluding software, and are recorded in the Canadian Banking, International Banking and
Global Wealth Management operating segments.
Canada Recovery Dividend: This quarter the Bank recognized an additional income tax expense of $579 million reflecting
the present value of the amount payable for the Canada Recovery Dividend (CRD). The CRD is a Canadian federal tax
measure which requires the Bank to pay a one-time tax of 15% on taxable income in excess of $1 billion, based on the
average taxable income for the 2020 and 2021 taxation years. The CRD is payable in equal amounts over five years, however,
the present value of these payments must be recognized as a liability in the current quarter. The charge was recorded in the
Other operating segment.
Adjustments impacting Q4, 2022 only:
Restructuring provision: The Bank recorded a restructuring charge of $66 million ($85 million pre-tax) related to the
realignment of the Global Banking and Markets businesses in Asia Pacific and reductions in technology employees, driven by
ongoing technology modernization and digital transformation. This charge was recorded in the Other operating segment.
Support costs for the Scene+ loyalty program: The Bank recorded costs of $98 million ($133 million pre-tax) to support the
expansion of the Scene+ loyalty program to include Empire Company Limited as a partner. These committed costs relate to
operational support, transition marketing and technology initiatives and were recognized as an expense in the Other
operating segment.
Net loss on divestitures and wind-down of operations: In Q4 2022, the Bank sold its investments in associates in Venezuela
and Thailand. Additionally, the Bank wound down its operations in India and Malaysia in relation to its realignment of the
business in the Asia Pacific region. Collectively, the sale and wind-down of these entities resulted in a net loss of $340 million
($361 million pre-tax), of which $294 million ($315 million pre-tax) related to the reclassification of cumulative foreign
currency translation losses net of hedges, from accumulated other comprehensive income to non-interest income in the
Consolidated Statement of Income. This net loss was recorded in the Other operating segment. For further details on these
transactions, please refer to Note 36 of the consolidated financial statements, in the 2022 Annual Report to Shareholders.
6 Scotiabank First Quarter Press Release 2023View entire presentation