Scotiabank Reports Increased Profits Amid Restructuring
TORONTO — Scotiabank has kicked off its fourth quarter earnings reporting with profit figures that surpassed analyst expectations, even considering the restructuring costs associated with layoffs.
The bank’s profit for the quarter ending on October 31 came in at $2.21 billion, up from $1.69 billion the previous year, buoyed by strong performances in wealth management and capital markets.
“We focused on execution in 2025,” Chief Executive Officer Scott Thomson stated during a conference call with financial analysts regarding the latest results. He emphasized that despite some unexpected challenges related to trade, the bank successfully achieved its goals by concentrating on controllable factors.
Scotiabank’s adjustments involved reducing its workforce, resulting in restructuring charges of $373 million for the quarter. Although the bank did not disclose specific numbers when layoffs were announced, reports indicate that Scotiabank had 2,291 fewer employees by the end of the fourth quarter compared to early 2025.
Thomson remarked, “This action will simplify our organizational structure, allowing for more investments in technology and sales staff focused on generating revenue.”
This restructuring aligns with the bank’s ongoing strategic plan established two years ago to improve profitability. The plan aims to make Scotiabank the main banking choice for more clients, particularly high-net-worth individuals, targeting a return on equity of at least 14%.
Thomson noted that profitability in International Banking, Global Banking, Markets, and Wealth segments has already shown improvement, and he anticipates that returns on equity for Canadian banking will see significant growth next year.
“I expect that by this time next year, we’ll be taking another step forward in our ROE journey, potentially getting closer to that 14% target sooner than anticipated,” he added.
Earnings in Canada’s banking sector are also expected to rise, with projections indicating that insurance, mutual fund fees, and premium credit card fees could increase nearly double digits next year. Additionally, refinancing mortgages at higher interest rates and reducing high-interest term deposits could further support profit growth. Banks are working to lessen their reliance on wholesale funding while focusing on enhancing overall deposits.
The bank anticipates that provisions for potential non-performing loans will increase in the early part of next year but then return to normal levels, contributing to improved profitability in the medium term.
Scotiabank’s allowance for credit losses for the quarter reached $1.11 billion, an increase from $1.03 billion during the same period last year. Phil Thomas, who steps into the role of group director and chief strategy officer, expressed optimism that certain trends will improve, partly due to upcoming federal government initiatives.
He mentioned that while the lack of a trade agreement with the United States and rising unemployment are concerns, there’s cautious optimism that the federal budget may foster economic growth and enhance both consumer and business confidence.
According to Thomas, although some customers are facing challenges, these issues are largely contained. He also noted a slight uptick in mortgage delinquencies, particularly in the Greater Toronto Area, which hasn’t significantly impacted overall earnings. Scotiabank reported adjusted earnings of $1.93 per diluted share for the recent quarter, up from $1.57 the previous year. Analysts had expected adjusted earnings to be around $1.84.
National Bank analyst Gabriel Deschenes observed that while provisions were slightly higher than anticipated, margin growth and capital markets played a significant role in the bank’s robust performance. Canaccord Genuity’s Matthew Lee highlighted that the results reflect the bank’s improving profitability.
Looking ahead, Thomson noted that Scotiabank is poised to take advantage of Canada’s renewed emphasis on energy and mining growth. He described the recent Energy Memorandum of Understanding between the federal government and Alberta as a crucial development, indicating that Canada is entering a new economic phase.
Thomson also expressed optimism about achieving double-digit annual earnings per share growth for the next year, despite an ongoing uncertain business climate.
