Bank of Nova Scotia surpassed market expectations for its fourth-quarter earnings, reporting a significant profit increase driven by its global operations. The performance comes even as the bank absorbed substantial costs related to a major organizational restructuring.
Strong Quarterly Performance Amid Strategic Shifts
Scotiabank announced its financial results for the three months ending October 31, revealing a net income of $2.2 billion. This marks a notable rise from the $1.7 billion reported in the same period last year. The result translated to net earnings per share of $1.65.
The bank's adjusted net income, which excludes one-time items, was even higher at $2.6 billion, compared to $2.2 billion a year ago. This yielded adjusted earnings per share of $1.93, comfortably exceeding the average analyst estimate of approximately $1.85 per share.
However, the quarter was also marked by significant one-time charges. Scotiabank recorded a $373 million charge for restructuring and severance provisions, primarily linked to workforce reductions across its global footprint.
Segment Growth and Annual Results
Scotiabank's CEO, Scott Thomson, stated the bank delivered improving results throughout the year while strengthening its balance sheet. He noted that all business lines reported year-over-year earnings growth in the quarter.
The Global Banking and Markets segment was a standout, with earnings soaring by 50% compared to the previous year. The Global Wealth Management unit also posted strong results, growing by 17%, fueled by higher mutual fund fees and brokerage revenues.
In its core operations, Canadian Banking earnings saw a modest 1% increase to $942 million. The International Banking segment generated $638 million, up 5% year-over-year.
For the entire 2025 fiscal year, Scotiabank reported a net income of $7.78 billion, slightly down from $7.9 billion the previous year. Annual adjusted net income, however, rose to $9.5 billion from $8.63 billion.
Restructuring for Future Efficiency
The bank clarified that the $373 million charge reflects strategic actions to streamline its operations. These include simplifying the organizational structure in Canadian Banking, restructuring and right-sizing its Asia operations within Global Banking and Markets, and regionalizing activities across its international network.
"We are making clear progress towards achieving our key priorities, including being disciplined in our capital allocation, prioritizing value over volume... and seeking out ways to work better, faster, safer and at a lower cost," Thomson said in the statement released on Tuesday.
On a cautious note, the bank set aside more money for potentially bad loans. Provisions for credit losses increased to $1.11 billion in the fourth quarter, up from $1.03 billion a year ago.
