Scotiabank Q2 2023 net income falls by 21.4% to C$2.16bn ($1.56bn). But Scotia reports progress in building its liquidity position with double digit year-over-year customer deposit growth. This outpaces loan growth in the quarter. Scotia increases the quarterly dividend by C$0.03 to $1.06 per share. Adjusted return on equity of 12.4% compares to 16.4% a year ago.

Provisions for credit losses of C$709m compares to C$219m million in the year ago quarter. The provision for credit losses ratio increases 24 basis points to 37 basis points.

The net interest margin in the second quarter drops by 10 basis points y-o-y to 2.13%. Expenses rise, by 10% y-o-y.

“I am pleased with the bank’s stable operational performance in the quarter and encouraged that our strong capital and liquidity profile positioned us well to manage through the current environment of heightened macroeconomic uncertainty.” said Scott Thomson, President and CEO of Scotiabank. “We are committed to delivering long-term profitable and sustainable growth through a focus on customers, capital discipline and operational excellence.”

Scotiabank Q2 2023 by business unit

Scotiabank’s Canadian Banking unit delivers adjusted second quarter earnings of C$1.06bn, down by 10% y-o-y. The fall is impacted by normalisation in provision for credit losses. Pre-tax pre-provision earnings increase due to strong revenue growth and net interest margin expansion of eight basis points. For the year to date, the unit reports net income of C$2.15bn, also down by 10% y-o-y.

The decline is again due primarily to higher provision for credit losses and non-interest expenses. This is partly offset by higher revenue.

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Canadian banking Q2 2023 highlights

The bank reports loan growth of 6%. Credit cards and business loans are ahead by 16% and 18% respectively. Residential mortgages rise by 3%. Deposits rise by 11% with retail banking deposits up by 15%.

International Banking generates adjusted earnings of C$650m, ahead by 6% y-o-y, partly offset by higher provisions. This is as a result of strong loan growth and net interest margin expansion of 16 basis points. But this is partly offset by higher non-interest expenses. Year to date net income rises by 13%. The increase is driven by higher net interest income and non-interest income, and lower provision for income taxes. This is again partly offset by higher non-interest expenses and provision for credit losses.

Wealth Management net income -10% YTD

Global Wealth Management posts adjusted earnings of C$359m, down by 13% y-o-y. Challenging market conditions continue to impact fee income growth in Canada. This is partly offset by strong growth across the bank’s international businesses and continued prudent expense management.

Year to date adjusted net income of C$751m is down by 10% y-o-y. The decline is due primarily to lower fee income, partly offset by higher net interest income and lower non-interest expenses.

Global Banking and Markets generates earnings of C$401m, down by 18% y-o-y. The results reflect strong loan and deposit growth, and were impacted by challenging market conditions and higher performing loan provisions.

Scotiabank Q2 2023 digital growth

Active digital banking customers rise by 6% y-o-y to 8.89 million. Active mobile banking customer numbers rise by 11% y-o-y to 7.8 million. Canada-based active m-banking customers rise by 12% to 3.9 million.