The Bank of Nova Scotia (NYSE:BNS) Q2 2016 Earnings Conference Call - Preliminary Transcript

May 31, 2016 • 08:00 am ET


The Bank of Nova Scotia (NYSE:BNS) Q2 2016 Earnings Conference Call - Preliminary Transcript


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Jake Lawrence

Good morning, everyone, and welcome to Scotiabank's 2016 Second Quarter Results Presentation. My name is Jake Lawrence; and I am the Senior Vice President of Investor Relations for the bank.

Presenting to you this morning is Brian Porter, Scotiabank's President and Chief Executive Officer; Sean McGuckin, our Chief Financial Officer; and Stephen Hart, the Bank's Chief Risk Officer.

Following our comments this morning, we will be glad to take your questions. Also in the room with us to join for the Q&A session is Scotiabank's business line group heads, James O'Sullivan from Canadian Banking; Nacho Deschamps from International Banking; and Dieter Jentsch from Global Banking and Markets.

Before we start the call, and on behalf of those speaking today, I would like to refer you to Slide 2 of our presentation, which contains Scotiabank caution regarding forward-looking statements.

And with that, I will now turn the call over to Brian Porter.

Brian Porter

Thank you Jake, and good morning everyone.I will start on Slide 4. We are pleased to report our second quarter results to our shareholders. For Q2, the bank delivered another good quarter of operating, and financial results. As we announced on May 2nd, this quarter's results include a restructuring charge, and while the decision to take the charge was not an easy one, it was done in a thoughtful manner.

The charge and associated investments will support our strategic objectives, and allow the bank to provide a better experience for our customers, and employees; as well as better results for you, our shareholders. Sean McGuckin, our CFO will provide further details on the charge, and expected benefits in a moment.

Adjusting for the impact of the restructuring charge, the bank earned $1.9 billion in the second quarter, delivering diluted earnings per share of $1.46, 3% ahead of the same period a year ago. Earnings growth this quarter was again driven by good performances in our personal, and commercial banking businesses, both in Canada and internationally.

Strong results in our retail businesses allowed the bank to grow earnings despite elevated provisions for credit losses, largely related to energy, which contributed to lower results in Global Banking and Markets, and reduced performance in International Banking. As a result of the continued strong performances in Canadian and International Banking, these businesses generated more than 80% of our Q2 earnings.

Our adjusted return on equity in Q2 was 14.4%. Looking at our capital position, the bank remains well capitalized with a Common Equity Tier 1 ratio of 10.1%. We are well positioned to continue to invest in, and grow the bank organically, and we have the balance sheet strength to selectively pursue acquisitions.

As an example, this quarter, we closed acquisitions in Panama, and Costa Rica, which strengthened our existing operations in these markets. As I said, I am pleased with this quarter's earnings, particularly the performance of our retail businesses, which are executing on our strategies, and driving bottom line growth. Before updating you on the bank's strategic priorities, I would like to