Scotiabank boosted its fourth-quarter profit despite trade war pressures on the economy and expenses related to staff cuts in its Canadian banking division.
The bank announced Tuesday that its profit for the quarter ended Oct. 31 was $2.2 billion, up from $1.69 billion in the same period last year. The results were attributed mainly to higher net interest income and non-interest income.
In a call with analysts following the earnings release, executives highlighted an increase in branch sales of mutual funds and success in the bank’s Mortgage Plus program, where homebuyers are offered better mortgage rates if they acquire other banking products.
At the same time, earnings were hit by a restructuring charge and severance provisions of $373 million in the quarter.
Scotiabank CEO Scott Thomson said most of the charges were related to “actions taken to simplify our Canadian operations.”
“While these types of decisions are always difficult, they are nevertheless necessary as we work to boost the value of the Canadian bank,” he said. The restructuring, he said, “will free up capacity to further invest in technology and … sales staff to propel future revenue growth.”
In mid-October, several media outlets reported that Scotiabank was cutting jobs across its Canadian banking unit, though the company did not disclose how many and which specific teams were impacted.
The Star later found that Scotiabank told the federal government it would be laying off close to 2,500 employees in Toronto this year, according to a public document that was removed from the government’s website shortly after the layoff news broke.
Scotiabank’s annual report, also released Tuesday, said the bank had 86,431 employees at the end of this fiscal year versus 88,488 last year.
Before the pandemic, the bank had 101,380 workers in the 2019 fiscal year, according to the annual report.
“We do not anticipate additional charges,” Thomson said in the call, “but we remain focused on running our bank as efficiently as possible, including taking full advantage of emerging technologies.”
Part of the bank’s technology strategy for 2026 includes investing in artificial intelligence, Thomson added, as well as enhancing fraud monitoring.
Scotiabank recorded $1.1 billion in provisions for credit losses — funds banks must reserve to cover potential defaults — in the quarter. That compares with $1.03 billion in the same period last year.
Phil Thomas, the bank’s chief risk officer, said in the call that the uncertain economic environment in the absence of a trade deal with the U.S., as well as higher unemployment, are hurting Canadian consumers.
Both fixed- and variable-rate mortgage borrowers saw an increase in delinquencies (missed payments), with most of them in Ontario and the GTA, according to Thomas. Many of them do not bank primarily with Scotiabank and are younger clients, he added.
The bank expects the outlook to improve in the 2026 fiscal year, forecasting lower provisions for credit losses going forward. Executives also said revenues from banking fees are poised to grow for insurance, mutual funds and credit cards as the bank expects to sell more products.
“We’re going to see very good fee growth, almost double digits next year,” said Canadian banking head Aris Bogdaneris.
