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Scotiabank reports 2009 fourth quarter net income of $902 million, up
substantially from last year
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Scotiabank's 2009 audited annual consolidated financial statements,
accompanying management's discussion & analysis (MD&A) will be available
today at www.scotiabank.com, along with the supplementary financial
information report which includes fourth quarter financial information.
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Fiscal 2009 Highlights (year over year)
- Earnings per share (diluted) of $3.31 versus $3.05
- Net income of $3.547 billion, up 13% from last year
- ROE was 16.7%
- Productivity ratio of 53.7%, versus 59.4%
- Annual dividends per share of $1.96, increased by 2.1%, compared
to $1.92
- Tier 1 capital ratio of 10.7%, compared to 9.3% last year
- Tangible common equity ratio of 8.2% compared to 6.6% last year
Fourth Quarter Highlights (versus Q4, 2008)
- Earnings per share (diluted) of $0.83 compared to $0.28
- Net income of $902 million, up from $315 million
- ROE of 16.4%
- Productivity ratio of 54.2%, versus 75.2%
- Maintained quarterly dividend of $0.49
Fiscal 2009 Performance versus Objectives
The Bank met or exceeded all of its four key financial and operational
objectives this year as follows:
1. TARGET: Generate growth in EPS (diluted) of 7 to 12% per year. The
year-over-year EPS growth was 8.5%
2. TARGET: Earn a return on equity (ROE) of 16 to 20%. For the full
year, Scotiabank earned an ROE of 16.7%
3. TARGET: Maintain a productivity ratio of less than 58%. Scotiabank's
performance was 53.7%
4. TARGET: Maintain sound capital ratios. At 10.7%, the Tier 1 capital
ratio remains strong.
Net income for the quarter ended
"Despite the challenges of the past year, results for the fourth quarter rounded out a very strong year for Scotiabank and I am pleased to report that we have met all of the targets established at the end of last year," said
"Canadian Banking had another record quarter with an 8% net income increase over the same period a year ago. The division benefited from increases in residential mortgages and revolving credit, while growth in personal and non-personal deposits reflected customers' preference for safe and liquid investments during periods of uncertainty. Gains in wealth management underscore our ability to be successful in a highly competitive market.
"With its second strongest quarter on record, Scotia Capital reported net income of
"International Banking reported net income of
"Scotiabank's strong capital position and continued profitability, with an industry-leading ROE of 16.7%, has enabled us to reward shareholders for their confidence in our organization by providing consistent quarterly dividends, which we have maintained at
"I would like to thank our great team of employees around the world for their continued dedication to serving our customers through some very difficult times. One of Scotiabank's competitive strengths is our people, and I appreciate the efforts that our employees have made, which have contributed to the Bank's success in 2009.
"We will continue to focus on our priorities of driving sustainable revenue growth; ensuring effective capital management that will allow us to explore opportunities for growth and provide shareholders with solid returns; and developing the Bank's leadership at all levels of the organization. We are also committed to maintaining prudent risk and expense management.
"Looking ahead, the environment continues to be challenging, but we have the right strategy and the right team. As we move into a new year, I am optimistic that our well-diversified businesses, each with excellent growth opportunities, and our commitment to serving our shareholders, employees, customers and communities, will enable us to succeed.
"By emphasizing our priorities and core competencies, and continuing our tradition of excellence in execution against our strategic goals, we are well positioned to achieve our targets for the next year and beyond."
Financial Highlights
As at and for the three months ended For the year ended
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October 31 July 31 October 31 October 31 October 31
(Unaudited) 2009 2009 2008 2009 2008
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Operating results
($ millions)
Net interest income 2,099 2,176 1,941 8,328 7,574
Net interest
income (TEB(1)) 2,172 2,244 2,036 8,616 7,990
Total revenue 3,735 3,775 2,491 14,457 11,876
Total revenue
(TEB(1)) 3,808 3,843 2,586 14,745 12,292
Provision for
credit losses 420 554 207 1,744 630
Non-interest
expenses 2,064 1,959 1,944 7,919 7,296
Provision for
income taxes 321 303 2 1,133 691
Provision for income
taxes (TEB(1)) 394 371 97 1,421 1,107
Net income 902 931 315 3,547 3,140
Net income available
to common shareholders 853 882 283 3,361 3,033
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Operating
performance
Basic earnings
per share ($) 0.84 0.87 0.28 3.32 3.07
Diluted earnings
per share ($) 0.83 0.87 0.28 3.31 3.05
Return on
equity(1)(2) (%) 16.4 17.3 6.0 16.7 16.7
Productivity ratio
(%) (TEB(1)) 54.2 51.0 75.2 53.7 59.4
Net interest margin
on total average
assets (%)
(TEB(1)(2)) 1.74 1.76 1.68 1.68 1.75
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Balance sheet
information
($ millions)
Cash resources
and securities(2) 160,572 148,257 125,353
Loans and
acceptances(2) 275,885 276,815 300,649
Total assets(2) 496,516 486,469 507,625
Deposits 350,419 333,728 346,580
Preferred shares 3,710 3,710 2,860
Common shareholders'
equity(2) 21,062 20,300 18,782
Assets under
administration 215,097 207,913 203,147
Assets under
management 41,602 39,806 36,745
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Capital measures
Tier 1 capital
ratio (%) 10.7 10.4 9.3
Total capital
ratio (%) 12.9 12.7 11.1
Tangible common
equity to
risk-weighted
assets(1)(3) (%) 8.2 7.9 6.6
Risk-weighted assets
($ millions) 221,656 221,494 250,591
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Credit quality
Net impaired loans(4)
($ millions) 2,563 2,509 1,191
General allowance
for credit losses
($ millions) 1,450 1,450 1,323
Sectoral allowance
($ millions) 44 48 -
Net impaired
loans as a %
of loans and
acceptances(4) 0.93 0.91 0.40
Specific provision
for credit losses
as a % of
average loans
and acceptances
(annualized) 0.63 0.64 0.29 0.54 0.24
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Common share information
Share price ($)
High 49.19 46.51 51.55 49.19 54.00
Low 42.95 33.75 35.25 23.99 35.25
Close 45.25 45.92 40.19
Shares outstanding
(millions)
Average - Basic 1,021 1,017 990 1,013 987
Average - Diluted 1,024 1,020 994 1,016 993
End of period 1,025 1,020 992
Dividends per
share ($) 0.49 0.49 0.49 1.96 1.92
Dividend yield(5) (%) 4.3 4.9 4.5 5.4 4.3
Market capitalization
($ millions) 46,379 46,858 39,865
Book value per
common share(2) ($) 20.55 19.89 18.94
Market value to book
value multiple(2) 2.2 2.3 2.1
Price to earnings
multiple (trailing
4 quarters) 13.6 16.6 13.1
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Other information
Employees 67,802 67,482 69,049
Branches and offices 2,686 2,689 2,672
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(1) Non-GAAP measure. Refer to Non-GAAP measures section of this press
release for a discussion of these measures.
(2) Comparative amounts for 2009 have been adjusted to reflect the impact
of the new accounting standard for classification and impairment of
financial assets. Refer to New Accounting Policies below for details.
(3) Comparative amounts have been restated to reflect a new definition of
tangible common equity. Refer to Non-GAAP measures below.
(4) Net impaired loans are impaired loans less the specific allowance for
credit losses.
(5) Based on the average of the high and low common share price for the
period.
Forward-looking statements
Our public communications often include oral or written forward-looking statements. Statements of this type are included in this document, and may be included in other filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, or in other communications. All such statements are made pursuant to the "safe harbour" provisions of the
By their very nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, and the risk that predictions and other forward-looking statements will not prove to be accurate. Do not unduly rely on forward-looking statements, as a number of important factors, many of which are beyond our control, could cause actual results to differ materially from the estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: the economic and financial conditions in
The preceding list of important factors is not exhaustive. When relying on forward-looking statements to make decisions with respect to the Bank and its securities, investors and others should carefully consider the preceding factors, other uncertainties and potential events. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf.
The "Outlook" sections in this document are based on the Bank's views and the actual outcome is uncertain. Readers should consider the above-noted factors when reviewing these sections. Additional information relating to the Bank, including the Bank's Annual Information Form, can be located on the SEDAR website at www.sedar.com and on the EDGAR section of the SEC's website at www.sec.gov
Non-GAAP measures
The Bank uses a number of financial measures to assess its performance. Some of these measures are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), are not defined by GAAP and do not have standardized meanings that would ensure consistency and comparability between companies using these measures. These non-GAAP measures are used throughout this report and defined below:
Taxable equivalent basis
The Bank analyzes net interest income and total revenues on a taxable equivalent basis (TEB). This methodology grosses up tax-exempt income earned on certain securities reported in net interest income to an equivalent before tax basis. A corresponding increase is made to the provision for income taxes; hence, there is no impact on net income. Management believes that this basis for measurement provides a uniform comparability of net interest income arising from both taxable and non-taxable sources and facilitates a consistent basis of measurement. While other banks also use TEB, their methodology may not be comparable to the Bank's. The TEB gross-up to net interest income and to the provision for income taxes for 2009 was
For purposes of segmented reporting, a segment's net interest income and provision for income taxes are grossed up by the taxable equivalent amount. The elimination of the TEB gross up is recorded in the "Other" segment.
Productivity ratio (TEB)
Management uses the productivity ratio as a measure of the Bank's efficiency. This ratio represents non-interest expenses as a percentage of total revenue on a taxable equivalent basis.
Net interest margin on total average assets (TEB)
This ratio represents net interest income on a taxable equivalent basis as a percentage of total average assets.
Operating leverage
The Bank defines operating leverage as the rate of growth in total revenue, on a taxable equivalent basis, less the rate of growth in expenses.
Return on equity
Return on equity is a profitability measure that presents the net income available to common shareholders as a percentage of common shareholders' equity. The Bank calculates its return on equity using average common shareholders' equity.
Economic equity and return on economic equity
For internal reporting purposes, the Bank attributes capital to its business lines based on their risk profile and uses a methodology that considers credit, market, operational and other risks inherent in each business line. The amount of risk capital attributed is commonly referred to as economic equity. Return on equity for the business lines is based on the economic equity attributed.
Tangible common equity to risk-weighted assets
Tangible common equity to risk-weighted assets is an important financial measure for rating agencies and the investing community. Tangible common equity is total common shareholders' equity, plus non-controlling interest in subsidiaries, less goodwill and unamortized intangible assets. Tangible common equity is presented as a percentage of risk-weighted assets.
Regulatory capital ratios, such as Tier 1 and Total Capital ratios, have standardized meanings as defined by the Office of the Superintendent of Financial Institutions
Fourth Quarter Review
Net income was
Total revenue
Total revenue (on a taxable equivalent basis) was
Net interest income
Net interest income (on a taxable equivalent basis) was
The Bank's net interest margin was 1.74% in the fourth quarter, an increase of 6 basis points from last year due to the positive impact of the change in fair value of financial instruments used for asset/liability management purposes and wider spreads in the corporate loan portfolio.
The Bank's net interest margin narrowed by 2 basis points from last quarter as the unfavourable impact of the change in the fair value of financial instruments more than offset lower volumes of non-earning assets.
Other income
Other income was
Quarter over quarter, other income was up
Provision for credit losses
The provision for credit losses was
The provision for credit losses was
International Banking's provision for credit losses was
Scotia Capital's provision for credit losses was
Total net impaired loans, after deducting the allowance for specific credit losses, were
The general allowance for credit losses was
Non-interest expenses and productivity
Non-interest expenses were
Quarter over quarter, non-interest expenses were up
The productivity ratio was 54.2% this quarter, compared to 75.2% reported for the same period last year and 51.0% last quarter. The significant year-over-year improvement reflected strong revenue growth of 47.3%, partly from the charges taken last year, and an increase in expenses of 6.2%.
Taxes
The Bank's effective tax rate was 25.7%, compared to 0.6% reported for the same period last year and 24.0% last quarter. The low tax rate a year ago was due primarily to the pre-tax charges taken in that quarter related to certain trading activities and valuation adjustments, which were in higher tax jurisdictions. The increase from last quarter was due to lower income in lower tax rate jurisdictions.
Common dividend
The Board of Directors, at its meeting on
Outlook
The global economy is transitioning from recession to recovery, although the return to positive growth is far from robust and highly uneven among countries, regions and sectors. Many of the large developed nations are recording modest to moderate growth.
A number of positive factors should continue to support a gradual strengthening of global growth including government incentives to stimulate the economy, very low borrowing costs, a rebound in commodities and emerging markets, and a gradual revival in consumer demand.
The Bank expects continued growth in 2010 with solid contributions from each of its business lines. In view of this outlook, the following targets have been established for 2010:
- TARGET: Generate growth in EPS (diluted) of 7 to 12% per year.
- TARGET: Earn a return on equity (ROE) of 16 to 20%.
- TARGET: Maintain a productivity ratio of less than 58%.
- TARGET: Maintain sound capital ratios.
Business Segment Review
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Canadian Banking
For the three months ended For the year ended
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(Unaudited)
($ millions)
(Taxable
equivalent October 31 July 31 October 31 October 31 October 31
basis)(1) 2009 2009 2008 2009 2008
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Business segment
income
Net interest
income(2) $ 1,280 $ 1,212 $ 1,160 $ 4,785 $ 4,324
Provision for
credit losses 190 169 107 702 399
Other income 606 593 554 2,279 2,174
Non-interest
expenses 991 933 939 3,757 3,632
Provision for
income taxes 202 203 202 754 743
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Net Income $ 503 $ 500 $ 466 $ 1,851 $ 1,724
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Other measures
Return on economic
equity(1) 22.1% 22.3% 38.0% 22.3% 35.6%
Average assets
($ billions) $ 196 $ 193 $ 185 $ 192 $ 175
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(1) Non-GAAP measure. Refer to Non-GAAP measures section of this press
release for a discussion of these measures.
(2) Commencing in 2009, net interest income includes liquidity premium
charges arising from a refinement in the Bank's transfer pricing.
Prior periods have not been reclassified. Refer to footnote (4) in
Other.
Q4 2009 vs Q4 2008
Canadian Banking net income for the quarter was a record
Average assets before securitization rose
Total revenue rose
Net interest income was
Other income increased by
The provision for credit losses was
Non-interest expenses increased 6% from the fourth quarter of last year reflecting higher VISA reward point costs and performance and stock-based compensation.
Q4 2009 vs Q3 2009
Quarter over quarter, net income increased
Compared to last quarter, average assets before securitization rose
Total revenues increased by
Compared to last quarter, net interest income was up
Other income grew by
As noted above, the provision for credit losses in Canadian Banking was
Expenses rose 6% quarter over quarter, due mainly to higher VISA reward point costs, performance and stock-based compensation, volume-related compensation in wealth management and seasonal expenses.
International Banking
For the three months ended For the year ended
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(Unaudited)
($ millions)
(Taxable
equivalent October 31 July 31 October 31 October 31 October 31
basis)(1) 2009 2009 2008 2009 2008
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Business segment
income
Net interest
income(2) $ 888 $ 979 $ 940 $ 3,773 $ 3,315
Provision for
credit losses 167 179 90 577 236
Other income 364 296 228 1,480 1,282
Non-interest
expenses 741 718 753 2,960 2,634
Provision for
income taxes 33 38 75 287 422
Non-controlling
interest in
net income of
subsidiaries 28 28 23 114 119
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Net Income $ 283 $ 312 $ 227 $ 1,315 $ 1,186
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Other measures
Return on
economic equity(1) 10.2% 10.9% 10.5% 12.5% 15.5%
Average assets
($ billions) $ 81 $ 87 $ 88 $ 90 $ 79
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(1) Non-GAAP measure. Refer to Non-GAAP measures section of this press
release for a discussion of these measures.
(2) Commencing in 2009, net interest income includes liquidity premium
charges arising from a refinement in the Bank's transfer pricing.
Prior periods have not been reclassified. Refer to footnote (4) in
Other.
Q4 2009 vs Q4 2008
International Banking's net income in the fourth quarter was
Total revenues were
Net interest income was
The specific provision for credit losses was
Non-interest expenses decreased
Q4 2009 vs Q3 2009
At
Total revenues decreased
Net interest income decreased
The specific provision for credit losses of
Non-interest expenses increased by
Scotia Capital
For the three months ended For the year ended
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(Unaudited)
($ millions)
(Taxable
equivalent October 31 July 31 October 31 October 31 October 31
basis)(1) 2009 2009 2008 2009 2008
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Business segment
income
Net interest
income(2) $ 321 $ 423 $ 331 $ 1,427 $ 1,120
Provision for
credit losses 63 106 10 338 (5)
Other income 589 681 (99) 2,138 707
Non-interest
expenses 284 266 249 1,072 937
Provision for
income taxes 210 262 (71) 704 108
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Net Income $ 353 $ 470 $ 44 $ 1,451 $ 787
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Other measures
Return on
economic equity(1) 18.1% 21.8% 3.6% 20.0% 21.5%
Average assets
($ billions) $ 167 $ 181 $ 169 $ 183 $ 164
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(1) Non-GAAP measure. Refer to Non-GAAP measures section of this press
release for a discussion of these measures.
(2) Commencing in 2009, net interest income includes liquidity premium
charges arising from a refinement in the Bank's transfer pricing.
Prior periods have not been reclassified. Refer to footnote (4) in
Other.
Q4 2009 vs Q4 2008
Net income for the quarter was very strong at
Fourth-quarter revenues in Global Corporate and Investment Banking were strong at
Fourth-quarter revenues in Global Capital Markets of
Scotia Capital's provision for credit losses was
Total non-interest expenses were
Q4 2009 vs Q3 2009
Net income was
Revenues of
Compared to last quarter, total revenues in Global Corporate and Investment Banking were down
In Global Capital Markets, the revenue decrease of
Scotia Capital's total provision for credit losses of
Total non-interest expenses were 7% higher than the third quarter. The increase reflected higher legal provisions and hiring costs, partially offset by lower performance-based compensation.
Other(1)
For the three months ended For the year ended
-------------------------------------------------------------------------
(Unaudited)
($ millions)
(Taxable
equivalent October 31 July 31 October 31 October 31 October 31
basis)(2) 2009 2009 2008 2009 2008
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Business segment
income
Net interest
income(3)(4) $ (390) $ (438) $ (490) $ (1,657) $ (1,185)
Provision for
credit losses - 100 - 127 -
Other income 77 29 (133) 232 139
Non-interest
expenses 48 42 3 130 93
Provision for
income taxes(3) (124) (200) (204) (612) (582)
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Net Income (Loss) $ (237) $ (351) $ (422) $ (1,070) $ (557)
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Other measures
Average assets
($ billions) $ 51 $ 45 $ 39 $ 48 $ 37
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(1) Includes all other smaller operating segments and corporate
adjustments, such as the elimination of the tax-exempt income
gross-up reported in net interest income and provision for income
taxes, differences in the actual amount of costs incurred and charged
to the operating segments, and the impact of securitizations.
(2) Non-GAAP measure. Refer to Non-GAAP measures section of this press
release for a discussion of these measures.
(3) Includes the elimination of the tax-exempt income gross-up reported
in net interest income and provision for income taxes for the three
months ended October 31, 2009 ($73), July 31, 2009 ($68), October 31,
2008 ($95), and the years ended October 31, 2009 ($288) and October
31, 2008 ($416) to arrive at the amounts reported in the Consolidated
Statement of Income.
(4) Commencing November 1, 2008, the impact of including a liquidity
premium charge in the cost of funds allocated to the business
segments was a reduction in the net interest income of the three
major segments, which was offset by a reduction in the net interest
expense of the Other segment. Prior periods have not been
reclassified.
Q4 2009 vs Q4 2008
The Other segment had a net loss of
Net interest income and the provision for income taxes include the elimination of tax-exempt income gross-up. This amount is included in the operating segments, which are reported on a taxable equivalent basis. The elimination was
Total revenue this quarter was negative
Net interest income was negative
Other income was
Non-interest expenses were
There were no changes in the general allowance in the fourth quarter this year, or the same period last year. During 2009, the general allowance increased
Q4 2009 vs Q3 2009
The Other segment's net loss of
As noted above, the net interest income and the provision for taxes include the elimination of tax-exempt income gross-up. The fourth quarter elimination was
The total revenue of negative
Net interest income of negative
Other income of
Non-interest expenses of
There was no increase in the general allowance during the quarter compared to a
Total
For the three months ended For the year ended
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(Unaudited) October 31 July 31 October 31 October 31 October 31
($ millions) 2009 2009 2008 2009 2008
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Business segment
income
Net interest
income $ 2,099 $ 2,176 $ 1,941 $ 8,328 $ 7,574
Provision for
credit losses 420 554 207 1,744 630
Other income 1,636 1,599 550 6,129 4,302
Non-interest
expenses 2,064 1,959 1,944 7,919 7,296
Provision for
income taxes 321 303 2 1,133 691
Non-controlling
interest in
net income of
subsidiaries 28 28 23 114 119
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Net Income $ 902 $ 931 $ 315 $ 3,547 $ 3,140
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Other measures
Return on
equity(1) 16.4% 17.3% 6.0% 16.7% 16.7%
Average assets
($ billions) $ 495 $ 506 $ 481 $ 513 $ 455
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(1) Non-GAAP measure. Refer to Non-GAAP measures section of this press
release for a discussion of these measures.
Quarterly Financial Highlights
For the three months ended
-------------------------------------------------------------------------
Oct. 31 July 31 April 30 Jan. 31
2009 2009 2009 2009
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Total revenue ($ millions) $ 3,735 $ 3,775 $ 3,596 $ 3,351
Total revenue (TEB(1))
($ millions) 3,808 3,843 3,673 3,421
Net income ($ millions) 902 931 872 842
Basic earnings per share ($) 0.84 0.87 0.81 0.80
Diluted earnings per share ($) 0.83 0.87 0.81 0.80
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For the three months ended
-------------------------------------------------------------------------
Oct. 31 July 31 April 30 Jan. 31
2008 2008 2008 2008
-------------------------------------------------------------------------
Total revenue ($ millions) $ 2,491 $ 3,374 $ 3,172 $ 2,839
Total revenue (TEB(1))
($ millions) 2,586 3,477 3,272 2,957
Net income ($ millions) 315 1,010 980 835
Basic earnings per share ($) 0.28 0.99 0.97 0.83
Diluted earnings per share ($) 0.28 0.98 0.97 0.82
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(1) Non-GAAP measure. Refer to non-GAAP measures section for a discussion
of these measures.
Consolidated Statement of Income
For the three months ended For the year ended
-------------------------------------------------------------------------
(Unaudited) October 31 July 31 October 31 October 31 October 31
($ millions) 2009 2009 2008 2009 2008
-------------------------------------------------------------------------
Interest income
Loans $ 2,961 $ 3,267 $ 4,321 $ 13,973 $ 15,832
Securities 1,029 1,234 1,054 4,090 4,615
Securities purchased
under resale
agreements 38 97 183 390 786
Deposits with banks 65 89 255 482 1,083
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4,093 4,687 5,813 18,935 22,316
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Interest expenses
Deposits 1,671 1,805 3,201 8,339 12,131
Subordinated
debentures 75 78 56 285 166
Capital instrument
liabilities 9 10 9 37 37
Other 239 618 606 1,946 2,408
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1,994 2,511 3,872 10,607 14,742
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Net interest income 2,099 2,176 1,941 8,328 7,574
Provision for
credit losses 420 554 207 1,744 630
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Net interest income
after provision
for credit losses 1,679 1,622 1,734 6,584 6,944
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Other income
Card revenues 102 104 107 424 397
Deposit and
payment services 220 229 222 905 862
Mutual funds 124 104 78 371 317
Investment
management, brokerage
and trust services 193 185 189 728 760
Credit fees 260 218 142 866 579
Trading revenues 255 387 (41) 1,057 188
Underwriting fees
and other commissions 184 146 101 620 402
Foreign exchange
other than trading 68 87 88 373 314
Net gain (loss) on
securities, other
than trading 20 (155) (543) (412) (374)
Securitization
revenues 21 71 45 409 130
Other 189 223 162 788 727
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1,636 1,599 550 6,129 4,302
-------------------------------------------------------------------------
Net interest and
other income 3,315 3,221 2,284 12,713 11,246
-------------------------------------------------------------------------
Non-interest expenses
Salaries and
employee benefits 1,097 1,093 1,058 4,344 4,109
Premises and
technology 394 382 382 1,543 1,417
Communications 81 86 89 346 326
Advertising
and business
development 95 66 96 307 320
Professional 62 47 59 216 227
Business and
capital taxes 41 47 24 177 116
Other 294 238 236 986 781
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2,064 1,959 1,944 7,919 7,296
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Income before
the undernoted 1,251 1,262 340 4,794 3,950
Provision for
income taxes 321 303 2 1,133 691
Non-controlling
interest in net
income of
subsidiaries 28 28 23 114 119
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Net income $ 902 $ 931 $ 315 $ 3,547 $ 3,140
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Preferred
dividends paid 49 49 32 186 107
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Net income
available to
common
shareholders $ 853 $ 882 $ 283 $ 3,361 $ 3,033
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Average number of
common shares
outstanding
(millions):
Basic 1,021 1,017 990 1,013 987
Diluted 1,024 1,020 994 1,016 993
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Earnings per
common share
(in dollars)(1):
Basic $ 0.84 $ 0.87 $ 0.28 $ 3.32 $ 3.07
Diluted $ 0.83 $ 0.87 $ 0.28 $ 3.31 $ 3.05
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Dividends per
common share
(in dollars) $ 0.49 $ 0.49 $ 0.49 $ 1.96 $ 1.92
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Certain comparative amounts have been reclassified to conform with
current period presentation.
(1) The calculation of earnings per share is based on full dollar and
share amounts.
See Basis of Preparation below.
Consolidated Balance Sheet
As at
-------------------------------------------------------------------------
October 31 July 31 October 31
(Unaudited) ($ millions) 2009 2009 2008
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Assets
Cash resources
Cash and non-interest-bearing
deposits with banks $ 3,355 $ 3,308 $ 2,574
Interest-bearing deposits with banks 34,343 21,516 32,318
Precious metals 5,580 4,897 2,426
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43,278 29,721 37,318
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Securities
Trading 58,067 59,624 48,292
Available-for-sale 55,699 55,495 38,823
Equity accounted investments 3,528 3,417 920
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117,294 118,536 88,035
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Securities purchased
under resale agreements 17,773 14,166 19,451
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Loans
Residential mortgages 101,604 98,334 115,084
Personal and credit cards 61,048 60,934 50,719
Business and government 106,520 109,588 125,503
-------------------------------------------------------------------------
269,172 268,856 291,306
Allowance for credit losses 2,870 2,982 2,626
-------------------------------------------------------------------------
266,302 265,874 288,680
-------------------------------------------------------------------------
Other
Customers' liability under acceptances 9,583 10,941 11,969
Derivative instruments 25,992 31,943 44,810
Land, buildings and equipment 2,372 2,372 2,449
Goodwill 2,908 2,875 2,273
Other intangible assets 561 541 521
Other assets 10,453 9,500 12,119
-------------------------------------------------------------------------
51,869 58,172 74,141
-------------------------------------------------------------------------
$496,516 $486,469 $507,625
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and shareholders' equity
Deposits
Personal $123,762 $123,996 $118,919
Business and government 203,594 189,120 200,566
Banks 23,063 20,612 27,095
-------------------------------------------------------------------------
350,419 333,728 346,580
-------------------------------------------------------------------------
Other
Acceptances 9,583 10,941 11,969
Obligations related to securities
sold under repurchase agreements 36,568 36,013 36,506
Obligations related to
securities sold short 14,688 13,840 11,700
Derivative instruments 28,806 36,155 42,811
Other liabilities 24,682 24,804 31,063
Non-controlling interest in subsidiaries 554 520 502
-------------------------------------------------------------------------
114,881 122,273 134,551
-------------------------------------------------------------------------
Subordinated debentures 5,944 5,958 4,352
-------------------------------------------------------------------------
Capital instrument liabilities 500 500 500
-------------------------------------------------------------------------
Shareholders' equity
Capital stock
Preferred shares 3,710 3,710 2,860
Common shares 4,946 4,768 3,829
Retained earnings 19,916 19,561 18,549
Accumulated other
comprehensive income (loss) (3,800) (4,029) (3,596)
-------------------------------------------------------------------------
24,772 24,010 21,642
-------------------------------------------------------------------------
$496,516 $486,469 $507,625
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Certain comparative amounts have been reclassified to conform with
current period presentation.
See Basis of Preparation below.
Consolidated Statement of Changes in Shareholders' Equity
For the year ended
-------------------------------------------------------------------------
October 31 October 31
(Unaudited) ($ millions) 2009 2008
-------------------------------------------------------------------------
Preferred shares
Balance at beginning of year $ 2,860 $ 1,635
Issued 850 1,225
-------------------------------------------------------------------------
Balance at end of year 3,710 2,860
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares
Balance at beginning of year 3,829 3,566
Issued 1,117 266
Purchased for cancellation - (3)
-------------------------------------------------------------------------
Balance at end of year 4,946 3,829
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings
Balance at beginning of year 18,549 17,460
Net income 3,547 3,140
Dividends: Preferred (186) (107)
Common (1,990) (1,896)
Purchase of shares - (37)
Other (4) (11)
-------------------------------------------------------------------------
Balance at end of year 19,916 18,549
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive income (loss)
Balance at beginning of year as previously reported (3,596) (3,857)
Cumulative effect of adopting new accounting policies 595(1) -
-------------------------------------------------------------------------
Balance at beginning of year as restated (3,001) (3,857)
Other comprehensive income (loss) (799) 261
-------------------------------------------------------------------------
Balance at end of year (3,800) (3,596)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total shareholders' equity at end of year $ 24,772 $ 21,642
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Consolidated Statement of Comprehensive Income
For the three months ended For the year ended
-------------------------------------------------------------------------
October 31 October 31 October 31 October 31
(Unaudited) ($ millions) 2009 2008 2009 2008
-------------------------------------------------------------------------
Comprehensive income
Net income $ 902 $ 315 $ 3,547 $ 3,140
-------------------------------------------------------------------------
Other comprehensive income
(loss), net of income taxes:
Net change in unrealized
foreign currency
translation losses 141 1,375 (1,736) 2,368
Net change in unrealized
gains (losses) on
available-for-sale
securities 55 (1,075) 894 (1,588)
Net change in gains
(losses) on derivative
instruments designated
as cash flow hedges 33 (185) 43 (519)
-------------------------------------------------------------------------
Other comprehensive
income (loss) 229 115 (799) 261
-------------------------------------------------------------------------
Comprehensive income (loss) $ 1,131 $ 430 $ 2,748 $ 3,401
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Relates to the adoption of a new accounting policy on financial
instruments adopted in the fourth quarter of 2009. Refer to New
Accounting Policies below for details.
See Basis of Preparation below.
Condensed Consolidated Statement of Cash Flows
For the three months ended For the year ended
-------------------------------------------------------------------------
Sources (uses)
of cash flows October 31 October 31 October 31 October 31
(Unaudited) ($ millions) 2009 2008 2009 2008
-------------------------------------------------------------------------
Cash flows from
operating activities
Net income $ 902 $ 315 $ 3,547 $ 3,140
Adjustments to determine
net cash flows from (used
in) operating activities 873 504 2,648 928
Net accrued interest
receivable and payable (170) (187) (229) 60
Trading securities 1,635 8,741 (10,898) 13,721
Derivative assets 6,379 (16,884) 17,320 (15,292)
Derivative liabilities (7,518) 15,744 (12,009) 11,202
Other, net (3,616) 1,894 (11,426) 6,290
-------------------------------------------------------------------------
(1,515) 10,127 (11,047) 20,049
-------------------------------------------------------------------------
Cash flows from
financing activities
Deposits 15,701 (1,134) 17,031 28,106
Obligations related to
securities sold under
repurchase agreements 476 7,329 1,109 6,913
Obligations related to
securities sold short 832 (383) 3,165 (5,020)
Subordinated debentures issued - 950 2,000 3,144
Subordinated debentures
redemptions/repayments (17) (266) (359) (691)
Preferred shares issued - 300 600 1,225
Common shares issued 151 89 585 234
Common shares
redeemed/purchased
for cancellation - (33) - (40)
Cash dividends paid (550) (517) (2,176) (2,003)
Other, net 330 (1,359) (1,789) (101)
-------------------------------------------------------------------------
16,923 4,976 20,166 31,767
-------------------------------------------------------------------------
Cash flows from
investing activities
Interest-bearing
deposits with banks (12,635) (4,276) (5,781) (5,052)
Securities purchased
under resale agreements (3,590) (1,665) 980 3,793
Loans, excluding
securitizations (3,447) (8,860) (12,583) (47,483)
Loan securitizations 690 2,537 11,879 5,121
Securities, other
than trading, net 3,698 (2,205) (790) (5,256)
Land, buildings and
equipment, net of disposals (55) (193) (199) (401)
Other, net(1) (31) (942) (1,635) (2,399)
-------------------------------------------------------------------------
(15,370) (15,604) (8,129) (51,677)
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
cash equivalents 9 161 (209) 297
-------------------------------------------------------------------------
Net change in cash
and cash equivalents 47 (340) 781 436
Cash and cash equivalents
at beginning of period 3,308 2,914 2,574 2,138
-------------------------------------------------------------------------
Cash and cash equivalents
at end of period(2) $ 3,355 $ 2,574 $ 3,355 $ 2,574
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash disbursements made for:
Interest $ 1,976 $ 3,692 $ 11,138 $ 14,544
Income taxes $ 253 $ 259 $ 1,234 $ 1,212
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Certain comparative amounts have been reclassified to conform with
current period presentation.
(1) For the three and twelve months ended October 31, 2009, comprises
investments in subsidiaries and associated corporations, net of cash
and cash equivalents at the date of acquisition of nil and $4,
respectively (October 31, 2008 - nil, and $37, respectively), and net
of non-cash consideration of common shares issued from treasury of
$23 and $523, respectively (October 31, 2008 - nil and nil,
respectively), and net of non-cumulative preferred shares of nil and
$250, respectively (October 31, 2008 - nil and nil, respectively).
(2) Represents cash and non-interest bearing deposits with banks.
See Basis of Preparation below.
Basis of preparation
These unaudited consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP), except for certain required disclosures. Therefore, these unaudited consolidated financial statements should be read in conjunction with the Bank's audited consolidated financial statements for the year ended
New accounting policies
Classification and impairment of financial assets
In
Goodwill and intangible assets
Commencing
Financial instrument disclosures
In
- Level 1 - quoted prices in active markets
- Level 2 - models using observable inputs other than quoted market
prices
- Level 3 - models using inputs that are not based on observable market
data
Shareholder and investor information
------------------------------------
Direct deposit service
Shareholders may have dividends deposited directly into accounts held at financial institutions which are members of the Canadian Payments Association. To arrange direct deposit service, please write to the Transfer Agent.
Dividend and share purchase plan
Scotiabank's dividend reinvestment and share purchase plan allows common and preferred shareholders to purchase additional common shares by reinvesting their cash dividend without incurring brokerage or administrative fees.
As well, eligible shareholders may invest up to
For more information on participation in the plan, please contact the Transfer Agent.
Dividend dates for 2010
Record and payment dates for common and preferred shares, subject to approval by the Board of Directors.
Record Date Payment Date
January 5 January 27
April 6 April 28
July 6 July 28
October 5 October 27
Annual meeting date for fiscal 2009
Shareholders are invited to attend the 178th Annual Meeting of Holders of Common Shares, to be held on
Duplicated communication
If your shareholdings are registered under more than one name or address, multiple mailings will result. To eliminate this duplication, please write to the Transfer Agent to combine the accounts.
Website
For information relating to Scotiabank and its services, visit us at our website: www.scotiabank.com.
Conference call and web broadcast
The quarterly results conference call will take place on
A telephone replay of the conference call will be available from
General information
Information on your shareholdings and dividends may be obtained by writing to the Bank's Transfer Agent:
Computershare Trust Company of Canada
100 University Avenue, Ninth Floor
Toronto, Ontario, Canada M5J 2Y1
Telephone: 1-877-982-8767
Facsimile: 1-888-453-0330
Electronic Mail: service@computershare.com
Contact information
Investors:
Financial analysts, portfolio managers and other investors requiring financial information, please contact Investor Relations, Finance Department:
Scotiabank
Scotia Plaza, 44 King Street West
Toronto, Ontario, Canada M5H 1H1
Telephone: (416) 933-1273
Facsimile: (416) 866-7867
Electronic Mail: investor.relations@scotiabank.com
Media:
For other information and for media enquiries, please contact the Public, Corporate and Government Affairs Department at the above address.
Telephone: (416) 866-3925
Facsimile: (416) 866-4988
Electronic Mail: corpaff@scotiabank.com
Shareholders:
For enquiries related to changes in share registration or address, dividend information, lost share certificates, estate transfers, or to advise of duplicate mailings, please contact the Bank's Transfer Agent:
Computershare Trust Company of Canada
100 University Avenue, Ninth Floor
Toronto, Ontario, Canada M5J 2Y1
Telephone: 1-877-982-8767
Facsimile: 1-888-453-0330
Electronic Mail: service@computershare.com
Co-Transfer Agent (U.S.A.)
Computershare Trust Company N.A.
350 Indiana Street
Golden, Colorado 80401 U.S.A.
Telephone: 1-800-962-4284
For other shareholder enquiries, please contact the Finance Department:
Scotiabank
Scotia Plaza, 44 King Street West
Toronto, Ontario, Canada M5H 1H1
Telephone: (416) 866-4790
Facsimile: (416) 866-4048
Electronic Mail: corporate.secretary@scotiabank.com
Rapport trimestriel disponible en français
Le Rapport annuel et les états financiers de la Banque sont publiés en français et en anglais et distribués aux actionnaires dans la version de leur choix. Si vous préférez que la documentation vous concernant vous soit adressée en français, veuillez en informer Relations publiques, Affaires de la société et Affaires gouvernementales, La Banque de Nouvelle-Ecosse, Scotia Plaza, 44, rue
The Bank of Nova Scotia is incorporated in
%SEDAR: 00001289EF %CIK: 0000009631
For further information: Peter Slan, Senior Vice-President, Investor Relations, (416) 933-1273; Ann DeRabbie, Director, Public Affairs, (416) 933-1344