Scotiabank Surpasses Earnings Expectations: Strong Canadian Business and Revenue Growth Drive Q3 Results
By Financial Desk
Toronto, August 27, 2025 – Scotiabank (TSX: BNS, NYSE: BNS) reported third-quarter fiscal 2025 earnings that exceeded analyst forecasts, fueled by robust performance in its Canadian banking operations and solid revenue expansion. The Canadian multinational bank announced adjusted earnings per share (EPS) of C$1.68, surpassing the consensus estimate of C$1.62, while total revenue climbed 6% year-over-year to C$8.2 billion, beating expectations of C$8.0 billion. The results underscore Scotiabank’s resilience amid economic uncertainties, with particular strength in domestic lending and wealth management.
The bank’s CEO, Scott Thomson, highlighted the positive momentum during a post-earnings call, attributing the outperformance to strategic investments in digital capabilities and customer-focused initiatives. “Our Canadian business delivered exceptional growth, reflecting the strength of our franchise and the effectiveness of our One Scotiabank strategy,” Thomson stated. Shares of Scotiabank rose approximately 2.5% in early trading on the Toronto Stock Exchange following the announcement, reaching C$78.50.
Key Financial Highlights
Scotiabank’s Q3 results, covering the period ended July 31, 2025, showcased balanced growth across segments, with the Canadian Banking division leading the charge. Here’s a breakdown of the performance:
- Revenue Growth: Total revenue increased by 6% from C$7.73 billion in the same quarter last year, driven by higher net interest income and non-interest revenue. Net interest income rose 4% to C$4.8 billion, benefiting from higher interest rates and loan volume expansion. Fee-based revenue, particularly from wealth management, jumped 8%, supported by improved market conditions and client inflows.
- Canadian Business Strength: The Canadian Banking segment reported a 12% revenue increase to C$3.1 billion, with adjusted pre-tax earnings up 15% to C$1.2 billion. Loan growth accelerated to 5% year-over-year, led by mortgages and commercial lending, while deposits grew 3%. Credit quality remained stable, with provisions for credit losses (PCL) at C$678 million, slightly below estimates of C$690 million. Thomson noted that “customer engagement and digital adoption have been key drivers, with over 70% of transactions now digital.”
- International Operations: While the focus was on Canada, international banking contributed positively with a 3% revenue rise to C$2.9 billion, primarily from Latin America. However, challenges in Mexico and Chile due to currency fluctuations tempered gains. Wealth management revenue globally increased 7% to C$1.2 billion, aided by equity market rallies.
- Profitability Metrics: Adjusted net income totaled C$2.1 billion, up 5% from last year, with a return on equity (ROE) of 9.8%, exceeding the bank’s target range of 9-10%. Expenses rose 4% to C$4.6 billion, reflecting investments in technology and regulatory compliance, but the efficiency ratio improved to 56.2% from 57.1%.
The bank also declared a quarterly dividend of C$1.06 per share, maintaining its commitment to shareholders. Year-to-date, Scotiabank has returned over C$3 billion to investors through dividends and share buybacks.
Factors Behind the Beat
Analysts attributed the earnings surprise to several tailwinds. Elevated interest rates in Canada have boosted margins, while a resilient housing market and steady consumer spending supported loan demand. Scotiabank’s focus on underserved segments, such as small businesses and immigrants, has driven deposit growth and cross-selling opportunities. Additionally, cost-saving measures from the 2023 efficiency program—aiming for C$1.3 billion in annual savings—continued to pay off, offsetting inflationary pressures.
However, the bank flagged potential headwinds, including softening economic indicators in Canada, such as rising unemployment (now at 6.4%) and persistent inflation around 2.8%. Internationally, geopolitical tensions and volatile commodity prices could impact Latin American operations. Thomson reiterated guidance for full-year adjusted EPS growth of 7-9%, with PCLs expected to remain manageable at 35-45 basis points of loan assets.
Market Reaction and Analyst Views
The positive results come at a pivotal time for Scotiabank, as it navigates a competitive landscape with peers like RBC and TD Bank, who reported mixed results earlier in the week. Wall Street and Bay Street analysts upgraded their outlook post-earnings. RBC Capital Markets raised its price target to C$82 from C$79, citing “sustained Canadian momentum.” BMO Nesbitt Burns echoed the sentiment, noting, “Scotiabank’s diversified model and disciplined execution position it well for 2026.”
Investor sentiment was buoyed by the bank’s progress on strategic priorities, including the integration of recent acquisitions like HSBC Canada’s operations (completed in 2024), which added C$100 billion in assets. Shares have gained 15% year-to-date, outperforming the TSX Banks Index by 5 points.
Looking ahead, Scotiabank’s next earnings release is scheduled for November 2025. As Canadian economic data evolves, the bank’s ability to sustain domestic growth will be crucial. For now, these results affirm Scotiabank’s status as a steady performer in the Big Five banks, rewarding patient investors amid broader market volatility.