Results arrive amid 'significant deterioration' in North American economic outlook, bank suggests
Scotiabank stashed away more money for potentially souring loans than expected in the second quarter, missing estimates as tariff-related turmoil continues to weigh against financial results at Canada’s top banks.
The banking giant said on Tuesday morning that its adjusted earnings per share totalled $1.52 for Q2, just below the $1.56 expected by analysts surveyed by Bloomberg, as it set aside $1.4 billion for credit losses compared with projections of $1.34 billion.
Those mounting credit loss provisions arrived with no end in sight to the trade chaos currently engulfing Canada’s economy thanks to Donald Trump’s levies on Canadian imports entering the US, and Scotiabank CEO Scott Thomson highlighted the “uncertain macroeconomic outlook” in his remarks accompanying its financial statement.
Scotiabank said it had “substantially” boosted credit loss provisions on performing loans “to reflect the impact of a significant deterioration in the macroeconomic outlook indicators, in the US, Canada and Mexico.”
The bank’s overall net income in the second quarter came in at just over $2.03 billion, down from $2.09 billion the same time last year, while its Canadian banking division saw adjusted earnings fall by 31% year over year to $613 million mainly due to those credit loss allowances.
Higher fee revenue in corporate and investment banking and robust performance on the capital markets side helped Scotiabank eke out 10% growth in the global banking and markets division compared with 2024’s second quarter.
All eyes on Canada’s banking giants as more Q2 results loom
Scotiabank became the second of Canada’s Big Six banking institutions to reveal its financial results for the quarter, following TD Bank – which also set aside hefty credit loss provisions for the three months through April.
TD Bank's Q2 2025 financials show increased credit loss provisions, yet the bank beat analyst expectations. CEO Raymond Chun noted positive revenue growth in wealth management and capital markets despite economic challenges. https://t.co/ExMh6IOEK6
— Canadian Mortgage Professional Magazine (@CMPmagazine) May 22, 2025
Those results are set to be followed this week by announcements from Bank of Montreal (BMO) on Wednesday (May 28) and Canadian Imperial Bank of Commerce (CIBC) and Royal Bank of Canada (RBC) on Thursday (May 29).
Unsurprisingly, much investor attention will be focused on how those institutions are faring amid the tariff turmoil – and whether the trend of higher allowances for loan losses continues.
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