Investor Presentation November 30, 1999 · Top Ten U.S. Presence Maintained Source: Loan Pricing...
Transcript of Investor Presentation November 30, 1999 · Top Ten U.S. Presence Maintained Source: Loan Pricing...
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Investor PresentationNovember 30, 1999Investor PresentationNovember 30, 1999
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Performance ReviewSabi MarwahExecutive Vice-President &Chief Financial Officer
Performance ReviewSabi MarwahExecutive Vice-President &Chief Financial Officer
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Performance Highlights• solid earnings growth
÷ EPS up 11% year-over-year
÷ strong contribution from business lines
÷ good top-line revenue growth
• strengthened balance sheet
÷ higher capital ratios
÷ increased general provision
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10 Years of RecordEarnings
0
500
1000
1500
2000
90 92 94 96 98 990
1
2
3
Net Income
EPS = $2.93
$ millions$
94 & 97 exclude unusual items
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Good Top-Line Revenue Growth$ millions
12%2,8933,247Operating income (TEB)8%805870
6%4,4464,716Non-interest expenses*-1,1961,196
9%7,3397,963Total revenues3%2,0012,066
10%2,8333,128Other income*4%808840
7%4,5064,835Net interest income (TEB)3%1,1931,226
change19981999changeQ3/99Q4/99
* Excludes: real estate write-down: ($22MM, Q3/99); gain on sale of business ($25MM, 1998); special one-time gain ($77MM, Q1/99); net restructuring cost ($40MM, Q4/99)
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Continued Productivity Leadershipexpenses as a % of revenues
55
60
65
1992 93 94 95 96 97 98 1999
Other Canadian Banks
Scotia advantage
66.2*
59.3
Scotiabank
* Q3/99 YTD
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Capital Ratios –Strengthened Significantly% of risk-adjusted assets
0
2
4
6
8
10
12
14
1996 1997 1998 1999
Total
Tier 1
Common
8.9
10.4 10.6
11.9
6.7 6.9 7.28.1
5.5 5.8 6.0 6.9
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Higher General Provision & Securities Surplus
General Provision as a % of RWA*
0
50
100
40bp
91bp
basispoints
Oct-98 Oct-99
$ billions
0
0.5
1
1.5
Oct-98 Oct-99
GeneralProvision
SecuritiesSurplus
0.7B
1.6B
* Risk-weighted assets
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Canadian Retail & Commercial - Steady
• strong growth in assets÷ mortgages up 10%
• some margin pressure
• broad-based fee growth
• lower loan losses
• market share gains0
200
400
600
800
98 99*
Net Income, $ millions
* includes net restructuring charge of $35MM pre-tax
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10
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14
16
18
20
1994 1995 1996 1997 1998 1999
% share
Residential Mortgages
#5
#2
Personal deposits
#2
Market Share Growth in 1999
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International – Better Results in 1999
0
100
200
300
1998 1999
Net Income, $ millions
Asia &Latin America
Caribbean
• very strong results in Caribbean
• lower contribution from Latin America
• Asia returned to profitability
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0
50
100
150
200
92 93 94 95 96 97 98 99
Highly Successful CaribbeanFranchisenet income, $ millions
CAGR = 24%
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Corporate - Record Year
• good growth in interest profit÷ solid increase in loans÷ wider spreads
• other income up 16%
• higher credit losses
• improving ROE
0
200
400
600
98 99
Net Income, $ millions
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Top Ten U.S. Presence Maintained
Source: Loan Pricing Corp, Nov. 15, 1999, Agent-only volume
Top Ten: seventh year in a row for syndicated loans
2 Bank of America
1 Chase Manhattan Corp
7 Bank of New York
3 Citibank/Salomon Smith Barney
4 BANK ONE
6 Deutsche Banc Alex. Brown
5 J.P. Morgan & Co
8 Credit Suisse First Boston
9 First Union
11 ABN AMRO Bank
12 Fleet Financial Group
10 Scotiabank
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Investment Banking –Solid 1999 Results
0
100
200
300
400
98 99
Net Income, $ millions
ScotiaCapital Markets
GroupTreasury
• Scotia Capital Markets÷ Global Trading:
• record year for 5 of 7 areas• revenues up 27%
• Group Treasury÷ strong gains
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Scotia Capital Markets –Improved Position
* Source: Brendan Woods 1999 Survey
• Led largest IPO in Canadian history
1997 1999
#1Inst. Sales #13
#2Research #5
• Top-tier service quality*
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Exceeded 1999 Targets
7%vs.8.1%Tier 1
<60%vs.59.3%Productivity
10%+vs.11%EPS Growth
14%+vs.15.3%ROE
GoalsActual
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Risk ReviewJohn CreanSenior Executive Vice-PresidentRisk Management
Risk ReviewJohn CreanSenior Executive Vice-PresidentRisk Management
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Risk Management: Overview
• Impaired loans:÷ decreases in Canada÷ some formations in U.S.
• Higher coverage ratios÷ increased 1999 specific provisions by
$50MM in Q4/99÷ general provision now at $1.3 billion
= 0.9% of risk-weighted assets
• Low trading risk
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Gross Impaired Loans$ millions
89(74)Total
Canada
414International
21067Corporate
(138)(102)- Commercial
(24)(43)- Retail
Q4/98Q3/99
Q4/99 vs.
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Improvement in NetImpaired Loans
-0.5
0
0.5
1
1.5
2
1995 1996 1997 1998 1999-0.5
0
0.5
1
1.5
2$ billions % of loans & acceptances
1.5%
0.7%
0.5%0.3%
(0.1)%
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Low Trading Risknet trading revenue, fiscal year 1999
0
10
20
30
40
-4 3 -2 -1 0 1 2 3 4 5 6 7 8 9
$ millions
# days
5th percentile 95th percentile
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Focus for 2000Peter GodsoeChairman & Chief Executive Officer
Focus for 2000Peter GodsoeChairman & Chief Executive Officer
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Retail & Commercial: Short-Term Plans• Focus on top-line revenue growth
÷ maximize revenue from acquisitions÷ leverage Sales & Service initiatives÷ focus on small & medium-size enterprises
• Develop Electronic Banking & E-Commerce÷ wireless banking (pager, cell phone)÷ e-Scotia.com & Microsoft alliance
• Streamline operations, reduce costs÷ “paperless” branch÷ cost savings = $100 million+
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Growing Wealth Management
Building blocks:
• A Leader in Personal Trust÷ ≈20% market share
• 3rd largest in Private Client Investment Mgmt.÷ $16 billion+ in Assets under Management
• Large full-service brokerage sales force÷ ≈800 investment executives in 85 offices
• Strong branch distribution in Canada÷ 8000+ licensed to sell mutual funds
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International: Build Profitability
Caribbean
÷ build on dominant franchise
Latin America
÷ Mexico - take ownership of Inverlat÷ Argentina - reinvest in Scotiabank Quilmes÷ Chile - assume majority control of Banco
Sudamericano
Asia
÷ leverage network
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Corporate & Investment Banking
Canada÷ reap benefits from “Scotia Capital” integration
U.S.A.÷ leverage top-10 presence÷ disciplined underwriting
Improve ROE÷ higher syndication, cross-sell÷ pricing discipline
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Setting Higher Targets
16-18%14%+ROE
12-15%10%+EPS Growth
Next 3 years1999
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This presentation includes forward-looking statements about objectives, strategies, and expected financial results. Such forward-looking statements are inherently subject to risks and uncertainties beyond the Bank’s control, including but not limited to economic and financial conditions globally, regulatory developments in Canada and elsewhere, technological developments, and competition. These and other factors may cause the Bank’s actual performance to differ materially from that contemplated by forward-looking statements, and the reader is cautioned not to place undue reliance on such forward-looking statements.
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Investor PresentationNovember 30, 1999Investor PresentationNovember 30, 1999