Scotiabank reports Q4 profits rise to $2.21 billion despite restructuring charge

TORONTO – Scotiabank kicked off fourth-quarter bank earnings by reporting a rise in profits that beat analyst expectations, despite a restructuring charge related to layoffs.

The bank said it earned $2.21 billion in the quarter ending Oct. 31, up from $1.69 billion in the same quarter a year earlier, helped by strength in its wealth management and capital markets businesses.

“2025 was a year of execution,” chief executive Scott Thomson told a conference call to discuss the latest results with financial analysts Tuesday.

“We did what we said we were going to do despite the emergence of unexpected trade-related economic challenges. We accomplish this by focusing on what we can control.”

Among the bank’s actions to adapt to uncertainty was to carry out job cuts that resulted in a $373-million restructuring charge in the quarter.

The bank wouldn’t say how many jobs were involved when news of the cuts first broke, but filings show Scotiabank had 2,291 fewer employees at the end of the fourth quarter than it did around the start of 2025. 

“The actions simplify and streamline our organizational setup, which will free up capacity to further invest in technology and revenue generating sales staff,” Thomson said. 

The restructuring comes as the bank continues to work through its strategic plan launched two years ago to boost profitability.

The plan has centred largely around Scotia working to become the primary bank for more clients, and for it to focus on richer clients, as it aims for a return-on-equity of at least 14 per cent. 

So far, Thomson says it’s paying off, with better profitability already in international banking, global banking and markets and wealth, while next year Scotia expects to see significant return-on-equity expansion in its Canadian banking division.

“So as we sit here next year at this time, I’m confident you’re going to see another step in that ROE journey, which is going to get us a lot closer to that 14 per cent, probably a year earlier than we thought.”

Returns should improve in Canadian banking in part from the almost double-digit fee growth it expects next year from insurance, mutual fund fees and premium credit cards.

Refinancing mortgages at higher rates next year will also help, as will the unwinding of some higher rate term deposits. The bank’s focus on boosting overall deposits, and relying less on wholesale funding, is also progressing.

And while the bank expects its provisions for potentially bad loans to increase in the first couple of quarters next year, it sees them then trending down back to normalized levels to also help with profitability in the medium-term.

Scotiabank’s provision for credit losses amounted to $1.11 billion for the quarter, up from $1.03 billion a year ago.

The trend is expected to improve thanks in part to changes initiated by the federal government, said Phil Thomas, who takes on the group head and chief strategy and operating officer role effective Tuesday.

“In Canada, the absence of a trade deal with the U.S. and elevated unemployment continue to weigh on sentiment,” said Thomas.

“However, we are cautiously optimistic that the federal budget will contribute to greater economic growth and improved consumer and business sentiment.”

Thomas, who is moving from the chief risk officer role as part of a wider leadership shuffle, said that while some clients are showing signs of stress, issues remain isolated and not systemic. Mortgage delinquencies rose slightly from the previous quarter, driven mostly from weakness in the Greater Toronto Area.

The uptick did little to slow down overall profits, which Scotiabank says on an adjusted basis worked out to earnings of $1.93 per diluted share in its latest quarter, up from an adjusted profit of $1.57 per diluted share a year ago.

Analysts on average had expected an adjusted profit of $1.84, according to estimates compiled by LSEG Data & Analytics.

National Bank analyst Gabriel Dechaine said in a note that margin expansion and capital markets drove the beat, while provisions came in slightly worse than expected.

Canaccord Genuity Corp. analyst Matthew Lee said the results demonstrate the improving earnings power of the bank. 

Looking ahead, Thomson said the bank is also well-positioned to benefit from Canada’s renewed focus on energy and mining development. 

“The recent memorandum of understanding on energy between the Canadian federal government and the province of Alberta is a very significant development in our view and proof that Canada truly is on a new economic trajectory.”

He said that overall, the bank could see double-digit annual earnings per share growth next year despite the continuing uncertain operating environment. 

This report by The Canadian Press was first published Dec. 2, 2025.

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