Scotiabank’s Q2 earnings fell short of estimates due to increased credit loss provisions amid economic uncertainty and tariffs affecting its Canadian and Mexican operations.
Scotiabank, officially known as Bank of Nova Scotia, one of Canada’s leading multinational banks headquartered in Toronto, Ontario, reported lower-than-expected earnings for its fiscal second quarter as it increased provisions for credit losses due to rising economic uncertainties and the impact of tariffs affecting its Canadian and Mexican operations.
The Toronto-based lender posted adjusted earnings per share of C$1.52 for the quarter ended April 30, 2025, slightly below analysts’ average estimate of C$1.56, according to a Bloomberg survey. The bank set aside C$1.4 billion ($1.02 billion) for credit loss provisions, exceeding the forecast of C$1.34 billion. The increase included a significant rise in allowances for performing loans, which grew to C$346 million from C$98 million in the previous quarter.
Scotiabank’s CEO, Scott Thomson, who assumed leadership in 2023, attributed the higher credit provisions to an uncertain macroeconomic outlook, citing weakening conditions in Canada’s economy that may be entering a recession. The domestic banking unit experienced a 31% year-on-year decline in earnings, primarily due to increased credit loss reserves.
The bank continues to realign its focus under Thomson’s direction, boosting its presence in domestic retail banking and wealth management while scaling back underperforming Latin American assets. In 2024, Scotiabank acquired a 14.9% stake in Cleveland-based KeyCorp as part of its strategic shift towards markets in Canada, the United States, and Mexico.
This financial performance contrasts with Toronto-Dominion Bank, which reported lower-than-expected credit loss provisions but also increased reserves for performing loans, signaling a cautious outlook across Canada’s major banks.