During Scotiabank‘s first-quarter earnings call, executives pointed to early signs of financial relief for homeowners as borrowing costs ease and noted stabilizing delinquencies in the residential mortgage portfolio.
Phil Thomas, Group Head of Canadian Banking, noted that while the retail portfolio remains somewhat soft, borrowers with variable-rate mortgages and those renewing are seeing the benefits of lower rates.
Since last June, the Bank of Canada has delivered 200 basis points worth of easing, which has lowered interest costs for variable-rate mortgages and those with personal and home equity lines of credit (HELOCs).
“Those rate cuts are benefiting those customers,” he said. “Consumer trends are shaping up, and we’ve got confidence in that outlook outside of the tariff landscape.”
That relief is already showing in delinquency data, with 90-day mortgage delinquencies rising just one basis point quarter-over-quarter to 0.24%. “Furthermore, decreasing payments continue to benefit variable rate mortgage clients as their deposit coverage maintained its upward trend,” Thomas added.
Even so, he warned that tariffs could pose long-term challenges, adding that ongoing uncertainty around trade policies could weigh on consumer confidence and economic growth in the years ahead.
“It’s really going to take time for tariffs to grip the Canadian consumer,” he said, adding that Scotiabank expects the biggest impact in terms of loan impairments to materialize in 2026.
Chief Financial Officer Raj Viswanathan echoed this sentiment, noting that uncertainty is already affecting borrowing decisions, particularly in commercial lending. “People are sort of holding their powder dry… waiting to see what’s going to happen.”
However, the threat of tariffs hasn’t yet deterred residential mortgage borrowers from making purchase decisions, according to Aris Bogdaneris, Group Head of Canadian Banking.
“As rates have come down, you start to see that pent-up demand in the [residential] mortgage business starting,” he said. “However, if the tariffs do get implemented, and of course, the economy contracts, you’ll probably see the mortgage business also start to come down, but we don’t see that yet.”
In response to the heightened uncertainty, Scotiabank increased its provisions for credit losses (PCLs) to $1.2 billion, or 60 basis points, reflecting a $132-million jump from the previous quarter. Thomas noted that while the base case assumes only modest tariff impacts, the bank has factored in more severe scenarios as part of its stress testing, preparing for potential economic fallout.
As part of its investor presentation, Scotiabank released an updated maturity schedule, detailing the volume of fixed and variable-rate loans maturing each fiscal year. The largest maturities are set for FY26 and FY27, with a significant portion of variable-rate loans coming due during this period.
Scotiabank earnings highlights
Q1 net income (adjusted: $2.4 billion (+7%))
Earnings per share: $1.76 (+4%)
| Q1 2024 | Q4 2024 | Q1 2025 | |
|---|---|---|---|
| Residential mortgage portfolio | $288B | $298B | $304B |
| Percentage of mortgage portfolio uninsured | 74% | 76% | 77% |
| Avg. loan-to-value (LTV) of total portfolio | 50% | 51% | 52% |
| Portfolio mix: percentage with variable rates | 33% | 30% | 31% |
| 90+ days past due (mortgage portfolio) | 0.20% | 0.23% | 0.24% |
| Canadian banking net interest margin (NIM) | 2.41% | 2.32% | 2.32% |
| Total provisions for credit losses | $962M | $1.03B | $1.16B |
| CET1 Ratio | 12.9% | 13.1% | 12.9% |
Conference Call
On driving mortgage growth and retention:
- “On a cumulative basis since our strategy launch, we have now added 200,000 new primary clients,” said President and CEO Scott Thomson. “Although primary client growth has decelerated due to the notable immigration slowdown, we continue to see good momentum in the number of clients we consider primary, which reached 30% of total clients in the quarter. Client debt in Canadian retail continues to trend above target, with clients holding three or more products, increasing sequentially to approximately 47%, up 30 basis points.”
On Tangerine growth
- “Tangerine continues to increase primary clients aligned to our goal of deepening relationships through everyday banking,” Thomson said. “This quarter, digital active clients reached an all-time high of 1.4 million. We have a new leadership team in place at Tangerine, who will be intently focused on relationship depth and client acquisition.”
Source: Q1 Conference Call
Note: Transcripts are provided as-is from the companies and/or third-party sources, and their accuracy cannot be 100% assured.
Aris Bogdaneris bank earnings big bank earnings earnings earnings calls Editor's pick lenders Phil Thomas Raj Viswanathan scotiabank scotiabank quarterly earnings Scott Thomson tangerine
Last modified: February 27, 2025
