Brian Porter Speech – April 10, 2018

Thank you, Tom, and good morning, everyone.

I’m pleased to welcome you to the Scotiabank Centre for our 186th Annual Meeting.

Thank you all for being here, and thanks also to everyone who is joining us via webcast.

This morning, I will spend a portion of my remarks highlighting the commitments your Bank is making to better equip our employees for success in a rapidly changing world.

Before I begin my formal remarks, I’d like to take a moment and acknowledge the horrible tragedy that occurred in Saskatchewan on Friday.

The Humboldt Broncos embody values like community, teamwork, perseverance and commitment…the team represents the very best of what hockey means to all of us.

More generally, minor and junior hockey teams across the country are the heart and soul of their communities, and they are integral parts of our national identity.

The tragedy has profoundly touched all Canadians, as we can see from the outpouring of grief, love and support.

On behalf of all Scotiabankers, I want to extend my deepest condolences to the families and communities of those affected.

We are committed to working with our local team in Saskatchewan – including our branch in Humboldt – to determine the best ways to support the affected communities over the coming weeks and months.

I want to now provide a brief update on the Bank’s 2017 performance, as well as the progress we are making to build an even better Bank and create value for you, our shareholders.

2017 was another very good year for Scotiabank, with earnings of $8.2 billion and all three of our business lines performing well.

We also raised our quarterly dividend twice in 2017…an increase of 6% from the previous year.

Last year, our Canadian Banking division reported record financial results, with earnings growth at 9%.

At the same time, our International Banking division also delivered record earnings, growing 15% year-over-year.

It’s worth noting that International Banking’s Return on Equity has improved from 11.7% in 2014 to 14.7% in 2017.

This significant improvement reflects the excellent progress we have made in strengthening our international operations.

Since I became President and CEO more than four years ago, the Bank has focused on implementing a Strategic Agenda that enables us to realise our untapped potential and positions the Bank for continued success.

Our strategy governs the investments we are making to provide a superior banking experience for our customers, to deliver strong returns for our shareholders, and to build capabilities for the future.

The Board – and I – believe we have struck the right balance across these equally important dimensions.

As a result, the Bank is much stronger and more competitive today.

Let me take a few minutes to summarize three critical areas where we have made especially good progress over the past year.

First and foremost, we were sharply focused on making the Bank’s operations stronger.

We did this, in part, through significant investments in key capabilities, such as risk, technology and innovation, and also by ensuring a high degree of clarity regarding our priorities.

We are a much more focused organization today, both strategically and operationally.

With this clarity across our management team, we have been able to increase our overall effectiveness and move forward with a faster drumbeat.

Our “alignment” is absolutely critical, particularly given the Bank’s size, scope and complexity.

At our Investor Day in February, we articulated the good progress we’ve made, outlined the untapped potential we have to enhance our growth and demonstrated strong alignment as a management team.

Secondly, the Bank has fortified our already strong financial position, with enhancements to our capital levels and our funding profile.

These enhancements give us greater optionality and financial flexibility.

Having improved many aspects of our core businesses, our stronger financial position has allowed us to deploy capital in several attractive growth opportunities.

It has also allowed us to build more scale in key businesses and geographies.

For example, we recently announced our intention to acquire:

• B.B.V.A.’s operations in Chile,
• Jarislowsky Fraser here in Canada,
• and Citibank Colombia’s consumer and small business operations.

In the case of B.B.V.A. in Chile, this acquisition will significantly improve our competitive positioning in one of our most strategic markets.

It will double our current market share and create the third largest private sector bank in the country.

Scotiabank has been operating in Chile for nearly 30 years.

It is a highly-rated country, with a transparent regulatory environment and strong economic growth prospects.

We are very pleased with our operations in Chile and the acquisition will make us even stronger.

Jarislowsky Fraser is an iconic institutional and high net worth asset manager, with a top-tier investment team and a disciplined research approach.

The business has $40 billion of Assets Under Management and this acquisition will make Scotiabank the third-largest active asset manager here in Canada.

Not only does Jarislowsky Fraser complement our existing businesses very nicely… it also creates further opportunities to expand across Canada and throughout our footprint.

And finally, we are making very good progress on our Digital Strategy, having committed last year to becoming a digital leader in the financial services industry.

This is important as digital is the connective tissue across the Bank.

It is already helping us better meet the needs of our customers, employees, and our shareholders.

Our digital capabilities will be critical to adding more primary banking customers and building deeper relationships with all of our customers.

To underscore our commitment here, we announced at our Investor Day a medium-term target of adding 1 million new primary banking customers in each of our Canadian Banking and International Banking divisions.

Let me give you a few concrete examples of how our digital transformation is gaining real traction.

Approximately 8 million of our customers are digitally active, meaning that they regularly use our mobile or online channels for a wide variety of banking services.

In Canada, more than 60% of our customers have engaged with us digitally, and these customers now do more fund transfers on their mobile devices than online.

In fact, our customers will make well over 50 million fund transfers this year alone using their phones.

Bill payments are following the same trend, with more customers shifting their payments from our branch network to digital channels, and from online to mobile devices.

In our key Latin American markets, we’re also seeing tremendous uptake of our digital offerings.

For example, in Peru, more than half a million of our customers are digitally active.

And, in Chile, where we have more than 250,000 student loans, our digital capabilities now allow students to service their loans online, rather than visit a branch.

As our digital offerings grow, and our customers increasingly embrace digital channels, we can:

• deliver an even better customer experience,
• make things easier for our employees,
• and improve our operating efficiency for the benefit of our shareholders.

Before moving on, I want to comment briefly on some of the headlines we’ve seen over the past few weeks about data protection, or the lack thereof.

For me, these stories have served as a powerful reminder of the importance of maintaining public trust and confidence, which are not only the foundation of the banking industry, they are key pillars of our society.

Let me be absolutely clear: while cybersecurity and data privacy have been dominating the front page recently, Scotiabank’s commitment to our customers’ privacy has been unwavering.

We know that cyber threats continue to evolve and no one can claim to be perfect... that is why we are vigilant about data privacy and we have extensive protocols in place to protect data.

We are also working with regulators, governments, and other stakeholders to develop solutions to keep the system, and our Bank, secure.

While the digital world unfolds, questions about data, privacy and trust will continue to rapidly evolve.

For Scotiabank, however, there is no question about the importance of trust.

For us, the trust we have earned from our 24 million customers is one of the most important assets we have and we will never take it for granted.

I want to now shift my focus and talk about how innovation is affecting people and, in particular, our commitment to investing in Scotiabankers as we transition to a digital economy.

A couple of months ago, the CEO of BlackRock, the world’s largest asset manager – and a significant shareholder of the Bank – released his annual letter to CEOs around the world.

Quoting from the letter: “To prosper over time, every company must not only deliver financial performance, but must also show how it makes a positive contribution to society.”

This resonated with us because we’ve always operated in this fashion.

At Scotiabank, we think of banking as a calling.

We believe deeply that banks are an important part of the economic and social fabric of the countries in which we operate.

This is a responsibility that we all take very seriously.

For example, last year, Scotiabankers contributed more than 400,000 hours of volunteering and fundraising time in their respective communities.

The Bank also contributed more than $80 million globally in donations, sponsorships and other forms of assistance.

More specifically, as part of our commitment to young people in the community, in 2017 we built several soccer fields for children in Peru and Mexico.

And, here in Canada, the Bank reached the important milestone of supporting nearly 10,000 minor league hockey teams and one million children and counting through our commitment to community hockey.

Our historic, 20-year partnership with Maple Leaf Sports & Entertainment – including their philanthropic Foundation – will provide us with even more opportunities to give back to the communities in which our customers and employees live and work.

I want to return to the BlackRock letter for just a moment, because it raises a timely and important question.

The letter asks whether businesses are providing the appropriate learning opportunities that employees will need to adjust to an increasingly digital economy.

Here at the Bank, we are on the front-lines of a world that is changing rapidly.

And while it’s evident that technological change is delivering meaningful benefits across our society… it’s also demanding new skill-sets and mind-sets.

Understandably, this is creating some anxiety about job security and displacement among various segments of society.

All stakeholders have a responsibility to address the financial and non-financial effects of rapid technological innovation.

For our part, we are committed to investing in learning opportunities that are relevant for Scotiabankers.

In 2017, we invested nearly $70 million in employee development, with notable results.

Some employees chose to take advantage of our Tuition Assistance Program and went back to school.

Others leveraged our new digital curriculum.

In the last year alone, Scotiabankers completed 32,000 online courses and sessions led by some of our key academic partners, such as Queen’s University and the University of British Columbia.

We want to do even more…

To that end, I’m pleased to announce an investment of $250 million over ten years to give Scotiabankers the tools and opportunities they need to adapt and thrive in a digital economy.

Let me briefly outline the three areas that will make up our expanded learning and re-skilling initiative, which will launch in January 2019.

Firstly, we are enabling continuous development opportunities for in-demand skills.

Later this year, we will be launching the Scotiabank Virtual University, which will be available to all employees.

The interactive portal will help Scotiabankers create their own learning programs with both internal and external content.

Secondly, we are supporting employees as they adapt to change by providing specific skill assessments and training.

We will offer training through accredited institutions as well as focus on new and enhanced skills to prepare employees for emerging roles at the Bank.

And finally, we will invest in development opportunities for those employees who have been, or may be, displaced by technological change.

This includes new funding for career counselling.

It also includes an enhanced tuition allowance, should an employee choose to go back to school to get a fresh start.

People – be it our customers, employees or shareholders – have always been at the centre of how we, at Scotiabank, think about banking.

We are committed to helping our employees adapt to the rapidly evolving realities of the digital economy.

It’s the right thing for our Bank, for our employees, for our communities and for our society at large.

Before I close, I’d be remiss if I didn’t use this opportunity to once again highlight the benefits of free trade and open markets more broadly and NAFTA in particular.

Over the past year, Scotiabank’s Economics Team has done a significant amount of analysis on NAFTA.

The evidence clearly shows that the Agreement has produced a net benefit for all three member countries.

NAFTA has created millions of jobs and helped to raise the standard of living here in Canada, the United States and Mexico.

We believe one of the reasons for Canada's present economic strength is our commitment to free trade and open markets.

Having said that, we must not ignore concerns about displacement, in our industry and beyond.

As I said at last year’s annual meeting, political and business leaders need to work together to alleviate the anxiety of citizens who feel that open markets have threatened their livelihoods.

A good example is the need for programs to support displaced employees who seek to join the new economy.

Since the NAFTA re-negotiation process began, your Bank has been involved in discussions with Canadian and Mexican government officials.

We have also helped to facilitate a number of meetings between private and public sector leaders here in Canada and in Mexico.

As a strong proponent of the agreement, we will continue to do what we can to promote its merits, and we remain optimistic that an agreement will be reached in the near future.

In closing, I want to thank all 89,000 Scotiabankers from around the world for their ongoing efforts to build an even better Bank.

I want to thank each of our 24 million customers… know that we will continue to make every effort to earn and maintain your trust.

Thanks also to our shareholders for your confidence in the Bank.

And finally, I want to thank our Board for their wise counsel and support of our ambitious agenda.

From where we sit, the Bank is in a stronger and more competitive position than ever before… and we are very excited about our future.

Thank you.