Scotiabank’s successes during the pandemic were due in large part to its thoughtful and strategic diversification through four business lines and a geographic footprint that offers tremendous opportunity, President and CEO Brian Porter says.
“Part of the DNA of this institution is diversification,” Porter said last week during a webcast that was part of Scotiabank’s annual Financials Summit. “We have had businesses outside this country for well over 100 years, so the power of diversification is something we think about and is really important.”
Porter made the comments during a wide-ranging discussion with Meny Grauman, Managing Director, Financial Services at Scotiabank, about the Bank’s recent results and outlook in the coming months. The Scotiabank CEO painted a picture of a thriving business, emphasizing that there is still plenty of room to grow across its geographical footprint and its four divisions.
Scotiabank’s Global Wealth Management business has seen 10 quarters of double-digit growth in Canada and the international business is growing nicely, Porter said.
“The business is performing exceedingly well, number one in terms of revenue growth, number two in our peer group in mutual fund sales, so the base of the business is exceedingly solid. We’ve got a great team and we’ll continue to build it organically and thoughtfully through an acquisition.”
Scotiabank would like to expand its Wealth platform in the US to meet the needs of Latin American High Net Worth clients who have business or personal financial dealings in the United States, Porter said. The expansion could take the form of buying a team of people, acquiring an existing business, or building the capability organically.
“A bigger piece of US dollar management is important to us, it’s important to our customers particularly in Latam [Latin America] so that's something that we will think about over time,” Porter said. “We're talking about it internally and we’ve talked to our board about it.”
Porter said the Global Banking and Markets business, which has seen three consecutive quarters of $500-million-plus in earnings, as very well diversified and highlighted its successes in Latin America.
“Latam GBM business last quarter made $182-million, it’s rated number one in terms of lead arranger for Latin America in corporate loans, the bulk of those are investment grade, and that business continues to build and grow in Latin America,” Porter said.
On the Canadian Banking side, the Scotiabank CEO highlighted steady growth in commercial lending, the continued strength of the mortgage business, the rebounding of the auto business, and the successful partnership between the Canadian bank and wealth in the mutual fund space. Porter said the Bank is relatively “under-indexed” in certain parts of the country, particularly Quebec and British Columbia, and is investing in those areas to spur more growth.
“There's a lot more runway in terms of earnings,” Porter said. “We're investing in salesforce, we’re investing in technology, we're investing in our people, so I think we're really well positioned in the Canadian Bank.”
Some of the countries that make up Scotiabank’s International Bank division have faced especially difficult pandemics, but their recoveries are well underway, Porter said. Earnings from Chile and Mexico — which, along with Peru and Colombia, make up the Pacific Alliance countries and are Scotiabank’s primary Latin American markets — have exceeded pre-COVID levels, and Peru is well on its way there, he added.
The Bank set a target of $500-million in earnings by the end of fiscal 2021, and hit $493-million in Q3, essentially hitting the target.
“We’re not near our earnings potential in the International Bank, and when it runs on eight cylinders shareholders will definitely see that,” Porter said.