While Scotiabank is realistic about the economic challenges ahead, the Bank is still optimistic about 2022, says President and Chief Executive Officer Brian Porter. 

The goal this year is to show the true earnings potential of Scotiabank, Porter said. He highlighted that the Bank is guiding toward pre-tax, pre-provision profit (PTPP) of mid-single digits in terms of growth for the year and is meeting or exceeding the targets it set for its four businesses at Investor Day in Santiago, Chile in January 2020. 

In terms of deploying capital, the Bank’s priorities continue to be organic growth initiatives and operating efficiency improvements while supporting its customers in difficult times, Porter said while outlining his expectations for the year during the recent virtual RBC Capital Markets Canadian Bank CEO Conference. 

The Bank’s recent increase to its dividend of 11%, Porter said, is an indication of how “we view our business and the confidence we have in it going forward.” From December into early January, Scotiabank repurchased 10.8 million shares at an average price of $86.50, a decision Porter said was made because “we felt our stock was inexpensive historically and relative to its peer group.” 

Despite expectations of as many as five interest rate hikes in the next 18 months, which could give rise to more volatile markets, Porter said Scotiabank is in a good position thanks to its focus on managing expenses and delivering positive operating leverage for its shareholders. Looking at the Bank’s footprint in Latin America, Omicron hasn’t had much of an impact in terms of the business, Porter said. That may vary depending on country, said he added, noting that Chile and Mexico have exceeded pre-COVID levels of profitability and are performing exceedingly well; while Peru and Colombia are coming back strongly, against a backdrop of a very strong commodity complex, a consumer that’s in good shape and the liquidity in those markets. “That’s what makes us optimistic about the year ahead in terms of the Pacific Alliance countries,” he said. 

The ramping up of vaccines in some countries has helped the region tackle Omicron better. In Chile, more than 86% of the population have had two vaccines and more than 55% have had a booster shot, while in Peru, the number of people who have had two vaccines is greater than in the US, Porter noted.  

Following a very good year last year, Porter said the Canadian Banking business is off to a very good start for 2022. He cites its lead position in the mortgage market business and in auto financing as factors for success. “I think it’s realistic to say there’s going to be some seasonality in the second quarter; there always is. I would expect mortgage demand to slow a bit in the second half of the year,” he said. 

“All the pieces of the Canadian banking puzzle are going to perform exceedingly well this year. If mortgages slowed down a bit, it will be more than made up for by other pieces of our businesses,” Porter said. 

The Bank also sees a lot of growth in the US, where Porter said it is a top-10 foreign bank. “We have a sizable balance sheet there, exceeding $40 billion. And we continue to enhance our business in the US,” he said. That progress shouldn’t be affected by higher interest rates and heightened market volatility, Porter added. “The lending is largely investment grade, we stick to our sweet spot,” he said. “It’s about risk appetite. We like consistency and predictability in our Global Banking Markets business.”