Jillian Shea

Jillian Shea from UBS focused on the GBM segment, asking about the sustainability of its substantial margin expansion and funding cost improvements, the durability of its revenues given constructive markets, and the net income outlook for the segment over the year, especially compared to a normalized range of CAD 475 million-CAD 500 million.

Answer

Travis Manchin, Managing Director, Global Co-Head of Diversified Industries, Scotiabank Global Banking and Markets, stated that GBM's margin expansion (40+ basis points) is due to managing asset and deposit betas, reducing deposit costs faster than asset yield drops, and a relentless focus on pricing. He highlighted the powerful build-out of Global Transaction Banking (GTB) capabilities, improved analytics, and a better go-to-market strategy as long-term drivers, though he doesn't expect another 40 basis point expansion in the near term. He acknowledged the constructive market environment contributing to strong trading and investment banking revenues but expects some normalization towards the CAD 475 million-CAD 500 million run rate, while emphasizing significant investments in new capabilities for long-term diversification and stable ROE.

Jillian Shee inquired about the durability of Scotiabank's Global Banking and Markets (GBM) revenues, the potential for further margin expansion, and the net income outlook for the segment, considering Q1 2026's strong performance relative to previous guidance.

Answer

Travis Machen, from Global Banking and Markets, attributed margin expansion to managing asset and deposit betas, particularly reducing deposit costs, and leveraging GTB capabilities. He noted long-term opportunities for margin growth but cautioned against expecting another 40 basis point expansion in the near term. Machen acknowledged Q1's strong performance due to constructive markets and volatility but expects some normalization towards the segment's run rate, while emphasizing significant investments for diversification and stable ROE.