Key Preview Table: What to Watch for in Q3 2026
| Factor / KPI | Q3 2026E (Consensus) | Q2 2026 Actual | Q3 2025 Actual | YoY Context / Notes |
|---|---|---|---|---|
| Revenue ($M) | 7,054 | 6,928 | 6,714 | +5% YoY consensus; Q3 2025 was a strong comp |
| Net Income ($M) | 1,812 | 1,691 | 1,548 | +17% YoY consensus; Q3 2025 was up YoY |
| Diluted EPS | $1.49 | $1.37 | $1.24 | +20% YoY consensus; Q3 2025 up YoY |
| Adjusted ROE (%) | 13.2 | 10.4 | Q2 2026 at multi-year high | |
| CET1 Ratio (%) | 13.3 | 13.3 | Capital remains strong | |
| Impaired PCL Ratio (bps) | 61 | 51 | Guidance: mid-50s bps for H2 2026 | |
| Canadian Banking Earnings | 935 | 959 | Q2 2026 +53% YoY; Q3 2025 was soft | |
| International Banking Earnings | 736 | 675 | Q2 2026 +3% YoY; Q3 2025 was up modestly | |
| Global Wealth Mgmt Earnings | 476 | 424 | Q2 2026 +19% YoY; strong AUM growth | |
| GBM Earnings | 457 | 473 | Q2 2026 +11% YoY; Q3 2025 was a record quarter | |
| KeyCorp Contribution ($M) | ~90 (adj.) | Q3 2026 pre-announced; up sequentially |
*Consensus figures from provided data. Actuals are as reported in source documents.
Summary and Conclusions
- Q3 2026 is expected to show continued strong momentum: Consensus calls for revenue of $7,054M (+5% YoY) and net income of $1,812M (+17% YoY), with EPS of $1.49 (+20% YoY). This follows a robust Q2 2026, which saw double-digit earnings growth and margin expansion.
- Year-over-year comparables are not especially tough: Q3 2025 was a solid quarter but not a high watermark, so the bar is reasonable. The company is coming off a period of accelerating earnings and margin improvement.
- Key factors to watch:
- Impaired PCL ratio: Management now expects impaired PCLs to settle in the mid-50s bps for H2 2026, a slight increase from earlier guidance due to macro headwinds. Q2 2026 was 61 bps, up from 58 bps in Q1.
- Canadian Banking: Q2 2026 saw a 53% YoY jump in earnings, driven by margin expansion, fee growth, and positive operating leverage. Management expects commercial loan growth to accelerate and spot credit card growth to reach mid-single digits by year-end.
- International Banking: Q2 2026 delivered 3% YoY earnings growth, with strong performance in Mexico (+25% YoY). Retail loans grew 4% YoY, non-mortgage loans up 7%. Commercial loan growth is expected to improve in H2.
- Global Wealth Management: Q2 2026 earnings up 19% YoY, AUM up 18%. Strong mutual fund sales and referral activity are expected to continue.
- Global Banking & Markets (GBM): Q2 2026 earnings up 11% YoY, but Q3 2025 was a record quarter. Management has guided for some normalization, with a run-rate of $475M–$500M/quarter.
- KeyCorp contribution: Pre-announced at ~$90M adjusted for Q3 2026, up sequentially.
- Capital returns: CET1 ratio remains strong at 13.3%. Share buybacks and dividend increases are expected to continue.
- NIM and margin expansion: All-bank NIM expanded 24 bps YoY in Q2 2026. Management expects further, though more modest, expansion in Q3, driven by deposit mix and asset yields.
- Fee income: Double-digit fee growth in Canadian Banking and Wealth is a focus, with management highlighting cards, mutual funds, and insurance as key drivers.
Recent Results: Q2 2026 (for Reference)
| Segment | Q2 2026 Actual ($M) | YoY Growth | Key Drivers / Notes |
|---|---|---|---|
| Revenue | 6,928 | +3% | NII +10% YoY, NIM +24 bps, NIR +17% YoY |
| Net Income | 1,691 | +15% | Strong PTPP growth, positive operating leverage |
| Diluted EPS | $1.37 | +9% | |
| Adjusted ROE | 13.2% | +280 bps | |
| CET1 Ratio | 13.3% | flat | |
| Canadian Banking Earnings | 935 | +53% | Margin expansion, fee growth, expense control |
| International Banking | 736 | +3% | Mexico +25%, retail loans +4%, non-mortgage +7% |
| Global Wealth Mgmt | 476 | +19% | AUM +18%, strong mutual fund sales |
| GBM | 457 | +11% | Capital markets +25%, NIM expansion |
| KeyCorp Contribution | ~90 (adj. Q3E) | Pre-announced for Q3 2026 |
Guidance and Management Commentary
- Impaired PCLs: "We expect impaired PCLs to settle in the mid-50 basis points range for the remainder of 2026. While this is slightly elevated relative to our initial outlook, we still expect PCLs to moderate from first half levels, though more gradual than previously anticipated."
- Canadian Banking: "By the end of the year, we expect to catch up to the broader market, thanks in large part to an acceleration in commercial loan growth. Commercial loans were up 2% sequentially this quarter, and we expect that pace to increase given our robust pipeline growth."
- International Banking: "Commercial loan growth was up 2% quarter-over-quarter and should continue to modestly improve in the second half of the year as we pursue growth thoughtfully and employ a cash management first strategy."
- NIM Outlook: "Net interest margin expansion we saw this quarter will continue, maybe not to the same magnitude... for the remainder of the year for margin expansion in the Canadian bank."
- Fee Income: "NIR growth for the quarter was close to 10%. First is on the card book... 45% of new card acquisition now is in the premium card segment... record mutual fund sales in the branches... fees were up 21% year-on-year."
- Buybacks and Capital: "Over the past 12 months, we have returned $7.5 billion in capital to our shareholders through share buybacks and dividends. And looking ahead, we expect to keep this pace while maintaining strong capital ratios."
- Tuck-in M&A: "If we could do something to get FDIC insurance, get some more sticky deposits that allowed us to fully capitalize on that opportunity, we would do something in that regard... we're not talking about billions of dollars here. We're talking about tuck-in."
Q3 2025 Actuals (for YoY Comparison)
| Segment | Q3 2025 Actual ($M) | YoY Growth (vs Q3 2024) | Notes |
|---|---|---|---|
| Revenue | 6,714 | +3% | |
| Net Income | 1,548 | +15% | |
| Diluted EPS | $1.24 | +15% | |
| Canadian Banking Earnings | 959 | -2% | Higher PCLs, margin pressure |
| International Banking | 675 | +7% | Mexico strong, Chile/Peru stable |
| Global Wealth Mgmt | 424 | +13% | AUM +12% |
| GBM | 473 | +29% | Record capital markets, NIM expansion |
Most Important Factors for Q3 2026
- Impaired PCL Ratio: Whether it stabilizes in the mid-50s bps as guided, or if macro headwinds (inflation, energy, trade) drive further increases.
- Canadian Banking Momentum: Confirmation of accelerating commercial loan growth, continued margin expansion, and double-digit fee growth.
- International Banking: Sustainability of strong Mexico performance, stabilization in Chile/Peru, and progress on commercial loan growth.
- Wealth Management Flows: Continued strong mutual fund sales, AUM growth, and referral activity.
- GBM Run-Rate: Whether earnings normalize to the $475M–$500M/quarter range after a strong Q2, and if capital markets activity remains robust.
- KeyCorp Contribution: Confirmation of ~$90M adjusted net income contribution.
- Capital Returns: Ongoing share buybacks and dividend growth, with CET1 ratio maintained at or above 13.3%.
- NIM and Fee Income: Sustained margin expansion and double-digit fee growth as key levers for ROE improvement.
Summary
Scotiabank enters Q3 2026 with strong momentum, coming off a robust Q2 with double-digit earnings growth, margin expansion, and positive operating leverage across all major segments. The YoY comparable for Q3 is not especially tough, but the bar is rising as management targets 14%+ ROE by FY27, one year ahead of plan. The most important factors to watch are the trajectory of impaired PCLs (now guided to mid-50s bps), the sustainability of Canadian and International Banking growth, continued strength in Wealth and GBM, and the impact of ongoing capital returns and tuck-in M&A. Management's tone remains confident, but macro risks (inflation, energy, trade) are acknowledged as potential headwinds.
