Aris Bogdaneris, Group Head of Canadian Banking at Bank of Nova Scotia (NYSE:BNS), said the lender is seeing progress from a strategy centered on deepening primary customer relationships, diversifying revenue sources and maintaining pricing and cost discipline.
Speaking at a Barclays event, Bogdaneris said tariff and trade-policy uncertainty remains a factor for Canadian businesses, but he described the bank’s commercial clients as resilient. He said the commercial banking business has its strongest deal pipeline in a long time, while the retail bank is monitoring customers and sectors that may be more vulnerable to economic pressures.
Canadian investment and commercial banking
Bogdaneris discussed Scotiabank’s commitment of CAD 100 billion to Canadian industry, saying the bank is already active with clients in oil and gas and defense. He said the commitment covers both the existing book and future activity, with the bank expanding its presence in Western Canada and other regions expected to benefit from investment.
In commercial banking, the bank has added sales capacity, particularly in mid-market and small-business segments, as well as in the prairies, British Columbia and Quebec. Bogdaneris said the pipeline developed through those additions is beginning to translate into growth.
- Small-business lending is growing 10% year over year, according to Bogdaneris.
- Commercial banking provisions for credit losses have declined for five consecutive quarters.
- Coverage ratios in the commercial business are at their highest level, he said.
He said the bank expects opportunities related to defense, energy, oil and gas to support commercial banking growth. However, he said a reduction in the Domestic Stability Buffer by the Office of the Superintendent of Financial Institutions does not materially alter Scotiabank’s lending approach. The bank remains focused on demand, customer needs and risk-adjusted returns rather than loosening standards because more capital is available, he said.
Returns, margins and fee growth
Bogdaneris said the Canadian banking unit’s return on equity expansion in the third quarter reflected two years of work rather than a single-quarter development. He identified four main drivers: a more diversified business mix, improvement in risk-adjusted margins, faster fee growth and productivity initiatives.
On the lending side, the bank has shifted away from being primarily mortgage-driven and toward greater contributions from small business, commercial banking and credit cards. Bogdaneris said risk-adjusted margin opportunities are emerging as roughly CAD 80 billion of mortgages are repriced this year and next year, including loans originated at thinner spreads. He also cited improving pricing and portfolio mix in auto lending.
Fee revenue has grown more than 20% over the past two quarters, driven by card, mutual fund and insurance fees, he said. Meanwhile, net interest margin has expanded for five consecutive quarters, operating leverage has improved for four consecutive quarters, and non-mortgage lending is growing faster than mortgage lending for the first time in two years.
The bank expects approximately 4% mortgage growth this year, but Bogdaneris stressed that it will not pursue market share through lower pricing. He said CAD 75 billion to CAD 80 billion of mortgages will come up for renewal in fiscal 2027, following roughly CAD 35 billion in renewals during 2026.
Primacy, cards and deposits
A core part of the strategy is “primacy,” or expanding customers’ use of multiple banking products. Bogdaneris said 95% of new mortgage inflows now include a Mortgage+ bundle with at least three products. The approach has generated 10% more day-to-day account volume and 10% more credit-card volume through mortgage relationships, he said.
Only 13% of mortgage balances are now held by single-product customers, compared with the bank’s historical approach of treating mortgages primarily as standalone products, according to Bogdaneris.
Scotiabank has also reworked its cards operation, adding a new leadership team, linking card products to account and mortgage bundles, and emphasizing premium products. He said 45% of new card acquisitions are premium-card customers. The bank is also using the Scene+ loyalty program, which he described as having 50 million members, to increase engagement across categories including gas, groceries, entertainment, dining and travel.
In deposits, retail day-to-day and savings balances rose 1.2% sequentially in the third quarter, about twice the Big Six average, Bogdaneris said. A high-interest savings account launched in March has added CAD 6 billion in balances, with 70% of the growth coming from new money and clients outside the bank.
Digital banking and AI
Digital sales represented 40% of total sales in the third quarter. Bogdaneris said the bank’s next goal is to raise the share of revenue generated through digital channels from about 18% to 30%.
He said the bank is using artificial intelligence to accelerate software development, prepare relationship managers for client meetings and speed mortgage-underwriting verification. In mortgage underwriting, AI has produced nearly 70% time savings in parts of the verification process, he said. Scotiabank also has an enterprise-wide AI tool available to 18,000 associates.
Bogdaneris said the bank is continuing to reduce physical branch space while adding specialists and virtual advisers. It has added 500 virtual advisers and is investing in sales capacity, digital tools, cybersecurity and process improvements.
He also highlighted Tangerine, Scotiabank’s digital banking platform with 2 million customers. The bank has spent the past year and a half building modern, AI-enabled capabilities and plans to unveil what Bogdaneris called the “new Tangerine” in coming quarters. He said the platform is expanding into wealth and small business and is expected to become a faster-growing part of Canadian banking.
On the bank’s investment in KeyBank, Bogdaneris said Scotiabank is satisfied with its current position and does not anticipate a change.
About Bank of Nova Scotia (NYSE:BNS)
The Bank of Nova Scotia, operating as Scotiabank, is a Canadian financial institution headquartered in Toronto, Ontario. Founded in Halifax in 1832, the bank provides banking and financial services to individuals, businesses, institutions and governments.
Scotiabank’s principal activities include Canadian personal and commercial banking, international banking, global wealth management, and global banking and markets. Its products and services include deposit accounts, mortgages, consumer and commercial loans, credit cards, investment products, financial planning, asset management, foreign exchange, capital markets services and corporate banking.
The bank serves customers across Canada and maintains international operations in Mexico, Peru, Chile, the Caribbean, Central America and other selected markets.
