Royal Bank of Canada Scotiabank’s 27th Annual Financials Summit

Good to see you. Awesome.

Basically It is a good thing.

No. You saw us 2 years ago set a 17%+ ROE target, but we kept saying "plus plus," because we knew the significant opportunities we had to drive the market-leading ROE in the country and improve upon that. If you look at the drivers of that, excuse me, is very much revenue efficiency and cost efficiency. We added 100 basis points in 2024 from 15.5% to 16.5%. Then in 2025, 16.5% to 17.5%, and now you see us moving through 2026 close to 18% with a number of tailwinds to that ROE. A few headwinds, but a number of tailwinds, like the cost efficiencies from the articulation that we had in Investor Day of our AI benefits of CAD 1 billion after costs are just starting to kick in now. We are driving an 18% ROE on a 13.5% CET1 ratio.

Still waiting for those benefits to really kick in on the revenue side, on the cost side. You will see us continue to, I am sure we will talk more about AI, up our ambition around AI. Even with that first series of opportunities are still starting to kick on the revenue expense side. We have growth tailwinds that we have seen in a number of areas. We have cost opportunities that we can talk about. When we look at where we are today and where we think we can take our business, we fully plan on continuing to expand that ROE into the plus plus plus area. You will see us either in Investor Day next year or in Q4, articulate what our next ambition is around those ROE targets. No, we are not surprised.

In fact, we think we can continue to improve upon it at a 13.5 CET1 ratio. As you know, once we get through the uncertainty of the trade friction that we are having and the economic uncertainty, and the growth footing starts to reemerge in Canada, we can start to pull that 13.5 back. Therefore, that is ROE enhancing as well. When I look at all those tailwinds on revenue cost, efficiency, CET1, returning capital to shareholders, that plus plus plus is going to kick in even more. Very excited about the story of capital efficiency, returning capital. We generate the most amount of capital of any bank in Canada, by a wide margin. I think from that perspective, to create that capital, generate the highest return on it, and be efficient, I think is a big part of our thesis.

We are super excited about what we can continue to do.

When you are issuing your shares or using your shares in exchange, it does when your currency is strong.

Yeah. When we look at, obviously, we look at doing share buybacks, we are very aware of the intrinsic value of our stock, and we know what our plans are and what our ability to continue to drive our pre-tax, pre-provision and our NIAT growth forward.

We continue to buy back shares at a 2% level because we have a good understanding that we feel the intrinsic value of the firm is higher than the current valuation. That is obviously a core metric in our decision-making of do we buy back. We are continuing to buy back at healthy levels, at that 2% level at these valuations, as you saw in the last quarter from our numbers, and you see in the month-to-month share numbers. Second thing is we also know that book value per share growth is also very important in the overall as another valuation metric.

There is a balance between accelerating your buybacks even beyond that, but continuing to grow book value per share. We grew book value per share at 10% in the last trailing four quarters. It would have been 12% had we not bought back those shares. We are obviously looking to make sure that we hit our book value per share growth targets as well, and we continue to do that by growing our bottom line profit growth, which we have done quite significantly. We look at both those metrics, but intrinsic value obviously is really super important. When we turn to organic growth, we have very significant organic growth opportunities in our WA growth. You saw that in the capital markets growth. You will see that in the U.S. in our commercial banking growth and City National there.