Bank of Nova Scotia is keeping its focus squarely on North America. That’s according to CEO Scott Thomson, who joined BNN Bloomberg for an interview on Wednesday.
Thomson, who has held the top job at Scotia since 2023, says Scotia’s strategy focuses on “redeployment of capital from developing markets to developed markets, with focus on the North American quarter with Canada first, U.S. second and Mexico third.”
The bank released quarterly results this week, numbers that showed the lender beat analysts' expectations on most metrics. During the quarter, Scotia put that capital redeployment plan into action, buying a nearly 15 per cent stake in Cleveland-based lender Keycorp, while also merging Scotia’s assets in Panama, Colombia and Costa Rica into the second largest bank in Colombia.
“The objective here is to do what is right for shareholders,” Thomson said of the Latin American consolidation.
Thomson said the bank is keeping an eye on the economic environment, adding his team “cannot control what is coming out of the White House,” but will continue to plan for growth while remaining conservative.
Thomson said he is very confident on the bank’s presence south of the border. However, when it comes to deploying capital into Mexico he says the team is waiting to see what the new administration is going to do.
“If the U.S. wants to achieve its geopolitical ambitions, resources in Canada and labour availability in Mexico will be important. For us to have a place in these three countries will be an important strategic objective,” he said.
‘Higher for longer’
Interest rate policy is another challenge Scotiabank is keeping a top of mind. Thomson said that “we are preparing for higher for longer.” He said the Bank of Canada’s job of taming inflation without causing a recession will be complicated by tariffs. In the U.S. he sees the terminal rate at 3.5 per cent in 2026, if tariffs don’t take a toll on inflation.
As a result of higher rates and the uncertainty around tariffs , Thomson said Scotiabank will continue to prepare for higher loan loss provisions.
“If tariffs don’t come into fruition, I think we will see a better back half of the year in terms of loan loss provisions,” he said.
