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TORONTO — Scotiabank reported a jump in first-quarter profits even as its Canadian banking segment showed rising financial stress for consumers.
The bank reported net income of $2.3 billion, up from $993 million in the same quarter last year when the bank took a $1.4 billion impairment charge related to the sale of some international divisions.
Chief executive Scott Thomson said on an analyst call Tuesday that the bank was moving forward on its strategic priorities “despite what remains a challenging operating environment.”
Its Canadian banking division saw profits rise to $960 million in the quarter ending Jan. 31, up from $913 million last year, but the segment also showed signs of softness.
Provisions for potentially bad loans in Canadian banking rose seven per cent from a year earlier to $576 million, and up about 17 per cent from the previous quarter.
The bank also reported both business and personal loans in the segment down one per cent, while mortgage loans rose five per cent.
Gross impaired loan formations for Canadian retail climbed steadily throughout 2025, from $870 million in the second quarter to $1.11 billion in the first quarter of 2026.
“Impaired loan loss provisions remain elevated in line with our expectations, as we continue to operate in an environment of heightened macroeconomic uncertainty,” said chief risk officer Shannon McGinnis on the call.
Mortgages were one source of struggling loans, especially those signed during the pandemic when interest rates were low and home prices were high, she said.
“That is a group that we are seeing having some stress,” said McGinnis.
The issues are mostly contained to Ontario and more specifically the Greater Toronto Area, but the bank is still comfortable with its risk exposure, she said.
The bank is still working through vehicle loans issued during the pandemic and has a “strong focus on collections effectiveness” for the portfolio, said McGinnis.
The company is also seeing rising stress in credit card loans for younger clients given the job market.
But with unemployment trending down, and expected to continue to do so, the pressure should ease going forward even if it takes time, she said.
Scotiabank says its overall provision for credit losses was $1.18 billion for the quarter, up from $1.16 billion a year earlier.
The bank saw impaired loans drop elsewhere after it closed the sale of its Colombia, Costa Rica and Panama divisions, which had prompted the impairment charge last year.
And while Scotiabank has made Mexico a bigger focus recently, it is not directly affected by the flare up in gang violence in recent days, said Francisco Aristeguieta, group head of international and global transaction banking.
