Scotiabank Expects CAD $77 Million Q2 Contribution From KeyCorp Stake
The Canadian lender's roughly 14.9% ownership in KeyCorp is projected to contribute approximately CAD $85 million on an adjusted basis in the second quarter of 2026.
Bank of Nova Scotia (BNS) disclosed that its approximately 14.9% stake in KeyCorp is expected to contribute roughly CAD $77 million to the Canadian lender's net income in the second quarter of 2026, the first earnings contribution from the U.S. regional bank investment to appear in Scotiabank's reporting. Adjusted for amortization of acquired intangible assets of about CAD $8 million, the contribution rises to approximately CAD $85 million, reflecting Scotiabank's share of KeyCorp's first-quarter 2026 net income reported on a one-month lag and including acquisition-related accounting impacts net of associated funding costs.
The KeyCorp stake, acquired for total cash consideration of roughly US$2.8 billion, or about CAD $4.1 billion, was completed alongside Scotiabank's divestiture of its Colombia, Costa Rica and Panama banking operations to Davivienda. As of the third quarter of 2025, the bank's CET1 capital ratio stood at 13.3%, a level that management characterized as well-capitalized following both transactions.
Scotiabank's most recently available full-quarter results, reported for the third quarter of 2025, showed net interest income of $5,493 million, up from $4,862 million in the year-earlier period. The Canadian Banking segment posted adjusted earnings of $959 million, a 56% increase from the second quarter of 2025, with continued growth in personal demand deposits and quarter-over-quarter margin expansion as drivers.
Global Banking and Markets reported earnings of $473 million in the third quarter of 2025, up 29% from the same period a year earlier, supported by stronger capital markets activity and higher fee revenue. Global Wealth Management adjusted earnings reached $427 million, a 13% year-over-year gain driven by higher mutual fund fees, brokerage revenues and net interest income, with assets under management of $407 billion growing 12% over the same span.
Credit quality held broadly steady. Provision for credit losses in the third quarter of 2025 totaled $1,041 million, down from $1,398 million in the second quarter of 2025 but roughly in line with the $1,052 million recorded in the third quarter of 2024, suggesting the elevated second-quarter provision was a one-period spike rather than the start of a sustained deterioration.
Profitability metrics improved across the board. Adjusted return on equity reached 12.4% in the third quarter of 2025, up from 11.3% a year earlier, while adjusted return on tangible common equity climbed to 15.1% from 13.7%. The adjusted productivity ratio narrowed to 53.7% from 56.0% in the year-ago quarter, reflecting revenue growth that outpaced expense growth and the effect of internal productivity initiatives.
The KeyCorp contribution will begin appearing as a recurring line item when Scotiabank reports second-quarter 2026 results. Investors will be watching whether the U.S. stake meaningfully lifts the bank's consolidated earnings trajectory and how management allocates the incremental capital as the broader Canadian banking environment evolves.