Mortgage originations in the Greater Toronto Area fell to $3.3 billion in Q2, down from $4.4 billion in the previous quarter. In the Greater Vancouver Area, originations declined to $1.7 billion from $2.1 billion.
On an annualized basis, average mortgage volumes were still up 6%.
“While mortgage growth is slowing, our Mortgage+ solution, a major driver of client primacy, accounted for 88% of our originations this quarter, and mortgage renewal retention rates remain high,” said President and CEO Scott Thomson.
Mortgage+ is Scotiabank’s bundled offering that combines a mortgage with other products like chequing accounts or investments, making it easier for clients to manage their finances in one place.
Looking ahead to the second half of the year, Thomson expressed optimism that loan growth will begin to recover. “We have seen softness, we have seen uncertainty,” he said. “But as we look to the back half of this year and into ’26, I do think there’s a moment here where you’re going to see an inflection point with a little bit more loan growth.”
Fixed-rate mortgage renewals to spike in 2026-27
Scotiabank’s residential mortgage book totals $305 billion, with 77% uninsured and 67% fixed-rate. A significant chunk of that is up for renewal in 2026 and 2027, with $90.2 billion and $100.7 billion maturing in those years, respectively.
In both the GTA and GVA, the bank’s uninsured loan-to-value (LTV) ratios on new originations declined slightly, coming in at 60% in Q2—down from 62% in Toronto and 61% in Vancouver in the previous quarter.
Delinquencies stable, but PCLs climb
Mortgage delinquencies also held steady at 0.24% in Q2—unchanged from the prior quarter and up slightly from 0.19% a year ago. That stability was reflected in the bank’s impaired mortgage provisions, which were relatively flat.
However, Scotiabank’s total provision for credit losses rose to $1.4 billion in Q2, up from $1.16 billion in Q1. The increase was driven largely by Canadian Banking, where PCLs rose to $805 million, up from $428 million a year earlier and $538 million in Q1.
Scotiabank Chief Risk Officer Phil Thomas said the bank’s $1.8 billion build in provisions since 2022 reflects the bank’s more cautious stance in the current uncertain macroeconomic backdrop.
Scotiabank earnings highlights
Q2 net income (adjusted): $2 billion (+2%)
Earnings per share: $1.52 (+14%)
| Q2 2024 | Q1 2025 | Q2 2025 | |
|---|---|---|---|
| Residential mortgage portfolio | $289B | $304B | $305B |
| Percentage of mortgage portfolio uninsured | 75% | 77% | 77% |
| Avg. loan-to-value (LTV) of total portfolio | 51% | 52% | 52% |
| Portfolio mix: percentage with variable rates | 33% | 31% | 33% |
| 90+ days past due (mortgage portfolio) | 0.19% | 0.24% | 0.24% |
| Canadian banking net interest margin (NIM) | 2.56% | 2.32% | 2.27% |
| Total provisions for credit losses | $1B | $1.16B | $1.4B |
| CET1 Ratio | 13.2% | 12.9% | 13.2% |
Other key highlights
On Scotia’s exposure to the condo market
- Phil Thomas addressed concerns around rising risks in the condo development space, particularly in light of headlines about buyers walking away from pre-construction deals.
- “Condos represent 20% of our mortgage portfolio,” he said. “But… we’ve been very deliberate focusing on Tier 1 developers with experience through down cycles in Tier 1 cities. So, we don’t feel we’re as exposed potentially to some of the headlines that we see there.”
- He added that condo developers account for just 6% of the bank’s commercial real estate portfolio in Canada, and that roughly 80% of that exposure is investment grade.
- “It’s not one of my top concerns right now.”
On the impact of falling rates
- Scotiabank said a 25-basis-point cut in short-term rates would increase net interest income by approximately $60 million over 12 months, assuming a static balance sheet. The bank cautioned that deposit pricing and customer behaviour could impact that estimate.
On commercial real estate
- Scotiabank’s commercial book, which accounts for 8.2% of total loans and acceptances, declined 3% in the quarter, “reflecting slower business activities due to economic uncertainty, higher construction costs and still relatively high borrowing costs,” the bank said.
- The portfolio remained concentrated in residential and industrial segments. Office exposure accounts for just 9% of the CRE total—roughly $5.5 billion—with about 80% of that exposure rated investment grade.
Note: Transcripts are provided as-is from the companies and/or third-party sources, and their accuracy cannot be 100% assured.
bank earnings big bank earnings earnings earnings calls Editor's pick Lender Calls quarterly earnings scotia scotiabank scotiabank mortgage renewals scotiabank quarterly earnings Scott Thomson
Last modified: May 28, 2025
