Scotiabank increased its investment in technology, personnel costs and advertising to grow business operations and remain competitive.  

In the third quarter of 2023, which ended June 30, the $1.3 trillion bank reported its tech expenses increased to $524 million, up from $476 million in Q3 2022, an increase of 10% year over year, according to the bank’s earnings presentation.

“Expenses went up 16% due mainly to higher personnel costs and technology investments, both related to business growth,” Scott Thomson, chief executive at Scotiabank, said during the bank’s earnings call today. “The productivity ratio was 56.1% this quarter, an improvement of 140 basis points (bps) quarter over quarter as revenue growth outpaced expenses.” 

The bank reported its global banking and markets expenses up by 16% YoY to $758 million in Q3, largely driven by higher spending on personnel and technology. 

THE BIG PICTURE: Scotiabank’s Canadian banking counterparts have also increased their tech and employee spending to increase productivity and remain competitive in Q3.  

Meanwhile, Royal Bank of Canada’s (RBC) noninterest expenses increased 22% YoY to $5.8 million, which included equipment and amortization costs, professional fees and marketing, travel and training expenses, according to the bank’s Q3 earnings presentation last week. 

“The core drivers of organic expense growth were investments in people and technology,” Nadine Ahn, chief financial officer of RBC, said during the bank’s Q3 earnings call. 

TD Bank also increased its investments in technology in the third quarter to remain competitive and serve a growing number of technology entrepreneurs.

TD Bank, the $1.9 trillion bank saw its noninterest expenses increase to $1.8 billion in Q3 2023, up by 5% YoY, “reflecting higher spend supporting business growth, including technology and higher employee-related expenses,” according to the bank’s earnings statement. 

BY THE NUMBERS: In Q3, Scotiabank reported; 

• Net Income of $2.2 billion, down by 15% YoY; 
• Revenue of $8 billion, up by 4% YoY; 
• Global digital banking adoption jumps to 61% in Q3 2023, compared to 58% in Q3 2022; 
• Global mobile banking users increased to 7.9 million, up by 9% YoY; and 
• Global digital banking users jumped to 9 million, up by 6% YoY.

WHAT THEY ARE SAYING: According to Moody’s Aug. 11 credit analyst report, Scotiabank’s expenses “may remain elevated due to inflationary pressures as well as continued technology investments to support business growth” in the coming quarters. 

Scotiabank is trying to mitigate cybersecurity and personal data risks “by significant technology investments and intensive planning focused on threat prevention and detection,” Moody’s report stated. 

FLASHBACK: The bank has been steadily increasing its investment in technology for the past two quarters. 

In Q1 2023 (ending Dec. 31, 2022), the bank’s tech spend was up by 9% YoY to $372 million to support business growth and it increased its tech spend in Q2 (ending March 31, 2023) by 13% YoY to $383 million. 

LOOKING AHEAD: The Nova Scotia, Canada-based bank announced that Glen Gowland, group head of global wealth management, will transition to the role of vice chairman, effective Jan. 1, 2024.  

MARKET REACTION: Scotiabank’s stock jumped by 3.01% and was trading at $47.58 on Tuesday trading. 

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