2020 ANNUAL REPORT - Scotiabank

1 2020 ANNUAL REPORTL eading Bank in the AmericasGuided by our purpose for every future we help our customers, their families and their communities achieve success through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. Leading Bank in the Americas with unique footprint across six core markets: Canada, the United States and the growth markets of Mexico, Peru, Chile and Colombia Diversified exposure to high quality banking markets with strong growth potential and superior returns Strong balance sheet, capital and liquidity ratios supported by conservative risk management culture Attractive dividend yield with established track record of dividend growth for 10 consecutive years Digital banking leader with strong levels of technology investment to support growth Well positioned with competitive advantages in technology, risk management and funding across core markets EARNINGS PER SHARE GROWTH*Diluted.

2 Dollars per shareSTRONG CAPITAL POSITIONDIVIDEND GROWTHD ollars per share16 17 18 19 = 6%CET1 Capital Ratio %$ -$ 17 18 19 2016 17 18 19 .111 . ON EQUITY:* 2019*Adjusted please refer to page 17VS0246816 17 18 19 -CAGR = (3%) 1 CEO s Message to Shareholders 7 Chairman s Message to Shareholders 8 Executive management Team 9 Board of Directors 10 Support for Customers 12 Environment, Social and Governance 13 management s Discussion and Analysis Highlights 14 management s Discussion and Analysis 147 Consolidated Financial StatementsMessage to our ShareholdersEARNINGS BY MARKET(in $ billions)l Canada.

3 64%l Pacific Alliance..16%l ..11%l Caribbean & Central America ..3%l Other International ..6%$1 .1$ $ $ $ $ *Total*Adjusted please refer to page 17 Dear fellow shareholders,By any measure, 2020 was an extraordinary year and, against that challenging backdrop, we hope you and your families are staying healthy and safe. We thank you for your ongoing trust in the Bank as we navigate these difficult times. The COVID-19 pandemic has had an adverse impact on economies, households, businesses, and financial institutions around the world. While we could never have predicted the nature or extent of the crisis we currently face, the Bank was on sound footing operationally and financially going into the crisis. Our years-long effort to build and maintain strong capital levels gave us the flexibility to serve as an economic shock absorber for our customers during this time of Bank has demonstrated tremendous financial and operational resilience during a period of intense stress.

4 Not only did we enter the crisis well-capitalized and with robust levels of liquidity, our efforts over the past few years to strategically reposition the Bank s footprint, focus on asset quality, and reduce risk have positioned us well to weather the current storm. Operationally speaking, we were pleased with our state of readiness. As we have seen during this period of instability, our significant, multi-year investments in our people, processes, and technology proved to be the right ones. The past year has demonstrated the vital, positive role that banks play across society. Indeed, without strong institutions, such as banks, you cannot have a strong society. The COVID-19 pandemic has unquestionably reinforced the role that your Bank plays as an enabler of economic stability, an advocate for CEO s Message to ShareholdersBrian J.

5 PorterPresident and Chief Executive OfficerWhat s inside2020 Scotiabank ANNUAL REPORT | 1positive social change, a partner in development, and a driver of growth and prosperity across our Americas footprint from the top of Canada s Arctic, through the United States and the Caribbean, and down to the southern tip of Latin America. The public health crisis we have faced in 2020 has underscored the importance of a strategic, coordinated response from the private, public, and charitable sectors, as well as the broader population, in tackling a crisis of such scale and severity. The pandemic has highlighted the necessity of strong collaboration between financial institutions and all levels of government in supporting families and businesses during this time of acute need.

6 You w ill learn about specific Bank-wide support measures in the following pages and, I hope, take pride in the ways your Bank responded during the will also be remembered for historic conversations focused on addressing racial inequality around the world. We know that our Bank is only as successful as the societies in which we operate, and when there are individuals and communities that feel left out, we cannot be strong. We are committed to calling out injustice of all kinds when we see it and striving to use every opportunity to make better, stronger societies today, and for generations to the economic impact of the COVID-19 crisis is yet to be fully realized, we remain confident in the Bank s strength and stability, and hopeful that better days lie ahead.

7 Financial performanceBefore commenting on business line performance in 2020, I want to take a moment to address the Bank s share price and valuation multiple. I want to be clear that our executive management team is committed to improving our share price in order to provide better returns to our shareholders. Employees and senior management are shareholders too, and we make decisions with a shareholder mindset. While our share price is not where we want it to be or where we think it should be having successfully repositioned the Bank, we are in a better position to produce consistent earnings growth. We are also encouraged by steadily improving customer satisfaction indicators across our core markets. The Bank s Net Promoter Score (NPS) in Canadian branches is up 11% and internationally we re seeing improvement of up to 52% across the Pacific Alliance (PAC) markets of Mexico, Peru, Chile, and Colombia.

8 We re especially proud of our improved competitive NPS ranking in Canada, moving from fourth to third place. Better customer satisfaction is a clear indication that our considerable investments in people, processes, and technology are working, and should soon be reflected in the Bank s share price. With regard to our financial performance in 2020, our results demonstrate the power of our diversified business model in a challenging environment. CANADIAN BANKING reported adjusted earnings of $ billion. The Canadian Bank s two largest loan portfolios Mortgages and Commercial Banking delivered strong growth in Canada this year. We continue to support our customers through the uncertainty of the COVID-19 pandemic with extensive customer relief on banking options and by delivering award-winning products and services.

9 Growth in Canadian Banking is expected to be driven by an increase in both retail and business banking, underpinned by assets and deposits growth. INTERNATIONAL BANKING has been repositioned to focus on a diversified presence across the high-growth markets of Mexico, Peru, Chile, and Colombia. The outlook is positive as GDP is poised to grow during calendar 2021 in all four of these core markets. While adjusted earnings for the year decreased to $ billion, our competitive position, balance sheet, and capital ratios remain strong. GLOBAL BANKING AND MARKETS (GBM) benefited from strong trading and financing activity in 2020 generating strong fee revenue for the Bank and record adjusted earnings of $ billion. We have also made significant advances in league table standings during the fiscal year.

10 In Canada, we ranked first in Loans and in Latin America, we were number one in Loans and we maintained our top-five ranking in Debt Capital Markets. The Business is now operating from a stronger platform and is expected to continue this momentum in 2021. 2 | 2020 Scotiabank ANNUAL ReportGLOBAL wealth management (GWM) delivered strong results in 2020 with adjusted earnings of $ billion, in part due to their fee-based business models. In 2019, we made the decision to REPORT wealth management as a stand-alone business line and it has continued to deliver record results. Our goal is for wealth management to generate approximately 15% of the Bank s overall earnings, which will further enhance earnings stability and are confident that our strategy will deliver better returns for our shareholders in all of our core markets in the future.