The Bank of Nova Scotia (BNS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Aaron Regent. I am the Chairman of your Board of Directors. It is my pleasure to welcome you to Scotiabank's 188th Annual Meeting of Shareholders. Close caption is available on the Webcast, and we are broadcasting in English and French through all the channels. These are certainly very historical times in light of COVID-19 or coronavirus. We made a decision to hold this meeting through remote channels for the health and well-being of our shareholders, employees and communities, which are of utmost importance and priority to Scotiabank. We recognize that this is not how you are customed to our shareholder meetings proceedings and thank you in advance for your patience. We fully expect to return to our usual format next year. This decision is consistent with our goals of ensuring the well-being of all of our stakeholders, while enabling our shareholders to participate in the meeting by replicating the in-person experience to the maximum extent possible. Any modifications to our procedures have been approved by a court order we received, along with other financial institutions, to allow us to hold this meeting through electronic means. It is also one of many examples over the past few weeks of the resilience of Scotiabank and the Canadian financial sector when confronted with unique challenges. We are proud of the role we play in helping to maintain the stability and soundness of our economy more broadly. Allow me to introduce the members of Scotiabank's management team, who will be presenting today. Brian Porter, President and Chief Executive Officer; and Julie Walsh, Corporate Secretary and Chief Corporate Governance Officer. In accordance with the bylaws of the bank, I, as Chairman of the Board, will act as Chair of this meeting; and Julie Walsh will act as Secretary. I appoint Bryce Docherty and Amanda Castellano of Computershare Trust Company of Canada as scrutineers. I also note that the Board of Directors and senior management have also joined us remotely and are available to answer your questions as required. Elio Luongo, Reinhard Dotzlaw and Naveen Kalia representing the auditors, KPMG, are also participating electronically. I received proof that notice has been duly given and a quorum is present. As such, this meeting is duly constituted. We have a few guidelines on how this morning's meeting will proceed. To facilitate the introductions of motions, given we are limiting the size of group gatherings, the bank has asked Julie to move and Brian to second the motions for shareholders' considerations today. Julie will now speak to some of the procedural items. Julie?

Thank you, Aaron. For those registered and beneficial shareholders who have not voted in advance, voting will be available throughout the meeting until the formal items of business are concluded. Instructions on how to submit your votes are available on our annual report and Annual General Meeting web page and on the voting instruction -- voting information forms and proxy forms that shareholders received as part of the meeting materials. The items to be voted on today are: the election of directors, the appointment of the auditors, the advisory vote on executive compensation and the shareholder proposals. Each item of business that will be put before this meeting will be voted on by ordinary resolution requiring a simple majority of the votes cast for approval. Voting will be closed shortly after the general question period begins so that the results can be tabulated. The final voting results will be available after the meeting.

Thank you, Julie. I also note that questions may be raised through various channels made available today. Either Brian, Julie, or I will read out the questions. Shareholders are asked to submit their questions in advance so that we can address them at the appropriate time. The agenda for today's meeting is posted as part of our webcast. Similar to previous years, we ask that anyone wishing to ask a question, limit themselves to one question until other shareholders have had an opportunity, and that questions be of a general nature as this is a shareholders meeting. Customer or personal questions can be directed to one of the contacts on the back of the proxy circular. As we will be receiving questions through multiple channels, we appreciate your patience. If there are several questions on the same topic, we will group these together. We are endeavoring to respond to your questions during the meeting. However, we may not be able to get to all of them as we are operating with a skeletal staff. If this is the case, we will respond to your questions after the meeting. Before we turn to items of business, I want to take this opportunity to say a few remarks. Today's meeting marks my first year as Chairman and my first annual meeting in this role. I joined Scotiabank's Board 7 years ago and was honored to be appointed as Chairman last year. It is a pleasure to serve the bank and you, our shareholders, by leading the highly qualified and engaged members of the Board of Directors. It has never been clear than in the last few weeks with the situation around COVID-19 of the incredible dedication, resourcefulness and compassion of our employees who are committed to putting our customers first, supporting their fellow employees and delivering for our shareholders. This includes prioritizing their health and safety, working with them on solutions for their immediate needs and doing what we can to demonstrate our resilience together in these challenging times. I would like to extend my sincere thanks to the entire Board of Directors, senior management and the close to 100,000 Scotiabankers around the world for your service. This team is proud of our reputation as a leading bank in the Americas. They are enthusiastic and deeply committed to living our core purpose for every future, for our customers, our shareholders and the communities in which we live and operate. I know that the Board is looking forward to working with the team as we are operating from a position of strength and continue to have significant growth opportunities to drive long-term sustainable earnings. Before we proceed further with our meeting this morning, I would like to take a minute to comment on the recent and sudden passing of our former chair, Tom O'Neill. Some of you may recall that Tom retired from our Board as Chairman following last year's annual meeting. As Chairman and a Director, Tom had a profound impact on our Board and our bank. He was an individual of tremendous integrity, who could always be relied upon for wise counsel, sound advice as well as a good joke. Tom was an exemplary leader and a true gentleman. He will be sorely missed by his many friends, former colleagues and by the causes he devoted himself to over the course of his long career. On behalf of the Board, I want to extend my deepest sympathies to Tom's Wife, Susan, and to his entire family. Now before we turn to the first items of business, I would like to point out that the discussion during today's meeting may contain forward-looking statements about the bank's outlook and objectives and our strategies to achieve them. The bank's actual results could differ materially from any expectations discussed. There may also be references to non-GAAP measures. The details of our warning regarding forward-looking statements and non-GAAP measures are on the webcast screen and can be found in the bank's first quarter report to shareholders. I'd now like to invite Scotiabank's President and Chief Executive officer, Brian Porter, to address the meeting.

Thank you, Aaron. Good morning, everyone, and thank you for joining us for the Bank of Nova Scotia's 188th Annual Meeting of Shareholders. At last year's annual meeting, I began my remarks by thanking our Chairman, Tom O'Neill, for his tremendous contributions to the bank following his retirement from our Board of Directors. Today, it is with great sadness that I offer my condolences to Susan and the entire O'Neill family on Tom's recent and unexpected passing. Tom's legacy can be seen far and wide, beyond his own family who he fiercely loved. I think part of his legacy is the impact he has on the many, many people he mentored, coached and encouraged. Over the course of his long and distinguished career, Tom made enormous contributions to corporate candidates. He demonstrated an unshakeable commitment to integrity and good corporate governance, while serving on the Boards of BCE, Loblaw and Scotiabank. Tom was warm, unassuming and jovial, but also decisive, balanced and laser focused, knowing when to offer support, lean in on a fight worth fighting or bring resolve to hard decisions that needed to be made. Tom's exceptional leadership extended beyond the boardroom and into our communities. As a Director, and later Chair of the Board of St. Mike's Hospital, Tom oversaw highly successful fundraising campaigns that saved lives and better equipped the hospital for the future. The lasting benefits of his leadership are evident in many respects, especially now at this critical time. Tom was a cherished and respected leader at the bank, who exemplified our core values of respect, integrity, accountability and passion. For those of us who were fortunate to know him and work with him, we will miss him greatly. Our deepest sympathies go out to Susan and the O'Neill family. You remain in our thoughts. The sad news of Tom's passing comes at a very challenging time for all of us as a public health emergency with serious economic consequences works its way around the world. Starting in Asia, moving to Europe and now unfolding in the Americas. Since the COVID-19 crisis began, Scotiabankers have gone above and beyond to put our customers first. This concern for our customers and our communities is evident as Scotiabankers have responded with courage and diligence to an unprecedented volume of calls, questions and concerns. As the crisis continues to unfold, we see the many ways that Scotiabankers are supporting each other and our customers. I can honestly say that I have never been as proud of the bank during my 39 years with this great institution. We have also seen the best in our customers, many of whom have responded to longer than normal wait times with remarkable calm and understanding. To our customers, I say, thank you for your patience and for your ongoing trust in us, and we do not take it for granted. Since the earliest days of the crisis, the bank has taken decisive, coordinated action to ensure the health and safety of our employees, especially those working on the front lines. We also announced a number of important customer-relief measures across our footprint. We're helping many customers who have been impacted by the coronavirus by deferring payments on their mortgages, personal loans, auto loans and credit cards. In addition, we have kept more than 90% of our branches in Canada open, albeit on reduced hours. This has allowed us to serve our customers directly while still practicing social distancing for the safety of both our employees and our customers. More generally, stressed environments like the one we're in today allow us to act as an important financial shock absorber for individuals, households, small businesses and corporations by providing important liquidity when it is needed most. This is a responsibility we take very seriously, and we will continue to stand by our customers going forward. We have long believed we are an important part of the economic and social fabric of the communities in which we operate. And at times such as this, when so many households and businesses are struggling, we want to do more to support those in need intangible ways. To that end, I'm proud to tell you that we are making a $2.5 million contribution to support a number of life-changing charities across our footprint. No one understands the specific needs in their communities better than the people who live there. That is why our approach is designed to support local charities in regions where we do business. By empowering local teams to make decisions about where funds should go, we are confident that the donations will make an even greater impact. For quite some time, we've been saying that we were downturn ready, and we meant that both in operational and financial terms. Operationally, we are very pleased with the bank's state of readiness. Over the past 5 years, we've invested more than $15 billion in technology to be operationally robust. We are demonstrating strong operational resilience today with approximately 60% of our employees globally working remotely, and with our operating systems showing great stability. We are particularly pleased with how our digital and online channels are helping to support our customers at this time. The significant investments we made in our digital capabilities over the past several years are allowing us to reach people on their phones and in their homes quickly and easily. Our digital channels helped to deflect elevated call volumes to our contact centers and keep branch volumes at safe levels for both our customers and our employees. In addition, we are using our digital capabilities to rapidly develop solutions for our customers, particularly credit relief. Turning to the bank's financial strength. We are very well capitalized and have robust levels of liquidity. In comparison to the global financial crisis, we have more than 3x as much common equity Tier 1 capital, which allows us to continue to support our customers. Our efforts over the past few years to strategically reposition the bank's footprint, focus on asset quality and reduce risk have also positioned us well to weather the current storm. While we could never have predicted the nature or extent of the crisis we currently face, we are nevertheless well prepared. We entered 2020 on very solid financial footing. After adjusting for acquisition-related costs, your bank earned $9.4 billion in 2019, up 3% compared to the previous year, with each of our business lines producing solid results. The bank's strong close to 2019 is evidence that our considerable efforts to focus and simplify our footprint, strengthen our businesses and provide a superior customer experience will continue to pay off in the long term. We were fortunate to close our major divestitures, including Thailand, Puerto Rico and El Salvador, substantially reducing operational and credit risk. We also fully integrated our recent acquisitions, which contributes to the strength of our businesses. Today, 95% of the bank's earnings come from Canada, the U.S., Mexico, Colombia, Peru, Chile and the Caribbean. While the economic impact of the COVID-19 crisis is yet to be fully realized, we remain confident in the bank's strength and stability. In addition to the impact of the coronavirus pandemic on public health, we are also seeing financial stress to individual households and to almost all small and medium-sized businesses. The federal government has worked closely with Canadian banks to develop and deliver relief for these businesses and their employees. Canada is unique in that our leading banks, regulators and government officials can work quickly and collaboratively to develop solutions. The cooperation and coordination we have seen with the Federal Ministry of Finance and other ministries as well as provincial governments, the Bank of Canada and OSFI has been impressive. There is a clear understanding that we are in this together, and the only way to get through this is together. At Scotiabank, we are certainly proud of the role we are playing in this important effort. In our core markets in Latin America, governments took early and decisive action to stop the spread of the virus, well before it had reached levels we have seen elsewhere. In addition, Latin American governments have acted by announcing interest rate cuts, liquidity measures and broad consumer and business stimulus programs that constitute a significant portion of GDP. Going into this crisis, these governments had very low debt to GDP ratios, much lower than the developed world, and this has provided them with additional financial flexibility to respond decisively. While the magnitude of the coronavirus pandemic is unlike anything we have faced in recent memory, it is certainly not the first crisis we have navigated. There will undoubtedly be learnings from the crisis for us at the bank and for society, more broadly. There will be permanent changes to the way people live, interact and work. New habits will be formed and behaviors ingrained. We also know that despite the current strains being placed on the banking system, it will endure, and it will be there for all of us in the future. And Scotiabank will continue to serve as an integral part of the banking systems in each jurisdiction in which we operate. We are resilient, and we will come through this crisis on solid footing. In closing, let me say, difficult times, bring out the best in people. Everywhere we look, we see people doing the right thing. And I could list countless examples as evidence. So far, the response by most people to the human tragedy we are seeing has been one of generosity, caring and courage. As some of you know, in addition to serving as the President and CEO of Scotiabank, I have also had the privilege of serving as Board Chair for the University Health Network for the past 3 years. UHN is Canada's top research hospital and has been rated as one of the top 4 hospitals in the world. The bank also has a strong partnership with the Canadian Medical Association, which grew from our acquisition of MD Financial in 2018. We were proud to partner with the CMA in support of the Code Life Ventilator initiative, which was announced last Friday. Through my relationships with UHN and the CMA, I see firsthand the professionalism, courage and commitment of our medical professionals, doctors, nurses, administrators, ambulance drivers, paramedics, and indeed volunteers. They are the embodiment of our highest values, and I know we are all grateful for their service and sacrifice, particularly during this period of acute need. I want to conclude my remarks by expressing my deep gratitude to the more than 100,000 Scotiabankers, all of whom deserve our profound thanks and appreciation. And of course, I would like to thank the Board for their continuing support and good counsel. In the coming days, the challenges of defeating the virus will continue to test our unity, our endurance and our resourcefulness. It is a challenge we must rise to, and I am very confident that we will. Thank you for joining us this morning and for your kind attention. I will now turn the meeting back to Aaron.

Thank you, Brian. We will now proceed with the first item of business as set out in the notice of meeting. Copies of the annual report that contains the bank's 2019 financial statements and auditor's report therein were sent to shareholders in advance of this meeting. You can also obtain a copy of our 2019 annual report on our website at scotiabank.com. Julie, have we received any questions related to the financial statements? And I should note that Raj Viswanathan, our Group Head and Chief Financial Officer, is joining us by phone.

Aaron, thank you. We have not received any question on this item.

Okay. Thank you, Julie. Seeing no questions, we'll proceed with the next item. We will now proceed with the election of directors. The Board's role is to oversee management of the bank, ensuring that strong corporate governance practices are in place. We believe good corporate governance is an essential foundation for a strong, long-term performance and fundamental to our success. Our directors are regional, national and international business and community leaders. As a group, they have been selected based on their collective skills and ability to contribute to the broad range of issues the Board considers when overseeing the bank's business and affairs. I would like to thank all of our directors for their commitment, hard work, leadership and counsel to me. I'd like to acknowledge the contributions of Barbara Thomas, who retired from the Board last June after serving on the Board since 2004, following a lengthy career with global brands. The Board of Directors has fixed the number of directors to be elected at 13, and I confirm that all nominees are eligible for election. We believe we have a Board with the right combination of skills, experience and integrity to provide strategic counsel to management and oversee the bank's business and affairs. I'll now invite Julie to read the names of the nominees standing for election and make the motion for the nomination for directors.

Thank you, Aaron. I nominate each of the Director nominees as set out in the management proxy circular to be a Director of the bank until the close of the next annual meeting of Shareholders. The nominees for election of directors are: Nora Aufreiter, Guillermo Babatz, Scott Bonham, Charles Dallara, Tiff MacKlem, Michael Penner, Brian Porter, Una Power, Aaron Regent, Indira Samarasekera, Susan Segal, Scott Thomson and Benita Warmbold.

Thank you. The Board looks forward to serving you, our shareholders this year. You'll find information about each of our nominated directors in the bank's management proxy circular on Pages 10 to 17. Julie, have we received any comments or questions?

We have not received any questions on this item. Thank you.

Okay. Thank you. Seeing none, I declare the nominations closed. If you have not yet voted, please vote now by checking either the box for or the box withhold for each individual director. Our next item of business is the appointment of auditors. At the annual meeting held on April 9, 2019, shareholders reappointed the firm of KPMG LLP as the shareholders -- auditors of the bank for the 2019 fiscal period. The Board recommends that KPMG be appointed as the auditors of the bank until the close of the next annual meeting. I now ask Julie to make this motion.

I move that KPMG LLP be appointed as the auditors of the bank until the close of the next annual meeting of shareholders.

And I second the motion.

Thank you. Have we received any questions on this motion, Julie?

We have not received any questions on this.

Okay. As there are no questions, this is the second item of business to be voted on. For those of you who have not yet voted, please vote now by checking either the for or withhold box. The next item of business on the agenda is the advisory vote on the bank's approach to executive compensation, commonly known as Say on Pay. Our approach to executive compensation is described in detail in the Compensation Discussion and Analysis section of the management proxy circular on Pages 53 to 100 and Pages 58 to 112 in the French version. Because our annual Say on Pay is an advisory vote, it is not binding upon the Board. However, the Board and the Human Resources Committee will take the outcome of the vote into account, together with other suggestions that we receive from you when considering future executive compensation arrangements. A resolution on the approach to executive compensation is set out in the management proxy circular on Page 5, under the heading, Advisory Vote On Our Approach To Executive Compensation. I now ask Julie to make the motion to approve the bank's executive compensation approach.

I move that the resolution set out in the management proxy circular under the heading Advisory Vote On Our Approach To Executive Compensation be passed.

And I second the motion.

Thank you. Julie, do we have any questions on this?

We have not received any questions. Thank you.

As there are no questions, if you have not already voted, please vote now. The next item on the agenda are the shareholder proposals. This year, 4 shareholder proposals were submitted for a vote at today's meeting. There will be an opportunity for questions related to the proposals after the proposals have been moved. The first 3 are from the Mouvement d’éducation et de défense des actionnaires, or known as MÉDAC, which you will find beginning on Page 23 or Page 24 in the French version of our management proxy circular. As we are hosting this meeting by webcast and phone, the bank has agreed to move MÉDAC's proposals. Julie?

On behalf of MÉDAC, I move each of Proposal 1, Proposal 2 and Proposal 3 submitted by MÉDAC as printed in the bank's proxy circular. As this constitutes a formal item of business today, Mr. Willie Gagnon, representing MÉDAC, has asked me to read several statements in respect of his proposals in French. The first statement is related to proposal 1. [Foreign Language] [Interpreted] This year, MÉDAC submitted the same 3 shareholder proposals to the 7 major banks. All the banks refused to have -- hold a group discussion, although these proposals dealt with a significant issue that could not be addressed individually. Those 3 proposals addressed the compensation ratio, digital privacy and the bank's target in terms of the number of women on the Board of Directors. All the banks refuse to take part in a group discussion relating to these shareholder proposals. This is regrettable. That being said, the following 2 proposals, which will be put to a vote today, can be found in the bank's circular starting on Page 23 of the English language version of the bank's 2020 circular. Disclosure of equity ratio. It is proposed that the bank disclose the compensation ratio used by the compensation committee as part of its compensation setting process. This is a standard proposal, which has already been submitted to the bank in the past, a simple and an inexpensive measure, and what is more, one that is mandatory in the United States. We have our own method for calculating the compensation ratio, which compares the compensation of the bank's highest compensated employee to the average employee based on full-time equivalent employees and payroll. This year's compensation ratio indicates that the $12,633,496 compensation of the bank's CEO is 153x the average employee compensation. This is too much. Moreover, the bank should not only consider this ratio when calculating executive compensation, but also disclose such ratio annually as well as its calculation method if only to promote alignment by public companies, among other things. Naturally, we invite all shareholders to vote in favor of this proposal.

Scotia approaches the issues raised by these proposals in a manner it believes to be in the best interest of Scotiabank, and we have detailed this in the proxy circular. As such, we did not feel it was appropriate to discuss these proposals collectively with other banks. Instead, we held several discussions with MÉDAC on each of its 3 proposals. We have a strong shareholder engagement program, and shareholders raising items can expect to engage with the bank directly on them as we do not have others speak on our behalf.

Thank you. MÉDAC has asked that I read the following statement with respect to their second proposal. [Foreign Language] [Interpreted] Competitiveness and protection of personal information. Very serious digital security breaches have occurred in the country's financial sector in 2019. It is important to specifically address these breaches and import the lessons learned into the bank's digital security policies. We have agreed with some of the other banks not to hold a vote on this proposal following their written acknowledgment in their respective circulars that these 2019 breaches had been thoroughly taken into consideration, that response measures had been taken and that the digital security policies of these banks had been amended accordingly. Perhaps, the Chairman would be willing to speak to that today. We hope so. Naturally, we invite all shareholders to vote in favor of this proposal.

Thank you, Julie. I'll note that we had significant engagement with MÉDAC on this proposal and that we are disappointed with their response. In our proxy circular, we have detailed how the bank protects personal information and how technology is a competitive advantage for us.

Thank you. MÉDAC has also requested that I read the following statement regarding their third proposal. [Foreign Language] [Interpreted] Diversity target. As we can see from the table accompanying our proposal in the circular, all the banks have adopted targets regarding the number of women on the Board of Directors. These targets are either 30% or 1/3. Also, all the banks have exceeded their own targets. We would like these targets to be raised to 40% for both genders. Banks play an important role in the financial ecosystem of this country, they must lead by example. Naturally, we invite all shareholders to vote in favor of this proposal.

Thank you. I'll remind everyone that the management proxy circular includes statements by MÉDAC in support of their proposals as well as the bank's response. Julie, have we received any comments or questions on these proposals?

Thank you, Aaron. We have not at this time.

Okay. I see no questions. If you have not yet voted, please mark your votes on proposals 1, 2 and 3. The fourth proposal was submitted by Harrington Investments, which you will find on Page 27 of our circular, Page 28 in the French version. In light of the fact that we are hosting this meeting remotely, the bank has also agreed to move this proposal.

On Harrington Investments behalf, I move the proposal submitted by them as printed in the bank's proxy circular. As this constitutes a formal item of business, Ms. Brianna Harrington of Harrington Investments has asked me to read the following statement. Harrington Investments purchased BNS stock for our clients as a financial sector equity until we discovered the bank's financial involvement in the construction of the Dakota Access Pipeline, or DAPL, in which BNS deny direct project financing. We discovered that the statement was disingenuous and could mislead some investors, and that the bank made a distinction between project-based financing and financing individual participants in DAPL for general corporate purposes. The construction of the DAPL has violated human and indigenous people's rights and poses future threats and associated risks. BNS has also funded other similar projects in the fossil fuel industry, i.e., Trans Mountain pipeline extension project, that pose the exact same threats and risks, including potential unforeseen long-term negative consequences. Furthermore, financing the fossil fuel industry has major environmental, societal, economic impacts, like climate change, pollution, dependency on fossil fuel, pipeline health and safety hazards, to name a few. Through supporting pipeline projects and the fossil fuel industry, risks posed to human and indigenous people's rights are unavoidable and a continuous risk to the company. As stated in the recently released report, Banking on Climate Change: Fossil Fuel Finance Report Card 2020, Scotiabank made the dirty dozen in finance for all fossil fuels globally, contributing $98 billion in the time period of 2016 to 2019. The recent economic crisis related to the fossil fuel prices and the bank's continued funding of fossil fuels is proof that our bank may be financially held hostage to a volatile industry, and our company's survival as a viable and responsible financial institution will be in serious jeopardy. Until BNS commits to phase out bank support of fossil fuel and makes proper amendments to its governing documents, recent experience suggests our bank will continue to sign agreements, make loans for pipeline projects and support the fossil fuel industry, doing business as usual without regard or accountability for the increasing damage inflicted. We have spoken to our colleagues and the Mississaugas of the Credit First Nation Community Trust Board of Trustees are in full support of this proposal. We urge shareholders to vote in favor of shareholder proposal #4, to revise our bank's human rights policies, to ensure and uphold human and indigenous people's rights in all forms of applicable financing.

Thank you, Julie. The management proxy circular includes statements by Harrington in support of its proposal as well as the bank's response. I also note in response to the statement we were asked to read that the Bank of Nova Scotia's commitment to human rights includes acknowledgment and respect of indigenous people's rights, consistent with the laws in countries in where we operate. As a bank, we pride ourselves on recognizing and respecting indigenous cultures, histories and traditions, and remain committed to assisting indigenous peoples in achieving economic prosperity and improving outcomes for future generations. Julie, have we received any comments or questions on this proposal?

We have not received any comments or questions. Thank you.

Okay. Seeing no questions, if you have not yet voted, please mark your votes on proposal #4. Having now completed the formal items of business as set out in the notice, the voting portals will be closed so that the scrutineers may tabulate the results. Now we will take questions from shareholders and proxy holders. In keeping with our past practice, I'll ask Brian to preside over this section of the meeting. And Julie, if you could please read the questions as you receive them.

Aaron, just before we take questions, before we turn to questions from shareholders, I'd first like to make a few comments about how we are prioritizing the health and safety of our employees and customers during this time. I will also outline some of the measures we have put in place in Canada and in our international operations. As I mentioned during my remarks, our investments in digital technology are paying off in a period like this. To date, tens of thousands of employees have been mobilized to work from home and provide seamless operations almost overnight. For those who are working to support the essential services of our customers' needs, we have reconfigured workspaces, including installing plexiglass screens in our branches. We are regularly updating our employees with relevant communications on all aspects of COVID-19. We are also hosting employee calls with nurses and our Chief Medical Officer, so they can have their questions addressed. We have enabled complementary remote medical advice for full-time, casual and contract employees. Next week, we will conduct a bank-wide survey to see how our employees are coping. We will take the findings from that survey and certainly respond accordingly. In the meantime, we have additional paid leave, emergency paid leave and special payments for those employees working in branches or offices. And in Canada, we have deposited an additional $500 per employee into their well-being account. We have enhanced how those funds may be used, for example, to purchase supplies for their home office or grocery delivery services. Doing our part to support the global efforts against the coronavirus pandemic is part of our responsibility and culture of being there for our employees, customers, communities and our shareholders. We will now take questions. Julie, have we received any questions?

Thank you, Brian. We have received several questions. The first question that we will address today concerns today's meeting, and we've had it from 2 different shareholders. Monsieur Willie Gagnon from MÉDAC has submitted a question concerning the conduct of our meeting today, and the fact that it is being held by remote channels for the first time. He's noted the importance of shareholder participation at annual meetings. I also note, we received a question from our shareholder, [ El Bast ], as well, about the experience today, and asking whether the bank will commit to an enriched experience for shareholders in the future using technology as well. Monsieur Gagnon's question is also, how would this meeting be held differently if there had been adequate time to prepare? Thank you, both [ Mr. Bast ] and Monsieur Gagnon, for your questions. Despite the tight time frame in which we had to act this year, we have made every effort possible to replicate the in-person meeting experience and allow all shareholders and proxy holders to listen to the meeting, vote and ask questions during today's proceedings. In addition to our usual webcast that allows participants to hear the business of the meeting and ask questions, we have also enabled a conference call line this year for those who might usually attend in person and do not feel as comfortable attending the meeting by webcast or are not able to do so. Questions may also be submitted through the conference call line. Further, we have also enabled all of our shareholders, both registered and beneficial, to vote during today's meeting, similar to an in-person meeting through the various channels, including online. All of these additional channels are offered in both English and French with closed captioning available on our webcast. Truly, differences would be insignificant as we have felt it was important to enable the full participation of all shareholders this year despite the meeting being held electronically. We thank you both [ Mr. Bast ] and Monsieur Gagnon for your questions, and we do hope to return to our usual in-person meeting format next year. I also note, we've had a delay in some of the questions coming through. And MÉDAC would like to be noted as having seconded in supporting Harrington Investments proposal. So we thank you for that. Brian, we have some other questions. We've also received a comment as well from [ El Bast ], shareholder, who says, good morning, Mr. Porter. I had occasion to visit one Scotiabank branch last week. I should point out that I was wearing a mask and that I am long overdue for a haircut. Despite my appearance, I received a cordial reception in these stressful times. The bank has physical protection for employees, and I was guided through safety precautions to enter the branch, conduct my business and leave the branch. The Scotiabankers in the branch were knowledgeable, efficient and cordial. The branch was spotless, and I thank them all.

Thank you, [ Mr. Bast ]. We appreciate your comments and your business.

Thank you. Brian, the next question that we have received has been submitted by shareholder, Ms. Linda Schwey. Ms. Schwey has provided the bank with her views on the importance of the government and banks helping Canadians in light of the current COVID-19 crisis. Ms. Schwey's question is as follows. Would it not be possible for Scotiabank to grant moratoriums to all clients, regardless of how long they've had the mortgage and regardless of their standing?

Thank you, Ms. Schwey, for your question. This is obviously a very topical question. And Scotiabank has a broad financial relief program in place that includes assistance for mortgages, auto loans, lines of credit and credit cards to help Canadians who are facing hardship as a result of COVID-19. As of last night, we've deferred payments on approximately $25 billion of lending instruments, mortgages would be the biggest component of that. But based on the average mortgage size, this means the typical Canadian homeowner does not have to make approximately $10,000 in payments on their mortgage over the next 6 months, which is a relief in terms of their cash flow each month. And the process to do this is relatively easy. You can find it online on our website or you can phone our contact center or visit one of our branches. So -- but in terms of offering it broadly, it depends exactly what your needs are. So that -- I would say that we're committed to working with all of our customers here to meet their unique needs as best we can, but an approach to defer payments for all mortgage holders might not be in the best interest of some. So I think it's important to understand that we want our customers to understand their options and make the best informed decision they can with regards to their financial position. Thank you for your question.

Thank you. Brian, the next question that we have received is from [ Sébastien Deschênes ], who is a shareholder. How safe are the dividends of the bank given the situation with the banks in Great Britain and the actions recently taken there?

Yes. That's a good question and a topical question. And this bank has been making dividend payments for 188 years, and we certainly expect that to continue. And that the construct of our shareholder base is different than you'd find in Europe and the U.S. About 50% of our shareholders are individual Canadians, who rely on the income stream from their shares to -- for their retirement or meet general household expenditures, those type of things. But I'll draw a couple of distinctions here for you. So if you look at Canadian banks versus U.K. or European banks, Canadian banks have much higher returns on equity. They have much higher returns on assets. They have higher net interest margins, higher pretax profits and lower dividend payout ratios. In comparison to the U.S., the Canadian banks, again, have higher return on equity, higher common equity Tier 1 generally across the spectrum and lower nonperforming loans as a percent of total loans. So it's -- we are certainly committed to paying our dividend. We know it's important for all our shareholders, whether they're institutional shareholders or individuals. Thank you for your question.

Thank you. We've received another question from [ Sébastien Deschênes ] on Board composition, Aaron. Since the departure of Frank H. Sobey, the Atlantic Canada have had no representation on the Board. Does geography factor in as a criteria in determining candidates?

Thank you for your question. The short answer is yes. But it is just one of many criteria that we look at when considering the composition of the Board. We obviously look at an individual's experience, their expertise as well as how they would fit with the balance of the rest of the Board. And at the end of the day, we're trying to get a Board that is -- brings a broad perspective, broad level of expertise, including a geographic perspective to the Board to help us exercise our obligations and to support management. Thank you for your question.

Thank you. Another question that we have received comes from [ El Bast ], a shareholder in Ottawa. Good morning, Mr. Porter. I've been a shareholder for some days, dating back to the days of Cedric Ritchie, Peter Godsoe and Rick Waugh, and I take a long-term view. In recent times, we have been on an acquisition and divestiture spree, and I recognize that it may take some time to reap the benefits of these decisions. The reasons for these decisions sounds convincing to me on an intuitive level, but I'd like to hear that a return to outperforming the 4 bad guys of the big 5 is on the horizon. Will Scotiabank return to being best-of-breed among the big 5? And when do you think we will get there?

Well, thank you, [ Mr. Bast ], for your support and your question. When I became CEO of the bank, 6.5 years ago, we were in many geographies. Just to put a finer point on it, we operate in 56 countries across 17 time zones. And given the change in regulatory affairs and things that came out of the global financial crisis in 2007-2008 with higher capital requirements, higher regulatory requirements, this bank had to change. And so some of those jurisdictions weren't as much of a strategic priority as they might have been earlier. So we've -- as I mentioned in my comments, we've announced a number of significant divestitures, which were meaningful to the bank to reduce operational risk and credit risk. And our business today, 95% of the bank's net income comes from the Americas. So Canada, U.S., Mexico, Peru, Chile, Colombia and the Caribbean. So you've got a much more focused operation. The acquisitions that we purchased in the wealth management business have been fully integrated and are operationally running extremely well, and we're proud of those acquisitions. And our increased presence in Chile is important to us. We've been operating in Chile since the late '70s. It's an investment-grade country, the most prosperous country in Latin America. Average GDP per capita is around USD 24,000 a year, and we think the future is very bright in Chile. And now we're a top 3 bank in that country. And -- so the -- to put a finer point on it, the divestitures are largely complete, and we're done. We're -- as I said in my prepared remarks, we're glad to have them finished given the turmoil in markets today. And we're very pleased with our acquisitions. So the management team here, I can tell you, [ Mr. Bast ], is highly focused on delivering for our shareholders, and that's what we'll be doing. Thank you.

Thank you. Brian, we've received a question from a shareholder, [ Donald Burton ]. What would be the greatest financial impact to BNS under our current situation with the COVID-19 pandemic? Are new estimations in place regarding default risks? And for how long are they expected?

Yes, that's a very good question and a timely question. And you've heard some banks publicly state this, and the American banks are going to start to report their Q1 earnings next week, and we'll see what view they take. But generally, in this type of environment, small business loan losses are going to be rising. We will see some defaults of medium-sized businesses as well, and that's part of the business. We're in the risk business. We price for risk, and we know how to manage risk. But I would say that where we sit today, we're going to have somewhat elevated loan losses for the next 3 quarters, maybe 4 quarters. But it's very manageable for the bank. And I go back to my premise that I mentioned about our capital levels, we have lots of capital in this bank to absorb losses, to absorb more assets coming on our balance sheet. And we manage for risk in this bank. That's part of our DNA. We're very comfortable with the assets we have on our balance sheet, and we'll managing -- manage those assets accordingly.

Thank you. Brian, we've received a question from our shareholder, [ Normand Nadeau ]. Mr. President, I've been a shareholder for several years and also a client at my Scotia branch in Puerto Vallarta. My question is, would it be possible to soften and lighten the administrative constraints when we want to carry out transactions with the branch and also by Internet in Mexico? Right now, doing business in Mexico is complicated, especially if we compare with Canada, where it is much simpler than in Mexico. Looking for a positive response in real-life to improve the quality and efficiency of services and thus, increase the clientele with Scotia. Thank you for your collaboration and good work.

Okay. Well, thank you very much for the question, and thank you for your support as a shareholder. Some of the administrative burdens you'd see in a country like Mexico would relate to AML processes. We're obviously very cognizant of the risk in terms of anti-money laundering throughout our footprint. As an organization, we spent hundreds of millions of dollars on people, process and technology regarding anti-money laundering to make sure that we have the right protocols and processes in place. Sometimes, these are -- can be a little burdensome for customers. But it's for the safety of the system, the safety of the country. And obviously, there's a lot of illicit activities that go on, on the other side of that. And we want to make sure that that's not in our financial system in Mexico or any other jurisdiction in which we operate.

Thank you. Another question that we have received from a shareholder, [ El Bast ]. Good morning, Mr. Porter. Credible scientific sources state that pandemics and climate change threaten our very existence. I'd like to see visible evidence in our branches that we are the go-to bankers, leading the way in the fight against climate change. There have been past promotional events such as, You're Richer Than You Think, that have made Scotiabank top of mind in the battle for market share. Will I see some evidence in 2020 in our branches that Scotiabank is leading the way in this battle for our lives?

Okay. Thank you, [ Mr. Bast ]. We've got a number of different initiatives throughout the bank in terms of climate change, and we view it as a -- the most important issue facing governments and businesses today, away from that -- obviously the pandemic. But the bank has a strategy, which we launched in November 2019, and it comprises of 5 different commitments to support clients, manage risks and address our own operations. And if I could just list those off, I think it would be helpful. As a bank, we are committed to mobilizing $100 billion by 2025, so over the next 5 years, to reduce the impacts of climate change. And this really speaks to the financing -- support of financing to transition to a low-carbon economy. So we're financing carbon-free different types of energy producers, those type of things. So we've made some big commitments here. We track these commitments. And we'll continue to finance entities that are going to bridge us to a more carbon-free environment. We also ensure that robust climate change-related governance and transparency in all our reporting, including reporting in our financial statements aligned to the task force on climate-related financial disclosure. Thirdly, we will integrate climate risk assessments in all our lending, financing and investing, and we track that. We are certainly working hard to decarbonize our own operations, which would include our branch network. And we will establish a climate change center of excellence to inform and collaborate within the branch and with our external shareholders. But we have reduced the amount of greenhouse gas emissions in the bank. We track that. And there's a lot of information in our environmental, social and governance report, which is available online. It's 82 pages in length, and I think is a very fulsome document. If you have further questions, you can certainly look at that document. Thank you, [ Mr. Bast ].

Okay. We've also received a comment from [ Adeen Onskovic ] with respect to the timing of today's meeting and whether the Board would give consideration to moving the start time to allow more participation by shareholders in Western Canada. 9 a.m. start time makes it very inconvenient for shareholders at West to fully participate. We thank you very much for your comments today. Aaron and Brian, and I have received your question, and we appreciate your feedback.

Okay. All right. Thank you, Julie. And thank you, ladies and gentlemen, for your questions. We really appreciate the thoughtfulness and the interest that you -- and the care about the bank. So with that, we'll continue with the meeting. The scrutineers have completed the preliminary tabulation of the votes cast in respect of each item of business and has sent them to us. And I would now ask Julie to speak to the preliminary report of voting results.

Thank you, Aaron. We wish to report that the vote return is approximately 55%. I am pleased to inform you that each of the 13 nominees for Director, named in the management proxy circular, has been elected and received in excess of 98% votes in favor. The auditors were reappointed, approximately 99% voted in favor of KPMG LLP. The advisory vote on the approach to executive compensation was passed, approximately 94% voted in favor. And the shareholder proposals were defeated. Proposal #1, approximately 93% voted against; proposal #2, approximately 98% voted against; on proposal #3, approximately 93% voted against; and on proposal #4, approximately 91% voted against.

Thank you, Julie. The final voting results will be available after the meeting. We will also issue a press release as required by the Toronto Stock Exchange and post results on the bank's website. Ladies and gentlemen, that concludes this meeting. I would like to say a sincere thank you to everyone who made today's meeting possible, especially in light of the circumstances we find ourselves in and our foremost goal of keeping everyone safe. There are many Scotiabankers behind the scenes as well as translators and the production team that should be acknowledged. I would also like to thank you, all of our shareholders, for attending our annual meeting. I wish you and your loved ones well in these extraordinary times as we continue to take care of each other for our health and safety and that of our communities. This meeting is now terminated. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]