Good morning, and welcome to Scotiabank's 2022 Q1 results presentation. My name is John McCartney, I'm Head of Investor Relations here at Scotiabank. Presenting to you this morning are Brian Porter, Scotiabank's President and Chief Executive Officer, Raj Viswanathan, our Chief Financial Officer, and Phil Thomas, our Chief Risk Officer. Following our comments, we'll be glad to take your questions. Also present to take questions are the following Scotiabank executives: Dan Rees from Canadian Banking, Glen Gowland from Global Wealth Management, Ignacio Deschamps from International Banking, and Jake Lawrence from Global Banking and Markets. Before we start, and on behalf of those speaking today, I'll refer you to slide two of our presentation, which contains Scotiabank's caution regarding forward-looking statements. With that, I will now turn the call over to Brian.
Thank you, John, and good morning, everyone. Before I speak to our Q1 results, I would be remiss if I didn't take a moment to acknowledge the recent invasion of Ukraine. The attack on a sovereign nation at this scale has serious and far-reaching implications for people everywhere. We stand unequivocally with the people of Ukraine and with our large and vibrant Ukrainian community here in Canada. Turning to our Q1 results, we are very pleased with our start to fiscal 2022. As strong loan growth and fee income resulted in solid earnings contribution from each of our four business segments. Strong Q1 earnings of CAD 2.7 billion represent a 14% year-over-year increase and a return on equity of 15.9%.
We are delivering on all of our commitments in terms of earnings growth, return on equity, expense control, and balance sheet management, while deploying capital in support of future earnings growth and executing on our share repurchase program. Double-digit loan growth continued in Canadian banking while international banking and global banking and markets also delivered accelerating loan growth in conjunction with improving margin performance. Credit trends remain favorable, a result of our high quality portfolio. Our common equity Tier 1 capital ratio remains strong at 12%, representing excess capital of approximately CAD 4 billion relative to a common equity Tier 1 ratio of 11%, providing us with significant optionality. Internally generated capital was approximately 60 basis points in the quarter, 29 basis points of which was deployed in support of organic growth.
We also returned approximately CAD 2.3 billion or 53 basis points to our shareholders, who are mostly Canadian-based institutions or retail shareholders through dividends and the repurchase of 12.4 million shares. Our results and continued growth have been led by organic initiatives that enhance our service levels, convenience, and connectivity for our customers. In Canadian banking, we created Scene+, the merger of our Scotia Rewards and Scene loyalty programs. In the two months since the launch, we have seen approximately 2 million members log on to the new Scene digital site, of whom CAD 1.5 million did so from their mobile app. Activity levels in terms of both point transactions and redemptions are up substantially since the mid-December launch, and we have added an additional 95,000 new members to the combined program.
In Canadian Wealth, we have continued to build momentum in advice delivery and investment sales. In partnership with SigFig, a U.S.-based enterprise financial technology firm, we recently launched a new hybrid digital advice platform, Scotia Smart Investor. This platform provides a digitally enabled investment option for customers and will empower them to seamlessly invest digitally at home or with an advisor across all our channels, in branch, online, or through contact centers. This initiative is another example of our Canadian Banking and Global Wealth business lines working together to bring the whole bank to our customers. Overall, digital adoption through the bank's footprint continues, with active mobile users increasing 13% year-over-year, and the percentage of self-serve transactions increasing to 91%.
Our digital metrics in the Pacific Alliance continue to track at a strong pace as we capitalize on the behaviors of the younger demographic embracing digital first approach to banking. These strong trends clearly validate our initiative to accelerate our customer experience-driven digital first model and improve efficiencies in our international business. Yesterday, we were pleased to announce an agreement to purchase the remaining 16.8% minority interest in Scotiabank Chile from our local partner. This purchase will add approximately CAD 35 million per quarter to our earnings in International Banking upon closing. The transaction allows us to further invest in a business, in an economy we know very well. Scotiabank Chile has exceeded pre-COVID levels of profitability since Q1 2021 and is very competitively positioned locally in terms of scale and profitability. Our Global Banking and Markets business has great client franchise momentum.
GBM recently launched ScotiaRED, a series of state-of-the-art electronic trading tools that provide high-quality electronic execution solution for our capital markets clients. Importantly, GBM also continued to build its leadership around ESG and sustainable finance. Year to date, and including 2021, GBM was ranked number one for ESG bond issuance here in Canada and number two in Latin America. Recently, GBM was also awarded its first ESG mandate in the U.S., which supports our continued growth in that area. We also continue to be a leader in advancing our own ESG efforts focused on climate, community, and diversity initiatives. Our pathways to net zero project with interim targets and timelines is largely complete and will be released shortly. We recently announced that Scotiabank's global operations will be carbon neutral by 2030.
In year one of ScotiaRISE, our ten-year CAD 500 million initiative to promote economic resilience, we supported over 200 organizations throughout our footprint. We were also recently included in the 2022 Bloomberg Gender-Equality Index and recognized as one of the best places to work for the LGBTQ+ equality by the Human Rights Campaign Foundation in the U.S., Mexico, and Chile. Our industry leadership on the ESG front has not gone unnoticed, having recently been named Best Corporate Sustainability Strategy at the ESG Investing Awards 2022 for our work addressing climate risk and promoting racial and gender equality. Finally, for the third consecutive year, Scotiabank was named Bank of the Year in Canada by The Banker, acknowledging excellence in providing customers with exceptional advice and a great banking experience while delivering for our shareholders and our communities.
Q1 was an excellent quarter in terms of both financial performance and progress on our initiatives to continue to enhance the customer experience and further invest in scale and product capability within our simplified geographic footprint. With that, I will turn the call over to Raj for the financial review.
Thank you, Brian, and good morning, everyone. Before I begin, I'd like to note that all my comments on the bank and business line results will be on an adjusted basis. As I did in the past few quarters, in select sections, I will refer to quarter-over-quarter performance as for certain metrics we feel it is relevant to discuss those trends. I'll also refer to numbers excluding the impact of FX in many areas as this continues to be an important factor for evaluating, particularly the year-over-year comparatives. You will recall in Q3, we added slide 38, which discloses the impact of FX to key income lines. We believe this continues to be a relevant disclosure. With that, I'll begin the review of the performance for the quarter on slide five.
The bank reported another strong quarter with earnings of CAD 2.7 billion and diluted earnings per share of CAD 2.15, an increase of 14% year-over-year and 2% quarter-over-quarter. All four business lines reported strong results again this quarter, reinforcing the strength of our diversified platform. Return on equity improved to 15.9% this quarter, while pre-tax pre-provision earnings increased a strong 6% compared to the previous quarter. Revenues were also up 3% excluding the impact of FX. In addition, lower investment gains and the high performance fees earned in global wealth management last year impacted the revenue growth by an additional 2%. Quarter-over-quarter revenues increased 5% with strong growth in all four business lines. Net interest income was up 3% excluding the impact of FX.
Net interest income was also up 3% compared to last quarter, driven by strong loan growth across all the business lines. Quarter-over-quarter net interest margin was relatively stable at 216 basis points. On slide six, you can see the drivers of the quarter-over-quarter change in net interest margin at the all bank level, as well as for the Canadian and international banking segments. Our balance sheet is naturally positioned to benefit from administered interest rate increases that are expected to commence in Canada in the next quarter. They made significant rate increases across the Pacific Alliance that will benefit earnings through the remainder of 2022, more specifically in Mexico and Chile. This quarter, we have provided additional interest rate sensitivity disclosures on slide 22. Year-over-year, non-interest income was up 2% excluding the impact of FX.
Higher banking and wealth management fees and higher income from associated corporations were offset by lower investment gains, trading revenues, and insurance income. Quarter over quarter, non-interest income was up a strong 7%, driven by higher trading revenues, banking and wealth management fees, and underwriting and advisory fees. The PCL ratio of 13 basis points for the quarter was a decline of 36 basis points from last year, but a modest increase of 3 basis points from last quarter. Year over year, adjusted expenses were up 2% excluding the impact of FX. The increase related to growth in performance and share-based compensation and other discretionary costs such as advertising and technology to support business growth. On an adjusted basis, the productivity ratio was 52.2% this quarter compared to 51.8% a year ago, while operating leverage was - 0.7%.
On slide seven, we provide an evolution of our common equity tier one ratio over the quarter as well as changes in risk-weighted assets. The bank reported a strong common equity tier one ratio of 12%, down 24 basis points compared to the prior quarter. The decrease was due primarily to buyback of approximately 12.4 million shares during the quarter under the bank's normal course issuer bid. Strong internal capital generation of 32 basis points was offset by organic business growth in risk-weighted assets of CAD 12 billion or 29 basis points across all business lines. At these levels, compared to 11% CET1 ratio, the bank will have excess capital of approximately CAD 4 billion to support continued organic growth while continuing its share buyback program. As Brian mentioned, we have agreed to purchase the remaining 16.8% of Scotiabank Chile from our local partner.
The transaction is valued at CAD 1.3 billion, and upon closing will have an impact on capital of approximately 10 basis points. The transaction remains subject to customary closing conditions and regulatory approvals. Turning now to the business line results beginning on slide eight. Canadian Banking reported very strong earnings of CAD 1.2 billion, up 32% year-over-year. Pretax pre-provision earnings grew 10% year-over-year as strong revenue growth outpaced expense growth. Revenue increased 9% year-over-year as net interest income and non-interest income grew by 8% and 12%, respectively. Net interest income growth was driven by a strong year-over-year loan growth of 12%, including 15% growth in mortgages and 16% growth in business loans and acceptances.
Net interest margin declined 7 basis points year-over-year, impacted by shifts in business mix, in particular, the continued strong growth in mortgages. The margin was, however, stable quarter-over-quarter. The non-interest income year-over-year increase of 12% was driven by higher banking and mutual fund distribution fees. Expenses increased 6%. The increase was driven by higher personal costs as we continue to build teams in the retail and business banking businesses, along with technology and other discretionary costs to support business growth. Operating leverage continued to be positive for the fourth quarter in a row at 2.1%. The PCL ratio was negative 3 basis points compared to 23 basis points a year ago and negative 10 basis points in the prior quarter. Turning now to Global Wealth Management on slide nine.
Earnings of CAD 419 million were up 13%, excluding the seasonally elevated performance fees in the prior year, and up a strong 7% quarter-over-quarter. Canadian Wealth Management earnings grew 14%, excluding the mentioned performance fees, driven by higher investment fund fees from AUM growth, double-digit balance sheet growth in private banking, and strong fee-based asset growth. International Wealth Management grew a strong 19% on a constant dollar basis. Revenue grew 6% quarter-over-quarter, underpinned by higher investment fees, net interest income growth and higher fee-based revenues. AUM and AUA both increased 11% to CAD 345 billion and CAD 601 billion compared to last year, with strong net sales and market appreciation.
We continue to generate positive net sales along with strong investment results for our clients, with Dynamic Funds ranked number one among independents in 5-year returns. Referring to slide 10, Global Banking and Markets. Global Banking and Markets generated earnings of CAD 561 million this quarter, up 3% year-over-year and a strong 12% quarter-over-quarter. Pre-tax pre-provision income increased 25% quarter-over-quarter and 2% year-over-year. Revenue increased 19% quarter-over-quarter and 5% year-over-year, driven by strong performance across most of GBM's business lines. Quarter-over-quarter, capital markets revenue was up 33%, with strong growth in FICC and equities. Corporate and investment banking also experienced a very strong quarter, with loan growth of 5% quarter-over-quarter and 8% year-over-year, combined with margin expansion.
Underwriting and advisory fees were up 4% year-over-year and 19% quarter-over-quarter. Expenses were up 13% sequentially due to seasonally higher personal costs. Year-over-year expenses rose 9% due to increase in technology costs to support business development. The productivity ratio of GBM remains strong at 47.7% for the quarter. GBM LatAm, which is reported as part of International Banking, had a record quarter with CAD 200 million of earnings, an increase of 15% from last year and 11% over the prior quarter. Revenues grew strongly in both business banking and capital markets, up 18% and 46% respectively from the prior quarter. This quarter we maintained our number one position in Bloomberg's loan syndication league tables. Slide 11 shows the international banking results.
My comments that follow are on an adjusted and constant dollar basis. International Banking reported net income of CAD 552 million, up 50% over Q1 last year and 5% quarter over quarter. Pre-tax pre-provision earnings grew 4% year-over-year and 7% quarter over quarter. Pre-tax pre-provision earnings in the Pacific Alliance grew a strong 9% quarter over quarter. While pre-tax pre-provision earnings in Mexico and Chile are well above pre-COVID levels, while Peru's pre-tax pre-provision earnings grew 15% quarter over quarter. The segment's net income continues to grow in line with economic recovery and has steadily delivered improving results for the last six quarters. Quarter over quarter loans grew 3%, with commercial up 2% and mortgages up a strong 5%, while personal loans and credit card balances increased 2% for the first time in eight quarters.
Revenue was up 5% over the prior quarter as the positive trend in net interest income continued. NII increased 5% quarter-over-quarter, driven by strong loan growth and margin expansion. Net interest margin improved 7 basis points from the prior quarter to 3.76%, driven by spread increases, offset slightly by business mix changes. Non-interest revenue was up 4% year-over-year and 5% over the prior quarter, mainly driven by strong capital markets results, banking and card fees across the Pacific Alliance and the Caribbean. Provisions for credit losses ratio declined quarter-over-quarter by 14 basis points to 77 basis points, driven primarily by lower provisions for unpaid loans, resulting from lower formations mainly in Peru and Mexico.
Non-interest expenses declined 2% year-over-year, but increased 3% quarter-over-quarter due to higher seasonal expenses in the Caribbean and due to higher performance-based compensation. This was partly offset by the benefits of the Q4 2021 restructuring charge. The business generated positive operating leverage of 1.8%. Now, turning to the other segment, we reported an adjusted net loss of CAD 67 million as compared to a loss of CAD 35 million in the prior quarter and a gain of CAD 47 million in the prior year. Year-over-year, the change was a result of significantly lower investment gains and lower contribution from asset liability management activities, partially offset by the Scene Loyalty program payment in 2021. I'll now turn the call over to Phil to discuss those.
Good morning, Raj. Thank you Raj and good morning, everyone. Credit performance has trended better than expectations we laid out at fiscal 2021 year-end. Our credit portfolio is healthy and well-balanced, driven by a favorable business mix shift towards more secured and higher quality affluent customers, especially in international banking. Our focus will continue to be on customers with strong individual balance sheets and investment-grade corporate clients. I'm pleased to outline the details for the quarter beginning on slide 14. Gross impaired formations and net write-offs continue to decline. We continue to see a positive trend with lower impairments across all portfolios and quarter-over-quarter, the GIL ratio has improved 3 basis points to 64 basis points. Our net write-off ratio also improved 27 basis points, down by 7 basis points quarter-over-quarter.
Write-offs were CAD 457 million, mainly driven by improved performance and underlying credit quality in international banking, and are expected to be stable for the remainder of the year. From a balance sheet perspective, we ended the quarter with allowances for credit losses of CAD 5.6 billion, down approximately CAD 150 million from the prior quarter. We are suitably provisioned, and our coverage ratio reflects the high quality nature of our portfolio, including a higher mix of secured lending. Our ACL ratio will continue to improve and is now 80 basis points. This is down 6 basis points compared to the prior quarter. Turning to slide 16, I will speak to our PCL performance this quarter. For Q1 2022, all bank PCL is CAD 222 million or 13 basis points, driven by net reversals from performing loan PCLs and lower formations.
International retail continues to improve, mostly driven by personal loans and credit card performance. Performing PCLs had a net reversal of CAD 183 million, and impaired PCLs reported CAD 405 million in Q1, down CAD 106 million from last quarter. Overall, our credit portfolio remains strong and we continue to thoughtfully expand our balance sheet with a focus on high-quality credit customers. Our provisioning approach incorporates multiple scenarios for economic factors such as GDP growth, inflation, and changes in rates, thus providing us with comfort with our provisioning and our total allowances for credit losses. I will now turn the call over to Brian for closing remarks.
Thank you, Phil. We are encouraged by our start to 2022, and we are confident in our ability to exceed our medium-term objectives. We expect the earnings growth in our Canadian banking business to continue, driven by loan growth and additional fee income as the year progresses. We expect the strong momentum in our international banking business to accelerate in the Pacific Alliance countries and the renewed growth in the Caribbean to continue for the balance of the year.
We expect pre-tax, pre-provision growth to continue from higher revenue and our ongoing focus on cost efficiencies. Strong franchise momentum continues in our global wealth businesses, resulting from industry-leading investment management performance and gains throughout our advice channels and our private banking businesses. GBM's earnings continue to grow with strong contributions from capital markets businesses and corporate and investment banking results driven by loan and advisory revenue growth. Our advisory pipelines remain strong.
The benefits of our diversified trading businesses, a strong advisory pipeline, and a rebound in financing activity throughout our footprint support our constructive outlook. We are confident that each of our four business lines are well-positioned to deliver growth and continue to believe that 2022 will be a year that clearly demonstrates the full earnings power of Scotiabank. With that, I'll turn the call back to John for Q&A.
Thank you Brian. We'll now be pleased to take your questions. Please limit yourself to one question and then rejoin the queue to allow everyone the opportunity to participate in the call. Operator, can we have the first question on the call, please?
The first question is from Douglas Young, Desjardins Capital Markets. Please go ahead.
Hi. Sorry good morning. Just wanted to go to the international banking side, and I guess this is a two-part question. I think, Raj, you know, you mentioned rate increases in Mexico and Chile should benefit international banking the rest of the year. Can you put this into context, in terms of what the NIM impact could be or in terms of dollar figures? You know, the second part of the question on international banking is, you know, we did see a sequential increase in pre-tax, pre-provision earnings in Peru and Colombia. I get the last quarter was low, but it is still encouraging to see the sequential increase. You know, have we made that pivot? You know, should we expect that momentum sequentially to continue? And what are some of the drivers? Thanks.
Yeah, sure, Doug. I'll talk about rate increases. You know, like we indicated last quarter, 25 basis points is roughly about CAD 20 million of NIAT in the international bank. That assumes a reasonable change in the slope of the rate curve. As we've disclosed this year, this quarter in our prepared analyst deck, you know, the rate situation both in Chile and Mexico, which is where we are most rate sensitive, you know, the long end of the curve has remained flat. We've seen significant improvement in the short end of the curve, and we have also seen significant rate increases, which you've seen, you know, 475 basis points in Chile and 175 basis points in Mexico and so on.
This quarter we did benefit because the seven basis points equates, as you can tell if you did this, the math to the, you know, the earning assets and so on, CAD 23 million of net interest income that has come through. As we see the rate curve move up, we should see significant benefits happening for the rest of the year. It's a little difficult to give you specific guidance by country because there's multiple factors that move the rates and therefore the impact on NII. Ignacio, you want to take the question on Colombia and Mexico?
Peru, yes.
Peru.
Good morning, Doug. Yes, it's really good to see Peru and Colombia recovering. Had a strong recovery in the quarter. This is coming on the back of very strong GDP growth, over 10% in 2021 in both countries, and we are seeing that reflected in strong loan growth, 3% in Peru, 5% in Colombia, margin expansion. What I'm very pleased is to see the overall performance of all geographies in international banking this quarter because strong loan growth was 3% for the second consecutive quarter. We saw also revenue acceleration at 5% Q-over-Q, both in net interest income and net interest revenue. NIM expansion, as you have highlighted, of seven basis points this quarter. Strong PTPP growth in all geographies, improved credit quality, and a positive operating leverage.
that in addition to the acquisition of the Scotiabank Chile shares of our partners there, is going to also add around CAD 35 million in incremental NIAT in international banking when we close this transaction. Looking forward, I see very good momentum for growth based on the macro outlook and the business performance.
Okay. Thank you.
The next question is from Gabriel Dechaine, National Bank Financial. Please go ahead.
Yeah. Sticking with international margin was up. There was a bit of a headwind from mix, and I know, you know, mortgage growth, commercial growth is outpacing other categories. I also wanna, you know, revisit the whole strategy to downsize or exit certain lending activities and if we can talk a bit about, you know, exactly what those are, how big they are and, you know, what sort of financial impact you expect from them.
Well, I would follow up on what I was saying, Gabe. We are seeing a very positive growth. We grew 3% in the quarter in International Banking. Very strong growth, 5% in mortgages, 2% in commercial. For the first time we also saw a growth 2% in personal loans and credit cards. Overall, we see within our risk appetite a very positive momentum for growth. Also positive in terms of revenues, NIM expansion that we increased seven basis points. This is equivalent to CAD 30 million in net interest income. As we mentioned the last time, we expect to continue growing our net interest income. Raj, if you would like to
Yes, sure. Gabe, if you go back to the outlook that we talked about asset growth in international banking, and we talked about high single-digit growth primarily in commercial, right? With, you know, call it 6%-9% in that range, likely double-digit growth in mortgages. Unsecured lending we said will be in the mid-single-digit growth. That's exactly how this quarter has played out with momentum like Ignacio mentioned, we're seeing growth in the unsecured lending space, which is personal and credit cards. We expect that to actually accelerate for the rest of the year. The risk appetite hasn't had a big change other than, like Phil mentioned, we have a lot of what we call affluent customers. We're originating better quality, and our stock is of better quality too.
You're seeing the effects of that on PCL, and likely you'll see the effect on growth, but not muted in any factor other than, you know, metrics like NIM and so on, like we mentioned earlier. Likely will not get to the, you know, 450 basis point range, but you're gonna see NIM expansion throughout the year.
There's nothing changing in the... I mean, I thought I heard last quarter there was some... I wanted to revisit that.
Yeah, Gabe, it's Brian. Last call, we made a comment about a consumer finance business in Peru. As you know, we were in the business in the DR. We exited, we sold the business, and same thing in Chile. Peru is the last business we had outstanding. We were close to having it sold pre-pandemic. That process is ongoing. It's relatively small. It's not material for the bank. Having said that, we didn't like how it performed throughout the pandemic, but it would be roughly CAD 400 million outstanding. It's relatively small. That's the only change in the product lineup.
Okay. All right. I thought it could be something more substantial, but that's not the case. Thanks.
Yeah.
Okay.
The next question is from Scott Chan, Canaccord Genuity. Please go ahead.
Thanks a lot. Brian, you talked about in your earlier comments that you've got full earnings power into 2022. If I look at your adjusted ROE this quarter of 15.9%, it continues to improve sequentially every quarter since the start of the pandemic. When I think about ROE potential in 2022, 2023, you know, considering credit is low, is it feasible that your ROE trajectory continues to improve?
Yes. Look, Scott, thank you for the question. The answer is yes. You know, it's you know, we're very bullish about the outlook of the bank. If you look at it by business line, and I'll give you a couple of examples in Dan's business in Canadian Banking. You know, auto is improving, but it's still not where you'd expect it to be, and there's issues there around supply chain and availability of cars and things like that. The credit card business is coming back, and you're seeing that in our numbers. You know, you'll see the full earnings power of the Canadian bank as well. As it pertains to International Banking, you know, Ignacio has articulated how business in the Pacific Alliance continues to improve.
The Caribbean is still playing catch up here a bit. We're a major bank in the Caribbean. As tourism improves, fee business improves for our credit card business there, and day-to-day banking will improve. You know, there's lots of things that will leverage the ROE going forward, and you'll see our ROE through 16%.
To 16%. Good. Maybe Dan, just on the auto loans in Canada, obviously supply chain issue, we've seen significantly higher used car prices. Just wondering on that growth outlook and it sounds as it's kind of paused right now, and has your underwriting standards changed, you know, recently?
Yeah, thank you. It's Dan here. No, our credit appetite remains open for business, but hasn't changed in the last number of quarters. As you mentioned, given the supply chain issues, there is a greater appetite for used cars. We anticipate to be clear that, you know, LGDs for used vehicles will be better in this part of the cycle than they would have been pre-COVID. As Brian mentioned, there's lots of opportunity to come when full supply comes to dealers in Canada. We have seen bookings rise as of Q1 up year-over-year 7%. So that's a very encouraging trend. Notwithstanding dealers having challenges getting product to their floor plans, so we are seeing some softness on the commercial side. The bulk of our revenue is driven by retail paper, and we had a record revenue year in fiscal 2021 in auto.
We saw that continue in Q1. The case really is when are we gonna see the full torque of this business? Is it Q3? Is it Q4? It's certainly coming. It's a mainstay of our franchise, and we're open for business in auto.
Okay. Thank you very much.
The next question is from Mike Rizvanovic from Stifel GMP. Please go ahead.
Good morning. I had a question for Dan. I wanted to go to slide 32 in your presentation. Thanks for this additional color. What I wanted to ask about is. With respect to your mortgage originations that come from the non-branch channel, is there any way you could give us a little bit of insight into the cross-sell? If it's coming in from the broke-
Just go ahead.
Yeah. Sorry, I think you may have dropped off there. I think, assuming the thrust of your question was sources of growth in mortgage, given we had a particularly robust balance quarter. One of my primary objectives in retail is to improve our direct ownership over the customer opportunity. We've been very intentional about growing the sales force in our proprietary mortgage specialist channel. I'm pleased to say in the last two years, we've added 50% more salespeople and dollar balance volume through that channel is up 100%. It's been a major source of growth for us over the last number of quarters, and you saw that appear again in Q1. On the question of cross-sell, I would like to demystify the perspective that mortgage brokers do not offer cross-sell opportunities.
The delta between our proprietary channel and mortgage broker in cross-sell is indistinguishable. I think in the last six months, in particular, our pickup on day-to-day checking and savings accounts off mortgages in general has been at levels we haven't seen in years. We do believe that we continue to have opportunity to convert more of these net new customers into full franchise Scotia customers, and that's our game plan, and you'll see us continue to invest in this anchor product from here. I hope that answers the full part of your question.
Yeah, that's very helpful, Dan. Basically, not much of a difference between what you can cross-sell through a branch-originated mortgage versus one that comes through the broker channel.
That's correct. As others have heard me speak of in the past, our unique market-leading STEP program, Scotia Total Equity Plan, the broker channel, I'm pleased to report, originates 80% of new product in that STEP program, which sets us up with a global limit for drawing customers into our revolving product, including the high ROE credit card position. Thank you.
That's super helpful. Thanks very much.
Welcome.
The next question is from Paul Holden from CIBC. Please go ahead.
Thank you. Good morning. Going back to international banking and Ignacio. Just a common question I'm hearing is regarding the pace of rate increases in the Pacific Alliance countries and potential for demand destruction as a result of that. Just wondering if you can help us think through demand sensitivity, loan demand sensitivity relative to borrowing costs?
Thank you for your question. Well, we have seen interest rate increases, but I believe this is also at the same time with a significant change in the economic environment, strong economic growth. Credit demand have been low, particularly for some retail products. We are seeing the opposite at this point, pick up in general in credit demand in all products. I would say that we expect this loan growth momentum to continue. Also, in the case of interest rates for retail products, there's much less sensitivity to these interest rate increases. It's more, of course, more relevant on the commercial segment. Overall, I'm very optimistic about loan growth. We are growing at 3%, as I said, and this is for two quarters already.
That is our expectation that we will continue to grow 2%-3% per quarter, which is similar to pre-COVID loan growth levels.
Okay, great. That's helpful. Thank you.
The next question is from Lemar Persaud from Cormark. Please go ahead.
Yeah, thanks. I want to circle back to the discussion on international banking margin. It feels like you guys can come in above the low end of the 380-390 basis point range as offered last quarter, quite easily, frankly, considering the 7 basis point increase this quarter and then the size of the raise you wanted to do this. Maybe R aj just update on the 380-390 basis point range, and then maybe take that discussion up to the all-bank level and offer an outlook on NIMS there. Thanks.
Sure. Thanks, Lemar. Happy to take that question. I'll start with in the order that you asked. International banking margin, as you know, is very complicated. You know, we've got inflation impacts over there. We've got rate caps. We've got obviously big increases that have come through fairly quickly in the administered rates, and we're seeing a flattening rate curve. There's a lot of things going on over there. Product mix is changing from our perspective as well. I wouldn't update the, you know, the outlook that we gave, the 380-390 basis points at this time. Likely, we'll talk more about it in Q2 because we see more trends. What I can tell you is it's trending better than what we thought when we gave the outlook in Q4 2021. I'll leave it at that, specifically to the international bank.
There's more to come, like I mentioned a little earlier. We think there is more goodness that will come through the process, but it depends a lot about how the rate curve shapes, you know, as we go through these months looking forward. The bank story is slightly different. I think the bank will manage our net interest margin, as I mentioned before, by actively positioning the balance sheet appropriately. That continues. As I mentioned in my prepared remarks, we are positioned to benefit from rate increases across our footprint, and we should see some of that benefit coming through the Canadian banking business, which has had, you know, pretty modest margin compression, and that's mostly driven by business mix. As credit cards and personal loans start growing as well, that will have an impact on NIM.
Like I mentioned in the outlook in November, the bank's margin should grow modestly throughout the year this year. A lot of it will depend on how the business mix shift happens and how soon it happens in our BNC businesses, of course, the rate curve situation, depending on how soon rate increases come in Canada and how does the long end of the rate curve shape itself. I think it'll be positive. It won't be a headwind for us for the rest of the year, but it's a little difficult to predict in this environment how soon and how much the rate increases will be at the whole bank level.
Okay. Thanks. That's it for me.
The next question is from Sohrab Movahedi from BMO Capital Markets. Please go ahead.
Thank you. Glen, there was mention that there is some work getting done with global wealth and Canadian banking to generate some, I guess, some new business opportunities. Are there such opportunities also that you could talk about in the international banking segment between the international wealth? Then maybe give us an update on plans to add some capabilities, maybe acquire some capabilities in the U.S. Where are you on that file?
Sure. Thanks very much, Sohrab. I would say if we look at international and the growth we have there, I really think, you know, Canada as a blueprint is a good place to look. We're obviously very proud of the strong results we had this quarter, but the real story is really the breadth across the various business lines. As I look across the business lines, before, you know, beyond the performance fees that Raj mentioned. In asset management, you know, the industry-leading investment results are helping drive those market share gains and positive net sales across all our internal external channels. That's actually moved us to number two among Canadian banks in retail mutual fund assets in Canada. That engine is a really important one because our asset management business is quite global by nature.
As we look to build out within our international footprint in conjunction with Ignacio, that's gonna play a very big role in that. Similarly, when we look across our advisory businesses and our total wealth offerings in Canada, the growth of our private banking and the advisory businesses more broadly is a really good blueprint that we've already started to launch in international. That led to that 92% growth. We're already starting to see early results there. The last thing I'll mention on the U.S., nothing to announce at this point, but certainly, as we look to develop U.S. capability is something that we continue to look at and more on that later.
Glen, just to be abundantly clear, some of the opportunities you were talking about with the international segment, for example, is that contingent on a U.S. capability or would a U.S. capability be additive to that?
Yeah, that's an important question, Sohrab. It's actually not. The biggest opportunity that we have, we've already got existing wealth management businesses in international. But as we build out and leverage our footprint across specifically the Pacific Alliance countries, that's really where the primary benefit is in onshore. The U.S. capability would help us in the ultra-high net worth space for those clients both in Latin America as well as Canada, but it's not contingent on that at all.
Okay. Thank you.
Thank you. There are no further questions on the lines at this time.
Well, thank you everyone for participating in our call today. We're very pleased with the strong start to the year with earnings momentum across all our businesses. On behalf of the entire management team, I want to thank everyone for participating in our call today and look forward to speaking with you again at our Q2 2022 call in May. This concludes the Q1 results call. Have a great day.
Thank you. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.