Bank of Nova Scotia Issues $1.438 Million Autocallable Notes Linked to Amazon and Alphabet Stocks with Maturity in 2029

Note Structure and Automatic Call Features

The Bank of Nova Scotia’s notes include an automatic call mechanism triggered when both Amazon and Alphabet stocks reach specified performance thresholds on designated observation dates. If the closing prices of both assets equal or exceed their initial values on any call observation date, the notes will be automatically redeemed. Upon such redemption, investors receive a cash payment equal to the principal plus any contingent coupon payable on that date, including accrued unpaid coupons. This early call feature limits upside participation while offering periodic redemption opportunities during the approximate three-year term.

Successful performance of both underlying stocks relative to their initial pricing values results in redemption rather than continued exposure. Once called, no further payments or gains from the reference assets accrue to investors. The Bank notes that call observation dates are specified in the pricing supplement, though these dates were not detailed in the announcement.

Contingent Coupon Payments and Memory Feature

The notes pay contingent coupons only if both reference assets maintain values at or above specified coupon barrier levels on observation dates. If both assets meet the barrier, investors receive the contingent coupon plus any unpaid coupons from prior periods, enabled by a "memory coupon" feature that accumulates missed payments until triggered.

If either asset closes below its coupon barrier on an observation date, the coupon is unpaid and carried forward until a future date when the barrier condition is met. Coupons are not guaranteed; investors risk receiving no payments if barriers are unmet throughout the term. Specific coupon rates and barrier levels are detailed in the full pricing supplement but were not disclosed in the announcement.

Maturity Payments and Potential Loss Scenarios

If the notes are not called before maturity, payment depends on the performance of the least performing reference asset—the one with the lowest percentage change from initial to final value. If this asset’s final value meets or exceeds its barrier, investors receive principal plus any contingent coupons due. This structure protects principal only if the worst-performing stock does not fall below a threshold.

If the least performing asset closes below its barrier at maturity and the notes remain uncalled, investors incur losses proportional to that asset’s depreciation, potentially losing up to 100% of principal. This risk profile differs significantly from traditional fixed-income securities, which typically protect principal absent issuer default. The notes do not guarantee interest payments, emphasizing that returns depend on barrier conditions.

Credit Risk and Unsecured Debt Status

These notes constitute unsubordinated, unsecured debt obligations of the Bank of Nova Scotia, exposing investors to the Bank’s credit risk. All payments—contingent coupons, call redemptions, and maturity amounts—depend on the Bank’s financial health. In case of distress or default, investors have no priority over other unsecured creditors, and payments may be delayed or reduced. This credit exposure is independent of the underlying stocks’ market performance.

The notes do not represent direct investments in Amazon or Alphabet stocks and confer no ownership, voting rights, or dividend claims. Investors effectively extend credit to the Bank for derivative payoffs linked to equity performance. Additionally, the notes are not insured by any Canadian or U.S. deposit insurance agencies, eliminating protections typical of bank deposits.

Pricing, Initial Valuation, and Underwriting Details

The notes were issued at 100.00% of principal with 1.50% underwriting commissions, reducing net proceeds to 98.50%. The Bank’s affiliate, Scotia Capital (USA) Inc. (SCUSA), purchased the notes at par and distributes them to broker-dealers at a $15.00 per note discount reflecting the commission. The Bank also pays third-party dealers a $4.50 structuring fee per note sold through such channels, embedding distribution costs that reduce investor returns.

The initial estimated value was $963.89 per $1,000 principal, below the issue price, reflecting the Bank’s funding rate, commissions, and hedging costs. The Bank’s internal funding rate is typically lower than conventional fixed-rate debt rates, lowering economic terms for investors. The Bank may reimburse some hedging and structuring costs over about three months, potentially causing secondary market prices to temporarily exceed estimated values.

Reference Assets and Performance Measurement

The notes reference Amazon.com Inc. common stock and Alphabet Inc. Class C capital stock. Returns are based on the least performing asset’s percentage change from initial to final valuation, meaning strong performance by one stock cannot offset declines in the other. Initial values set at pricing serve as baselines for call and coupon observation dates and final valuation.

Specific barrier levels, coupon rates, observation dates, and initial values were not disclosed in the announcement but are detailed in the full pricing and product supplements. The use of two distinct technology stocks introduces correlation and concentration risks unique to this product.

Secondary Market, Liquidity, and Transferability

The notes will not be listed on any U.S. securities exchange or automated quotation system, limiting transparent pricing and liquidity. SCUSA may provide market-making bids and offers post-sale, but no obligation exists to maintain liquidity. Investors face uncertainty regarding ease and pricing of early sales.

The Bank acknowledges the difficulty in accurately valuing the notes in secondary markets due to their complexity and lack of standardized trading platforms. Investors must rely on dealer quotes, which may include wide bid-ask spreads and discretionary pricing, potentially impacting execution quality.

Term, Maturity, and Settlement Information

The notes have an approximate three-year term, maturing on July 20, 2029, unless automatically called earlier. The trade date was July 17, 2026, with settlement on July 22, 2026, following standard three-business-day conventions. The minimum investment is $1,000, with additional increments of $1,000.

Identified by CUSIP 063941BZ0 and ISIN US063941BZ08, payments will be made in cash rather than physical securities, simplifying settlement for both parties.

Valuation Methodology and Hedging Economics Risks

The initial estimated value of $963.89 per $1,000 principal was derived using the Bank’s internal pricing models, incorporating its funding rate and market assumptions. This valuation is not based on third-party or market consensus models, potentially biasing estimates in favor of the issuer. The difference between issue price and estimated value reflects commissions, structuring costs, and hedging expenses, reducing investor returns compared to lower-cost scenarios.

The Bank’s internal funding rate is generally lower than conventional fixed-rate debt issuance costs, benefiting the Bank but disadvantaging investors. The Bank may choose whether and when to reimburse hedging and structuring costs, adding uncertainty to secondary market pricing and investor timing decisions.

Regulatory Status and Investor Risk Disclosures

Neither the U.S. Securities and Exchange Commission nor state securities commissions have approved or disapproved the notes or verified the accuracy of offering documents. Misrepresenting SEC approval is a criminal offense. Investors are advised to review extensive risk disclosures in the pricing supplement, product supplement, prospectus supplement, and prospectus, which detail market, credit, liquidity, and tax risks.

The Bank emphasizes the complexity and risk inherent in these structured notes and urges thorough due diligence before investing.