Independent Auditor’s Report

the consolidated balance sheets as of October 31, 2022 and 2021;

the consolidated statements of income for the years then ended;

the consolidated statements of comprehensive income for the years then ended;

the consolidated statements of changes in equity for the years then ended;

the consolidated statements of cash flows for the years then ended; and

the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Allowance for Credit Losses for Financial Assets Categorized as Stage 1 and Stage 2 (Stage 1 and Stage 2 ACL)

Refer to Note 2 - Summary of significant accounting policies, estimates and judgments, Note 4 - Securities and Note 5 - Loans and allowance for credit losses to the consolidated financial statements.

The Bank’s allowance for credit losses for financial assets was $4,214 million as of October 31, 2022 and represents management’s estimate of expected credit losses on financial assets as of the balance sheet date, of which a significant portion relates to financial assets categorized as Stage 1 and Stage 2. Performing financial assets are categorized as Stage 1 from initial recognition to the date on which the asset has experienced a significant increase in credit risk relative to its initial recognition. Performing financial assets transfer into Stage 2 following a significant increase in credit risk relative to the initial recognition. Financial assets are categorized as Stage 3 when considered to be credit-impaired. As disclosed by management, the measurement of expected credit losses is a complex calculation that involves a large number of interrelated inputs and assumptions such as borrower risk ratings, forward-looking macroeconomic conditions, scenario design and the weights assigned to each scenario. The probability of default, loss given default and exposure at default inputs are modelled based on the macroeconomic variables that are most closely correlated with credit losses.

Management’s estimation of expected credit losses in Stage 1 and Stage 2 considers five distinct future macroeconomic

Our approach to addressing the matter included the following procedures, among others:

•  Testing the effectiveness of controls relating to the estimation of the Stage 1 and Stage 2 ACL, including controls over:

^¡   The probability of default, loss given default and exposure at default models.

^¡    The design of future macroeconomic scenarios, the forecasting of certain macroeconomic variables, and the probability-weighting of these scenarios.

^¡    The assignment of borrower risk ratings.

^¡   The completeness and accuracy of certain data inputs underlying the Stage 1 and Stage 2 ACL calculation.

•  Testing management’s process for estimating the Stage 1 and Stage 2 ACL, which consisted of:

^¡    Testing the completeness and accuracy of certain underlying data used in the estimation of the Stage 1 and Stage 2 ACL.

^¡    Using professionals with specialized skill and knowledge to assist in evaluating:

•   The appropriateness of the probability of default, loss given default and exposure at default models used in the estimation of the Stage 1 and Stage 2 ACL.

scenarios, each of which includes a forecast of relevant macroeconomic variables, designed to capture a wide range of possible outcomes and which are probability-weighted according to management’s expectation of the relative likelihood of the range of outcomes that each scenario represents at the reporting date. Significant management judgment is required in making assumptions and estimations when calculating the Stage 1 and Stage 2 ACL.

We considered this a key audit matter due to:

•  The significant judgment required by management when estimating the Stage 1 and Stage 2 ACL.

•  A high degree of auditor judgment and subjectivity in performing procedures related to management’s assumptions for:

^¡   Designing future macroeconomic scenarios.

^¡   Forecasting certain macroeconomic variables.

^¡    Probability-weighting scenarios.

^¡   Assigning borrower risk ratings.

•  The significant audit effort necessary to evaluate audit evidence as the estimation of the Stage 1 and Stage 2 ACL is a complex calculation that involves a large volume of data, interrelated inputs and assumptions, some of which are model-based.

•  The audit effort involved the use of professionals with specialized skill and knowledge.

•   The reasonableness of significant inputs and assumptions used in the estimation of the Stage 1 and Stage 2 ACL related to:

•   The design of future macroeconomic scenarios.

•   Certain forecasted macroeconomic variables.

•   The probability-weights assigned to the scenarios.

•   The assignment of borrower risk ratings for samples of loans.

Goodwill Impairment Assessment of the Caribbean Banking Cash Generating Unit (CGU)

Refer to Note 2 - Summary of significant accounting policies, estimates and judgments and Note 11 - Goodwill and other intangible assets to the consolidated financial statements.

The goodwill allocated to the Caribbean Banking CGU was $1,759 million. Management conducts a goodwill impairment test as of August 1 of each year by comparing the carrying amount of each CGU to its recoverable amount. The recoverable amount of a CGU is represented by its value in use (VIU), except in circumstances where the carrying amount of a CGU exceeds its VIU. In such cases, the greater of the CGU’s fair value less costs of disposal (FVLCD) and its VIU is the recoverable amount.

Management estimated the recoverable amount of the Caribbean Banking CGU based on its FVLCD. Management calculated the FVLCD using a discounted cash flow method that projects future cash flows over a 5-year period based on management forecasts, adjusted to approximate the considerations of a prospective third-party buyer. Cash flows beyond the initial 5-year period are assumed by management to increase at a constant rate using a nominal long-term growth rate. The discount rate used to determine the present value of the Caribbean Banking CGU’s projected future cash flows is based on the bank-wide cost of capital, adjusted for the risks to which the CGU is exposed.

As of August 1, 2022, management determined that the recoverable amount was 109% of its carrying amount. Management also considered reasonably possible alternative scenarios, including market comparable transactions, which yielded valuations ranging from an immaterial deficit to an immaterial surplus.

Management uses significant judgment to determine inputs to the discounted cash flow model. If the future cash flows and other assumptions in future periods deviate significantly from the current amounts used in management’s impairment testing, the value of goodwill could become impaired.

Our approach to addressing the matter included the following procedures, among others:

•  Testing the effectiveness of controls relating to management’s goodwill impairment test, including controls over the determination of the recoverable amount of the Caribbean Banking CGU.

•  Testing management’s process for determining the recoverable amount of the CGU, which consisted of:

^¡    Evaluating the appropriateness of the discounted cash flow model.

^¡   Testing the completeness and accuracy of certain underlying data used in the model.

^¡    Evaluating the reasonableness of certain assumptions used by management, related to future cash flows, which involved evaluating the consistency with:

•   Current and past performance of the CGU.

•   External market and industry data.

^¡    Evaluating consistency of the recoverable amount with market comparable transactions.

^¡   Professionals with specialized skill and knowledge assisted us in evaluating:

•   The appropriateness of management’s discounted cash flow model.

•   The consistency of the recoverable amount of the CGU with market comparable transactions.

We considered this a key audit matter due to:

•   The significant judgment required by management when determining the recoverable amount of the CGU, including projecting future cash flows.

•   A high degree of auditor judgment and subjectivity in performing procedures and evaluating audit evidence related to management’s calculation of the recoverable amount of the CGU.

•   The audit effort involved the use of professionals with specialized skill and knowledge.

Uncertain Tax Positions

Refer to Note 2 - Summary of significant accounting policies, estimates and judgments and Note 22 - Income taxes to the consolidated financial statements.

The Bank is subject to income tax laws in various jurisdictions where it operates and the complex tax laws are potentially subject to different interpretations by management and the relevant taxation authorities. As disclosed by management, significant judgment is required in the interpretation of the relevant tax laws, and in assessing the probability of acceptance of the Bank’s tax positions to determine tax provisions, which includes management’s best estimate of uncertain tax positions that are under audit or appeal by the relevant taxation authorities. Management performs a review on a quarterly basis to incorporate its best assessment based on information available, but additional liability and income tax expense could result based on the acceptance of the Bank’s tax positions by the relevant tax authorities.

In some cases, the Bank has received reassessments denying the tax deductibility of dividends from transactions including those with Tax Indifferent Investors.

We considered this a key audit matter due to:

•  The significant judgment required by management, including a high degree of estimation uncertainty, when:

^¡   Interpreting the relevant tax laws.

^¡    Assessing the probability of acceptance of the Bank’s tax positions, which includes management’s best estimate of uncertain tax positions that are under audit or appeal by relevant taxation authorities.

•  A high degree of auditor judgment and subjectivity in performing procedures and evaluating the uncertain tax positions.

•  The audit effort involved the use of professionals with specialized skill and knowledge.

Our approach to addressing the matter included the following procedures, among others:

•  Testing the effectiveness of controls relating to the evaluation of uncertain tax positions and the impact on tax provisions.

•  Testing management’s process for (i) assessing the probability of acceptance of the Bank’s tax positions; and (ii) estimating provisions relating to uncertain tax positions, if applicable, which reflects management’s best estimate of uncertain tax positions that are under audit or appeal by relevant taxation authorities. This consisted of:

^¡   Evaluating the appropriateness of the methods used.

^¡    Testing the completeness and accuracy of underlying data used in the estimate.

^¡   Reviewing correspondence with relevant taxation authorities.

^¡    Making inquiries of the Bank’s internal and external legal counsel.

^¡   Evaluating, with the assistance of professionals with specialized skill and knowledge:

•   Application of relevant tax laws.

•   The reasonableness of management’s assessment of whether it is probable that the relevant tax authorities will accept the Bank’s tax positions.

•   Evidence used by management.

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Bank to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.