Thank you, Phil, and good morning, everyone. I'll start on Slide 4.
We are pleased to report third quarter results to our shareholders. The quarter included acquisition related cost, which we have adjusted for in our results. On an adjusted basis, net income was $2.3 billion, up 7% compared to last year. Diluted earnings per share of $1.76 was up 5% from last year, while return on equity was 14.5%. And year-to-date operating leverage was positive 4.7%.
Turning to the business lines, Canadian Banking performed well, delivering earnings of $1.1 billion, up 9% year-over-year. Results were driven by broad based asset growth led by commercial and small business banking, credit cards, auto finance and mortgages. Canadian banking results also reflect margin expansion, improving credit quality and positive operating leverage. Strong cost management improved Canadian Banking’s productivity ratio this quarter and year-to-date which is on track to achieve its productivity target, up 49% or better.
In addition, good progress is being made on growing primary customer relationships in both Scotiabank and Tangerine. International Banking delivered another quarter of very strong earnings, with adjusted earnings up 15% year-over-year driven by double-digit growth in loans and earnings in the Pacific Alliance, solid credit quality and positive operating leverage.
Our financial performance in Mexico was very strong again this quarter, reflecting positive economic growth and strong demand across all products. Revenues grew 15% year-over-year and our operating leverage was 900 basis points. This trend is in line with the last two years, in that period Mexico has been winning market share, improving the efficiency ratio from 62% to 55% and improving ROE. Overall our personal and commercial banking businesses, which generate 80% of Scotiabank’s earnings continued to deliver strong growth, positive operating leverage and improving return-on-equity.
Our recent high quality acquisitions will increase scale and market share in key markets, as well as enhance the bank’s earnings growth and quality. I will provide some additional comments on our recent acquisitions in a moment. Global Banking and Markets continued to deliver consistent earnings.
This quarter was marked by increases in net interest income and improving credit quality. At the enterprise level, we improved the adjusted productivity ratio to 51.8% from 53% and generated strong year-to-date operating leverage.
Our digital efforts are progressing well and we are seeing increasing momentum in digital adoption and sales across our footprint. From an operations perspective, we continue to invest in technology, process improvement and talented people.
Our contact centers are a growing sales channel as our digital adoption and sales continue to increase with more than 70 million customer interactions annually. In summary, this quarter’s strong performance reflects the ongoing execution of our strategy, to grow organically and through strategic acquisitions, with a focus on achieving greater scale in our key markets. Investing in technology and operations to drive productivity gains and enhance the customer experience, and to deploy capital strategically while maintaining strong capital ratios. At this point, we are confident the banks fiscal 2018 performance will meet our medium term financial objectives.
Turning to acquisitions for a moment, I’d like to take this opportunity to provide an overview of our recent transactions. The bank has committed or deployed approximately 7 billion in capital this year that will significantly enhance the banks scale in key markets, grow earnings and improve business mix.
We also like the positive impact to earnings quality. The two wealth acquisitions Jarislowsky Fraser and MD Financial will both continue -- contribute attractive fee income and grow assets under management. Jarislowsky Fraser strengthens our high net worth franchise and institutional money management capability. It will also allow us to sell additional products to high net worth clients with sophisticated financial need. The Jarislowsky Fraser platform will be used for expansion across the banks footprint. Combined with our existing operations, the acquisition of MD Financial creates the largest private investment counsel business in Canada. Under our Affinity Agreement with the Canadian Medical Association, Scotiabank will become the exclusive provider of financial products to a medical community of nearly 110,000 physicians, their family members and employees, which will further grow the bank's primary customer base.
As we said many times, the Pacific Alliance countries are a key part of our strategy.
This quarter, they generated nearly $500 million in earnings on an adjusted basis, and we are strengthening our scale further through acquisitions of BBVA Chile, Citibank’s consumer and small business operation in Colombia and Banco Cencosud, Peru. More recently, we have also announced our acquisition of Banco Dominicano del Progreso in the Dominican Republic, a country which has experienced GDP growth of over 5% annually for the past decade. This acquisition doubles our scale and establishes Scotiabank as the third largest private bank in the country. The management team is now focused on integration efforts.
We are experienced at integrating businesses and to date, our BBVA Chile acquisition is proceeding ahead of schedule. From an accretion standpoint, we are committed to our prior guidance of adjusted EPS, excluding integration costs of approximately $0.15 per share by fiscal 2020, and we expect the common equity tier 1 capital ratio to reach 11% or better in early fiscal 2019. I will now turn the call over to Raj to discuss our financial performance.