Thanks, Brian. I'll begin on slide 6, which provides a brief progress update on integration and synergies associated with our recent material acquisitions of BBVA Chile and MD Financial. Client retention rates at MD financial are ahead of plan with 98% of both assets and clients so far which speaks to the continued high levels of client trust with MD Financial. Employee satisfaction also remains high and we've experienced minimal advisor attrition. We had over 1600 cross referrals between Scotiabank and MD Financial since September 2018. With regards to BBVA Chile, we've captured approximately 45% of our total target synergies to date and remain on track to achieve total pretax synergies of $1.150 million to $1.180 million per year by 2020.
Our existing operations in Chile with BBVA Chile has resulted in increased loan market share of approximately 16 basis points year over year. Client attrition is tracking well below our expectations, which were 5% in retail and 10% in commercial. Overall, we remain on track to achieve our targeted attrition of $0.15 to adjusted diluted EPS in 2020 for acquisitions that we announced in 2018.
Turning now to the Q1 19 key financial performance on slide seven. All my comments will be on an adjusted basis, which excludes acquisition related costs.
We’re pleased with the bank’s solid start to 2019, particularly in light of the market volatility that negatively impacted our global banking and markets businesses. The bank delivered $2.3 billion in earnings and diluted EPS of $1.75 for the quarter, down 6% compared to last year.
Excluding the impact of the re-measurement benefit of $150 million or $0.12 cents per share in Q1 2018, adjusted diluted EPS was in line year-over-year. Revenues increased 7% from last year, driven by solid growth in both net interest and non-interest income, including the benefit from acquisitions.
As noted earlier, challenging industry market conditions negatively impacted our capital markets revenue related revenues, which reduced all bank revenue growth by approximately 2%. Net interest income was up 9%, about two thirds from acquisitions and the rest from volume growth.
In addition, to continued residential mortgage volume growth in Canadian banking, business lending grew double digits and credit cards grew high single digits. In the Pacific Alliance, we saw double digit growth in both commercial and retail loans as well as strong corporate loan growth in global banking and markets. The core banking margin was down 1 basis point versus last year due to the change in business mix from the impact of international banking acquisitions and higher margins in Canadian banking. This was offset by lower margin in global banking and markets and asset liability management activities. Non-interest income grew 6% compared to last year. This growth was driven by strong contribution from acquisitions, income from associated corporations, insurance revenues as well as the impact of the gain of -- on a foreclosed asset in international banking and the alignment of the reporting period of the bank this quarter. Partly offsetting were lower trading revenues, advisory fees and the impact of the new revenue accounting standard, which requires card related expenses to be offset against card related revenues applied prospectively. Expenses were up 18% year-over-year. Acquisitions and the prior year benefit re-measurement and the impact of the new revenue accounting standard contributed approximately two-thirds of those expense growth. The remaining growth related to increased investments in technology and regulatory initiatives, higher share based payments costs, business growth related expenses, and the negative impact of foreign currency translation. The bank's productivity ratio increased to 54.1%. Adjusting for the acquisition related costs and the impact of acquired benefits re-measurement related, the productivity ratio was up 220 basis points. The credit quality of our portfolios remain solid with a PCL ratio on impaired loans of 47 basis points, up 4 basis points from last year. There were net provisions on performing loans of $9 million and when combined with provisions on impaired loans resulted in a total PCL ratio of 47 basis points.
Our tax rate was in line with last quarter, due to higher tax benefits in a number of jurisdictions. The effective tax rate is expected to be in the lower end of our outlook through the remainder of 2019. On slide 8, we provide an evolution of our CET1 capital ratio over the last quarter. The bank’s strong internal capital generation of 28 basis points was deployed in organic growth, and the growth in risk weighted assets.
This quarter, the bank’s capital ratio was impacted 9 basis points by the re-measurement of employee pension and post-retirement benefits, largely due to the decline in the discount rate by 40 basis points. Risk weighted assets increased by approximately $8 billion or 2% primarily due to strong organic asset growth across our businesses and the impact of foreign currency translation.
During the quarter, we repurchased 3.25 million shares at $71.93 per share. Since June 2018, under the current NCIB, we have purchased 9.23 million shares. Including the pro forma impact of all announced acquisitions, and select non-core dispositions, yet to close, the CET1 ratio is expected to be 11.2%.
We’re pleased with the pace of capital results, driven by strong internal capital generation and the divestitures that will improve the Bank’s CET1 ratio to exceed 11.5% by the end of fiscal 2019.
As Brian mentioned earlier, the monetization of our significant investment in Thanachart Bank would further increase our pro forma CET1 ratio by approximately 25 basis points.
Turning now to the business line results, beginning on slide 9. Canadian banking reported net income of $1.1 billion, down 3% year-over-year or down 2%, adjusting for the impact of acquisition related costs. Revenues were up 3% from last year, including strong contributions from acquisitions. Net interest income grew 5% due to improved spreads and volume growth. Residential mortgages grew 3%, business loans a strong 10% and personal loans at 3%. Deposits grew by 9% with personal deposits growth at 7% and non-personal deposits at a strong 12%.
For the second straight quarter, deposit growth outpaced asset growth. The net interest margin was up 3 basis points year-over-year, primarily due to the impact of prior Bank of Canada rate increases and business mix. Sequentially, margins were down 1 basis point, reflecting competitive pricing pressures and slightly higher funding costs. Non-interest income was up 1% due to higher fee income, driven by the wealth acquisitions and higher credit fees. These were mostly offset by lower net card revenues due to the adoption of the new revenue accounting standard, which reduced both non-interest income and expenses by approximately $55 million, lower gains on sale of real estate and the prior year interact reorganization gain. Wealth management adjusted earnings increased by 6% year-over-year, driven by strong contributions from the MD Financial and JF acquisitions. Global asset management has leveraged strong foundational growth and momentum to strengthen the collective businesses in Q1 2019. In Global Asset Management, ScotiaFunds has ranked number one amongst the banks for one year and three year performance and combined with Dynamic Funds, 94% of Scotia and Dynamic Fund assets were in the top two quartile in one year returns. [indiscernible] was ranked number one in revenue and number one in assets per advisor and Scotia Trust was ranked number 1 in trust and foundation assets and total asset revenue for the full year by Investor Economics. Provision for credit losses were up $23 million. Higher provision on impaired loans was primarily due to high provision on one commercial account. Provision on performing loans increased in line with asset growth. On an adjusted basis, expenses increased 7% year-over-year with half of the growth driven by acquisitions and the adoption of the new revenue accounting standards. The balance growth was driven by higher investment in regulatory initiatives, digital and technology partly offset by the benefits from cost reduction initiatives. The division’s adjusted productivity ratio was 50%.
Turning to the next slide on international banking. On a reported basis, earnings of 782 million in Q1 ‘19 were up 16% year over year, while adjusted earnings of 805 million were up 19% year over year. 6% of the adjusted earnings growth related to the alignment of the reporting period of probe with the bank this quarter. My comments which follow are on an adjusted and constant currency basis. Q1 results reflected strong asset and deposit growth in the Pacific Alliance, including the benefit of recent acquisitions, positive operating leverage and good credit quality. The Pacific Alliance had very strong net income growth of 23%, driven by strong loan and deposit growth. The results benefited from a strong performance in Chile, Mexico and Colombia. Revenues grew a strong 22%, of which approximately half was driven by recently closed acquisitions. The Pacific Alliance saw an increase of 31% in revenue year-over-year. Loans grew by 29% compared to a year ago. Loan growth in the Pacific Alliance region increased 44% year-over-year, including acquisitions in both retail and commercial in Chile and Colombia. Mexico and Peru had strong double digit loan growth. Net interest margin of 4.52% was down 14 basis points year-over-year, primarily due to the business mix impact of the BBVA acquisition, as we previously indicated. Quarter over quarter, the margin was stable. The provision for credit loss ratio on impaired loans decreased 2 basis points year over year, while provision on performing loans increased by $21 million in line with asset growth and due to low commercial provision last year. Expenses were up 18% with approximately two-thirds, driven by acquisitions. The remaining increase was driven by business volume growth and inflation. Operating leverage was a strong positive 4.2% for the quarter, leading to an improvement in the productivity ratio of approximately 180 basis points.
Excluding the alignment of the reporting period of Peru with the bank this quarter, operating leverage was positive 2.1% and the improvement in the productivity ratio was approximately 90 basis points.
Moving to slide 11, global banking and markets. Net income of 335 million was down 26% year over year, significantly impacted by lower market sensitive revenues, given the industry conditions. Lower trading revenues, primarily in interest and credit rating and higher non-interest expenses were partly offset by the favorable impact of foreign currency translation, reversal of provision for credit losses and slightly lower taxes. Revenues were down 10% year over year, mainly reflecting lower non-interest income. Non-interest income was down 12% year over year, primarily due to lower client driven trading related revenues that were down approximately $90 million. This was partly offset by higher fee income. Net interest income was down 5% versus last year, due to lower lending margins, primarily due to lower loan origination fees. Margins however were up a strong 8 basis points compared to last quarter. Profit loan growth was strong, up 8% quarter-over-quarter and 15% year-over-year. The strong growth in lending in our profit book was primarily due to M&A activity in the US. Approximately 90% of the growth in lending volumes this quarter was to investment grade corporates. The PCL ratio improved 3 basis points year-over-year. The improvement was primarily driven by reversals on performing loans due to improving credit quality in the energy portfolio. Expenses were up 13% year-over-year, driven by higher regulatory and technology investments, share based compensation and the favorable impact of foreign currency translation. I’ll now turn to the other segment on slide 12, which incorporates the results of book treasury, smaller operating units and certain corporate adjustments. The results also include the net impact of asset and liability management activities.
The other segment reported a net loss of 54 million this quarter. The net loss in this segment versus net income last year was due to higher non-interest expenses as Q118 benefited from the benefits re-measurement credit, lower gains on the sale of investment securities and lower contributions from asset liability management activities, which were driven by margin compression on high quality liquid assets. This was partly offset by higher tax benefits this quarter. This completes my review of our financial results. I’ll now turn it over to Daniel who will discuss risk management.