National Bank Of Canada · TSX:NA
National Bank Of Canada — Q1 2023 Earnings Presentation
34 slides from National Bank Of Canada's earnings presentation, Mar 1, 2023
Slide 1: Investor Presentation First Quarter 2023
INVESTOR PRESENTATION First Quarter 2023 March 1, 2023
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES Caution Regarding Forward-Looking Statements Certain statements made in this document are forward-looking statements. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media and o
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q1 2023 - Strong Financial Performance
Q1 2023 - STRONG FINANCIAL PERFORMANCE Revenues ($MM; YoY) ▪ Solid results across our business segments Reported: $2,582 ; +5% Adjusted(1): $2,712 ; +7% ▪ Diversified earning streams leading to strong organic growth PTPP(2) ($MM; YoY) Reported: $1,179 ; (1%) Adjusted(1): $1,309 ; +5% ▪ Robust CET1 r
Slide 5: Q1 2023 - Solid Results in All Segments
Q1 2023 - SOLID RESULTS IN ALL SEGMENTS P&C Banking ▪ Revenues up 17% YoY on balance sheet growth and margin expansion Revenues: +17% YoY ▪ NIM up 30 bps YoY and 9 bps QoQ driven by deposit spread PTPP(1): +29% YoY ▪ Personal: Mortgage loans up 5% YoY(2); flat QoQ(2) ▪ Commercial: Loans up 12% YoY(2
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q1 2023 – Balanced Approach to Business Growth and Investment
Q1 2023 – BALANCED APPROACH TO BUSINESS GROWTH AND INVESTMENT Q1 2023 Performance ▪ Adjusted revenues up 7.2% YoY (YoY) - Strong performance in all business segments Reported Adjusted(1) - Continued balance sheet growth Revenue growth 4.7% 7.2% - NIM excl. trading up 33 bps YoY and 15 bps QoQ Expens
Slide 8: Strong NII Growth and NIM Expansion
STRONG NII GROWTH AND NIM EXPANSION Net interest income, non-trading - Adjusted(1) ($MM) ▪ NII of $1,373MM, up 29% YoY +29% YoY - P&C: up 23% YoY mainly on deposit margin expansion and balance sheet growth 1,373 - WM: up 75% YoY, continuing to benefit from higher 1,256 interest rates and a strong de
Slide 9: Balance Sheet Growth - Total Bank
BALANCE SHEET GROWTH - TOTAL BANK Loans and BA’s(1) ($B) +12% YoY ▪ Total loans of $210B(1), up 12% YoY - Personal banking: +4% - Commercial banking: +10% 207 210 - Corporate banking: +36% - ABA: +27% 188 - Credigy: +22% - Continuing to balance volume growth, margin and credit quality Q1 22 Q4 22 Q1
Slide 10: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) 0.71% (0.27%) ▪ Maintaining a strong CET1 ratio of 12.6% while 0.07% generating solid RWA growth 12.68% 12.58% (0.61%) ▪ Continued organic growth supported by solid net income stemming from a diversified earnings stream and strong ROE (2) (2) Q4 22 Net Income Di
Slide 11: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 12: Provisions for Credit Losses (PCL)
PROVISIONS FOR CREDIT LOSSES (PCL) PCL ($MM) POCI Q1 Total PCL Performing 173 Impaired (excl. POCI) Total (bps) ▪ PCL of $86M (16 bps), reflecting continued 40 17 16 strong performance and portfolio mix 11 20 123 0 1 $87 0 Q1 PCL on Impaired Loans (excl. POCI) $86 $29 $8 -20 ▪ $20M (4 bps) 73 $57 -4
Slide 13: Allowance for Credit Losses (ACL)
ALLOWANCE FOR CREDIT LOSSES (ACL) ACL ($MM) Total Allowances + 5% ▪ Increased by 5% ($51M) QoQ ▪ Remain ~54% above pre-pandemic level $1,131 $1,182 ▪ Maintaining prudent level of allowances in light $1,086 $1,058 $1,093 of continued uncertainties Impaired (1) Impaired (1) Impaired (1) $318 Impaired
Slide 14: Gross Impaired Loans and Formations (excluding POCI)
GROSS IMPAIRED LOANS AND FORMATIONS (excluding POCI) Gross Impaired Loans (GIL) Excluding POCI Loans(1) ($MM) 39 ▪ Gross impaired loans (excl. POCI) of 38bps 38 $1,000M 40 ($793M), decrease of 1bp QoQ 32 31 30 $812 $793 30 $800M ▪ Net formations of $21M, decrease of $243M $608 $611 $615 20 $600M $37
Slide 15: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province ▪ Uninsured mortgages and HELOC in GTA and (As at January 31, 2023) GVA represent 12% and 2% of the total 54% portfolio and have an average LTV(1) of 53% ▪ Uninsured mortgages and HELOC for condos represents 9% of the total portfo
Slide 16: Retail Mortgages Rate Type and Maturity Profile
RETAIL MORTGAGES RATE TYPE AND MATURITY PROFILE (As at January 31, 2023) Canadian Mortgages Distribution by Rate Type ▪ 33% of mortgage portfolio is on variable rate ▪ For variable rates, the monthly payments are adjusted to reflect rate increases, allowing borrowers to progressively adapt their bud
Slide 17: Appendices
APPENDICES
Slide 18: Appendix 1 │ Total Bank – Q1 23 Results
APPENDIX 1 │ TOTAL BANK – Q1 23 RESULTS Total Bank Summary Results – Q1 2023 ($MM, TEB) (1) Adjusted Results Q1 23 Q4 22 Q1 22 QoQ YoY ▪ Adjusted revenues(1) up 7% YoY and adjusted Revenues 2,712 2,429 2,530 12% 7% PTPP (1)(2) up 5% YoY Non-Interest Expenses 1,403 1,346 1,280 4% 10% (2) 1,309 1,083
Slide 19: Appendix 2 │ Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q1 2023 ($MM) Q1 23 Q4 22 Q1 22 QoQ YoY ▪ Revenues up 17% YoY, mainly from deposit Revenues 1,124 1,071 958 5% 17% margin expansion, and balance sheet growth Personal 623 595 588 5% 6% - NIM up 30 bps YoY and 9 bps QoQ, primarily Com
Slide 20: Appendix 3 │ Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q1 2023 ($MM) ▪ Record net income of $198MM, up 16% YoY Q1 23 Q4 22 Q1 22 QoQ YoY Revenues 637 613 592 4% 8% ▪ Continued momentum in NII, up 75% YoY and Fee-Based 347 347 372 - (7%) 11% QoQ, supported by higher interest rates Transac
Slide 21: Appendix 4 │ Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q1 2023 (TEB, $MM) Q1 23 Q4 22 Q1 22 QoQ YoY ▪ Revenues up 4% YoY: Revenues 689 563 662 22% 4% - C&IB up 28% YoY: Strong quarter driven by Global Markets 397 304 433 31% (8%) M&A, DCM and lending activity C&IB 292 259 229 13% 28% - G
Slide 22: Appendix 5 │ USSF&I - ABA
APPENDIX 5 │ USSF&I - ABA ABA Summary Results – Q1 2023 ($MM) Q1 23 Q4 22 Q1 22 QoQ YoY ▪ Strong balance sheet growth with loans up 31% Revenues 180 179 158 1% 14% YoY and deposits up 24% YoY Non-Interest Expenses 61 58 47 5% 30% Pre-Tax / Pre-Provisions 119 121 111 (2%) 7% ▪ Revenues up 14% YoY on
Slide 23: Appendix 6 │ USSF&I - Credigy
APPENDIX 6 │ USSF&I - CREDIGY Credigy Summary Results – Q1 2023 ($MM) Q1 23 Q4 22 Q1 22 QoQ YoY ▪ Continued momentum with assets up 5% QoQ, Revenues 137 88 126 56% 9% driven by acquisition of high-quality, longer Net Interest Income 136 116 129 17% 5% duration, secured assets Non-Interest Income 1 (
Slide 24: Appendix 7 │ Other
APPENDIX 7 │ OTHER Other Segment Summary Results – Q1 2023 ($MM) Adjusted Results(1) Q1 23 Q4 22 Q1 22 ▪ Revenues for the Other segment of $(57)MM, Revenues (57) (85) 33 in line with expectations Non-Interest Expenses 48 79 22 Pre-Tax / Pre-Provisions(2) (105) (164) 11 ▪ Expense growth reflects a ~$
Slide 25: Appendix 8 │ Balance Sheet - P&C
APPENDIX 8 │ BALANCE SHEET - P&C Average Loans and BA’s Average Deposits ($B) ($B) 144.3 145.3 135.2 85.9 85.1 80.1 50.0 50.8 45.2 47.1 45.5 2.2 2.3 42.8 2.1 11.0 11.0 10.5 77.4 81.0 81.2 37.3 38.8 39.6 Q1 22 Q4 22 Q1 23 Q1 22 Q4 22 Q1 23 Mortgage loans Personal loans Credit cards Commercial Persona
Slide 26: Appendix 9 │ Total Loan Portfolio Overview
APPENDIX 9 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 95% As at January 31, 2023 % of Total of Retail loans Retail ▪ Indirect auto loans represent 1.8% of total loans Secured - Mortgage & HELOC 96.7 46% ($3.8B) Secured - Other (1) 13.0
Slide 27: Appendix 10 │ Regional Distribution of Canadian Loans
APPENDIX 10 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at January 31, 2023) Within the Canadian loan portfolio: Oil Maritimes (2) ▪ Limited exposure to unsecured consumer loans and Quebec Ontario Regions (1) BC/MB Territories Total (2.8%) Retail Secured ▪ Modest exposure to un
Slide 28: Appendix 11 │ Prudent Provisioning in Uncertain Economic Environment
APPENDIX 11 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 8.4X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 9.7x 8.4x 7.8x 7.1x 6.4x 6.7x 6.1x 6.2x 5.9x 6.0x 5.9x 3.0x 1.8x 2.6x Q1 20 Q1 21 Q1 22 Q2 2
Slide 29: Appendix 12 │ Commercial Banking CRE Portfolio
APPENDIX 12 │ COMMERCIAL BANKING CRE(1) PORTFOLIO Commercial Banking CRE 5-year growth Commercial Banking portfolio of $15.8B ($B) accounts for 86% of total CRE portfolio ▪ 51% of 5-year growth coming from Residential Insured Residential (52% of Commercial Banking CRE) ▪ Insured loans accounted for
Slide 30: Appendix 13 │ Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 13 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30 25 20 15 10 5 0 November, 2022 December, 2022 January, 2023 (5) (10) (15) Trading P&L Trading VaR 30
Slide 31: Appendix 14 │ Strong Capital and Liquidity Positions
APPENDIX 14 │ STRONG CAPITAL AND LIQUIDITY POSITIONS Regulatory Capital, Leverage, TLAC and Liquidity Ratios ($MM) ▪ Our capital levels remain strong Q1 23 Q4 22 Q1 22 (1) Capital CET1 $15,330 $14,818 $13,515 ▪ Total capital ratio of 16.0% Tier 1 $18,478 $17,961 $16,164 Total $19,484 $19,727 $17,123
Slide 32: Appendix 15 │ Range of Macroeconomic Scenarios - IFRS9
APPENDIX 15 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q1/23 vs. Q4/22 ($ Trillions) (Full Calendar Years) Base Scenario C2023 C2024 Real GDP (Annual Average % Change) As at Oct. 31, 2022 1.5 % 1.3 % As at Jan. 31, 2023 0.7 % 1.6 % Unemployment Rate (Avera
Slide 33: Appendix 16 │ Reconciliation of Non-GAAP Financial Measures
APPENDIX 16 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) (1) Q1 23 Non- Total Income Net Diluted Interest PTPP(3) Revenues taxes Income EPS Expenses Adjusted Results(2) 2,712 1,403 1,309 318 905 $2.56 Taxable equivalent (130) - (130) (130) - - Income taxes related to the Canadia
Slide 34: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
National Bank of Canada — Q1 2023 Earnings Presentation on 6ix