National Bank Of Canada · TSX:NA

National Bank Of Canada — Q4 2016 Earnings Presentation

33 slides from National Bank Of Canada's earnings presentation, Dec 2, 2016

  1. Slide 1: Analyst and Investor Presentation Q4-2016 Conference Call

    ye NATIONAL BANK OF CANADA ANALYST AND INVESTOR PRESENTATION Q4-2016 CONFERENCE CALL Friday, December 2, 2016 — 11:00 am NATIONAL BANK Powering your ideas

  2. Slide 2: Caution Regarding Forward-Looking Statements

    CAUTION REGARDING FORWARD-LOOKING STATEMENTS From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Outlook for National Bank and the Major Economic Trends sections of this Annual Report, in other filings with Canadian securities regulators, and

  3. Slide 3: Highlights

    HIGHLIGHTS  Strong performance in all business ADJUSTED RESULTS (1) Q4 16 Q3 16 Q4 15 QoQ YoY segments Net Income(2) 463 486 417 (5%) 11% Diluted EPS $1.24 $1.33 $1.16 (7%) 7%  Net income up 11% Provision for Credit Losses 59 45 61 31% (3%)  Solid ROE at 17.4% Return on Equity 17.4% 19.0% 16.6% 

  4. Slide 4: Mid-Term Objectives

    MID-TERM OBJECTIVES Excluding specified items MID-TERM Growth in diluted earnings per share 5% to 10% Return on common shareholders' equity 15% to 20% Common Equity Tier 1 capital ratio > 10% Leverage ratio > 3.5% Dividend payout ratio 40% to 50% Liquidity coverage ratio > 100% Q4 2016 RESULTS CONFE

  5. Slide 5: Financial Review

    FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance and Treasury

  6. Slide 6: Performance Snapshot – Q4 2016

    PERFORMANCE SNAPSHOT – Q4 2016 (millions of dollars)  Adjusted revenues up 11% YoY ADJUSTED (1) Q4 16 Q3 16 Q4 15 QoQ YoY Revenues (2) 1,632 1,610 1,473 1% 11%  1% positive operating leverage Expenses 954 932 869 2% 10%  Adjusted net income of $463 million up 11% YoY Net Income 463 486 417 (5%) 1

  7. Slide 7: Performance Snapshot – FY 2016

    PERFORMANCE SNAPSHOT – FY 2016 (millions of dollars) ADJUSTED (1) 12M 16 12M 15 YoY  Adjusted revenues up 5% Revenues (2) 6,279 5,982 5%  1% positive operating leverage Expenses 3,653 3,505 4% Net Income 1,613 1,682 (4%) Diluted EPS $4.35 $4.70 (7%) ROE 15.5% 17.6% REPORTED 12M 16 12M 15 YoY Speci

  8. Slide 8: Income Statement Overview – Q4 2016

    INCOME STATEMENT OVERVIEW – Q4 2016 (Excluding specified items) (millions of dollars) Q4 16 Q3 16 Q4 15 QoQ YoY REVENUES Q4-16 (vs. Q4-15) T.E.B. (1) Revenues 1,632 1,610 1,473 1% 11% 25% (23%) P&C Banking 740 739 721 - 3% 46% (49%) 5% Wealth Management 375 362 340 4% 10% (5%) Financial Markets 481

  9. Slide 9: Income Statement Overview – FY 2016

    INCOME STATEMENT OVERVIEW – FY 2016 (Excluding specified items) (millions of dollars) 12M 16 12M 15 YoY REVENUES 12M-16 (vs. 12M-15) T.E.B. (1) Revenues 6,279 5,982 5% 24% (25%) P&C Banking 2,901 2,827 3% 47% Wealth Management 1,450 1,392 4% (48%) 5% (4%) Financial Markets 1,801 1,720 5% 24% (23%) O

  10. Slide 10: Non Interest Expenses

    NON INTEREST EXPENSES (Excluding specified items) (millions of dollars) Q4 16 Q3 16 Q4 15 QoQ YoY 12M 16 12M 15 YoY Salaries and Staff Benefits 554 553 513 - 8% 2,151 2,147 - Technology, Professional and Servicing Fees 221 203 191 9% 16% 817 720 13% Other Expenses 179 176 165 2% 8% 685 638 7% Non In

  11. Slide 11: Restructuring & Savings

    RESTRUCTURING & SAVINGS  Pursuing restructuring initiatives DETAILS OF THE CHARGE to: Q4 16 charge breakdown:  Accelerate transformation plan  Restructuring: $131 million  Meet clients' changing needs $44 million  Write-off of intangible assets:  Achieve greater operating $175 million efficien

  12. Slide 12: Strong Capital Position

    STRONG CAPITAL POSITION TOTAL RISK-WEIGHTED ASSETS COMMON EQUITY TIER 1 UNDER BASEL III UNDER BASEL III EVOLUTION (QoQ) 0.26% 68,835 69,741 68,375 68,530 68,205 0.08% 3,965 3,779 3,971 3,291 2,807 0.14% 9,127 9,278 9,254 9,391 9,495 9.86% 10.06% 9.86% 9.98% 9.98% 55,743 56,684 55,150 55,848 55,903 C

  13. Slide 13: Risk Management

    RISK MANAGEMENT William Bonnell Executive Vice-President, Risk Management

  14. Slide 14: Loan Portfolio Overview

    LOAN PORTFOLIO OVERVIEW HIGHLIGHTS (billions of dollars) Q4 16 % of Total  Modest exposure to unsecured retail Retail mortgages & HELOC 58.3 46% lending Secured by non real estate 4.6 3% Credit cards 2.0 2%  Wholesale portfolio is well-diversified Other retail 7.9 6% across industries Total Retail

  15. Slide 15: Regional Distribution of Canadian Loans

    REGIONAL DISTRIBUTION OF CANADIAN LOANS As at October 31, 2016 RETAIL WHOLESALE Other Wealth Oil & Gas REGION RM + HELOC Other Retail Mgt Sector Commercial Other (1) TOTAL QC / ON 38.9% 8.1% 2.3% 0.1% 21.1% 11.0% 81.5% Oil Regions (AL/SK/NL) 3.4% 0.4% 0.3% 1.6% 0.8% 3.3% 9.8% BC / MB 2.8% 0.4% 0.5%

  16. Slide 16: Retail Mortgage and HELOC Portfolio

    RETAIL MORTGAGE AND HELOC PORTFOLIO DISTRIBUTION BY PROVINCE CANADIAN MORTGAGE PORTFOLIO COMPOSITION As at October 31, 2016 As at October 31, 2016 (vs. July 29, 2016) 61% 34.0% (33.6 %) 43.1% (43.5 %) 23% 6% 6% 4% 22.9% (22.9 %) QC ON AB BC Others Insured Uninsured HELOC HIGHLIGHTS  The average Loa

  17. Slide 17: Provision for Credit Losses

    PROVISION FOR CREDIT LOSSES (millions of dollars) 67 63 61 1 2 59 HIGHLIGHTS 1 1 4  19 bps of specific provisions 20 21 27 45 1 18  $9 million transferred from the 7 Oil & Gas sectoral allowance  $4 million PCLs in Credigy’s 40 41 38 37 36 performing portfolio  Maintain PCLs target of 20-30bps f

  18. Slide 18: Impaired Loans and BA's and Formation

    IMPAIRED LOANS AND BA’S AND FORMATION (millions of dollars) IMPAIRED LOANS AND BA’S IMPAIRED LOANS AND BA’S FORMATION (1) 0.43% (millions of dollars) Q4 16 Q3 16 Q2 16 Q1 16 Q4 15 0.39% 0.36% 0.36% 0.39% 521 Retail 17 11 21 23 23 492 457 434 452 Commercial (excluding O&G) 24 (23) 3 (35) (6) Oil & Ga

  19. Slide 19: Business Segment Review

    BUSINESS SEGMENT REVIEW Jean Dagenais Senior Vice-President, Finance

  20. Slide 20: Personal and Commercial Banking

    PERSONAL AND COMMERCIAL BANKING (millions of dollars) Q4 16 Q3 16 Q4 15 QoQ YoY HIGHLIGHTS Revenues 740 739 721 - 3%  Revenues up 3% YoY due to:  Strong loan and deposit volume growth Personal Banking 349 344 347 1% 1%  Higher insurance revenues due to gain on disposal of investments Commercial B

  21. Slide 21: Wealth Management

    WEALTH MANAGEMENT (1) (millions of dollars) Q4 16 Q3 16 Q4 15 QoQ YoY YoY HIGHLIGHTS Revenues 375 362 340 4% 10%  Revenues up 10% mainly due to:  9% growth fee-based revenues Fee-based 212 202 195 5% 9%  Higher NII (+21%) Transaction & Others 65 66 64 (2%) 2%  Good cost control  Solid net incom

  22. Slide 22: Financial Markets

    FINANCIAL MARKETS (millions of dollars) Q4 16 Q3 16 Q4 15 QoQ YoY YoY HIGHLIGHTS Revenues 481 440 404 9% 19%  Higher trading revenues driven by equity derivatives, interest rate Trading 222 181 195 22% 14% derivatives and fixed income trading Banking Services 91 84 79 8% 15%  Strong performance fr

  23. Slide 23: Appendix

    APPENDIX NATIONAL BANK Powering your ideas

  24. Slide 24: Detail of Specified Items

    APPENDIX 1 │ DETAIL OF SPECIFIED ITEMS (millions of dollars) Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Wealth Management acquisitions (6) (9) (7) (7) (9) Items related to TMX (1) (18) - (1) (2) MAV and Other Notes (2) (2) (3) (2) (2) Litigation provisions - - - - (25) Write-off of Intangible Assets - - - - (44)

  25. Slide 25: FY 2016 Income Statement

    APPENDIX 2 │ FY 2016 INCOME STATEMENT (1) (taxable equivalent basis) Personal & Commercial Wealth Management Financial Markets (millions of dollars) FY 2016 FY 2015 YoY FY 2016 FY 2015 YoY FY 2016 FY 2015 YoY Revenues 2,901 2,827 2.6% 1,450 1,392 4.2% 1,801 1,720 4.7% Operating Expenses 1,640 1,630

  26. Slide 26: Balance Sheet Overview

    APPENDIX 3 │ BALANCE SHEET OVERVIEW (Banking Book & Other) (billions of dollars) LENDING – LOANS AND BAs (MONTH END BALANCE) FUNDING – DEPOSITS AND BAs (MONTH END BALANCE) 139.3 124.8 126.2 135.3 121.1 131.2 118.5 128.7 129.3 115.2 28.1 23.6 24.5 28.8 17.8 20.5 28.8 16.1 29.0 29.0 9.3 9.3 9.3 9.5 9.

  27. Slide 27: Oil & Gas Sector & Related Segments

    APPENDIX 4 │ OIL & GAS SECTOR & RELATED SEGMENTS OUTSTANDING LOANS – Q4 16 2.0 $B 0.9 $B IG 41% 0.8 $B 0.7 $B 0.5 $B IG 100% 0.1 $B IG 87% IG 26% Producers Services (OFS) Midstream Refinery and Oil Regions - Oil Regions - Integrated Commercial Other Retail Oil and Gas Sector Other Wholesale - Oil Re

  28. Slide 28: Producers & Services

    APPENDIX 5 │ PRODUCERS & SERVICES HISTORICAL TREND IN EXPOSURES AT DEFAULT ($B) 5.7 5.5 5.5 5.2 5.2 4.9 4.6 IG=64% IG=68% 3.9 IG=62% IG=67% IG=78% IG=57% 3.7 IG=57% IG=63% IG=67% IG=36% IG=41% IG=40% IG=41% IG=65% IG=39% IG=35% IG=46% IG=40% Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Draw

  29. Slide 29: Comparative Performance – Capital Ratios

    APPENDIX 6 │ COMPARATIVE PERFORMANCE – Capital Ratios CAPITAL RATIOS UNDER BASEL III 15.3% 15.1% 14.3% Total 14.8% Total 14.0% Tier 1 13.5% 13.3% 12.0% 12.9% 11.7% Tier 1 CET1 CET1 10.1% 9.9% 10.5% 9.8% 10.2% Q4 16 Q3 16 Q3 16 Q2 16 Q2 16 NBC NBC Canadian NBC Canadian Peers (1) Peers (1) Common Equi

  30. Slide 30: Daily Trading and Underwriting Revenues vs VaR

    APPENDIX 7 │ DAILY TRADING and UNDERWRITING REVENUES vs VaR Daily Trading and Underwriting Revenues vs Trading VaR - Q4 2016 (CAD millions) 20.0 Trading and Underwriting Revenues Trading VaR Millions 15.0 10.0 5.0 0.0 (5.0) (10.0) 2-Aug 9-Aug 16-Aug 23-Aug 30-Aug 7-Sep 14-Sep 21-Sep 28-Sep 5-Oct 13-

  31. Slide 31: VaR Trend

    APPENDIX 8│ VaR TREND Trading VaR Quarterly Average Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 -5.2 -5.5 -6.4 -6.4 -6.7 $ millions Q4 2016 RESULTS CONFERENCE CALL – December 2, 2016 I 31

  32. Slide 32: Trading P&L Results

    APPENDIX 9 │ TRADING P&L RESULTS # days Distribution of daily trading and underwriting revenues - Q4 2016 12 10 8 6 4 2 0 (1) - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 $ millions Q4 2016 RESULTS CONFERENCE CALL – December 2, 2016 I 32

  33. Slide 33: Investor Relations

    INVESTOR RELATIONS Financial analysts and investors who want to obtain financial information on the Bank are asked to contact the Investor Relations Department. 600 De La Gauchetière Street West, 7th Floor, Montreal, Quebec H3B 4L2 Toll-free: 1-866-517-5455 Fax: 514-394-6196 E-mail: investorrelation

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