National Bank Of Canada · TSX:NA
National Bank Of Canada — Q1 2022 Earnings Presentation
32 slides from National Bank Of Canada's earnings presentation, Feb 25, 2022
Slide 1: Investor Presentation First Quarter 2022
INVESTOR PRESENTATION First Quarter 2022 February 25, 2022
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES Caution Regarding Forward-Looking Statements From time to time, the Bank makes written forward-looking statements such as those contained in this document, in other filings with Canadian securities regulators, and in other communications. In
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q1 2022 – Strong Start to the Year
Q1 2022 – STRONG START TO THE YEAR Revenues ($MM; YoY) ▪ Strong start to the year across all segments Reported: $2,466 ; +11% - Revenues up 11% YoY (1) Adjusted : $2,530 ; +11% - PTPP up 14% YoY(2) PTPP(2) ($MM; YoY) - Positive operating leverage Reported: $1,189 ; +14% (1) Adjusted : $1,253 ; +14%
Slide 5: Q1 2022 – Solid Organic Growth Across the Bank
Q1 2022 – SOLID ORGANIC GROWTH ACROSS THE BANK P&C Banking ▪ Strong quarter across the franchise, with PTPP up 11% YoY Revenues: +9% YoY ▪ Continued momentum in commercial lending, with loans up 3% QoQ(3) PTPP(1): +11% YoY ▪ Housing market remains robust, with retail mortgage loans up 2% QoQ(3) Weal
Slide 6: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q1 2022 - Balanced Approach to Investment and Cost Management
Q1 2022 - BALANCED APPROACH TO INVESTMENT AND COST MANAGEMENT Revenue ($MM; YoY) Reported: $2,466 ; +11% ▪ Strong performance across the Bank with PTPP(2) up 14% Adjusted(1): $2,530 ; +11% - PTPP up 12% excluding a ~$20MM reversal of provision for provincial compensatory tax on salaries Expense ($MM
Slide 8: Expense Management - Continued Focus Across the Bank
EXPENSE MANAGEMENT - CONTINUED FOCUS ACROSS THE BANK Adjusted Revenue(1) ($MM ; YoY) +11% ▪ P&C: Expense growth driven by salaries and continued +11% +4% $23 IT investments to support our transformation $11 $2,530 +14% $64 ▪ Wealth: Expense growth mostly related to variable comp. +9% $74 - Shift in
Slide 9: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) ▪ Strong CET1 ratio of 12.7%(2) ▪ Robust net income generation ▪ RWA growth primarily driven by loan growth ▪ NCIB: Risk-Weighted Assets(1) 500k common shares repurchased in Q1 ($MM) (1) Represents a capital management measure. See slide 2. (2) Ratio takes into
Slide 10: Strong Capital and Liquidity Positions
STRONG CAPITAL AND LIQUIDITY POSITIONS Capital and Capital Ratios(1) ($MM) ▪ Our capital levels remain strong Q1 22 Q4 21 Q3 21 Capital CET1 $13,515 $12,973 $12,574 ▪ Total capital ratio of 16.1% Tier 1 $16,164 $15,622 $15,221 Total $17,123 $16,643 $16,303 ▪ Strong liquidity ratios TLAC(2) $29,462 $
Slide 11: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 12: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES PCL Q1 2022 ($MM) Total PCL POCI Performing ▪ PCL recovery of $2M (0 bp), reflecting 173 Impaired 40 19 Total (bps) continued strong portfolio performance 20 1 0 123 -10 -9 0 PCL on Impaired Loans ▪ $24M (5bps) $81 -20 73 $10 $5 ▪ Continued low impaired PCLs in both reta
Slide 13: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q1 22 Total Allowances ($MM) ▪ Declined by 7% ($83M) QoQ ▪ Remain ~41% above pre-pandemic level + 76% - 7% ▪ Maintaining prudent level of allowances in light of continued uncertainty $1,354 $1,169 Performing Allowances Impaired $1,086 $357 ▪ Decline of 4% ($32M) QoQ I
Slide 14: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) ▪ Gross impaired loans of 32bps ($608M), a 45 50 decline of 4bps QoQ and 13bps YoY 42 $1 000M 39 36 40 32 $757 $ 800M $731 $699 30 ▪ Net formations of $40 million $662 $608 20 $ 600M - Slow normalization of formations in $463 $4
Slide 15: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at January 31, 2022) ▪ Insured mortgages account for 32% of the total RESL portfolio 54% ▪ Distribution across product and geography remained stable ▪ Uninsured mortgages and HELOC in GTA and Uninsured & HELOC 73% GVA represen
Slide 16: Appendices
APPENDICES
Slide 17: Appendix 1 │ Total Bank – Q1 22 Results
APPENDIX 1 │ TOTAL BANK – Q1 22 RESULTS Total Bank Summary Results – Q1 2022 ($MM, TEB) ▪ Revenues up 11% YoY(1) and PTPP up 14% (1) Adjusted Results Q1 22 Q4 21 Q1 21 QoQ YoY Revenues 2,530 2,252 2,281 12% 11% YoY(1)(2) Non-Interest Expenses 1,277 1,249 1,180 2% 8% (2) - Average loans up 12% YoY Pr
Slide 18: Appendix 2 │ Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q1 2022 ($MM) ▪ Revenues up 9% YoY - Strong growth on both sides of the balance Q1 22 Q4 21 Q1 21 QoQ YoY sheet, partly offset by lower margin Revenues 958 930 881 3% 9% Personal 588 570 556 3% 6% - Other income up 15% YoY on strong
Slide 19: Appendix 3 │ Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q1 2022 ($MM) ▪ Net income up 11% YoY and 8% QoQ from strong business performance Q1 22 Q4 21 Q1 21 QoQ YoY Revenues 592 561 518 6% 14% Fee-Based 372 357 304 4% 22% ▪ Strong growth in fee-based revenues driven by Transaction & Others
Slide 20: Appendix 4 │ Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q1 2022 ($MM) ▪ Record revenues of $662M, up 11% YoY Q1 22 Q4 21 Q1 21 QoQ YoY - Global Markets: Record performance in Equity amid pick-up in volatility and client activity; Revenues 662 496 598 33% 11% continued momentum in Structur
Slide 21: Appendix 5 │ US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q1 2022 ABA Bank ($MM) ABA Bank Summary Results Q1 22 Q4 21 Q1 21 QoQ YoY ▪ Continued growth with revenues up 33% YoY, Revenues 158 139 119 14% 33% loans up 38% and deposits up 28% Non-Interest Expenses 47 45 44 4% 7% Pre-Tax
Slide 22: Appendix 6 │ Other
APPENDIX 6 │ OTHER Other Segment Summary Results – Q1 2022 ($MM) ▪ Higher revenues YoY from gains on investments reflecting favorable markets Adjusted Results(1) Q1 22 Q4 21 Q1 21 Revenues 33 23 10 ▪ Lower non-interest expenses YoY resulting Non-Interest Expenses 53 117 65 from a ~$20MM reversal of
Slide 23: Appendix 7 │ Balance Sheet Growth - Total Bank
APPENDIX 7 │ BALANCE SHEET GROWTH - TOTAL BANK Average Loans and BA’s Average Deposits ($B) ($B) 2-Yr CAGR: 9.6% 2-Yr CAGR: +13.2% 180.6 185.8 254.8 246.2 165.6 8.8 227.6 8.5 154.6 13.5 14.4 8.3 199.0 7.4 11.9 19.8 20.2 9.9 7.0 19.8 6.6 18.7 5.4 4.8 176.9 184.7 43.7 45.2 160.3 37.4 137.1 35.8 82.9 8
Slide 24: Appendix 8 │ Balance Sheet Growth - P&C
APPENDIX 8 │ BALANCE SHEET GROWTH - P&C Average Loans and BA’s Average Deposits ($B) ($B) 2-Yr CAGR: +9.1% 2-Yr CAGR: +11.9% 132.3 135.4 120.2 79.8 80.1 113.7 73.8 43.7 45.2 63.9 37.4 35.8 2.1 42.7 42.8 2.0 37.7 1.8 10.4 10.5 2.2 10.3 32.0 10.5 70.7 76.3 77.6 65.2 36.1 37.1 37.3 31.9 Q1 20 Q1 21 Q4
Slide 25: Appendix 9 │ Total Loan Portfolio Overview
APPENDIX 9 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 95% As at of Retail loans January 31, 2022 % of Total Retail ▪ Indirect auto loans represent 1.6% of total Secured - Mortgage & HELOC 90.5 48% loans ($3.1B) Secured - Other (1) 11.4
Slide 26: Appendix 10 │ Regional Distribution of Canadian Loans
APPENDIX 10 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at January 31, 2022) Within the Canadian loan portfolio: Oil and ▪ Limited exposure to unsecured consumer Quebec Ontario Regions(1) BC/MB Territories Total loans (3.0%) Retail Secured 27.1% 14.0% 4.3% 3.4% 1.0% 49.8% ▪ Mod
Slide 27: Appendix 11 │ Prudent Provisioning in Uncertain Economic Environment
APPENDIX 11 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 6.1X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 7.9x 6.0x 6.4x 6.6x 4.8x 5.9x 6.1x 5.4x 3.8x 4.7x 3.3x 4.1x 2.8x 2.8x 2.8x 3.0x 1.8x 2.6x Q1
Slide 28: Appendix 12 │ Oil & Gas and Pipelines Sector
APPENDIX 12 │ OIL & GAS AND PIPELINES SECTOR O&G Producers and Services Exposure Gross Loans in $MM and % of Total Loans ▪ O&G producers and services exposure significantly reduced $3,956 - 55% reduction in outstanding loans: down from $4B in Q1/15 to $1.8B in Q1/22 (stable QoQ) - Reduction as a % o
Slide 29: Appendix 13 │ Commercial Real Estate Portfolio
APPENDIX 13 │ COMMERCIAL REAL ESTATE PORTFOLIO (As at January 31, 2022) Total CRE Portfolio Commercial Banking share Total CRE Portfolio of $15.1B $15.1B (8.0% of total loans) $13.4B (7.1% of total loans) ▪ Corporate Banking accounts for 11% of portfolio, primarily public REITs, well diversified acr
Slide 30: Appendix 14 │ Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 14 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 25 20 15 10 5 0 November, 2021 December, 2021 January, 2022 (5) (10) (15) Trading P&L Trading VaR 30
Slide 31: Appendix 15 │ Reconciliation of Non-GAAP Financial Measures
APPENDIX 15 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q1 22 Non- Income Non- Total Net Diluted Interest Before controlling Revenues Income EPS Expenses Taxes interest Adjusted Results(1) 2,530 1,277 1,255 932 - 2.65 $ Taxable equivalent (64) - (64) - - - Total impact (64) - (
Slide 32: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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