National Bank Of Canada · TSX:NA
National Bank Of Canada — Q4 2022 Earnings Presentation
40 slides from National Bank Of Canada's earnings presentation, Nov 30, 2022
Slide 1: Investor Presentation Fourth Quarter 2022
INVESTOR PRESENTATION Fourth Quarter 2022 November 30, 2022
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: FY 2022 - Solid Foundations Driving Results
FY 2022 - SOLID FOUNDATIONS DRIVING RESULTS PTPP(1): Double-digit growth across business segments +10% (reported) ; +11% (adjusted(2)) Operating leverage(3): Disciplined cost management +1.4% (reported) ; +2.1% (adjusted(4)) CET1 ratio(5): Strong capital levels 12.7% Total allowances: Prudent credit
Slide 5: Q4 2022 – Strong Business Performance
Q4 2022 – STRONG BUSINESS PERFORMANCE Revenues ($MM; YoY) ▪ Strong performance across our business segments Reported: $2,334 ; +6% - Adjusted PTPP up 9% YoY(2) Adjusted(1): $2,429 ; +8% - Positive operating leverage PTPP(2) ($MM; YoY) Reported: $988 ; +5% ▪ Defensive credit positioning with prudent
Slide 6: Q4 2022 – Solid Organic Growth in All Segments
Q4 2022 – SOLID ORGANIC GROWTH IN ALL SEGMENTS ▪ Revenues up 15% YoY on solid balance sheet growth and margin expansion P&C Banking ▪ NIM up 20 bps YoY and 8 bps QoQ Revenues: +15% YoY ▪ Personal: Mortgage loans up 7% YoY(2) and 1% QoQ(2) PTPP(1): +24% YoY ▪ Commercial: Continued growth on both side
Slide 7: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 8: FY 2022 - Balanced Approach Driving Strong PTPP Growth
FY 2022 - BALANCED APPROACH DRIVING STRONG PTPP GROWTH FY 2022 Performance (YoY) Reported Adjusted(1) ▪ Strong execution throughout the year Revenue growth 8.1% 9.0% Expense growth 6.7% 6.9% ▪ Adjusted PTPP up 11.4% on strong business Variable compensation 1.4% 1.4% performance Operational costs(2)
Slide 9: Q4 2022 - Solid Results and Positive Operating Leverage
Q4 2022 - SOLID RESULTS AND POSITIVE OPERATING LEVERAGE Q4 2022 Performance (YoY) ▪ Adjusted revenues up 7.9% YoY and adjusted Reported Adjusted(1) PTPP up 9.1% YoY Revenue growth 5.6% 7.9% - Strong organic growth across business segments; Expense growth 6.2% 6.9% partly offset by the Other segment
Slide 10: Strong Performance and Cost Discipline Across the Bank
STRONG PERFORMANCE AND COST DISCIPLINE ACROSS THE BANK Segment Performance – FY 2022 ▪ Strong revenue growth and cost discipline across our (YoY) segments Revenue Expense PTPP Efficiency (1) (1) (1)(2) (1)(3) Growth Growth Growth Ratio ▪ P&C: Expense growth primarily driven by salaries P&C Banking 1
Slide 11: Strong NII Growth and NIM Expansion
STRONG NII GROWTH AND NIM EXPANSION Net interest income, non-trading - Adjusted(1) ($MM) ▪ Adjusted Non-trading NII of $1,256MM, up 24% YoY +24% YoY - P&C: up 20% YoY on balance sheet growth and NIM expansion 1,256 1,186 - WM: up 64% YoY, continuing to benefit from higher 1,068 1,084 interest rates
Slide 12: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) ▪ Maintaining a strong CET1 ratio of 12.7%(3) ▪ Solid net income generation ▪ Solid organic RWA growth primarily driven by business growth - Models and methodology updates representing 7bps of (2) (2) RWA increase, of which 4bps relates to early adoption of sele
Slide 13: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 14: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES PCL Q4 2022 ($MM) POCI FY 2022 Full Year PCL Performing 173 Impaired (excl. POCI) Total (bps) 40 ▪ Impaired (excl. POCI): 7 bps; Performing: 0 bps 17 11 123 0 1 20 ▪ Impaired PCLs (excl. POCI) continue to be -9 $87 0 below pre-pandemic levels in both retail and non-retai
Slide 15: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q4 22 Total Allowances ($MM) ▪ Increased by 3% ($38M) QoQ + 3% ▪ Remain ~47% above pre-pandemic level ▪ Maintaining prudent level of allowances in light of continued uncertainties $1169 $1,131 $1,086 $1,093 $1,058 Performing Allowances Impaired (1) Impaired (1) $379 I
Slide 16: Gross Impaired Loans and Formations (excluding POCI)
GROSS IMPAIRED LOANS AND FORMATIONS (excluding POCI) Gross Impaired Loans (GIL) Excluding POCI Loans(1) ($MM) ▪ Gross impaired loans (excl. POCI) of 39bps 39 ($812M), increase of 9bps QoQ and 3bps YoY $1,000M 36 40 32 31 30 $812 30 $800M $662 ▪ Net formations of $264M, increase of $230M $608 $611 $6
Slide 17: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO ▪ Uninsured mortgages and HELOC in GTA and Canadian Distribution by Province GVA represent 12% and 2% of the total portfolio and have an average LTV(1) of 49% (As at October 31, 2022) 54% ▪ Uninsured mortgages and HELOC for condos represents 9% of the total portfo
Slide 18: Retail Mortgages Rate Type and Maturity Profile
RETAIL MORTGAGES RATE TYPE AND MATURITY PROFILE (As at October 31, 2022) Canadian Mortgages Distribution by Rate Type ▪ For variable rates, the monthly payments are adjusted to reflect rate increases, allowing borrowers to progressively adapt their budget and avoid a higher payment shock at renewal
Slide 19: Appendices
APPENDICES
Slide 20: Appendix 1 │ FY 2022 Total Bank Results
APPENDIX 1 │ FY 2022 TOTAL BANK RESULTS Total Bank Summary Results – FY 2022 ($MM, TEB) Adjusted Results (1) FY 22 FY 21 YoY ▪ Adjusted revenues up 9% YoY(1) and adjusted Revenues 9,934 9,116 9% PTPP up 11% YoY(1)(2) Non-Interest Expenses 5,230 4,894 7% Pre-Tax / Pre-Provisions (2) 4,704 4,222 11% ▪
Slide 21: Appendix 2 │ FY 2022 Segment Results
APPENDIX 2 │ FY 2022 SEGMENT RESULTS P&C Banking Wealth Management ($MM) ($MM) FY 22 FY 21 YoY FY 22 FY 21 YoY Revenues 4,034 3,615 12% Revenues 2,375 2,166 10% Personal 2,359 2,234 6% Fee-Based 1,429 1,322 8% Commercial 1,675 1,381 21% Transaction & Others 352 398 (12%) Non-Interest Expenses 2,149
Slide 22: Appendix 3 │ Total Bank – Q4 22 Results
APPENDIX 3 │ TOTAL BANK – Q4 22 RESULTS Total Bank Summary Results – Q4 2022 ($MM, TEB) Adjusted Results (1) Q4 22 Q3 22 Q4 21 QoQ YoY ▪ Adjusted revenues up 8% YoY(1) and adjusted Revenues 2,429 2,484 2,252 (2%) 8% PTPP up 9% YoY(1)(2) Non-Interest Expenses 1,346 1,305 1,259 3% 7% (2) Pre-Tax / Pre
Slide 23: Appendix 4 │ Personal and Commercial Banking
APPENDIX 4 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q4 2022 ($MM) Q4 22 Q3 22 Q4 21 QoQ YoY ▪ Revenues up 15% YoY on solid balance sheet Revenues 1,071 1,043 930 3% 15% growth and margin expansion (2) Personal 595 605 570 (2%) 4% - Average loans up 9% YoY and average deposits Commerci
Slide 24: Appendix 5 │ Wealth Management
APPENDIX 5 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q4 2022 ($MM) ▪ Net income up 24% YoY and 10% QoQ Q4 22 Q3 22 Q4 21 QoQ YoY - FY 2022 double-digit net income growth of 12% Revenues 613 591 561 4% 9% Fee-Based 347 351 359 (1%) (3%) ▪ NII up 64% YoY driven by a favourable rate Trans
Slide 25: Appendix 6 │ Financial Markets
APPENDIX 6 │ FINANCIAL MARKETS Financial Markets Summary Results – Q4 2022 ($MM) Q4 22 Q3 22 Q4 21 QoQ YoY ▪ Revenues up 14% YoY Revenues 563 611 496 (8%) 14% - Global Markets up 14%: Resilient performance Global Markets 304 369 267 (18%) 14% across the franchise and continued opportunities C&IB 259
Slide 26: Appendix 7 │ USSF&I - ABA
APPENDIX 7 │ USSF&I - ABA ABA Summary Results – Q4 2022 ($MM) ▪ Revenues of $179M reflecting balance sheet growth and favourable FX Q4 22 Q3 22 Q4 21 QoQ YoY - Revenues up 29% YoY (19% in US$) Revenues 179 168 139 7% 29% Non-Interest Expenses 58 55 45 5% 29% - Loans up 37% YoY (29% in US$) Pre-Tax /
Slide 27: Appendix 8 │ USSF&I - Credigy
APPENDIX 8 │ USSF&I - CREDIGY Credigy Summary Results – Q4 2022 ▪ Momentum picking-up with assets up 6% QoQ, ($MM) driven by a combination of new deals and Q4 22 Q3 22 Q4 21 QoQ YoY extensions Revenues 88 105 100 (16%) (12%) Net Interest Income 116 113 114 3% 2% ▪ Lower revenue primarily reflecting
Slide 28: Appendix 9 │ Other
APPENDIX 9 │ OTHER Other Segment Summary Results – Q4 2022 ($MM) ▪ Revenues for the Other segment averaged $(60)MM per quarter in the second half of 2022 Adjusted Results(1) Q4 22 Q3 22 Q4 21 reflecting lower investment gains and treasury Revenues (85) (34) 23 revenues Non-Interest Expenses 110 85 1
Slide 29: Appendix 10 │ Balance Sheet Growth - Total Bank
APPENDIX 10 │ BALANCE SHEET GROWTH - TOTAL BANK Average Loans and BA’s Average Deposits ($B) ($B) 204.0 269.0 197.7 260.4 246.2 180.6 10.4 10.9 15.4 16.6 8.5 13.5 23.0 24.6 19.8 7.2 7.3 6.6 188.0 192.5 50.0 176.9 48.3 43.7 88.6 93.4 94.5 69.3 72.3 76.5 Q4 21 Q3 22 Q4 22 Q4 21 Q3 22 Q4 22 Personal Ba
Slide 30: Appendix 11 │ Balance Sheet Growth - P&C
APPENDIX 11 │ BALANCE SHEET GROWTH - P&C Average Loans and BA’s Average Deposits ($B) ($B) 141.7 144.5 132.3 85.9 83.0 79.8 48.3 50.0 43.7 44.6 47.1 2.2 2.2 42.7 2.0 11.0 10.8 10.4 76.3 80.4 81.2 37.1 38.4 38.8 Q4 21 Q3 22 Q4 22 Q4 21 Q3 22 Q4 22 Mortgage loans Personal loans Credit cards Commercial
Slide 31: Appendix 12 │ Total Loan Portfolio Overview
APPENDIX 12 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 95% As at October 31, 2022 % of Total of Retail loans Retail ▪ Indirect auto loans represent 1.8% of total Secured - Mortgage & HELOC 95.6 46% loans ($3.7B) Secured - Other (1) 12.7
Slide 32: Appendix 13 │ Regional Distribution of Canadian Loans
APPENDIX 13 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at October 31, 2022) Within the Canadian loan portfolio: Maritimes (2) ▪ Limited exposure to unsecured consumer Oil and Quebec Ontario Regions (1) BC/MB Territories Total loans (2.9%) Retail Secured ▪ Modest exposure to un
Slide 33: Appendix 14 │ Prudent Provisioning in Uncertain Economic Environment
APPENDIX 14 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 5.9X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 9.7x 7.9x 7.8x 6.7x 6.1x 6.2x 6.4x 5.9x 5.4x 6.0x 4.8x 2.8x 2.6x 1.8x Q1 20 Q4 20 Q4 21 Q1 2
Slide 34: Appendix 15 │ Oil & Gas and Utilities-Pipelines Sectors
APPENDIX 15 │ OIL & GAS AND UTILITIES-PIPELINES SECTORS O&G Producers and Services Exposure Gross Loans in $MM and % of Total Loans ▪ O&G producers and services exposure significantly reduced ▪ 64% reduction in outstanding loans: down from $4B in Q1/15 to $1.4B in Q4/22 ▪ Reduction as a % of total l
Slide 35: Appendix 16 │ Commercial Banking CRE Portfolio
APPENDIX 16 │ COMMERCIAL BANKING CRE(1) PORTFOLIO Commercial Banking CRE 5-year growth Commercial Banking portfolio of $15.1B ($B) accounts for 86% of total CRE portfolio ▪ 50% of 5-year growth coming from Residential Insured Residential (53% of Commercial Banking CRE) ▪ Insured loans accounted for
Slide 36: Appendix 17 │ Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 17 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 25 20 15 10 5 0 August, 2022 September, 2022 October, 2022 (5) (10) (15) (20) (25) (30) Trading P&L Trading VaR 36
Slide 37: Appendix 18 │ Strong Capital and Liquidity Positions
APPENDIX 18 │ STRONG CAPITAL AND LIQUIDITY POSITIONS Regulatory Capital, Leverage, TLAC and Liquidity Ratios ($MM) ▪ Our capital levels remain strong Q4 22 Q3 22 Q4 21 (1) Capital CET1 $14,818 $14,270 $12,973 ▪ Total capital ratio of 16.9% Tier 1 $17,961 $16,918 $15,622 Total $19,727 $18,734 $16,643
Slide 38: Appendix 19 │ Range of Macroeconomic Scenarios - IFRS9
APPENDIX 19 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q4/22 vs. Q3/22 ($ Trillions) (Full Calendar Years) Base Scenario C2023 C2024 Real GDP (Annual Average % Change) As at Jul. 31, 2022 1.5 % 1.3 % As at Oct. 31, 2022 0.7 % 1.6 % Unemployment Rate (Avera
Slide 39: Appendix 20 │ Reconciliation of Non-GAAP Financial Measures
APPENDIX 20 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q4 22 FY 2022 Non- Non- Non- Non- Total (2) Net Diluted Total (2) Net Diluted Interest PTPP controlling Interest PTPP controlling Revenues Income EPS Revenues Income EPS Expenses interest Expenses interest (1) Adjusted Res
Slide 40: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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