National Bank Of Canada · TSX:NA
National Bank Of Canada — Q1 2019 Earnings Presentation
26 slides from National Bank Of Canada's earnings presentation, Feb 27, 2019
Slide 1: Investor Presentation Q1|19
INVESTOR PRESENTATION Q1|19 February 27, 2019
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 Economic Review and Outlook section of the Report to Shareholders – First quarter 2019 and in the Major Economic Trends section of the 2018 Annua
Slide 3: Overview
OVERVIEW Louis Vachon President & Chief Executive Officer
Slide 4: Overview - Q1|19 Highlights
OVERVIEW - Q1|19 Highlights ▪ Good overall performance offset by ($MM, TEB) Q1 19 Q4 18 Q1 18 QoQ YoY lower activity in Financial Markets Revenues 1,862 1,874 1,865 (1%) - ▪ Continued cost control Net Income 552 566 550 (2%) - ▪ ROE of 17.2% Diluted EPS $1.50 $1.52 $1.46 (1%) 3% ▪ High capital level
Slide 5: Segment Highlights – Q1|19
SEGMENT HIGHLIGHTS – Q1|19 P&C Banking ▪ Continued momentum driven by strong loan and NET INCOME ($MM) Q1 19 Q4 18 Q1 18 QoQ YoY deposit growth P&C Banking 246 257 230 (4%) 7% ▪ Positive operating leverage Wealth Management 125 118 114 6% 10% Wealth Management Financial Markets 170 192 204 (11%) (17
Slide 6: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Transformation Driving Efficiencies
TRANSFORMATION DRIVING EFFICIENCIES Highlights ($MM, TEB) Q1 19 Q1 18 YoY ▪ Efficiency remains a top priority Revenues 1,862 1,865 (0.2%) ▪ Ability to adjust costs rapidly in a Expenses 1,026 1,024 0.2% lower growth environment Operating Leverage (0.4%) ▪ Efficiency ratio improvement of 20 bps QoQ Q
Slide 8: Strong Capital Position
STRONG CAPITAL POSITION Total RWA under Basel III Highlights 77,036 72,834 73,268 73,654 71,179 3,964 3,336 4,055 4,755 3,435 10,910 ▪ Common Equity Tier 1 ratio at 11.5% 10,402 10,539 10,743 10,218 ▪ Total capital ratio at 16.3% ▪ Leverage ratio at 4.1% 58,377 59,476 62,162 57,625 57,974 ▪ Liquidit
Slide 9: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 10: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES Highlights Quarterly PCL Ratio (bps) 27 PCL on impaired loans: 25 25 24 ▪ $77 million (21 bps), improved by 2 bps QoQ 23 due to lower provisions in Commercial Banking 23 ▪ Excluding USSF&I, PCL on impaired loans 21 21 21 declined to $46 million (13 bps) remaining close 2
Slide 11: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS(1) AND FORMATIONS(2) Gross Impaired Loans (GIL) ($MM) Highlights 42 42 44 43 41 45 ▪ GIL ratio of 41 bps, down 2 bps QoQ 715 40 due to repayments in Commercial 615 35 Banking 515 30 415 25 ▪ Lower formations, primarily due to 315 582 586 630 630 603 20 Commercial Banking 215 15
Slide 12: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province Highlights (As at Jan. 31, 2019) ▪ Distribution across product and geography 54% remained stable. Insured mortgages account Insured for 41% of the total Uninsured & HELOC ▪ Uninsured mortgages and HELOC in GTA and 66% GVA represen
Slide 13: Appendices
NATIONAL BANK Powering your ideas” APPENDICES
Slide 14: Appendix 1 │ Strong Fundamentals in Québec Economy
APPENDIX 1 │STRONG FUNDAMENTALS IN QUÉBEC ECONOMY QUÉBEC: JOBLESS RATE STANDS AT 5.4% IN JANUARY 2019 GLOBAL PERSPECTIVE ON HOME PRICES Price per square feet in USD for downtown living (Summer 2018) QUÉBEC: HOUSEHOLD LEVERAGE REMAINS BELOW NATIONAL AVERAGE Household debt as a % of disposable income,
Slide 15: Appendix 2 │ Personal and Commercial Banking
APPENDIX 2 | PERSONAL AND COMMERCIAL BANKING Highlights(1) ▪ Net income up 7% YoY due to good ($MM) Q1 19 Q4 18 Q1 18 QoQ YoY revenue growth and good cost control Revenues 852 849 815 - 5% ▪ Solid loan and deposit volume growth Personal 527 530 520 (1%) 1% ▪ Pressure on retail loan margin due to low
Slide 16: Appendix 3 │ Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Highlights(1) ($MM) Q1 19 Q4 18 Q1 18 QoQ YoY ▪ Double digit earnings growth in a Revenues 434 427 424 2% 2% challenging market environment Fee-based 242 247 246 (2%) (2%) ▪ Revenues were up 2%, driven by higher interest rates and volume growth Transaction & Others 64
Slide 17: Appendix 4 │ Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Highlights ▪ Solid Global Markets performance ($MM) Q1 19 Q4 18 Q1 18 QoQ YoY driven by increased client activity and Revenues 410 436 454 (6%) (10%) revenues in Commodities and Interest Rate Derivatives Global Markets 251 235 257 7% (2%) Corporate & Investment Banking
Slide 18: Appendix 5 │ US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL Highlights ($MM) Q1 19 Q4 18 Q1 18 QoQ YoY ▪ ABA’s net income up 50% due to Revenues 171 158 161 8% 6% strong loan and deposit volume Credigy 105 100 117 5% (10%) growth as well as network ABA 65 57 43 14% 51% expansion Other 1 1 1 - - Operating Expe
Slide 19: Appendix 6 │ Other
APPENDIX 6 │ OTHER Highlights ($MM, TEB) Q1 19 Q4 18 Q1 18 QoQ YoY ▪ Lower Treasury revenues offset by lower variable compensation Revenues (5) 4 11 (225%) (145%) and employee benefits Operating Expenses 60 84 76 (29%) (21%) Provision - (1) - for Credit Losses Net Income (49) (56) (48) 19
Slide 20: Appendix 7 │ Total Loan Portfolio Overview
APPENDIX 7 │TOTAL LOAN PORTFOLIO OVERVIEW Highlights Loan Distribution by Borrower Category As at ▪ Secured lending accounts for % of Total ($B) Jan. 31, 2019 92% of Retail loans Retail - Secured - Mortgage & HELOC 71.2 49% ▪ Limited exposure to unsecured - Secured - Other (1) 8.8 6% retail and card
Slide 21: Appendix 8 │ Regional Distribution of Canadian Loans
APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Highlights Maritimes(2) Quebec Ontario Oil BC/MB and TOTAL Within the Canadian loan Regions(1) Territories portfolio: As at Jan 31, 2019 Retail ▪ Limited exposure to Secured 27.1% 13.2% 4.8% 3.8% 1.1% 50.0% unsecured consumer - Mortgage & HELOC Se
Slide 22: Appendix 9 │ Oil & Gas and Pipelines Sector
APPENDIX 9 │ OIL & GAS AND PIPELINES SECTOR Outstanding Loans ($B) Highlights ▪ New segmentation for O&G industry. 5% 6% Producers and Services, Pipelines and Refinery & Integrated are now Producers (IG = 59%) presented as one sector. Midstream (IG = 95%) $4.4B 33% IG 73% 56% Refinery & Integrated (
Slide 23: Appendix 10 │ Balance Sheet Overview (Banking Book & Other)
APPENDIX 10 │ BALANCE SHEET OVERVIEW (BANKING BOOK & OTHER) ($B) Lending - Loans and BAs (month end balance) Funding - Deposits and BAs (month end balance) 166.9 168.9 159.5 162.0 142.8 146.1 146.7 139.9 150.9 28.5 136.4 5.7 6.1 29.2 5.9 5.6 28.0 28.6 5.9 16.5 15.9 14.6 15.2 27.2 13.1 8.1 8.6 8.7 7.
Slide 24: Appendix 11 │ Daily Trading and Underwriting Revenues vs VaR
APPENDIX 11 │ DAILY TRADING and UNDERWRITING REVENUES vs VAR ($MM) Daily Trading Revenues Trading VaR 20.0 15.0 10.0 5.0 0.0 (5.0) (10.0) (15.0) 1-Nov 8-Nov 16-Nov 23-Nov 30-Nov 7-Dec 14-Dec 21-Dec 2-Jan 9-Jan 16-Jan 23-Jan 30-Jan 24
Slide 25: Appendix 12 │ Trading VaR Trend
APPENDIX 12 │ TRADING VaR TREND ($MM) Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 -3.9 -5.1 -5.9 -6.0 -6.4 25
Slide 26: Investor Relations Contact Information
INVESTOR RELATIONS CONTACT INFORMATION W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455 Linda Boulanger, Vice President 514-394-0296 | linda.boulanger@bnc.ca Marianne Ratté, Senior Director 514-412-5437 | marianne.ratte@bnc.ca Arslan Benbakouche, Chief Analyst 514-412-8027
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