National Bank Of Canada · TSX:NA
National Bank Of Canada — Q2 2002 Earnings Presentation
31 slides from National Bank Of Canada's earnings presentation, May 30, 2002
Slide 1: Investor Presentation: Q2 2002 Results Conference Call
Investor Presentation Q2 2002 Results Conference Call May 30th, 2002 www.nbc.ca/investorrelations 1
Slide 2: Strong Financial Markets performance complements steady business line results
Strong Financial Markets performance complements steady business line results Cash EPS of $0.62 National Bank remains extremely well positioned amongst Canadian Banks for gross and net non performing loan ratios notwithstanding Teleglobe provision At April 30, share buyback stands at 58.7% redeemed,
Slide 3: Financials (Millions $) Cash Basis
Financials (Millions $) Cash Basis Q2 02 Q1 02 Q2 01 Evolution Y/Y Q/Q Revenues $827 $805 $798 4% 3% Net income $122 $146 $145 -16% -16% EPS $0.62 $0.73 $0.71 -12% -15% ROE 13.1% 15.0% 16.6% 3
Slide 4: Financials: Cash Basis Reconciliation
Financials (Millions $) Cash Basis Q2 02 Before After Per taxes taxes share As reported 122 $0.62 Teleglobe provision 100 63 $0.33 Adjustment to general allowance (30) (19) ($0.10) Merchant Bank (10) (6) ($0.03) 160 $0.82 4
Slide 5: Financials: Q2 02 Share buyback status
Financials Q2 02 Share buyback status 14.5% 5.6 $184.9 3.8% 2.9 $99.2 1.3% April April 0.8% Tier 1 10.7% 8.6% 2.7 March $85.7 March Tangible equity Non-cum. Pref. shares In millions of shares In millions $ Innovative instruments Tier 2 5
Slide 6: Personal Banking and Wealth Management: 6 months ending April 30, 2002
Personal Banking and Wealth Management For the 6 months ending April 30, 2002 in millions of dollars Excluding Other segment $95.7 $123.6 $27.9 Personal Banking Wealth Management Commercial Capital Markets Treasury 6
Slide 7: Personal Banking and Wealth Management: Quarter ending April 30
Personal Banking and Wealth Management For the Quarter ending April 30 in millions of dollars Total Revenues Net Income 65.0 Wealth Management 484.3 56.0 476.4 Personal 18.3 12.8 Banking 151.0 143.1 Volume increase (Q2 02 vs Q2 01): + 2.9% for mortgages 46.7 + 6.0% for credit card services 333.3 333
Slide 8: Personal Banking and Wealth Management: 6 months ending April 30
Personal Banking and Wealth Management For the 6 months ending April 30 in millions of dollars Total Revenues Net Income 129.7 Wealth 123.6 Management 960.4 955.9 37.0 Personal 27.9 Banking 295.0 285.1 675.3 95.7 660.9 92.7 2001 2002 2001 2002 8
Slide 9: Personal Banking and Wealth Management: As at April 30
Personal Banking and Wealth Management As at April 30 in billions of dollars te: 3. 0% te : 4.7% h r a Growt h r a G rowt 64.9 22.6 62.0 9.6 8.7 21.9 Others Deposits Full Brokerage 32.7 31.4 Deposits 21.9 22.6 2001 2002 2001 2002 9 Others include Mutual Funds, Discount Brokerage and Trust Services
Slide 10: Longer hours in 60 of our branches
Personal Banking and Wealth Management h+ Longer hours in 60 of our branches 1st phase Start date: April 2nd Number of branches: 60 Minimum # of hours: 35 h / week Impact: nearly 530,000 clients will benefit from a 25% to 40% increase in service hours 2nd phase Start date: 2002-2003 Impact: 40 addit
Slide 11: Specialized Sales Force implementation
Personal Banking and Wealth Management Specialized Sales Force implementation Initial Target Rollout 110,000 clients 113,300 clients already (7% of global NBC clientele) reattributed to different Advisors 250 to 300 Financial Planners 169 Financial Planners and and Personal Bankers Personal Bankers
Slide 12: On target for TelNat customers
Personal Banking On target for TelNat customers Telnat subscribers In thousands Oct. 31, 2002 Target 482.1 525,000 468.8 454 441.4 Oct. 31, 2001 Target 423.8 453,000 404.7 409.9 Oct 00 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Mar 02 12
Slide 13: Internet customer migration is progressing
Personal Banking Internet customer migration is progressing Internet subscribers - Retail In thousands Oct. 31, 2002 Target 234.1 400,000 215.6 195.5 Oct. 31, 2001 Target 200,000 122.4 97.3 78.6 65.1 Oct 00 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Mar 02 13
Slide 14: Correspondent Network activity
Wealth Management Correspondent Network activity Revenue maintained despite market conditions Continued growth in core boutique business segment More than 70 associated organizations Over 2,000 financial consultants Over $26 billion AUA 14
Slide 15: Commercial: 6 months ending April 30, 2002
Commercial For the 6 months ending April 30, 2002 in millions of dollars Excluding Other segment $59.0 Personal Banking Wealth Management Commercial Capital Markets Treasury 15
Slide 16: Commercial: Quarter ending April 30
Commercial For the Quarter ending April 30 in millions of dollars Total Revenues Net Income 107.0 104.4 29.4 28.2 Q2 02 vs Q2 01 Volume decrease of $300 M Margin stable at 2.54% 2001 2002 2001 2002 16
Slide 17: Commercial: 6 months ending April 30
Commercial For the 6 months ending April 30 in millions of dollars Total Revenues Net Income $212.7 $210.9 $65.3 $59.0 2001 2002 2001 2002 17
Slide 18: Commercial: Annualized growth (%)
Commercial Annualized growth (%) Growth rates unless otherwise indicated Past Past 3 months 6 months Domestic Demand Ref. period Retail sales Mar 02 10.7 5.1 Manufacturers’ shipments Mar 02 9.6 -5.4 Housing starts (000) Apr 02 30.0 29.6 Income and Prices Consumer price index Apr 02 4.9 0.1 Wages and
Slide 19: Migration of Commercial and Small independent business towards electronic services progressing
Commercial Migration of Commercial and Small independent business towards electronic services progressing Subscribers In thousands Oct. 31, 2002 Target 16.1 19,000 15.5 14.8 12.8 11.5 The 19,000 subscriber 9.8 goal represents 20% of 8.7 all business customers targeted by the Bank Oct 00 Jan 01 Apr 0
Slide 20: Financial Markets: 6 months ending April 30, 2002
Financial Markets For 6 months ending April 30, 2002 in millions of dollars Excluding Other segment $73.9 $143.2 $69.3 Personal Banking Wealth Management Commercial Capital Markets Treasury 20
Slide 21: Financial Markets: Quarter ending April 30
Financial Markets For the Quarter ending April 30 in millions of dollars Net Income 78.8 Total Revenues Capital 53.1 237.9 Markets 40.5 Treasury 184.9 24.1 158.0 121.4 Q2 02 vs Q2 01 38.3 Corporate volume decrease 79.9 29.0 of $1 B 63.5 2001 2002 2001 2002 21
Slide 22: Financial Markets: 6 months ending April 30
Financial Markets For the 6 months ending April 30 in millions of dollars Net Income Total Revenues 143.2 444.1 353.3 Capital 97.0 69.6 288.5 Markets 39.1 Treasury 226.7 73.9 155.6 57.9 126.6 2001 2002 2001 2002 22
Slide 23: Solid revenues due to strong Treasury and Capital Market activities
Financial Markets Solid revenues due to strong Treasury and Capital Market activities For the Quarter ending April 30 74.8 in millions of dollars 55.4 52.1 43.7 2001 28.8 2002 20.0 15.0 9.7 Trading Capital Investment ALM Revenues Market Fees Gains 23
Slide 24: Acquisition of Putnam Lovell
Financial Markets Acquisition of Putnam Lovell Announcement of acquisition of US-based advisory and research franchise Putnam Lovell April 15 2002 Expected closing date: Beginning of June Putnam Lovell brings: Low risk, low cost entry in the U.S. market Significant revenue synergies High end franchi
Slide 25: Financial Markets: Key Achievements
Financial Markets 1 Lowered costs substantially during 2001 2 Continued aggressive hiring of senior managers across the firm Almost doubled NBF equity underwriting market share from 4% in 2000 to 7.4% in 3 2001 with another significant leap in 2002 YTD to 10% (calendar year basis) 4 Ranked #1 in qua
Slide 26: Risk Management
Risk Management Millions $ Q2 02 Q1 02 Gross impaired loans $670 $568 Gross impaired loans as a % of tangible capital & reserves 15.9% 13.6% Net impaired loans Individuals and small businesses 82 96 Commercial Canada 129 144 Corporate 53 20 Real Estate 40 39 Treasury 3 3 Other 4 5 Sub-total 311 307
Slide 27: Risk Management: Teleglobe
Risk Management Teleglobe 245 495 Revision of estimate 100 Regular General 130 provision 185 185 98 100 60 60 240 (30) (30) Q4 01 Q1 02 Q2 02 Year end 2002 27
Slide 28: Risk Management: Telecommunications exposure
Risk Management As at April 30, 2002 in millions of dollars Outstanding % Invest. % Non-Invest. % of loans grade grade and BA’s Telecommunications Cable $118.9 30.9 69.1 0.27 Wireless and Wireline $242.8 36.4 63.6 0.54 TOTAL $361.7 34.6 65.4 0.81 Ø Net impaired loans in Telecom sector represent $27
Slide 29: Conclusion: 2002 Objectives
Conclusion 2002 Objectives Q1 02 Q2 02 YTD 02 Growth in earnings per share 4% - 6 % 3% -13% -5% Return on common shareholders’ equity 15% - 17% 15% 13.1% 14.1% Expense ratio (2003 target) 61% 62.6% 59.4% 60.8% Tier 1 capital ratio 7.75% - 8.75% 11.1% 10.7% 10.7% 29
Slide 30: Solid performance despite higher than expected provisions
Conclusion Solid performance despite higher than expected provisions Ø Solid operating profits Ø Quebec poised for economic recovery Ø Well capitalized Ø Additional $15 M expense reduction program to take place as of Q3 02 Ø Should be on track to meet financial objectives 30
Slide 31: Question and Answer Session
This presentation may contain certain forward looking statements about the operations, objectives and strategies of the National Bank of Canada. Such statements are subject to risk and uncertainties. Actual results may differ materially due to a variety of factors, including legislative or regulator
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