National Bank Of Canada · TSX:NA
National Bank Of Canada — Q3 2024 Earnings Presentation
34 slides from National Bank Of Canada's earnings presentation, Aug 28, 2024
Slide 1: Investor Presentation Third Quarter 2024
INVESTOR PRESENTATION Third Quarter 2024 August 28, 2024
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES Certain statements in this document and made orally are forward-looking statements. All such statements are made in accordance with applicable securities legislation in Canada and the United States. The forward-looking statements in this doc
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q3 2024 – Strong Financial Performance
Q3 2024 – STRONG FINANCIAL PERFORMANCE Revenues ($MM; YoY) Reported: $2,996; 20% ▪ Strong earnings growth and returns reflecting continued execution Adjusted (1)(2): $2,982; 17% PTPP(3) ($MM; YoY) Reported: $1,455; 34% ▪ Solid growth on both sides of the balance sheet Adjusted (1)(2): $1,448; 24% PC
Slide 5: Q3 2024 – Strong Results Across All Businesses
Q3 2024 – STRONG RESULTS ACROSS ALL BUSINESSES P&C Banking (YoY) ▪ Solid revenue performance with loans up 7% YoY and deposits up 6% YoY Revenues: 7% ▪ Personal: Loans up 4% YoY and 2% QoQ(2) PTPP(1): 13% ▪ Commercial: Loans up 14% YoY and 4% QoQ(2); broad-based growth in commercial lending, includi
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q3 2024 – Strong Operating Leverage
Q3 2024 – STRONG OPERATING LEVERAGE Q3 2024 Performance (YoY) ▪ Double-digit PTPP growth across all business segments in Q3 Reported Adjusted(1) Q3 YTD Q3 YTD Revenue growth 20.3% 12.8% 16.9% 10.5% ▪ Continued discipline with strong efficiency ratios Expense growth 9.8% 7.4% 11.2% 7.8% - Positive op
Slide 8: Delivering NII Growth in Q3
DELIVERING NII GROWTH IN Q3 NII and NIM ($MM; NIM on Average Interest-Bearing Assets) ▪ Reported net interest income and margin reflect the financing costs to support growth in our trading activities(1) 1,546 1,437 1,423 1,388 1,372 2.22% 2.18% 2.14% 2.21% 2.17% ▪ Adjusted NII (excl. trading)(2) up
Slide 9: Strong Growth on Both Sides of the Balance Sheet
STRONG GROWTH ON BOTH SIDES OF THE BALANCE SHEET Loans and BA’s(1) ($B) Total loans of $240B(1), up 9% YoY and 2% QoQ 230.2 234.8 239.5 ▪ Personal banking: +4% YoY; +2% QoQ 219.4 225.4 ▪ Commercial banking: +16% YoY; +4% QoQ ▪ Corporate banking: +6% YoY; (2%) QoQ ▪ Credigy ($US): +11% YoY; +1% QoQ ▪
Slide 10: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) Robust CET1 ratio of 13.5%, up 23 bps QoQ 0.67% ▪ Strong organic capital generation (40 bps) 0.02% 0.04% (0.27%) (0.23%) 13.46% ▪ Solid RWA expansion (-23 bps) 13.23% (2) Q2 24 Net income - Dividends RWA CWB-related Other Q3 24 adjusted (2) (3) ex. FX items (4)
Slide 11: CWB Acquisition: CET1 Sensitivity to Interest Rates
CWB ACQUISITION: CET1 SENSITIVITY TO INTEREST RATES IS LIMITED AND ACTIVELY MITIGATED CET1 sensitivity to interest rates is limited… … and actively mitigated via a hedging strategy ▪ Purchase accounting requires us to fair value CWB’s ▪ Following the announcement, we implemented an assets and liabil
Slide 12: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 13: Provisions for Credit Losses (PCL)
PROVISIONS FOR CREDIT LOSSES (PCL) PCL Q3 Total PCL ($MM) ▪ $149MM (25 bps), reflecting resilient portfolio mix and prudent provisioning Q3 PCL on Impaired Loans (excl. POCI) ▪ Provision of $122MM (21 bps) ▪ Retail: stable QoQ ▪ Commercial: lower QoQ ▪ FM: primarily 1 file in mining ▪ USSF&I: ▪ Cred
Slide 14: Allowance for Credit Losses (ACL)
ALLOWANCE FOR CREDIT LOSSES (ACL) ACL ($MM) Total Allowances + 6.5% ▪ 2.0x pre-pandemic level $1,514 ▪ Strong coverage of 4.6x LTM Net Charge-Offs $1,377 $1,416 $1,421 $1,297 ▪ Maintaining a prudent level of allowances in Impaired (1) Impaired (1) light of continued uncertainties Impaired (1) $467 I
Slide 15: Gross Impaired Loans and Formations (excluding POCI)
GROSS IMPAIRED LOANS AND FORMATIONS (excluding POCI) Gross Impaired Loans (GIL) Excluding POCI Loans(1) ▪ Gross impaired loans (excl. POCI) of $1,426MM, ($MM) $1,426 increase of 5 bps QoQ at 59 bps $1,365 $1,267 ▪ GIL excl. USSF&I(2): 39 bps (up 3 bps QoQ) $1,103 $1,165 $1,024 $519 ▪ Net formations
Slide 16: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO (As at July 31, 2024) Canadian Distribution by Province ▪ Uninsured mortgages and HELOC in GTA and 54% GVA represent 12% and 2% of the total RESL portfolio and have an average LTV(1) of 52% ▪ Uninsured mortgages and HELOC for condos Uninsured & HELOC represent 9%
Slide 17: Retail Mortgages Rate Type and Maturity Profile
RETAIL MORTGAGES RATE TYPE AND MATURITY PROFILE (As at July 31, 2024) Canadian Mortgages Distribution by Rate Type ▪ 60% of our Canadian Mortgage portfolio has been repriced, absorbing the impact of rate increases ▪ 27% of mortgage portfolio is variable rate and the Variable monthly payments are adj
Slide 18: Appendices
APPENDICES
Slide 19: Q3 2024 – Total Bank Results
APPENDIX 1 │ Q3 2024 – TOTAL BANK RESULTS Total Bank Summary Results – Q3 2024 ($MM) ▪ Strong earnings growth and (1) Reported Results Adjusted Results returns Q3 24 Q2 24 Q3 23 QoQ YoY Q3 24 Q2 24 Q3 23 QoQ YoY Revenues 2,996 2,750 2,490 9% 20% 2,982 2,837 2,551 5% 17% ▪ Positive operating leverage
Slide 20: Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q3 2024 ($MM) ▪ Revenues up 7% YoY, reflecting strong growth on both sides of the balance sheet Q3 24 Q2 24 Q3 23 QoQ YoY - Average loans up 7% YoY and average Revenues 1,198 1,131 1,115 6% 7% deposits up 6% YoY Personal 661 624 621
Slide 21: Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q3 2024 ($MM) ▪ Net income of $217MM, up 19% YoY Q3 24 Q2 24 Q3 23 QoQ YoY - NII of $219MM; deposits up 8% YoY and 3% Revenues 716 683 629 5% 14% QoQ Fee-Based 409 394 364 4% 12% - Fee-based revenues up 12% YoY with strong Transactio
Slide 22: Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q3 2024 (TEB, $MM) ▪ Net income of $318MM, reflecting well-diversified franchise and continuous investments Q3 24 Q2 24 Q3 23 QoQ YoY Revenues 781 766 560 2% 39% ▪ Global Markets revenues of $452MM Global Markets 452 453 277 - 63% -
Slide 23: USSF&I – Credigy
APPENDIX 5 │ USSF&I – CREDIGY Credigy Summary Results – Q3 2024 ($MM) ▪ Revenues up 24% YoY Q3 24 Q2 24 Q3 23 QoQ YoY - NII up 12% YoY and 2% QoQ (constant currency Revenues 139 136 112 2% 24% basis), driven by asset growth Net Interest Income 129 126 112 2% 15% - Non-interest income of $10MM reflec
Slide 24: USSF&I – ABA
APPENDIX 6 │ USSF&I – ABA ABA Summary Results – Q3 2024 ($MM) ▪ Revenues up 23% YoY in line with balance Q3 24 Q2 24 Q3 23 QoQ YoY sheet growth Revenues 223 209 181 7% 23% Non-Interest Expenses 76 73 66 4% 15% ▪ Loans up 17% YoY and deposits up 21%, with Pre-Tax / Pre-Provisions 147 136 115 8% 28% c
Slide 25: Other
APPENDIX 7 │ OTHER Other Segment Summary Results – Q3 2024 ($MM) Reported Results Adjusted Results (1) ▪ Reported results in Q3 2024 reflect items Q3 24 Q2 24 Q3 23 Q3 24 Q2 24 Q3 23 related to our intention to acquire CWB(3) Revenues (60) (180) (106) (74) (93) (45) Non-Int. Expenses 75 40 57 68 40
Slide 26: Total Loan Portfolio Overview
APPENDIX 8 │ TOTAL LOAN PORTFOLIO OVERVIEW (As at July 31, 2024) Loan Distribution by Borrower Category(1) ▪ Secured lending accounts for 95% of Retail loans $B % of Total Retail ▪ Indirect auto loans represent 2.5% of total loans Secured - Mortgage & HELOC 103.7 43% ($6.1B) (2) Secured - Other 15.8
Slide 27: Canadian Loan Portfolios
APPENDIX 9 │ CANADIAN LOAN PORTFOLIOS Geographic distribution (As at July 31, 2024) Within the Canadian loan portfolio: (2) Maritimes Oil and ▪ Limited exposure to unsecured consumer Quebec Ontario Regions (1) BC/MB Territories Total loans (2.7%) Retail Secured Mortgage & HELOC 24.5% 13.3% 3.7% 2.8%
Slide 28: Prudent Provisioning in Uncertain Economic Environment
APPENDIX 10 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 4.6x NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs (Excluding POCI) 9.7x 8.7x 7.8x 6.7x 6.6x 4.5x 4.4x 4.5x 4.6x 3.4x 2.9x 2.7x 1.8x 2.6x Q1 20
Slide 29: Real Estate and Construction Real Estate
APPENDIX 11 │ REAL ESTATE AND CONSTRUCTION REAL ESTATE Total Portfolio by Sector ($29.7B) Corporate Banking (9%) (As at July 31, 2024) ▪ Primarily diversified Canadian REIT Short Term Construction (19%) ▪ Mainly residential construction ▪ No US exposure Commercial Banking CRE (72%) ▪ 61% of 5-year g
Slide 30: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 12 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30
Slide 31: Diversified Funding Profile & Sound Liquidity Metrics
APPENDIX 13 │ DIVERSIFIED FUNDING PROFILE & SOUND LIQUIDITY METRICS Balance Sheet Overview ($B, as at July 31, 2024) Balance sheet reflects our diversified business $454 $454 model Business & Government Loans 98 Business & Government (2) ▪ Core banking activities well-funded through Deposits 153 div
Slide 32: Range of Macroeconomic Scenarios – IFRS
APPENDIX 14 │ RANGE OF MACROECONOMIC SCENARIOS – IFRS 9 Canada Real GDP NBC Macroeconomic Forecast: Q3/24 vs. Q2/24 ($ Trillions) (Full Calendar Years) 2.50 Base Scenario C2024 C2025 Real GDP (Annual Average % Change) 2.40 As at April 30, 2024 0.6 % 1.2 % As at July 31, 2024 0.7 % 1.2 % 2.30 Unemplo
Slide 33: Reconciliation of Non-GAAP Financial Measures
APPENDIX 15 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q3 24 Q3 23 Non- Non- Total (8) Income Net Diluted Total (8) Income Net Diluted Interest PTPP PCL Interest PTPP PCL Revenues taxes Income EPS Revenues taxes Income EPS Segment Expenses Expenses Reported Results 2,996 1,541
Slide 34: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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