National Bank Of Canada · TSX:NA
National Bank Of Canada — Q4 2021 Earnings Presentation
36 slides from National Bank Of Canada's earnings presentation, Dec 1, 2021
Slide 1: Investor Presentation Fourth Quarter 2021
INVESTOR PRESENTATION Fourth Quarter 2021 December 1, 2021
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: FY 2021 – Strong Performance Across the Bank
FY 2021 – STRONG PERFORMANCE ACROSS THE BANK Revenues ▪ Strong performance in F2021 Reported: $8,927 MM ; +13% - Revenues up 11%(1) Adjusted(1): $9,116 MM ; +11% - PTPP up 12%(1)(2) PTPP(2) - Positive operating leverage Reported: $4,074 MM ; +20% Adjusted(1): $4,272 MM ; +12% ▪ Industry-leading ROE
Slide 5: FY 2021 – Solid Organic Growth in All Segments
FY 2021 – SOLID ORGANIC GROWTH IN ALL SEGMENTS P&C Banking ▪ Strong growth on both sides of the balance sheet Revenues: +7% YoY ▪ Commercial loans up 18%(3) and retail mortgage loans up 11%(3) PTPP(1): +10% YoY ▪ Continued momentum in client activity Wealth Management ▪ Outstanding year for Wealth M
Slide 6: Strong Performance Against Our Medium-Term Objectives
STRONG PERFORMANCE AGAINST OUR MEDIUM-TERM OBJECTIVES National Bank’s Medium-Term Objectives FY 2021 Results Medium-Term Objectives Growth in Diluted EPS excluding specified items(1) 48.2% √ 5 - 10 % Return on Equity excluding specified items(2) 20.8% √ 15 - 20 % Dividend Payout Ratio excluding spec
Slide 7: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 8: FY 2021 - Balanced Approach Between Investment and Cost Management
FY 2021 - BALANCED APPROACH BETWEEN INVESTMENT AND COST MANAGEMENT Revenue Reported: $8,927 MM ; +13% ▪ Strong performance across the Bank Adjusted(1): $9,116 MM ; +11% ▪ Positive operating leverage and continued discipline in cost management Expense Reported: $4,853 MM ; +7% Adjusted(2): $4,844 MM
Slide 9: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) 0.46% 0.06% (0.17%) ▪ Strong CET1 ratio of 12.4%(2) while (0.11%) 12.43% generating robust organic growth throughout 12.19% the year ▪ RWA growth in Q4 primarily driven by loan growth across all segments Q3 21 Net Income Ex. Flinks RWA (Ex. FX) Acquisition of Fl
Slide 10: Strong Capital and Liquidity Positions
STRONG CAPITAL AND LIQUIDITY POSITIONS Capital and Capital Ratios(1) ($MM) ▪ ▪Our Our capital capital levels levels remain remain strong strong Q4 21 Q3 21 Q2 21 ▪ ▪Total Total capital capital ratio ratio of of 16%15.9% Capital $12,973 CET1 $12,574 $11,997 ▪ ▪Strong Strong liquidity liquidity ratios
Slide 11: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 12: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES Q4 Total PCL PCL Q4 2021 ▪ PCL recovery of $41M (-9bps), reflecting ($MM) continued strong portfolio performance 27 POCI 173 19 Performing Impaired 20 Q4 PCL on Impaired Loans Total (bps) 1 ▪ $19M (4bps), new cyclical low 123 -10 -9 0 $110 ▪ Recoveries in Commercial offs
Slide 13: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q4 21 Total Allowances ($MM) ▪ Declined by 6% ($70M) QoQ ▪ Remain ~52% above pre-pandemic level + 76% - 6% ▪ Maintaining prudent level of allowances in light of continued uncertainty $1,354 $1,309 $1,239 $1,169 Performing Allowances Impaired Impaired $357 $382 Impaire
Slide 14: Prudent Provisioning in Uncertain Economic Environment
PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 7.9X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 7.9x 4.8x 6.4x 6.6x 3.8x 5.9x 5.4x 3.3x 4.7x 2.8x 2.8x 3.0x 4.1x 2.8x 2.6x 1.8x Q1 20 Q2 20 Q3 20 Q4 20 Q1
Slide 15: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) 49 45 50 ▪ Gross impaired loans of 36bps ($662M), a 42 decline of 3bps QoQ and 13bps YoY $1 000M 39 36 40 $817 $757 $731 $ 800M $699 30 $662 ▪ Continued low net formations 20 $ 600M $467 $463 $470 $450 $406 10 $ 400M 0 $ 200M $2
Slide 16: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at October 31, 2021) ▪ Insured mortgages account for 33% of the total RESL portfolio 54% ▪ Distribution across product and geography remained stable ▪ Uninsured mortgages and HELOC in GTA and 72% Uninsured & HELOC GVA represen
Slide 17: Appendices
APPENDICES
Slide 18: Appendix 1 – FY 2021 Total Bank Results
APPENDIX 1 │ FY 2021 TOTAL BANK RESULTS Total Bank Summary Results - FY 2021 ($MM, TEB) ▪ Strong business performance with (1) Adjusted Results FY 21 FY 20 YoY revenues up 11%(1) and PTPP up 12%(1)(2) Revenues 9,116 8,216 11% Non-Interest Expenses 4,844 4,413 10% ▪ Positive operating leverage (2) Pr
Slide 19: Appendix 2 – FY 2021 Segment Results
APPENDIX 2 │ FY 2021 SEGMENT RESULTS P&C Banking Wealth Management ($MM) ($MM) FY 21 FY 20 YoY FY 21 FY 20 YoY Revenues 3,686 3,457 7% Revenues 2,169 1,859 17% Personal 2,228 2,148 4% Fee-Based 1,316 1,087 21% Commercial Transaction & Others 405 330 23% 1,458 1,309 11% Net Interest Income 448 442 1%
Slide 20: Appendix 3 – Total Bank Q4 21 Results
APPENDIX 3 │ TOTAL BANK – Q4 21 RESULTS Total Bank Summary Results – Q4 2021 ($MM, TEB) Adjusted Results (1) Q4 21 Q3 21 Q4 20 QoQ YoY ▪ Revenues up 9% YoY(1) and PTPP up 8% Revenues 2,252 2,301 2,073 (2%) 9% YoY(1)(2) Non-Interest Expenses 1,249 1,216 1,140 3% 10% - Average loans up 11% YoY Pre-Tax
Slide 21: Appendix 4 – Personal and Commercial Banking
APPENDIX 4 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q4 2021 FY 2021 ($MM) ▪ Strong growth on both sides of the balance sheet Q4 21 Q3 21 Q4 20 QoQ YoY Revenues 945 937 881 1% 7% Q4 2021 Personal 569 563 545 1% 4% ▪ Strong growth on both sides of the balance Commercial 376 374 336 1% 1
Slide 22: Appendix 5 – Wealth Management
APPENDIX 5 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q4 2021 FY 2021 ($MM) ▪ Outstanding year for Wealth, with PTPP up 22% Q4 21 Q3 21 Q4 20 QoQ YoY Q4 2021 Revenues 562 547 467 3% 20% ▪ Strong revenue growth of 20% YoY and 3% QoQ Fee-Based 357 339 281 5% 27% - Transaction revenues dow
Slide 23: Appendix 6 – Financial Markets
APPENDIX 6 │ FINANCIAL MARKETS Financial Markets Summary Results – Q4 2021 ($MM, TEB) FY 2021 ▪ Solid performance for FM after record revenues in Q4 21 Q3 21 Q4 20 QoQ YoY previous year Revenues 482 520 495 (7%) (3%) Global Markets 267 279 281 (4%) (5%) Q4 2021 C&IB 215 241 214 (11%) - ▪ Revenues do
Slide 24: Appendix 7 – US Specialty Finance & International
APPENDIX 7 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q4 2021 ABA Bank ($MM) FY 2021 ABA Bank Summary Results Q4 21 Q3 21 Q4 20 QoQ YoY ▪ Continued growth with revenues up 24% Revenues 139 131 111 6% 25% Non-Interest Expenses 45 42 41 7% 10% Q4 2021 Pre-Tax / Pre-Provisions 94 8
Slide 25: Appendix 8 – Other
APPENDIX 8 │ OTHER Other Segment Summary Results – Q4 2021 ($MM, TEB) ▪ Higher revenues YoY: Adjusted Results (1) Q4 21 Q3 21 Q4 20 - Gain on remeasurement of Flinks and gains Revenues 21 49 (2) on investments reflecting favorable markets; partly offset by FV measurement of interest in Non-Interest
Slide 26: Appendix 9 – Robust Volume Growth Across the Bank
APPENDIX 9 │ ROBUST VOLUME GROWTH ACROSS THE BANK Average Loans and BA’s Average Deposits ($B) ($B) (1) (2) CAGR CAGR QoQ YoY (2-Yr) QoQ YoY (2-Yr) Avg Loan Growth 3.7% 11.4% 8.9% Avg Deposit Growth 3.8% 13.0% 12.5% Personal Banking 2.5% 9.4% 7.3% Retail 1.2% 4.2% 5.6% Commercial Banking 5.1% 17.5%
Slide 27: Appendix 10 – Strong Growth on Both Sides of the Balance Sheet in P&C
APPENDIX 10│ STRONG GROWTH ON BOTH SIDES OF THE BALANCE SHEET IN P&C Average Loans and BA’s Average Deposits ($B) ($B) CAGR CAGR QoQ YoY QoQ YoY (2-Yr) (2-Yr) Average Loan Growth 3.3% 12.0% 7.9% Average Deposit Growth 3.3% 11.7% 11.8% Mortgage loans 2.6% 10.9% 8.9% Personal 0.2% 4.7% 9.1% Personal l
Slide 28: Appendix 11 – Total Loan Portfolio Overview
APPENDIX 11 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 95% As at of Retail loans October 31, 2021 % of Total Retail ▪ Indirect auto loans represent 1.7% of total Secured - Mortgage & HELOC 89.0 49% loans ($3.1B) Secured - Other (1) 10.9
Slide 29: Appendix 12 – Regional Distribution of Canadian Loans
APPENDIX 12 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at October 31, 2021) Within the Canadian loan portfolio: Maritimes (2) ▪ Limited exposure to unsecured consumer Oil (1) and loans (3.1%) Quebec Ontario Regions BC/MB Territories Total Retail ▪ Modest exposure to unsecured
Slide 30: Appendix 13 – Limited Exposure to COVID-19 Most Impacted Industries
APPENDIX 13 │ LIMITED EXPOSURE TO COVID-19 MOST IMPACTED INDUSTRIES ▪ Exposure to COVID-19 key impacted sectors remains modest at 3.1% of total gross loans Gross Loans % of ($MM) Book Non-Food / Non-Pharmacy Retailers Car Dealerships $551 0.3% nIncrease of 4% QoQ / Typically secured by real estate /
Slide 31: Appendix 14 – Oil & Gas and Pipelines Sector
APPENDIX 14 │ 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 $3,956 significantly reduced - 54% reduction in outstanding loans: down from $4B in Q1/15 to $1.8B in Q4/21 (vs $1.9B in Q3/21) - Reduction a
Slide 32: Appendix 15 – Commercial Real Estate Portfolio
APPENDIX 15 │ COMMERCIAL REAL ESTATE PORTFOLIO (As at October 31, 2021) Total CRE Portfolio Commercial Banking share Total CRE Portfolio of $14.4B $14.4B (7.8% of total loans) $12.8B (7.0% of total loans) ▪ Corporate Banking accounts for 11% of portfolio, primarily public REITs, well diversified acr
Slide 33: Appendix 16 – Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 16 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 25 20 15 10 5 0 August/2021 September/2021 October/2021 (5) (10) (15) Trading P&L Trading VaR 33
Slide 34: Appendix 17 – Range of Macroeconomic Scenarios - IFRS9
APPENDIX 17 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q4/21 vs. Q3/21 ($ Trillions) (Full Calendar Years) 2.40 Base Scenario C2021 C2022 C2023 2.30 Real GDP (Annual Average % Change) 2.20 As at Jul. 31, 2021 6.0% 4.0% 2.2% As at Oct. 31, 2021 5.0% 4.0% 2.
Slide 35: Appendix 18 – Reconciliation of Non-GAAP Financial Measures
APPENDIX 18 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) (2) (2) Q4 21 FY 2021 Non- Income Non- Non- Income Non- Total Net Diluted Total Net Diluted Interest Before controlling Interest Before controlling Revenues Income EPS Revenues Income EPS Expenses Taxes interest Expenses T
Slide 36: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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