National Bank Of Canada · TSX:NA
National Bank Of Canada — Q3 2022 Earnings Presentation
33 slides from National Bank Of Canada's earnings presentation, Aug 24, 2022
Slide 1: Investor Presentation Third Quarter 2022
INVESTOR PRESENTATION Third Quarter 2022 August 24, 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: Q3 2022 – Strong Business Performance
Q3 2022 – STRONG BUSINESS PERFORMANCE Revenues ($MM; YoY) ▪ Strong performance across our business segments Reported: $2,413 ; +7% - Adjusted PTPP up 9% YoY(2) Adjusted(1): $2,484 ; +8% - Positive operating leverage PTPP(2) ($MM; YoY) Reported: $1,107 ; +7% ▪ Robust CET1 ratio of 12.8%(4) while gene
Slide 5: Q3 2022 – Solid Organic Growth in All Business Segments
Q3 2022 – SOLID ORGANIC GROWTH IN ALL BUSINESS SEGMENTS P&C Banking ▪ Record quarter with revenues >$1B, up 13% YoY Revenues: +13% YoY ▪ Strong growth on both sides of the balance sheet and NIM expansion PTPP(1): +18% YoY - Deposits up 7% YoY - Commercial loans up 17% YoY(3) and retail mortgage loan
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q3 2022 – Strong Results and Positive Operating Leverage
Q3 2022 – STRONG RESULTS AND POSITIVE OPERATING LEVERAGE Q3 2022 Performance ▪ Balancing revenue and expense growth (YoY) - Strong revenue growth across our business segments; partly offset by our Other segment Reported Adjusted(1) - Continued cost management discipline Revenue growth 7.1% 8.0% Expe
Slide 8: Expense Management - Continued Focus Across the Bank
EXPENSE MANAGEMENT - CONTINUED FOCUS ACROSS THE BANK Adjusted Revenues(1) ($MM; YoY) +10% ▪ P&C: Expense growth mostly driven by salaries and +14% continued technology investments +8% +8% - Retaining and attracting talent +13% - Continued investments in digitalization to enhance online offering ▪ We
Slide 9: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) ▪ Maintaining a strong CET1 ratio of 12.8%(3) ▪ Solid net income generation ▪ RWA growth representing 47 bps of CET1 ratio: - Credit Risk: 29 bps; strong asset growth, partly offset by a reduction in counterparty credit risk - Market Risk: 14 bps; higher market
Slide 10: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 11: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES PCL Q3 2022 ($MM) POCI Total PCL Performing 173 Impaired 40 ▪ PCL of $57M (11bps), reflecting continued Total (bps) 11 20 strong performance and portfolio mix 0 1 123 -10 -9 0 PCL on Impaired Loans -20 ▪ $17M (3bps) 73 $57 -40 ▪ Continued low impaired PCLs in both retail
Slide 12: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q3 22 Total Allowances ($MM) ▪ Increased by 3% ($35M) QoQ + 3% ▪ Remain ~42% above pre-pandemic level ▪ Maintaining prudent level of allowances in light $1,239 of continued uncertainty $1,169 $1,086 $1,058 $1,093 Impaired Performing Allowances $388 Impaired Impaired $
Slide 13: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) ▪ Gross impaired loans of 30bps ($615M), 50 a decline of 1bp QoQ and 9bps YoY $1,000M 39 36 40 32 31 30 $800M $699 30 ▪ Net formations of $34M, a decline of $11M $662 $608 $611 $615 QoQ 20 $600M - Formations in Personal remains
Slide 14: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at July 31, 2022) ▪ Uninsured mortgages and HELOC in GTA and GVA represent 12% and 3% of the total 55% portfolio and have an average LTV(1) of 44% for both segments ▪ Uninsured mortgages and HELOC for condos represents 9% of t
Slide 15: Appendices
APPENDICES
Slide 16: Total Bank – Q3 22 Results
APPENDIX 1 │ TOTAL BANK – Q3 22 RESULTS Total Bank Summary Results – Q3 2022 ($MM, TEB) Adjusted Results (1) Q3 22 Q2 22 Q3 21 QoQ YoY ▪ Adjusted revenues up 8% YoY(1) and adjusted Revenues 2,484 2,491 2,301 - 8% PTPP up 9% YoY(1)(2) Non-Interest Expenses 1,306 1,293 1,216 1% 7% ▪ Positive operating
Slide 17: Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q3 2022 ($MM) ▪ Revenues up 13% YoY mainly driven by strong growth on both sides of the balance sheet and Q3 22 Q2 22 Q3 21 QoQ YoY NIM expansion Revenues 1,043 962 922 8% 13% Personal 605 571 565 6% 7% - Other income up 10% on stron
Slide 18: Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q3 2022 ($MM) ▪ Revenues up 8% YoY led by robust NII growth Q3 22 Q2 22 Q3 21 QoQ YoY - Diversified revenue mix Revenues 591 579 546 2% 8% - Strong deposit base, well positioned to benefit Fee-Based 351 359 341 (2%) 3% from rising ra
Slide 19: Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q3 2022 ($MM) ▪ Revenues of $611MM, up 14% YoY Q3 22 Q2 22 Q3 21 QoQ YoY - Global Markets: Strong performance driven by revenue growth across most business lines Revenues 611 632 537 (3%) 14% Global Markets 369 396 279 (7%) 32% - C&I
Slide 20: US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q3 2022 ABA Bank ($MM) ▪ Continued growth with revenues up 28% YoY, ABA Bank Summary Results Q3 22 Q2 22 Q3 21 QoQ YoY loans up 42% and deposits up 29% Revenues 168 164 131 2% 28% Non-Interest Expenses 55 52 42 6% 31% ▪ Solid
Slide 21: Other
APPENDIX 6 │ OTHER Other Segment Summary Results – Q3 2022 ($MM) ▪ Lower revenues YoY: - Lower investment gains in the context of more Adjusted Results(1) Q3 22 Q2 22 Q3 21 favorable markets last year Revenues (34) 33 48 - Unfavourable mark-to-market due to hedge Non-Interest Expenses 85 76 97 accou
Slide 22: Balance Sheet Growth - Total Bank
APPENDIX 7 │ BALANCE SHEET GROWTH - TOTAL BANK Average Loans and BA’s Average Deposits ($B) ($B) (1) (2) QoQ YoY QoQ YoY Avg Loan Growth 4.1% 13.4% Avg Deposit Growth 3.6% 9.8% Personal Banking 2.4% 8.0% Retail 2.3% 5.6% Commercial Banking 5.0% 16.6% Non-Retail 4.1% 11.5% Wealth Management 2.6% 16.1
Slide 23: Balance Sheet Growth - P&C
APPENDIX 8 │ BALANCE SHEET GROWTH - P&C Average Loans and BA’s Average Deposits ($B) ($B) QoQ YoY QoQ YoY Average Loan Growth 3.2% 10.8% Average Deposit Growth 5.2% 7.3% Mortgage loans 2.1% 8.1% Personal 2.3% 3.8% Personal loans 3.1% 5.2% Commercial 7.8% 10.6% Credit cards 7.8% 17.3% Commercial 5.0%
Slide 24: Total Loan Portfolio Overview
APPENDIX 9 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 95% As at of Retail loans July 31, 2022 % of Total Retail ▪ Indirect auto loans represent 1.8% of total Secured - Mortgage & HELOC 93.9 47% loans ($3.6B) Secured - Other (1) 12.4 6%
Slide 25: Regional Distribution of Canadian Loans
APPENDIX 10 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at July 31, 2022) Within the Canadian loan portfolio: Maritimes (2) ▪ Limited exposure to unsecured consumer Oil and loans (3.0%) Quebec Ontario Regions (1) BC/MB Territories Total Retail ▪ Modest exposure to unsecured con
Slide 26: Prudent Provisioning in Uncertain Economic Environment
APPENDIX 11 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 6.7X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 9.7x 7.9x 7.8x 6.7x 6.6x 6.2x 6.1x 6.0x 5.4x 4.8x 3.8x 2.8x 1.8x 2.6x Q1 20 Q4 20 Q3 21 Q4 2
Slide 27: Oil & Gas and Utilities-Pipelines Sectors
APPENDIX 12 │ 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 - 71% reduction in outstanding loans: down from $4B in Q1/15 to $1.1B in Q3/22 - Reduction as a % of total l
Slide 28: Commercial Banking CRE Portfolio
APPENDIX 13 │ COMMERCIAL BANKING CRE PORTFOLIO Commercial Banking CRE 5-year growth Commercial Banking portfolio $14.5B accounts ($B) for 86% of total CRE portfolio. Residential (3.7% of total loans) ▪ Insured loans accounted for all of the growth QoQ ▪ Insured portfolio now represents 59% ▪ LTV on
Slide 29: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 14 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 29
Slide 30: Strong Capital and Liquidity Positions
APPENDIX 15 │ STRONG CAPITAL AND LIQUIDITY POSITIONS Regulatory Capital, TLAC and Liquidity Ratios ($MM) ▪ Our capital levels remain strong Q3 22 Q2 22 Q1 22 Capital(1) CET1 $14,270 $13,833 $13,515 ▪ Total capital ratio of 16.8% Tier 1 $16,918 $16,481 $16,164 Total $18,734 $17,399 $17,123 ▪ Strong l
Slide 31: Range of Macroeconomic Scenarios - IFRS9
APPENDIX 16 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q3/22 vs. Q2/22 ($ Trillions) (Full Calendar Years) Base Scenario C2022 C2023 Real GDP (Annual Average % Change) As at Apr. 30, 2022 3.6% 2.4% As at Jul. 31, 2022 3.5% 1.5% Unemployment Rate (Average %
Slide 32: Reconciliation of Non-GAAP Financial Measures
APPENDIX 17 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q3 22 Q2 22 Non- Non- Non- Non- Total Net Diluted Total Net Diluted Interest PTPP(2) controlling Interest PTPP(2) controlling Revenues Income EPS Revenues Income EPS Expenses interest Expenses interest Adjusted Results(1)
Slide 33: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
National Bank of Canada — Q3 2022 Earnings Presentation on 6ix