National Bank Of Canada · TSX:NA
National Bank Of Canada — Q1 2021 Earnings Presentation
32 slides from National Bank Of Canada's earnings presentation, Feb 24, 2021
Slide 1: Investor Presentation First Quarter 2021
INVESTOR PRESENTATION First Quarter 2021 February 24, 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 Louis Vachon President & Chief Executive Officer
Slide 4: Q1 2021 – Strong Start to the Year
Q1 2021 – STRONG START TO THE YEAR Revenues(1) PTPP(2) ▪ Strong business performance from all segments $2,281 MM $1,101 MM - Revenues up 13% YoY(1) +13% YoY +18% YoY(3) - PTPP up 18% YoY(2)(3) - EPS up 26% YoY(3) - Operating leverage of 4.0% Total PCL EPS $81 MM $2.15 ▪ Prudently provisioned -9% YoY
Slide 5: Q1 2021 – Segment Highlights
Q1 2021 – SEGMENT HIGHLIGHTS P&C Banking ▪ Strong growth on both sides of the balance sheet Revenues: +3% YoY ▪ Strong housing market with mortgages up 8% YoY PTPP(1): +3% YoY ▪ Continued support to our clients through uncertain times Wealth Management ▪ Strong net sales, favorable markets and eleva
Slide 6: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 7: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES PCL Q1 2021 PCL on Impaired Loans ($MM) ▪ $75M (17bps) of impaired PCLs reflecting cyclical low Retail 500 $504 provisions and stable Non-Retail Impaired & POCI provisions 400 Performing PCL on Performing Loans 300 $365 ▪ $6M (2bps). Key drivers: forward looking macroeco
Slide 8: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q1 21 Stable Total Allowances QoQ: ($MM) ▪ Increase of $11M QoQ, $585M YoY ▪ Maintaining prudent level of allowances in 76% increase in allowances YoY light of continued uncertainty $1,354 Performing Allowances: $1,343 PCL $81 NCO ($55) ▪ Increased 79% YoY driven by a
Slide 9: Prudent Provisioning in Uncertain Economic Environment
PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total ACL Consistent with Portfolio Positioning Performing ACL / LTM PCL on Impaired Loans Total ACL / Total Loans excl. FVTPL Q1 21 Q4 20 Q1 20 Q1 21 Q4 20 Q1 20 Total Bank 3.0x 2.8x 1.8x Total Bank 0.84% 0.85% 0.
Slide 10: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) ▪ Gross impaired loans decreased to $757M 48 49 49 45 50 (45bps) $ 900M 43 $817 $794 45 $780 $ 800M $757 40 ▪ Meaningful decline in net formations $677 $ 700M 35 - Decrease across all segments $ 600M $467 30 - Lower gross format
Slide 11: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at January 31, 2021) ▪ Insured mortgages account for 37% of the total RESL portfolio (71% in Alberta) 54% Uninsured & HELOC ▪ Distribution across product and geography Insured remained stable ▪ Uninsured mortgages and HELOC in
Slide 12: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 13: Balanced Approach Between Growth, Investment and Cost Management
BALANCED APPROACH BETWEEN GROWTH, INVESTMENT AND COST MANAGEMENT Revenue Growth: ▪ Differentiated business mix supporting strong revenue and PTPP growth 13.5%(1) Q1 2021 YoY Expense Growth: ▪ Expense growth reflecting higher compensation from revenue growth, and brand and technology investments 9.5%
Slide 14: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio 0.51% ▪ Strong CET1 ratio of 11.9%(2) (0.07%) 0.09% (0.41%) 11.90% ▪ Strong net income growth 11.78% ▪ RWA growth primarily driven by organic loan growth ▪ Limited impact from rating migration - 7 bps improvement in retail (mainly credit Q4 20 Net Income (Net of Di
Slide 15: Strong Capital and Liquidity Positions
STRONG CAPITAL AND LIQUIDITY POSITIONS Capital and Capital Ratios ($MM) ▪ Our capital levels remain strong Q1 21 Q4 20 Q3 20 ▪ Our capital levels remain strong Capital ▪ Total capital ratio of 16% CET1 $11,563 $11,167 $10,840 ▪ Total capital ratio of 16% Tier 1 $14,512 $14,112 $13,290 ▪ Strong liqui
Slide 16: Appendices
APPENDICES
Slide 17: Total Bank – Q1 21 Results
APPENDIX 1 │ TOTAL BANK – Q1 21 RESULTS Total Bank Summary Results – Q1 2021 ($MM, TEB) ▪ Revenues up 13% YoY and PTPP up 18% Results Ex. Specified Items (1) Q1 21 Q4 20 Q1 20 QoQ YoY YoY(1)(2) Revenues 2,281 2,073 2,010 10% 13% - Robust operating leverage Non-Interest Expenses 1,180 1,140 1,078 4%
Slide 18: Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q1 2021 ($MM) ▪ Revenues up 3% YoY: Q1 21 Q4 20 Q1 20 QoQ YoY - Continued momentum on both sides of the Revenues 902 881 879 2% 3% balance sheet Personal 554 545 545 2% 2% - Partly offset by lower margin and lower client Commercial 3
Slide 19: Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q1 2021 ($MM) ▪ Net income up 20% YoY on strong Q1 21 Q4 20 Q1 20 QoQ YoY revenue growth and solid operating Revenues 519 467 466 11% 11% leverage of 5% Fee-Based 302 281 273 7% 11% Transaction & Others 107 79 74 35% 45% ▪ Strong net
Slide 20: Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q1 2021 ($MM, TEB) ▪ Strong performance across Financial Q1 21 Q4 20 Q1 20 QoQ YoY Markets with PTPP up 35% YoY Revenues 577 495 458 17% 26% ▪ Global Markets revenues up 23% YoY Global Markets 355 281 289 26% 23% - Strong performance
Slide 21: US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q1 2021 ($MM) ABA Bank ABA Bank Summary Results Q1 21 Q4 20 Q1 20 QoQ YoY ▪ Continued momentum with net income up Revenues 119 111 95 7% 25% 39% YoY, loans up 36% and deposits up Non-Interest Expenses 44 41 41 7% 7% 41% Pre-T
Slide 22: Other
APPENDIX 6 │ OTHER Other Segment Summary Results – Q1 2021 ($MM, TEB) ▪ Non-interest expenses up YoY: (1) Results Ex. Specified Items Q1 21 Q4 20 Q1 20 - Technology investments Revenues 9 (2) 12 Non-Interest Expenses 76 115 36 - Incremental expenses for health and Pre-Tax / Pre-Provisions (67) (117)
Slide 23: Total Loan Portfolio Overview
APPENDIX 7 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 94% As at of Retail loans January 31, 2021 % of Total Retail ▪ Indirect auto loans represent 1.7% of total Secured - Mortgage & HELOC 83.2 49% loans ($2.9B) Secured - Other (1) 8.8 5
Slide 24: Regional Distribution of Canadian Loans
APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at January 31, 20201 Within the Canadian loan portfolio: Maritimes (2) ▪ Limited exposure to unsecured consumer Oil (1) and loans (3.4%) Quebec Ontario Regions BC/MB Territories Total Retail ▪ Modest exposure to unsecured c
Slide 25: Limited Exposure to COVID-19 Most Impacted Industries
APPENDIX 9 │ LIMITED EXPOSURE TO COVID-19 MOST IMPACTED INDUSTRIES ▪ Limited exposure to COVID-19 most impacted industries (3.5% of total gross loans) Gross Loans % of ($MM) Book Non-Food / Non-Pharmacy Retailers Essential Services Retailers $490 0.3% n Majority of exposure is secured / No loan stil
Slide 26: Oil & Gas and Pipelines Sector
APPENDIX 10 │ 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 significantly reduced $3,956 - 42% reduction in outstanding loans: down from $4B in Q1/15 to $2.3B in Q1/21 (vs $2.5B in Q4/20) $2,304 - Redu
Slide 27: Commercial Real Estate Portfolio
APPENDIX 11 │ COMMERCIAL REAL ESTATE PORTFOLIO (As at January 31, 2021) Total CRE Portfolio Commercial Banking share Total CRE Portfolio of $12.0B $12.0B (7.1% of total loans) $10.3B (6.1% of total loans) ▪ Corporate Banking accounts for 14% of portfolio, primarily public REITs, well diversified acr
Slide 28: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 12 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30 25 20 15 10 5 0 November-2020 December-2020 January-2021 (5) (10) (15) Trading P&L Trading VaR 28
Slide 29: Loan & Deposit Overview
APPENDIX 13 │ LOAN & DEPOSIT OVERVIEW Loans and BA’s(1) Deposits(2) ($B) ($B) 162.7 164.7 167.7 184.8 156.2 161.8 176.3 168.5 158.9 152.0 60.7 61.8 58.9 64.2 61.3 108.8 116.3 102.3 90.6 95.0 97.2 98.5 100.5 104.1 105.9 61.4 63.9 66.2 67.5 68.6 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1
Slide 30: Range of Macroeconomic Scenarios - IFRS9
APPENDIX 14 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q1/21 vs. Q4/20 ($ Trillions) (Full Calendar Years) 2.25 Base Scenario C2020 C2021 C2022 Real GDP (Annual Average % Change) 2.15 As at Oct. 31, 2020 (5.7%) 4.1% 2.7% 2.05 As at Jan. 31, 2021 (5.6%) 4.3
Slide 31: Specified Items
APPENDIX 15 │ SPECIFIED ITEMS ($MM, except EPS) Q4 20 Q1 20 Non- Income Non- Non- Income Total Net Total Net Interest Before controlling EPS Interest Before EPS Revenues Income Revenues Income Expenses Taxes interest Expenses Taxes (1) Results Excluding Specified Items 2,024 1,140 774 615 12 1.69 $
Slide 32: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455 Linda Boulanger, Senior Vice-President 514-394-0296 | linda.boulanger@bnc.ca Marianne Ratté, Senior Director 514-412-5437 | marianne.ratte@bnc.ca Arslan Benbakouche, Senior Manager 514-
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