National Bank Of Canada · TSX:NA
National Bank Of Canada — Q1 2024 Earnings Presentation
33 slides from National Bank Of Canada's earnings presentation, Feb 28, 2024
Slide 1: Investor Presentation First Quarter 2024
INVESTOR PRESENTATION First Quarter 2024 February 28, 2024
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 in this document are forward-looking statements. All such statements are made in accordance with applicable securities legislation in Canada and the United States. The forward-l
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q1 2024 – Strong Start to the Year
Q1 2024 – STRONG START TO THE YEAR Revenues ($MM; YoY) Reported: $2,710; 6% ▪ Organic growth and disciplined execution generating strong returns (1) Adjusted : $2,820; 5% - EPS of $2.59 PTPP(2) ($MM; YoY) - ROE of 17.1% Reported: $1,261; 8% Adjusted(1): $1,371; 5% ▪ Positive operating leverage PCL (
Slide 5: Q1 2024 – Solid Business Performance
Q1 2024 – SOLID BUSINESS PERFORMANCE P&C Banking (YoY) ▪ Revenues up 5% YoY, mainly from balance sheet growth Revenues: 5% ▪ NIM up 1 bp YoY and stable QoQ at 2.36% PTPP(1): 5% ▪ Personal: Loans up 2% YoY and stable QoQ(2) ▪ Commercial: Loans up 11% YoY and 4% QoQ(2) Wealth Management (YoY) ▪ Record
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q1 2024 – Strong Results and Continued Cost Discipline
Q1 2024 – STRONG RESULTS AND CONTINUED COST DISCIPLINE Q1 2024 Performance (YoY) ▪ Positive operating leverage in Q1/24 Reported Adjusted(1) - Strong revenue growth YoY in Financial Markets (+10%), Revenue growth 5.8% 4.8% P&C Banking (+5%) and Wealth Management fee-based (+8%) Expense growth 4.2% 4
Slide 8: Maintaining Strong NII and NIM
MAINTAINING STRONG NII AND NIM(1) NII and NIM, non-trading – Adjusted(2)(3) ($MM) Adjusted non-trading NII(2) up 4.7% QoQ 2.19% 2.09% 2.18% 2.14% 2.21% 3.00% ▪ P&C: up $13M QoQ on balance sheet growth 1,600 2.00% 1,400 1,437 1,200 1,373 1,280 1,388 1,372 1.00% ▪ WM: up $10M QoQ from strong deposit b
Slide 9: Strong Loan-to-Deposit Ratio of 98%
STRONG LOAN-TO-DEPOSIT RATIO(1) OF 98% Loans and BA’s(2) ($B) Total loans of $230B(2), up 9% YoY and 2% QoQ 225.4 230.2 210.4 215.8 219.4 ▪ Personal banking: +2% YoY; flat QoQ ▪ Commercial banking: +13% YoY; +4% QoQ ▪ Corporate banking: +16% YoY; +3% QoQ ▪ Credigy ($US): +14% YoY; +13% QoQ ▪ ABA ($U
Slide 10: Diversified Funding Profile & Sound Liquidity Metrics
DIVERSIFIED FUNDING PROFILE & SOUND LIQUIDITY METRICS Balance Sheet Overview ($B, as at January 31, 2024) Balance sheet reflects our diversified business model $434 $434 Other Assets 23 Other Liabilities 24 ▪ Core banking activities well-funded through Cash & Reverse Repos 50 Unsecured Funding 54 Wh
Slide 11: Strong Capital Position While Generating Robust RWA Growth
STRONG CAPITAL POSITION WHILE GENERATING ROBUST RWA GROWTH CET1 Ratio(1) 0.69% Strong CET1 ratio of 13.1% (0.28%) ▪ Strong organic capital generation (+41 bps) and robust organic RWA growth (-58 bps) 13.47% 0.04% (0.58%) 0.15% 13.11% ▪ Methodology updates (-23 bps) (0.38%) - Adoption of FRTB and CVA
Slide 12: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 13: Provisions for Credit Losses (PCL)
PROVISIONS FOR CREDIT LOSSES (PCL) PCL ($MM) Q1 Total PCL ▪ $120M (21 bps), reflecting resilient portfolio mix and prudent provisioning Q1 PCL on Impaired Loans (excl. POCI) ▪ Provision of $99M (17 bps) ▪ Retail: continued normalization ▪ Non-retail: primarily 3 files ▪ USSF&I: Credigy – normal seas
Slide 14: Allowance for Credit Losses (ACL)
ALLOWANCE FOR CREDIT LOSSES (ACL) ACL ($MM) Total Allowances + 3% ▪ 1.8x pre-pandemic level $1,377 $1,416 ▪ Strong coverage of 6.6x LTM Net Charge-Offs $1,297 ▪ Maintaining a prudent level of allowances in $1,235 $1,182 Impaired (1) Impaired (1) light of continued uncertainties Impaired (1) $426 $41
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 $1,103M, $1,365 ($MM) increase of 3 bps QoQ at 48 bps $1,103 $1,165 $1,024 ▪ GIL excl. USSF&I(2): 31 bps (stable QoQ) $912 $965 $793 $814 $397 ▪ Net formatio
Slide 16: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO (As at January 31, 2024) Canadian Distribution by Province ▪ Uninsured mortgages and HELOC in GTA and GVA represent 12% and 2% of the total RESL 54% portfolio and have an average LTV(1) of 52% ▪ Uninsured mortgages and HELOC for condos represent 9% of the total RE
Slide 17: Retail Mortgages Rate Type and Maturity Profile
RETAIL MORTGAGES RATE TYPE AND MATURITY PROFILE (As at January 31, 2024) Canadian Mortgages Distribution by Rate Type ▪ More than half of our Canadian Mortgage portfolio has been repriced, absorbing the impact of rate increases ▪ 28% of mortgage portfolio is variable rate and the Variable monthly pa
Slide 18: Appendices
APPENDICES
Slide 19: Appendix 1 │ Q1 2024 – Total Bank Results
APPENDIX 1 │ Q1 2024 – TOTAL BANK RESULTS Total Bank Summary Results – Q1 2024 ($MM) (1) Adjusted Results Q1 24 Q4 23 Q1 23 QoQ YoY Revenues 2,820 2,725 2,692 3% 5% ▪ Diluted EPS of $2.59 Non-Interest Expenses 1,449 1,461 1,390 (1%) 4% Pre-Tax / Pre-Provisions (2) 1,371 1,264 1,302 8% 5% ▪ Positive
Slide 20: Appendix 2 │ Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q1 2024 ($MM) ▪ Revenues up 5% YoY, mainly from balance Adjusted Results (1) Q1 24 Q4 23 Q1 23 QoQ YoY sheet growth Revenues 1,154 1,118 1,104 3% 5% Personal 640 611 603 5% 6% ▪ Expenses up 4% YoY, with continued technology Commercia
Slide 21: Appendix 3 │ Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q1 2024 ($MM) Adjusted Results(1) Q1 24 Q4 23 Q1 23 QoQ YoY ▪ Record revenues of $660MM, up 4% YoY Revenues 660 638 637 3% 4% - Continued momentum in fee-based revenues, Fee-Based 375 371 347 1% 8% driven by strong asset growth, prim
Slide 22: Appendix 4 │ Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS(1) Financial Markets Summary Results – Q1 2024 (TEB, $MM) ▪ Record net income of $308MM, up 3% YoY, Adjusted Results(2) Q1 24 Q4 23 Q1 23 QoQ YoY reflecting well-diversified business mix Revenues 755 735 689 3% 10% Global Markets 451 435 397 4% 14% - In light of the pr
Slide 23: Appendix 5 │ USSF&I – Credigy
APPENDIX 5 │ USSF&I – CREDIGY Credigy Summary Results – Q1 2024 ($MM) ▪ Average assets up 6% QoQ(1) and 12% YoY, Q1 24 Q4 23 Q1 23 QoQ YoY with strong momentum in investment volumes Revenues 125 126 137 (1%) (9%) - US$1.3B deployed in Q1, mainly in mortgage Net Interest Income 117 126 136 (7%) (14%)
Slide 24: Appendix 6 │ USSF&I – ABA
APPENDIX 6 │ USSF&I – ABA ABA Summary Results – Q1 2024 ($MM) ▪ Solid growth in loans and deposits with client Q1 24 Q4 23 Q1 23 QoQ YoY base up 28% YoY Revenues 194 187 180 4% 8% - Leading digital capabilities and continued Non-Interest Expenses 65 68 61 (4%) 7% investments Pre-Tax / Pre-Provisions
Slide 25: Appendix 7 │ Other
APPENDIX 7 │ OTHER Other Segment Summary Results – Q1 2024 ($MM) Adjusted Results(1) Q1 24 Q4 23 Q1 23 ▪ Reported net income in prior year included TEB $24MM of income taxes related to the Revenues (75) (79) (57) Canadian government’s 2022 tax measures Non-Interest Expenses 31 51 48 Pre-Tax / Pre-Pr
Slide 26: Appendix 8 │ Total Loan Portfolio Overview
APPENDIX 8 │ TOTAL LOAN PORTFOLIO OVERVIEW (As at January 31, 2024) Loan Distribution by Borrower Category(1) ▪ Secured lending accounts for 95% of Retail loans $B % of Total Retail ▪ Indirect auto loans represent 2.4% of total loans Secured - Mortgage & HELOC 100.3 43% ($5.5B) (2) Secured - Other 1
Slide 27: Appendix 9 │ Canadian Loan Portfolios
APPENDIX 9 │ CANADIAN LOAN PORTFOLIOS Geographic distribution (As at January 31, 2024) Within the Canadian loan portfolio: Maritimes (2) Oil and Quebec Ontario Regions (1) BC/MB Total ▪ Limited exposure to unsecured consumer Territories loans (2.7%) Retail Secured Mortgage & HELOC 24.7% 13.3% 3.7% 2
Slide 28: Appendix 10 │ Prudent Provisioning in Uncertain Economic Environment
APPENDIX 10 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 6.6x NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs (Excluding POCI) 7.1x 8.4x 8.6x 8.7x 7.8x 6.0x 6.2x 6.6x 6.1x 4.5x 4.4x 3.4x 1.8x 2.6x Q1 20
Slide 29: Appendix 11 │ Real Estate and Construction Real Estate
APPENDIX 11 │ REAL ESTATE AND CONSTRUCTION REAL ESTATE Total Portfolio by Sector ($27.4B) Corporate Banking (10%) (As at January 31, 2024) ▪ Primarily diversified Canadian REIT Short Term Construction (20%) ▪ Mainly residential construction ▪ No US exposure Commercial Banking CRE (70%) ▪ 59% of 5-ye
Slide 30: Appendix 12 │ Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 12 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30 25 20 15 10 5 0 November, 2023 December, 2023 January, 2024 (5) (10) (15) Trading P&L Trading VaR 30
Slide 31: Appendix 13 │ Range of Macroeconomic Scenarios – IFRS 9
APPENDIX 13 │ RANGE OF MACROECONOMIC SCENARIOS – IFRS 9 Canada Real GDP NBC Macroeconomic Forecast: Q1/24 vs. Q4/23 ($ Trillions) (Full Calendar Years) 2.50 Base Scenario C2024 C2025 Real GDP (Annual Average % Change) 2.40 As at October 31, 2023 (0.0) % 1.7 % As at January 31, 2024 (0.2) % 1.4 % 2.3
Slide 32: Appendix 14 │ Reconciliation of Non-GAAP Financial Measures
APPENDIX 14 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q1 24 Q1 23 Non- Non- Total Income Net Diluted Total Income Net Diluted Interest PTPP(6) PCL Interest PTPP(6) PCL Revenues taxes Income EPS Revenues taxes Income EPS Segment Expenses Expenses (1) Adjusted Results 2,820 1,4
Slide 33: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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