National Bank Of Canada · TSX:NA
National Bank Of Canada — National Bank Financial — Investor Presentation (December 2000)
50 slides from National Bank Of Canada's investor presentation, Dec 6, 2000
Slide 1: National Bank Financial
NATIONAL BANK FINANCIAL
Slide 2: Year-End Investor Presentation
YEAR-END INVESTOR PRESENTATION KYM ANTHONY President & CEO DAVID WOOD Chief Administrative Officer
Slide 3: Developing Positive Momentum
Developing Positive Momentum ■ Update at National Bank Financial ■ Financial Overview of NBF ■ Three Pieces of the NBF Puzzle ● NB Capital Partners – Merchant Bank ● Individual Investor Services ● Investment Banking ■ Looking Forward – NBF Strategy and Key Initiatives 3
Slide 4: National Bank Financial
National Bank Financial KYM ANTHONY President & CEO
Slide 5: Update of National Bank Financial
Update of National Bank Financial OVERVIEW ■ Formed in August 1999 ■ Full service, national investment dealer ■ $780 million in annual revenues ■ Leading institutional equity sales and trading ■ Integrated corporate and investment banking capability ■ 827 IA’s – managing $36 billion assets 5
Slide 6: Update of National Bank Financial
Update of National Bank Financial FULL RANGE OF SERVICE TO GROWING CLIENTS ■ Full service investment dealer offering a complete range of financial services. INVESTMENT BANKING CORPORATE BANKING MERGERS & ACQUISITIONS MERCHANT BANKING SALES & TRADING FIXED INCOME RESEARCH HIGH YIELD DISTRIBUTION PRIV
Slide 7: What is National Bank Financial?
What is National Bank Financial? NBF ORGANIZATION CHART Administration & Support Services NB Capital Partners Investment — Banking Corporate Merchant Institutional Full Service Discount Correspondent NB Clearing Banking Research Fixed Income Brokerage Banking Equity Brokerage Network Corporation 7
Slide 8: Investment Banking
What is National Bank Financial? INVESTMENT BANKING ROLE • Manages relationships with issuer clients and executes transactions ■ 65 professionals located in Montreal, Toronto, Calgary and Vancouver ■ Significant recent growth with more to come ■ Particular areas of strength: ● Mid-cap and entreprene
Slide 9: Individual Investor Services
What is National Bank Financial? INDIVIDUAL INVESTOR SERVICES ROLE • Important distributor of equity, debt, and high-yield new issues • Significant revenue generator from wealth management activities ■ One of Canada’s leading retail distribution networks ● Proprietary network: 827 advisors with $36
Slide 10: Correspondent Network
What is National Bank Financial? CORRESPONDENT NETWORK ROLE • Markets securities execution, clearing, and custodial services to third parties ■ NBF is the leading supplier of correspondent brokerage services in Canada ● 70 associated organizations – 3,000 financial consultants ● $20 billion AUA 10
Slide 11: Merchant Banking – NB Capital Partners
What is National Bank Financial? MERCHANT BANKING – NB CAPITAL PARTNERS ROLE • Takes advantage of our intellectual capital by applying more financial capital. ■ One of the outstanding private capital groups in Canada ■ Expanded to 5 funds – 27 Direct Investments ■ Tremendous potential for top and bo
Slide 12: Equity Sales & Trading
What is National Bank Financial? EQUITY SALES & TRADING HISTORICAL CORE COMPETENCY OF THE FIRM ROLE • Distribute new issues and generate commissions in secondary trading ■ Dominant share of block trading of TSE 300 stocks. ■ Leader in risk arbitrage trading. 12
Slide 13: Research
What is National Bank Financial? RESEARCH ROLE • Value-added investment ideas for institutional and retail investors • Important “account coverage” tool for investment banking NATIONAL RANKING ACCORDING TO BRENDAN WOOD & ASSOCIATES(1) RESEARCH Number of 1st “Rising analysts Star” with 11 For researc
Slide 14: Fixed Income Capital Markets
What is National Bank Financial? FIXED INCOME CAPITAL MARKETS ROLE • Primary distributor and secondary trader of fixed income securities • Responsible for executing many debt offerings ■ #1 trader of municipal and provincial bonds ■ Dedicated high yield debt trading and origination team with cross-b
Slide 15: NB Clearing Corporation
What is National Bank Financial? NB CLEARING CORPORATION ROLE • Core security processing operations for the bank family ■ Will handle over 10 million securities transactions per year ■ CHALLENGE: To increase the value of scale and improve the quality of services 15
Slide 16: David Wood
DAVID WOOD Chief Administrative Officer
Slide 17: Financial Overview of NBF
Financial Overview of NBF 1 PLUS 1 ■ Combined firm actively participates in bull market ■ Real growth in key business segments ■ Greater absorption of merger costs ■ Realized improvement in profit margins 17
Slide 18: Future Focus Is Clear
Financial Overview of NBF FUTURE FOCUS IS CLEAR ■ Continue to grow “one” firm ■ Systematic restructure of business platform ■ Participate actively in Operational Excellence Program ■ Surpass industry profitability standards 18
Slide 19: Financial Overview of NBF: Plus = 2+
Financial Overview of NBF 1 PLUS 1 = 2+ LBG – OLD FMSL – OLD ACTUAL ACTUAL 99-00 99-00 (millions $) (millions $) Revenues $548.1 $224.2 Commissions 271.6 75.9 Operating Expenses 186.5 97.5 Pre-tax Income 90.0 50.8 Income Taxes 36.9 20.8 Net Income $53.1 $30.0 19
Slide 20: Merger & Integration Costs
Financial Overview of NBF MERGER & INTEGRATION COSTS ACTUAL 99-00 (millions $) Legal 2,000 Single Book 4,293 Amortization $4,829 Severance, other 8,768 Long-Term Incentive 13,660 $33,550 20
Slide 21: Financial Overview of NBF: Results to Sept. 30, 2000
Financial Overview of NBF 1 PLUS 1 = 2+ For 12 months ended Sept. 30 2000 NBF ACTUAL 99-00 (millions $) Revenues $812.8 Commissions 373.5 Operating Expenses 298.9 Pre-tax Income 140.5 Income Taxes 64.8 Net Income $75.7 21
Slide 22: Volume Indicators
Financial Overview of NBF VOLUME INDICATORS Fiscal 1999-2000 as at Sept. 30 Number of Transactions Individual Investor Services 4,697 Correspondent Network 2,212 Institutional Equity and Debt 1,754 Market Makers 1,794 10,457 22
Slide 23: Individual Investor Services: Evolution 1995-2000
Individual Investor Services EVOLUTION 1995-2000 ASSET GATHERING 40 35,6 35 30 27,5 Assets ($ billions) 25 22,2 20,3 20 16,2 15 12,7 10 5 0 1995 1996 1997 1998 1999 2000 23
Slide 24: National Bank Discount
National Bank Discount Broadening our Wealth Management Product ■ Account growth up 35% to 135,000 ■ Assets administered up 34% to $5.1 b ● (as at 10/31/00) ■ Trades up 111% to 899,000 24
Slide 25: Achieving Productivity Target
Financial Overview of NBF ACHIEVING PRODUCTIVITY TARGET CURRENT EXPERIENCE 86.3% Eliminate Unusual Items (1.6%) Effect Cost Reduction (1.0%) Shift Mix of Business (0.8%) NBF – 2001 82.9% 25
Slide 26: Actions – Non Actions
Financial Overview of NBF ACTIONS – NON ACTIONS ■ Expect no unusual items ■ Initial launch of cost reduction program ■ Mix of business shift to higher margin, not as volume dependent, businesses ■ Participate actively in Operational Excellence Program ■ Realize greater synergies from “one firm” 26
Slide 27: Two Pieces of the NBF Puzzle
Two Pieces of the NBF Puzzle
Slide 28: NB Capital Partners: Mission
NB Capital Partners MISSION To become the pre-eminent private capital funds manager based in Canada To deliver superior returns to National Bank and its employees 28
Slide 29: NB Capital Partners: Implementation
NB Capital Partners IMPLEMENTATION ■ Create a portfolio of equity and mezzanine funds ■ Aggressively employ third party capital ■ Build the best integrated team ■ Establish superior employee co-investment vehicles that attract and retain the best employees ■ Partner with SVA Partners 29
Slide 30: Current Family of Funds
NB Capital Partners CURRENT FAMILY OF FUNDS NB Capital Partners Inc. NB Capital NB Capital NB Capital Bryker NB Capital Equity Mezzanine Venture Technology Funds Fund, L.P Fund I & II, L.P. Fund, L.P. Partners, L.P. Partners II, L.P. INVESTMENT FOCUS Equity investments in mid- Mezzanine investments
Slide 31: Attractive Merchant Banking Opportunities
NB Capital Partners ATTRACTIVE MERCHANT BANKING OPPORTUNITIES ATTRACTIVE SPECIALIZED HIGH POTENTIAL NBOC / NBF MERCHANT NBCP FOCUS AREAS FOR CAPABILITY BANKING CAPABILITIES NEEDED(1) NBCP FUNDAMENTALS Technology ↑) +/-(↑ + ↑) +/-(↑ + + Telecom & Media ↑) +/-(↑ + ↑) +/-(↑ + + Forest Products + - +/-
Slide 32: Organizational Synergy
NB Capital Partners ORGANIZATIONAL SYNERGY ■ Many of NBCP’s portfolio companies require full capital solutions ■ NBCP works together with the Institution to provide companies with financing solutions at all levels of the balance sheet ■ Many of NBCP’s investments include ● senior debt from NBOC ● fi
Slide 33: The Year in Review
Investment Banking THE YEAR IN REVIEW • U.S. dealers continue to make in-roads in large, cross-border business TRENDS • Demutualization continues to impact league table • “New Product Development” proved successful: NEW PRODUCTS – CATS, Pro-AMS US Trust, split-share deals etc. – Can dramatically aff
Slide 34: Organizational Overview
Investment Banking ORGANIZATIONAL OVERVIEW Mergers & Acquisitions ■ Investment Banking is Technology organized by industry Biotech groups Telecom & Media ■ 11 dedicated groups Financial Institutions Merchandising & Consumer Products ■ M&A works across all Mining groups as “product specialists” Indus
Slide 35: Structuring Initiatives
Investment Banking STRUCTURING INITIATIVES Excellence established in “knowledge” sectors • Recruited and grew hi-tech team • Restructured bio-tech team Rebalanced resources in “old economy” sectors • Industrial products Decision made to implement CRM system • Pilot test with hi-tech • Roll-out to fu
Slide 36: 2000 Revenue Mix – Industry
Investment Banking 2000 REVENUE MIX – INDUSTRY Tech & Biotech 37% Financial Inst. 13% Telecom & Media 11% Diversified Ind. 10% Income Trusts 9% Oil & Gas 6% Mining 4% Gov't & Utilities 3% Forest Products 3% Consumer Products 2% Real Estate 2% 0 2 4 6 8 10 12 14 16 18 20 22 Revenue ($ millions) 36
Slide 37: 2000 Market Share – Equity Mandates
Investment Banking 2000 MARKET SHARE – EQUITY MANDATES Full credit to lead or co-lead (Full Service CDN Firms) 45 40 Number of Lead or Co-Lead Mandates 35 30 25 20 15 10 5 0 CIBC BMO NBF Scotia Merrill RBC DS TDSI 37
Slide 38: 2000 Market Share – Equity Participation
Investment Banking 2000 MARKET SHARE – EQUITY PARTICIPATION Full Credit to All 120 100 80 # of Deals 60 40 20 0 RBC DS Merrill Goepel TDSI CIBC BMO NBF Yorkton Scotia Canaccord 38
Slide 39: Syndicate Participation
Investment Banking SYNDICATE PARTICIPATION ■ Increasing syndicate participation: 1999 full year 8.9% 1st half 6.4% 2000 2nd half 12.6% 39
Slide 40: 2000 Revenue Mix – Product
Investment Banking 2000 REVENUE MIX – PRODUCT M&A 20% Fixed Income 7% Equity 73% 40
Slide 41: 2000 Deal Highlights
Investment Banking 2000 DEAL HIGHLIGHTS $100,000,000 $115,300,000 $912,000,000 $183,000,000 BFI $6.25 billion $21,000,000 41
Slide 42: Looking Forward – Initiatives
Investment Banking LOOKING FORWARD – INITIATIVES Selective Expansion • Senior MD’s and/or Vice-Chairmen • Boutique Add-on? More efficient organization • Explore “Super-groups” • Account coverage alignment • Management information system Integrate with Corporate Bank • Finder’s fees paid for exemplar
Slide 43: Summary
Investment Banking SUMMARY Momentum is building! Our department is a key driver for next year’s budget Re-focused senior management and a commitment to grow our business 43
Slide 44: NBF Key Initiatives
LOOKING NBF Key Initiatives KYM ANTHONY President & CEO
Slide 45: Looking Back: Integration
Looking Back INTEGRATION ■ Largest Issue Merger of our systems into a single book of record ■ Largest such integration in Canadian industry ■ Cost: $16 million + untold hours of labour 45
Slide 46: Relative Market Position 1999
Looking Back RELATIVE MARKET POSITION 1999 COMPETITIVE POSITIONING OF INVESTMENT DEALERS CANADIAN INSTITUTIONAL EQUITIES (Reputational Franchise vs. Market Share) 7.4 7.2 BWI Reputational Franchise 7.0 TD RBC SCM 6.8 BMO CIBC ML HSBC 6.4 NC LBG FM GMB 6.2 BW 6.0 3% 4% 5% 6% 7% 8% 9% 10% Market Share
Slide 47: Relative Market Position 2000
Looking Back RELATIVE MARKET POSITION 2000 COMPETITIVE POSITIONING OF INVESTMENT DEALERS CANADIAN INSTITUTIONAL EQUITIES (Reputational Franchise vs. Market Share) 7.4 TD SCM BMO RBC 7.2 ML CIBC NC BWI Reputational Franchise GMB 7.0 6.8 UBS 6.4 HSBC 6.2 6.0 3% 4% 5% 6% 7% 8% 9% 10% Market Share of Co
Slide 48: Relative Market Position: The Merger Beats Benchmarks
Looking Back RELATIVE MARKET POSITION 2000 COMPETITIVE POSITIONING OF INVESTMENT DEALERS CANADIAN INSTITUTIONAL EQUITIES (Reputational Franchise vs. Market Share) 7.4 TD SCM BMO RBC 7.2 ML CIBC NC BWI Reputational Franchise GMB 7.0 The Merger Beats 6.8 Industry Benchmarks for UBS a Merger in this Bu
Slide 49: Looking Forward: Strategic Objectives
Looking Forward STRATEGIC OBJECTIVES Get our service levels up • More products Grow Assets Under Management Upgrade Investment Banking • Advisory Continue to build Merchant Banking Launch e initiatives • Fixed income • Market makers • Retail • Equities Partnerships Corporate Lending 49
Slide 50: National Bank Financial
NATIONAL BANK FINANCIAL
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