National Bank Of Canada · TSX:NA
National Bank Of Canada — Q3 2002 Earnings Presentation
28 slides from National Bank Of Canada's earnings presentation, Aug 29, 2002
Slide 1: Investor Presentation: Q3 2002 Results Conference Call
Investor Presentation Q3 2002 Results Conference Call August 29th, 2002 www.nbc.ca/investorrelations 1
Slide 2: Key messages for Q3 2002
Key messages for Q3 2002 Profits & Solid performance in challenging environment Revenues Sectoral Holding up well in difficult markets Results Capital Consistency of strong capital ratios Management Risk Comprehensive measures reduce risk exposure Management 2
Slide 3: Profits & Revenues: Solid performance in challenging environment
Profits & Solid performance in challenging Revenues environment Ø Good underlying result from business lines Ø ROE up to 14.6% from 13.1% at Q2 Ø Reevaluation of Cognicase investment 3
Slide 4: Reevaluation of strategic investment
Financials Reevaluation of strategic investment (Millions $) Cash Basis As reported at Q2 00 $183.5 M Book Value $19.75 / share Number of shares acquired 9.3 M Adjustment of share value $5.00 Adjusted Book Value $46.5 M Reevaluation of investment, before taxes $137 M $112 M after taxes Core net inco
Slide 5: Financials: Excluding investment reevaluation
Financials Excluding investment reevaluation (Millions $) Cash Basis Q3 02 Q2 02 Q3 01 Evolution Y/Y Q/Q Revenues $804 $827 $812 -1% -3% Net income $138 $122 $147 -6% 13% EPS $0.73 $0.62 $0.73 0% 18% ROE 14.6% 13.1% 15.9% 5
Slide 6: Personal Banking and Wealth Management
Personal Banking and Wealth Management Sectoral Holding up well in difficult markets Results Ø Personal Banking and Wealth Management’s momentum: Ø 4.9 % net income increase Ø Personal Banking well positioned: Ø Volume increase Ø Retail credit quality improving Ø Stable margins Ø Wealth Management s
Slide 7: Personal Banking and Wealth Management: quarter ending July 31
Personal Banking and Wealth Management For the quarter ending July 31 in millions of dollars Total Revenues Net Income Wealth 66.9 Management 481.6 480.2 63.8 8.7 Personal 12.8 Banking 130.7 127.0 58.2 Personal loans increase 3.4% y/y 353.2 51.0 350.9 Personal Banking margins slightly improving:+3 b
Slide 8: Personal Banking and Wealth Management: 9 months ending July 31
Personal Banking and Wealth Management For the 9 months ending July 31 in millions of dollars Total Revenues Net Income Wealth 1,437.5 1,440.7 Management 193 191.0 425.7 Personal 412.1 50.4 Banking 37.0 1,028.5 A good performance despite a challenging environment 154.0 1,011.8 142.6 Personal Banking
Slide 9: Personal Banking and Wealth Management: as at July 31
Personal Banking and Wealth Management As at July 31 r a te : 3.2% in billions of dollars Gr owth 1% 63.9 h r ate: 4. G rowt 61.9 22.5 + 5.6% 9.3 8.8 21.6 Deposits Other + 1.9% Full Brokerage 32.1 31.5 Deposits 22.5 21.6 2001 2002 2001 2002 9 Other includes Mutual Funds, Discount Brokerage and Trust
Slide 10: Acquisition of Altamira
Personal Banking and Wealth Management Acquisition of Altamira Ø Acquisition of mutual fund manager and distributor Altamira concluded August 12, 2002 Ø Altamira manages approx. $5.6 billion in assets, including $4.5 billion in mutual funds for individual investors Ø 2nd largest independent direct s
Slide 11: Commercial: Sectoral Results
Commercial Sectoral Holding up well in difficult markets Results Ø Commercial Lending: Ø Stable credit quality Ø Lower volumes driven by lower demand and conservative credit selection 11
Slide 12: Commercial: quarter ending July 31
Commercial For the quarter ending July 31 in millions of dollars Total Revenues Net Income 108.0 108.0 NII decrease is compensated by 29.0 an increase in « Other » revenues 26.0 Productivity ratio stable at 36% 2001 2002 2001 2002 12
Slide 13: Commercial: 9 months ending July 31
Commercial For the 9 months ending July 31 in millions of dollars Total Revenues Net Income 321.0 Small margin increase (+ 4 bps) with a slowdown in volume 319.0 90.8 NII decrease is compensated by an increase in « Other » 88.6 revenues 2001 2002 2001 2002 13
Slide 14: Financial Markets: Showing little effect of market slowdown
Financial Markets Sectoral Showing little effect of market slowdown Results Ø Financial Markets turn in fairly strong performance despite capital market activity slowdown Ø Despite lower corporate lending volumes, strategy to service mid-market paying off, avoiding large syndicated US loan market Ø
Slide 15: Financial Markets: quarter ending July 31
Financial Markets For the quarter ending July 31 in millions of dollars Total Revenues Net Income 58.7 209.8 52.9 187.9 Capital Markets 27.7 Treasury 20.3 138.9 119.2 Decrease in Corporate volume from $6 billion to $4.5 billion Y/Y 32.6 70.9 30.9 68.7 2001 2002 2001 2002 15
Slide 16: Financial Markets: 9 months ending July 31
Financial Markets For the 9 months ending July 31 in millions of dollars Net Income Total Revenues 201.8 654.0 541.2 150.4 97.0 Capital 427.5 Markets 59.9 Treasury 345.9 104.8 90.5 226.5 195.3 2001 2002 2001 2002 16
Slide 17: Treasury and Capital Market activities
Financial Markets Treasury and Capital Market activities For the quarter ending July 31 in millions of dollars 66.3 52.3 46.9 42.1 2001 22.3 19.6 20.5 2002 18.0 * Trading Capital Investment ALM Revenues Market Fees Gains * Excluding investment reevaluation 17
Slide 18: Financials: 9 months ending July 31, 2002
Financials For the 9 months ending July 31, 2002 in millions of dollars Excluding Other segment 104.8 156.4 97.0 36.6 88.6 Personal Banking Wealth Management Commercial Capital Markets Treasury 18
Slide 19: Share buyback status: 90% completed
Capital Consistency of strong capital ratios Management Share buyback status: 90% completed 8.5 $277.4 2.9 $92.5 Q3 02 Q2 02 5.6 $184.9 In millions In millions $ of shares 19
Slide 20: Capital Management: Consistency of strong capital ratios
Capital Consistency of strong capital ratios Management Q3 02 14.2% 4.0% 1.3% 0.8% Tier 1 10.2% 8.1% Tangible equity Non-cum. Pref. shares Innovative instruments Tier 2 20
Slide 21: Risk Management: Comprehensive measures reduce risk exposure
Risk Comprehensive measures reduce Management risk exposure Ø Credit quality holding up very well Ø NBC absent from non Canadian syndicated loan market Ø As such, no large name with US material exposure Ø Comprehensive measures to reduce credit risk Ø Overall better portfolio shape: Ø Personal loans
Slide 22: Risk Management: impaired loans
Risk Management Millions $ Q3 02 Q2 02 Gross impaired loans $640 $670 Gross impaired loans as a % of tangible capital & reserves 15.7% 15.9% Net impaired loans Individuals and small businesses 66 82 Commercial Canada 123 129 Corporate 49 53 Real Estate 37 40 Treasury 3 3 Other 3 4 Sub-total 281 311
Slide 23: Risk Management: Teleglobe and provisions
Risk Management Millions $ 495 100 Teleglobe Revision of estimate 185 Regular General provision 240 (30) Year end 2002 guidance 23
Slide 24: Risk Management: Telecommunications exposure
Risk Management As at July 31, 2002 in millions of dollars Outstanding % Invest. % Non-Invest. % of loans grade grade and BA’s Telecommunications Cable $122.4 29.8 70.2 0.27 Wireless $119.9 21.2 78.1 0.28 Wireline $124.0 62.5 37.5 0.28 TOTAL $366.3 38.2 61.8 0.84 Ø Decrease of $205 M since Y/E Octob
Slide 25: Electric Power and Power Generation
Risk Management Electric Power and Power Generation As at July 31, 2002 in millions of dollars Outstanding Loans Invest. Non-Invest. and BA’s grade grade Regulated Utilities $2 2 0 Generation Projects with PPA’s * $170 95 75 Other Generation Projects $13 1 12 TOTAL $185 98 87 Ø Portfolio 100 % Canad
Slide 26: Conclusion: 2002 objectives and guidance
Conclusion Excluding investment reevaluation 2002 Objectives Q3 02 YTD 02 Guidance Year end 02 Growth in earnings per share 4% to 6 % 0% (3)% (3)% to 0% Return on common shareholders’ equity 15% to 17% 14.6% 14.2% 14% to16% Expense ratio (2003 target) 61% 63.3% 61.6% 2003 target Tier 1 capital ratio
Slide 27: Commitment to deliver on priorities
Conclusion Commitment to deliver on priorities Ø Conservative assumptions going forward Ø Current earnings focus Ø Further improvement on balance sheet management Ø Optimization of franchise, strong asset gathering base 27
Slide 28: Question and Answer Session
This presentation may contain certain forward looking statements about the operations, objectives and strategies of the National Bank of Canada. Such statements are subject to risk and uncertainties. Actual results may differ materially due to a variety of factors, including legislative or regulator
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