National Bank Of Canada · TSX:NA

National Bank Of Canada — Q4 2017 Earnings Presentation

30 slides from National Bank Of Canada's earnings presentation, Dec 1, 2017

  1. Slide 1: Analyst and Investor Presentation Q4-2017 Conference Call

    ye NATIONAL BANK OF CANADA ANALYST AND INVESTOR PRESENTATION Q4-2017 CONFERENCE CALL Friday, December 1, 2017 — 11:00 am NATIONAL BANK Powering your ideas

  2. Slide 2: Caution Regarding Forward-Looking Statements

    CAUTION REGARDING FORWARD-LOOKING STATEMENTS From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Outlook for National Bank and the Major Economic Trends sections of this Annual Report, in other filings with Canadian securities regulators, and

  3. Slide 3: Overview

    OVERVIEW Louis Vachon President & Chief Executive Officer

  4. Slide 4: Highlights

    HIGHLIGHTS (millions of dollars) ADJUSTED RESULTS (1) Q4 17 QoQ YoY 12M 17 12M 16 YoY F2017 HIGHLIGHTS Revenues 1,760 1% 8% 6,864 6,279 9%  Adjusted diluted EPS up 25% (2) Net Income 531 1% 15% 2,049 1,613 27% Diluted EPS $1.40 1% 13% $5.45 $4.35 25%  Positive operating leverage of 4% Provision fo

  5. Slide 5: Total Shareholder Returns

    TOTAL SHAREHOLDER RETURNS  Returned 48% of net earnings to common shareholders in F2017  Increased dividend twice for a combined annual increase of 5%  2 million common shares repurchased TOTAL SHAREHOLDER RETURN (1) (2) 1 YEAR 5 YEAR 10 YEAR National Bank 36.2% 15.1% 13.6% Canadian Peers 21.6% 1

  6. Slide 6: Segment Snapshot – Q4 2017

    SEGMENT SNAPSHOT – Q4 2017 (millions of dollars) F2017 HIGHLIGHTS ADJUSTED NET INCOME Q4 17 QoQ YoY 12M 17 12M 16 YoY P&C Banking 239 - 25% 925 557 66%  P&C BANKING P&C Banking  Net income up 21% 239 - 25% 896 740 21% excl. sectoral provision adj. (1)  Revenues up 6% due to increase in Wealth Man

  7. Slide 7: Mid-Term Objectives

    MID-TERM OBJECTIVES Excluding specified items MID-TERM OBJECTIVES - F2017 F2017 Results Achieved Growth in diluted earnings per share 5% to 10% 25%  Return on common shareholders' equity 15% to 20% 18.3%  Common Equity Tier 1 capital ratio > 10% 11.2%  Leverage ratio > 3.5% 4%  Dividend payout r

  8. Slide 8: Financial Review

    FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance and Treasury

  9. Slide 9: Strong Capital Position

    STRONG CAPITAL POSITION TOTAL RISK-WEIGHTED ASSETS COMMON EQUITY TIER 1 UNDER BASEL III UNDER BASEL III EVOLUTION (QoQ) 70,173 0.40% 68,205 68,574 69,383 69,156 2,807 2,768 3,263 3,097 0.05% 3,815 0.13% 9,760 9,827 10,039 0.20% 9,495 9,611 11.18% 11.53% 11.40% 11.18% 11.20% 11.20% 55,903 55,148 56,8

  10. Slide 10: IFRS 9 Transition Adjustments

    IFRS 9 TRANSITION ADJUSTMENTS  Estimated after tax impact of adopting IFRS 9 on shareholder’s equity: reduction of $165 million - Classification and measurement  Gains or losses on equities accumulated in Other Comprehensive Income  Fair Value of reverse mortgages  Securities and liabilities des

  11. Slide 11: Risk Management

    RISK MANAGEMENT William Bonnell Executive Vice-President, Risk Management

  12. Slide 12: Retail Mortgage and HELOC Portfolio

    RETAIL MORTGAGE AND HELOC PORTFOLIO CANADIAN RETAIL MORTGAGE PORTFOLIO DISTRIBUTION DISTRIBUTION BY CANADIAN PROVINCE As at October 31, 2017 130% 2 2 1 1 2 PCL (bps) 0 110% 55% -10 90% 34% 31% 31% 31% 32% Insured -20 70% Uninsured & -30 63% HELOC 23% 21% 22% 23% 24% 26% 50% -40 30% 52% -50 8% 43% 48

  13. Slide 13: Impaired Loans and BA's and Formation

    IMPAIRED LOANS AND BA’S AND FORMATION (millions of dollars) IMPAIRED LOANS AND BA’S IMPAIRED LOANS AND BA’S FORMATION (1) 39 35 (millions of dollars) Q4 17 Q3 17 Q2 17 Q1 17 Q4 16 655 32 34 28 35 492 460 Personal 17 13 18 23 17 442 422 Commercial (excluding O&G) 10 1 22 (11) 24 455 380 25 Oil & Gas

  14. Slide 14: Provision for Credit Losses

    PROVISION FOR CREDIT LOSSES (millions of dollars) 70 HIGHLIGHTS 1 59 60 58  Specific provisions for credit losses of 1 56 18 4 1 6 1 1 1 21 bps (16 bps excluding Credigy) 9 11 1 18 15 1  Growth in Credigy’s portfolio, PCLs, 8 6 14 and profitability continue to meet expectations  $2 million transf

  15. Slide 15: Appendix

    APPENDIX NATIONAL BANK Powering your ideas

  16. Slide 16: Strong Fundamentals in Quebec Economy

    APPENDIX 1 │STRONG FUNDAMENTALS IN QUEBEC ECONOMY RECORD LOW UNEMPLOYMENT RATE STRONG CONSUMER CONFIDENCE Shaded area: Recession in Canada Source: NBF Economics and Strategy (data via Statistics Canada) Source: NBF Economy and Strategy, data from Conference Board of Canada PERSPECTIVES ON HOME PRICE

  17. Slide 17: Performance Snapshot – YTD 2017

    APPENDIX 2 │ PERFORMANCE SNAPSHOT – YTD 2017 (millions of dollars) ADJUSTED (1) 12M 17 12M 16 YoY HIGHLIGHTS Revenues (2) 6,864 6,279 9%  Adjusted diluted EPS of $5.45, up 25% YoY Expenses 3,838 3,653 5%  Adjusted revenues up 9% YoY Net Income 2,049 1,613 27%  Expenses up 5% Diluted EPS $5.45 $4.

  18. Slide 18: Personal and Commercial Banking

    APPENDIX 3 │ PERSONAL AND COMMERCIAL BANKING (millions of dollars) Q4 17 QoQ YoY 12M 17 12M 16 YoY HIGHLIGHTS Q4-17 vs. Q4-16 Revenues 787 0% 6% 3,061 2,900 6%  Net income up 25% YoY due to good Personal Banking 363 (1%) 4% 1,428 1,365 5% revenue growth, strong cost control and Commercial excl. Oil

  19. Slide 19: Wealth Management

    APPENDIX 4 │ WEALTH MANAGEMENT(1) (millions of dollars) Q4 17 QoQ YoY 12M 17 12M 16 YoY HIGHLIGHTS Q4-17 vs. Q4-16  Good momentum continues in every business Revenues 413 2% 10% 1,613 1,451 11% lines Fee-based 233 - 9% 906 803 13%  Revenues up 10% mainly due to:  NII growth of 19% mainly driven b

  20. Slide 20: Financial Markets

    APPENDIX 5 │ FINANCIAL MARKETS(1) (millions of dollars) Q4 17 QoQ YoY 12M 17 12M 16 YoY HIGHLIGHTS Q4-17 vs. Q4-16 Revenues 415 6% 3% 1,630 1,477 10%  Higher trading revenues mainly Trading 227 10% 2% 903 817 11% driven by securities lending Banking Services 92 10% 1% 338 322 5% activities Financia

  21. Slide 21: US Specialty Finance & International

    APPENDIX 6 │ US SPECIALTY FINANCE & INTERNATIONAL (millions of dollars) Q4 17 QoQ YoY 12M 17 12M 16 YoY HIGHLIGHTS Q4-17 vs. Q4-16 Revenues 154 5% 51% 541 411 32% Credigy 111 (5%) 39% 409 324 26%  Credigy’s revenues up 39% due to: ABA 38 19% 58% 125 41 205%  Strong performance across all products

  22. Slide 22: Loan Portfolio Overview

    APPENDIX 7 │LOAN PORTFOLIO OVERVIEW (billions of dollars) Q4 17 % of Total HIGHLIGHTS Secured - Mortgage & HELOC 66.4 49%  Modest exposure to unsecured retail Secured - Other 4.8 3% lending Unsecured 9.5 7%  Secured retail loans accounts for 52% Credit Cards 2.1 2% of total loans Total Retail 82.8

  23. Slide 23: Regional Distribution of Canadian Loans

    APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS As at October 31, 2017 RETAIL WHOLESALE Secured Corporate Unsecured and Oil & Gas Mortgages & Secured Others Commercial Banking and TOTAL Credit Card Sector REGION HELOC Other (1) Quebec 28.1% 2.0% 5.4% 0.0% 18.1% 5.0% 58.6% Ontario 13.0% 0.9% 1.1

  24. Slide 24: Balance Sheet Overview (Banking Book & Other)

    APPENDIX 9 │ BALANCE SHEET OVERVIEW (Banking Book & Other) (billions of dollars) LENDING – LOANS AND BAs (MONTH END BALANCE) FUNDING – DEPOSITS AND BAs (MONTH END BALANCE) 149.4 148.4 150.6 126.9 128.8 143.1 123.1 139.3 120.1 6.1 5.7 119.3 28.0 27.2 28.0 6.7 6.9 6.8 13.6 26.9 13.3 12.0 28.1 12.4 11.

  25. Slide 25: Oil & Gas Sector & Related Segments

    APPENDIX 10 │ OIL & GAS SECTOR & RELATED SEGMENTS OUTSTANDING LOANS – Q4 17 2.0 $B 1.1 $B 1.1$B IG 61% 0.5 $B IG 92% 0.1 $B 0.1 $B IG 50% IG 100% Producers Services (OFS) Midstream Refinery and Integrated Commercial Retail - Unsecured and Credit Cards Oil and Gas Sector Other Wholesale - Related Seg

  26. Slide 26: Producers & Services

    APPENDIX 11 │ PRODUCERS & SERVICES HISTORICAL TREND IN EXPOSURES AT DEFAULT ($B) 5.2 4.9 4.6 4.1 4.2 IG 67% 3.9 3.8 IG 57% 3,7 3.7 IG 57% IG 57% IG 63% IG 73% IG 75% IG 67% IG 67% IG 72% IG 41% IG 40% IG 41% IG 46% IG 40% IG 49% IG 57% IG 57% IG 54% 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 Drawn

  27. Slide 27: Daily Trading and Underwriting Revenues vs VaR

    APPENDIX 12 │ DAILY TRADING and UNDERWRITING REVENUES vs VAR Daily Trading and Underwriting Revenues vs Trading VaR - Q4 2017 (CAD millions) 20.0 Trading and Underwriting Revenues Trading VaR Millions 15.0 10.0 5.0 0.0 (5.0) (10.0) 1-Aug 9-Aug 16-Aug 23-Aug 30-Aug 7-Sep 14-Sep 21-Sep 28-Sep 5-Oct 13

  28. Slide 28: VaR Trend

    APPENDIX 13 │ VaR TREND Trading VaR Quarterly Average Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 -4.4 -4.9 -4.9 -5.2 -6.7 $ millions Q4 2017 RESULTS CONFERENCE CALL – December 1, 2017 I 28

  29. Slide 29: Detail of Specified Items

    APPENDIX 14│ DETAIL OF SPECIFIED ITEMS (millions of dollars) Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Wealth Management acquisitions (9) (6) (7) (8) (7) Items related to TMX (2) - (2) - - MAV and Other Notes (2) - - - - Litigation provisions (25) - - - - Write-off of Intangible Assets (44) - - - - Restructurin

  30. Slide 30: Investor Relations

    INVESTOR RELATIONS Financial analysts and investors who want to obtain financial information on the Bank are asked to contact the Investor Relations Department. 600 De La Gauchetière Street West, 7th Floor, Montreal, Quebec H3B 4L2 Toll-free: 1-866-517-5455 Fax: 514-394-6196 E-mail: investorrelation

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