National Bank Of Canada · TSX:NA
National Bank Of Canada — Q2 2007 Earnings Presentation
44 slides from National Bank Of Canada's earnings presentation, May 31, 2007
Slide 1: Analyst and Investor Presentation Q2 2007 Results Conference Call
Analyst and Investor Presentation Q2 2007 Results Conference Call Montreal, May 31st, 2007 a bank like no other
Slide 2: Q2 2007 - Highlights
Q2 2007 - Highlights Adjusted • Total revenues (TEB) reached over $1B • Net income stands at $233M, a 12% increase (1) (YoY) EPS up • ROE at 20.3%, exceeds financial targets 14% • Good performance in all three business segments • Solid risk management • Q3 dividend increased by $0.06 to $0.60 (1) Ex
Slide 3: Financial Review
Financial Review Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 3
Slide 4: Q2 2007 - Performance Snapshot
2007 - Performance Snapshot TEB Q2 2007 – YoY: (millions of dollars) Q2 07 Q2 06 Change 6M 07 6M 06 Change • Total revenues Total revenues 1,064 968 10% 2,118 1,959 8% up 10% Operating expenses 661 615 7% 1,318 1,251 5% (or 8% excluding Contribution 403 353 14% 800 708 13% Innocap minority Provision
Slide 5: Dividend per Common Share
Dividend per Common Share Quarterly + 20% Growth $0.60 for shareholders $0.54 $0.54 $0.50 $0.50 • Q3 2007 dividend increased by $0.06 to $0.60 • 3M common shares bought back YTD, Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 including 2.2M in Q2 2007 Annual + 111% $1.96 $1.72 $1.42 $1.08 $0.93 2002 2003 2004 2005 2
Slide 6: Revenues
Revenues TEB (millions of dollars) Other Personal and Commercial Banking Q2 2007 – YoY: Wealth Management Financial Markets All business segments 1,054 1,064 contributing to growth: 1,054 968 969 • P&C Banking: 3% 298 299 334 244 • Wealth 255 Management: 6% 202 224 227 • Financial 214 197 Markets: 3
Slide 7: P&C Loan Evolution
P&C Loan Evolution Volume growth Q2 2006 = 100 (millions of dollars) Highlights – YoY: Mortgage loans Pers. loans excl. indirect loans • 15% increase in Credit card receivables Commercial loans (incl. energy) consumer loans • Mortgage loans kept momentum at 4% 15% • Commercial loans up 2% 4% • Credi
Slide 8: Global Portfolio Composition
Global Portfolio Composition Outstanding As at April 30th, 2007 Highlights: Personal loans Corporate Banking • Retail Banking Commercial Banking represents 63% of total portfolio Mortgages 3% Credit cards 23% 37% 11% 26% Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 8
Slide 9: Risk Provisioning
Risk Provisioning (millions of dollars) Highlights – YoY: P&C Financial Markets Ongoing favorable 28 credit environment PCL at $23M 22 22 23 1 1 16 1 21 21 15 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 9
Slide 10: Impaired Loans
Impaired Loans (millions of dollars) Gross impaired loans Net impaired before general allowance Sound risk Net impaired loans management Gross impaired/Common equity minus goodwill plus reserves continues to provide stable 6.4% 5.9% results 5.6% 5.8% 5.6% 242 234 240 236 214 • Ratio at 5.6% • Net im
Slide 11: Impaired Loan Formation
Impaired Loan Formation (millions of dollars) Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Personal & Commercial 18 -1 41 22 19 Corporate 1 3 (1) 0 (1) Total 19 2 40 22 18 Formations include new accounts, disbursements, principal repayments and exchange rate fluctuation Analyst and Investor Presentation Q2 Results
Slide 12: Daily Trading P/L – Q2 2007
Daily Trading P/L – Q2 2007 (millions of dollars) Excludes underwriting Highlights: 10 • Stability and 8 profitability 6 4 2 0 2 - 4 - 02-févr 09-févr 16-févr 23-févr 02-mars 09-mars 16-mars 23-mars 30-mars 06-avr 14-avr 21-avr 28-avr Analyst and Investor Presentation Q2 Results Conference Call – Ma
Slide 13: Business Segment Review
Business Segment Review Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 13
Slide 14: Personal and Commercial Banking
Personal and Commercial Banking Q2 2007 Highlights: • Sustained personal loan and deposit volume growth • Momentum in SMEs • Positive operating leverage Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 14
Slide 15: Personal and Commercial Banking – Quarterly
Personal and Commercial Banking – Quarterly TEB Q2 2007 – YoY: (millions of dollars) • Net income up 6% Revenues Expenses Net Income 121 123 116 110 Driven by : 104 • 3% increase in revenues attributed 537 542 538 518 504 to higher volume in P&C Banking • Expense grew only 315 329 334 317 310 by 1%
Slide 16: Personal and Commercial Banking – YTD
Personal and Commercial Banking – YTD TEB (millions of dollars) Net Revenues Expenses Net Income Income up 233 210 11% 1,013 1,056 • Revenues grew by $43M while 632 627 expenses went down $5M 2006 2007 Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 16
Slide 17: P&C Revenue Composition
P&C Revenue Composition TEB (millions of dollars) Retail Banking Credit cards Insurance Commercial Q2 2007 - YoY: Sub-segments 537 542 538 518 504 contributing 178 to growth: 183 181 170 166 • Retail Banking: 6% 36 28 • Commercial 29 28 25 Banking: 2% 64 63 63 62 62 • Increase in 247 261 262 265 266
Slide 18: P&C Volume Evolution
P&C Volume Evolution Quarterly average volume (billions of dollars) Q2 06 Q2 07 Strong volume 7% growth 34,2 31,9 • 7% increase in personal loans 2% • 13% increase in commercial deposits 20,3 20,8 1% 13,4 13,5 13% 8,9 7,9 Loans & BAs - Deposits - Personal Loans & BAs - Deposits - Personal Commercial
Slide 19: P&C Margin Evolution
P&C Margin Evolution P&C Loans Deposits Highlights: Q2-07 vs Q1-07 • Slightly narrower mortgage spread 2.88% 2.91% 2.90% 2.84% 2.80% • Lower spread on secured lines of credit • Narrower spread 1.92% 1.92% 1.93% 1.90% on commercial 1.87% deposit 1.72% 1.70% 1.71% 1.68% 1.66% Q2 06 Q3 06 Q4 06 Q1 07 Q
Slide 20: Wealth Management
Wealth Management Q2 2007 Highlights: • Private investment management reached the $6B mark (AUM) • Meritage launch successful • Retail brokerage volume rising steadily Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 20
Slide 21: Wealth Management – Quarterly
Wealth Management – Quarterly TEB (million of dollars) Q2 2007 – YoY: Revenues Expenses Net Income • Net income up 10% 45 43 • Revenues 39 increased by 6% 36 with half the 30 contribution coming 224 227 214 197 202 from brokerage activities 154 155 156 161 144 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Analyst a
Slide 22: Wealth Management – YTD
Wealth Management – YTD TEB (millions of dollars) Revenues Expenses Net Income Net 88 Income up 76 16% 420 451 317 302 2006 2007 Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 22
Slide 23: Wealth Management Revenue Composition
Wealth Management Revenue Composition TEB (millions of dollars) Trust (Private inv. mgmt) Q2 2007 – YoY: Mutual funds incl. Natcan Invest. Mgmt • 9% growth in Brokerage mutual funds • 10% growth in 227 214 224 private investment 197 202 22 22 20 management 20 20 48 47 43 • 5% growth in retail 44 44
Slide 24: Retail Assets Under Management Composition
Retail Assets Under Management Composition TEB (billions of dollars) Deposits Retail brokerage Mutual funds Q2 2007 – YoY: Discount brokerage Private inv. mgmt • Overall up 9% 97 99 101 106 • Growth in 97 5 6 5 5 all sub-sectors: 5 9 8 8 9 8 - Deposit: 5% 11 11 12 11 10 - Retail brokerage: 10% - Pri
Slide 25: Financial Markets
Financial Markets Q2 2007 Highlights: • Innocap / BNP Paribas joint venture announced • Strong revenues from M&A activity • National Bank Financial is now eligible to be a co-manager, co-lead or lead manager for Ontario's domestic syndicated issues Analyst and Investor Presentation Q2 Results Confer
Slide 26: Financial Markets – Quarterly
Financial Markets – Quarterly TEB (million of dollars) Q2 2007 – YoY: Total Revenues Expenses Net Income Revenue excl. minority interest • Revenues up 31% 95 (23 % excluding 87 78 Innocap minority 72 interest) while 66 334 298 299 expenses increased 311 255 by 18% 244 293 298 • Net income up 32% 252
Slide 27: Financial Markets – YTD
Financial Markets – YTD TEB (millions of dollars) Total Revenue Expenses Net Net Income Rev. excl. minority interest Income up 163 182 195 180 12% 545 633 609 165 150 135 541 120 105 338 297 90 75 60 45 30 15 0 2006 2007 Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 2
Slide 28: Financial Markets Revenue Composition
Financial Markets Revenue Composition 1 TEB (millions of dollars) Q2 2007 – YoY: Trading Corp. Banking Capital Markets Inv. gains Other • Trading up • Capital Markets up 25 % due to M&A 293 298 311 activities in CIB 252 244 22 50 54 36 20 36 32 29 31 43 83 81 66 65 57 45 45 43 40 45 107 108 113 80 6
Slide 29: Trading Revenue Breakdown
Trading Revenue Breakdown TEB (millions of dollars) Q2 2007 – YoY: Commodities and precious metals & Foreign exchange contracts Fixed income and money markets • Cash and Equity derivatives drove up equity trading 107 108 113 5 15 20 12 80 6 12 67 1 14 12 87 90 93 54 54 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07
Slide 30: Business Line Expense Ratio - YTD
Business Line Expense Ratio - YTD 2006 2007 Continuous improvement 71,9% 70,3% of the 62,4% efficiency 59,4% 54,9% 55,5% ratio Personal and Wealth Management Financial Market Commercial Banking Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 30
Slide 31: Strategic Update
Strategic Update Louis Vachon, President & CEO Montreal, May 31, 2007 Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 31
Slide 32: Our Mission
Our Mission The Key: Continue to deliver good risk-adjusted Execution earnings growth. of growth initiatives Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 32
Slide 33: A bank like no other
A bank like no other Equilibrium • Successful regional model + Centres of Excellence in selected markets in the three • Balanced revenue mix with conservative risk core management segments • Strong commitment to employees, clients and remains the shareholders best model • Highly regarded brand with
Slide 34: Vision and Strategy
Vision and Strategy Three Priorities: • One client, one bank • Number One in Wealth Management in Quebec • Continued expansion outside Quebec Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 34
Slide 35: A Client-Centric Vision
A Client-Centric Vision Key Differentiator: One Leveraging our clients’ relationships with the right Client, bundle of products and services One Initiatives: • Technological Bank • Organizational • Cultural Maximizing Franchise Value One example Increase the number of of a premium products per comme
Slide 36: Leader in Wealth Management in Quebec
Leader in Wealth Management in Quebec Number Advantages in Quebec: • Strong brand recognition one • #1 Commercial bank - close to entrepreneurs in Wealth • #1 Retail broker Manage- • Product capabilities ment in Quebec Initiatives: • Enhance cross-selling (One client, one bank) • Measure of success:
Slide 37: Leverage our Strengths to Accelerate Growth
Leverage our Strengths to Accelerate Growth Continued • Centres of Excellence with specific focus in selected markets: expansion • Wealth Management outside • Capital Markets Quebec • Geographic clusters • Joint ventures and partnerships: • Investors Group / MD • Corrnet • Innocap / BNPP Analyst and
Slide 38: An Experienced and Diversified Team
An Experienced and Diversified Team An Executive Office experienced Louis Vachon, President & CEO and Michel Tremblay Patricia John Cieslak, diversified Chief Operating Senior VP Curadeau-Grou executive Officer, Executive VP, Technology, Business P&C Banking and Intelligence and team working Finance
Slide 39: New Structure - Operations
New Structure - Operations A new Highlights: structure • P&C and Wealth Management are integrated and led by Michel Tremblay as Chief Operating Officer aligned with • Commercial Banking Head: Mario Lecaldare strategic • Operations and Marketing integrated priorities. • Ricardo Pascoe and Luc Paiemen
Slide 40: New Structure – Finance / Corporate
New Structure – Finance / Corporate A new Highlights: structure • Finance, Treasury and Risk under the leadership of Patricia Curadeau-Grou aligned with • Jean Dagenais is appointed Senior strategic Vice-President and Chief Financial priorities. Officer • Laura Dottori is appointed Senior Vice-Presi
Slide 41: 2007 Objectives
2007 Objectives 2007 Objectives Q2 07 YTD Growth in earnings per share 5% to 10% 14% 14% Return on common shareholders' equity 16% to 20% 20.3% 20.5% Tier 1 capital ratio Greater than 8.5% 9.3% 9.3% (1) Dividend payout ratio 40% to 50% 38% 38% (1) Trailing 4 quarters Analyst and Investor Presentatio
Slide 42: Capital Strategy
Capital Strategy BNC National Dividend Repurchase Bank will continue to proactively 27% 32% manage its 20% capital. 34% 37% 38% 2005 2006 6M 2007 • Excess capital returned to shareholders through dividends and share buy backs. Analyst and Investor Presentation Q2 Results Conference Call – May 31st,
Slide 43: Investor Day
Investor Day Today • Introduction of new organizational structure August 30 • Third quarter financial results Sept. 25 • Investor Day to present initiatives and objectives Analyst and Investor Presentation Q2 Results Conference Call – May 31st, 2007 43
Slide 44: Investor Relations
Investor Relations Investor Relations: 514-394-0296 www.bnc.ca/investorrelations investorrelations@nbc.ca CAUTION REGARDING FORWARD-LOOKING STATEMENTS From time to time, National Bank of Canada makes written and oral forward-looking statements, included in this Investor Presentation, in other filing
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