National Bank Of Canada · TSX:NA
National Bank Of Canada — Q2 2022 Earnings Presentation
32 slides from National Bank Of Canada's earnings presentation, May 27, 2022
Slide 1: Investor Presentation Second Quarter 2022
INVESTOR PRESENTATION Second Quarter 2022 May 27, 2022
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 made in this document are forward-looking statements. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media and o
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q2 2022 – Strong Performance Across the Bank
Q2 2022 – STRONG PERFORMANCE ACROSS THE BANK Revenues ($MM; YoY) ▪ Strong performance across all segments Reported: $2,439 ; +9% - Adjusted Revenues up 9% YoY (1) Adjusted : $2,491 ; +9% - Adjusted PTPP up 11% YoY(2) PTPP(2) ($MM; YoY) - Positive operating leverage Reported: $1,146 ; +10% (1) Adjust
Slide 5: Q2 2022 – Solid Organic Growth in All Segments
Q2 2022 – SOLID ORGANIC GROWTH IN ALL SEGMENTS P&C Banking ▪ Strong quarter across the franchise, with PTPP up 10% YoY Revenues: +9% YoY ▪ Revenues up 9% YoY supported by strong balance sheet growth and client activity PTPP(1): +10% YoY ▪ Commercial loans up 18% YoY(3) and retail mortgage loans up 9
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q2 2022 – Strong Results and Positive Operating Leverage
Q2 2022 – STRONG RESULTS AND POSITIVE OPERATING LEVERAGE Q2 2022 Performance ▪ Strong adjusted revenue growth of 9.2% driven by (YoY) all business segments Reported Adjusted(1) ▪ Positive operating leverage of 1.4% Revenue growth 9.0% 9.2% ▪ Expense growth reflecting: Expense growth 7.8% 7.8% - Oper
Slide 8: Expense Management - Continued Focus Across the Bank
EXPENSE MANAGEMENT - CONTINUED FOCUS ACROSS THE BANK Adjusted Revenues(1) ($MM; YoY) ▪ P&C: Expense growth mostly driven by salaries and +20% +9% continued technology investments +8% $48 ($2) $2,491 - Continued investments in digitalization to enhance online +7% $45 offering +9% $38 - Retaining and
Slide 9: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) ▪ Strong CET1 ratio of 12.9%(2) ▪ Robust net income generation ▪ Solid organic RWA growth, partly offset by: - Positive impact from rating migration (17 bps), mostly from non-retail lending portfolios and derivatives exposure ▪ Modest impact from model updates:
Slide 10: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 11: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES PCL Q2 2022 ($MM) POCI Total PCL Performing 40 173 Impaired ▪ PCL of $3M (1bp), reflecting continued strong Total (bps) 20 portfolio performance 1 0 1 123 -10 -9 0 PCL on Impaired Loans -20 ▪ $28M (6bps) $5 73 $2 -40 ▪ Continued low impaired PCLs in both retail ($43) ($2
Slide 12: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q2 22 Total Allowances ($MM) ▪ Declined by 3% ($28M) QoQ ▪ Remain ~38% above pre-pandemic level + 76% - 3% ▪ Maintaining prudent level of allowances in light $1,354 of continued uncertainty Impaired $1,086 Performing Allowances $357 $1,058 ▪ Decline of 3% ($26M) QoQ I
Slide 13: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) 50 ▪ Gross impaired loans of 31bps ($611M), 42 a decline of 1bp QoQ and 11bps YoY $1,000M 39 36 40 32 31 $800M $731 $699 $662 30 ▪ Net formations of $45 million $608 $611 20 $600M - Lower formations in Personal $470 $450 10 $406
Slide 14: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at April 30, 2022) ▪ Insured mortgages account for 30% of the total RESL portfolio 54% ▪ Distribution across product and geography remained stable ▪ Uninsured mortgages and HELOC in GTA and 74% Uninsured & HELOC GVA represent
Slide 15: Appendices
APPENDICES
Slide 16: Appendix 1 │ Total Bank – Q2 22 Results
APPENDIX 1 │ TOTAL BANK – Q2 22 RESULTS Total Bank Summary Results – Q2 2022 ($MM, TEB) Adjusted Results (1) Q2 22 Q1 22 Q2 21 QoQ YoY ▪ Adjusted revenues up 9% YoY(1) and adjusted Revenues 2,491 2,530 2,282 (2%) 9% PTPP up 11% YoY(1)(2) Non-Interest Expenses 1,293 1,277 1,199 1% 8% ▪ Positive opera
Slide 17: Appendix 2 │ Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q2 2022 ($MM) ▪ Revenues up 9% YoY Q2 22 Q1 22 Q2 21 QoQ YoY - Strong growth on both sides of the balance sheet YoY with NII up 9% Revenues 962 958 882 - 9% Personal 571 588 543 (3%) 5% - Continued momentum in client activity with ot
Slide 18: Appendix 3 │ Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q2 2022 ($MM) ▪ Revenues up 7% YoY against record transaction revenues in Q2 21 Q2 22 Q1 22 Q2 21 QoQ YoY - Strong growth in fee-based revenues mainly Revenues 579 592 541 (2%) 7% driven by full-service brokerage Fee-Based 359 372 31
Slide 19: Appendix 4 │ Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q2 2022 ($MM) ▪ Strong performance with revenues of $632MM, up 8% YoY Q2 22 Q1 22 Q2 21 QoQ YoY - Global Markets: Continued momentum in Revenues 632 662 587 (5%) 8% Structured Products Global Markets 396 433 269 (9%) 47% - C&IB: Good
Slide 20: Appendix 5 │ US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q2 2022 ABA Bank ($MM) ▪ Continued growth with revenues up 36% YoY, ABA Bank Summary Results Q2 22 Q1 22 Q2 21 QoQ YoY loans up 39% and deposits up 28% Revenues 164 158 121 4% 36% Non-Interest Expenses 52 47 42 11% 24% ▪ Soli
Slide 21: Appendix 6 │ Other
APPENDIX 6 │ OTHER Other Segment Summary Results – Q2 2022 ($MM) ▪ Stable revenues YoY Adjusted Results(1) Q2 22 Q1 22 Q2 21 ▪ Lower non-interest expenses YoY: Revenues 33 33 35 - Lower variable compensation Non-Interest Expenses 76 53 93 - Lower pension plan expense Pre-Tax / Pre-Provisions(2) (43)
Slide 22: Appendix 7 │ Balance Sheet Growth - Total Bank
APPENDIX 7 │ BALANCE SHEET GROWTH - TOTAL BANK Average Loans and BA’s Average Deposits ($B) ($B) (1) (2) CAGR CAGR QoQ YoY (2-Yr) QoQ YoY (2-Yr) Avg Loan Growth 2.2% 12.5% 8.9% Avg Deposit Growth (1.4%) 7.5% 10.7% Personal Banking 1.2% 8.7% 8.0% Retail 0.7% 3.6% 7.2% Commercial Banking 1.9% 17.8% 12
Slide 23: Appendix 8 │ Balance Sheet Growth - P&C
APPENDIX 8 │ BALANCE SHEET GROWTH - P&C Average Loans and BA’s Average Deposits ($B) ($B) CAGR CAGR QoQ YoY QoQ YoY (2-Yr) (2-Yr) Average Loan Growth 1.4% 11.6% 9.3% Average Deposit Growth (1.4%) 5.6% 11.5% Mortgage loans 1.4% 9.2% 9.3% Personal 0.7% 3.1% 7.6% Personal loans 0.2% 3.3% 0.5% Commercia
Slide 24: Appendix 9 │ Total Loan Portfolio Overview
APPENDIX 9 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 95% As at of Retail loans April 30, 2022 % of Total Retail ▪ Indirect auto loans represent 1.7% of total Secured - Mortgage & HELOC 91.9 47% loans ($3.3B) Secured - Other (1) 11.9 6%
Slide 25: Appendix 10 │ Regional Distribution of Canadian Loans
APPENDIX 10 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at April 30, 2022) Within the Canadian loan portfolio: Maritimes(2) ▪ Limited exposure to unsecured consumer Oil and loans (3.0%) Quebec Ontario Regions(1) BC/MB Territories Total Retail ▪ Modest exposure to unsecured cons
Slide 26: Appendix 11 │ Prudent Provisioning in Uncertain Economic Environment
APPENDIX 11 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 6.2X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 7.8x 7.9x 6.0x 6.4x 6.6x 6.1x 6.2x 5.9x 4.8x 5.4x 4.7x 3.8x 3.3x 4.1x 2.8x 2.8x 2.8x 3.0x 1.
Slide 27: Appendix 12 │ Oil & Gas and Pipelines Sector
APPENDIX 12 │ OIL & GAS AND PIPELINES SECTOR O&G Producers and Services Exposure Gross Loans in $MM and % of Total Loans ▪ O&G producers and services exposure significantly reduced $3,956 - 64% reduction in outstanding loans: down from $4B in Q1/15 to $1.4B in Q2/22 (stable QoQ) - Reduction as a % o
Slide 28: Appendix 13 │ Commercial Real Estate Portfolio
APPENDIX 13 │ COMMERCIAL REAL ESTATE PORTFOLIO (As at April 30, 2022) Total CRE Portfolio Commercial Banking share Total CRE Portfolio of $15.8B $15.8B (8.1% of total loans) $13.7B (7.0% of total loans) ▪ Corporate Banking accounts for 13% of portfolio, primarily public REITs, well diversified acros
Slide 29: Appendix 14 │ Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 14 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30 25 20 15 10 5 0 February/22 March/22 April/22 (5) (10) (15) Trading P&L Trading VaR 29
Slide 30: Appendix 15 │ Strong Capital and Liquidity Positions
APPENDIX 15 │ STRONG CAPITAL AND LIQUIDITY POSITIONS Regulatory Capital, TLAC and Liquidity Ratios ($MM) ▪ Our capital levels remain strong Q2 22 Q1 22 Q4 21 Capital(1) CET1 $13,833 $13,515 $12,973 ▪ Total capital ratio of 16.2% Tier 1 $16,481 $16,164 $15,622 Total $17,399 $17,123 $16,643 ▪ Strong l
Slide 31: Appendix 16 │ Reconciliation of Non-GAAP Financial Measures
APPENDIX 16 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q2 22 Q1 22 Non- Non- Non- Non- Total Net Diluted Total Net Diluted Interest PTPP(2) controlling Interest PTPP(2) controlling Revenues Income EPS Revenues Income EPS Expenses interest Expenses interest Adjusted Results(1)
Slide 32: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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