National Bank Of Canada · TSX:NA
National Bank Of Canada — Q4 2023 Earnings Presentation
38 slides from National Bank Of Canada's earnings presentation, Dec 1, 2023
Slide 1: Investor Presentation Fourth Quarter 2023
INVESTOR PRESENTATION Fourth Quarter 2023 December 1, 2023
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 in this document are forward-looking statements. All such statements are made in accordance with applicable securities legislation in Canada and the United States. The forward-
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: FY 2023 – Solid Foundations Driving Strong Returns
FY 2023 – SOLID FOUNDATIONS DRIVING STRONG RETURNS Organic growth across our business Achieved our F2023 adjusted PTPP(1) objective of segments and continued cost discipline mid to high single digit growth: 6.7% Achieved our adjusted ROE(2) target range of Superior ROE 15% - 20% again in F2023: 16.8
Slide 5: Q4 2023 – Strong Financial Performance
Q4 2023 – STRONG FINANCIAL PERFORMANCE Revenues ($MM; YoY) Reported: $2,594; 11% ▪ Strong business growth and continued cost discipline (1) Adjusted : $2,759; 14% - Adjusted PTPP up 19% YoY PTPP(2) ($MM; YoY) - Adjusted operating leverage of 4.3% Reported: $987; -% (1) Adjusted : $1,288; 19% ▪ Solid
Slide 6: Q4 2023 – Strong Business Performance
Q4 2023 – STRONG BUSINESS PERFORMANCE P&C Banking (YoY) ▪ Revenues up 8% YoY, mainly from NII growth Revenues: 8% ▪ NIM up 10 bps YoY and 2 bps QoQ PTPP(1) (Reported; Adjusted): (7%); 7% ▪ Personal: Loans up 2% YoY and 1% QoQ(2) ▪ Commercial: Loans up 9% YoY and 3% QoQ(2) Wealth Management (YoY) ▪ R
Slide 7: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 8: FY 2023 – Strong Execution Amidst Uncertain Environment
FY 2023 – STRONG EXECUTION AMIDST UNCERTAIN ENVIRONMENT FY 2023 Performance (YoY) ▪ Adjusted PTPP up 6.7% Reported Adjusted(1) Revenue growth 5.4% 7.3% ▪ Adjusted efficiency ratio of 52.9% Expense growth 10.9% 7.8% - Solid revenue and PTPP growth across our PTPP growth(2) (1.2%) 6.7% businesses and
Slide 9: Q4 2023 – Solid Results and Continued Cost Discipline
Q4 2023 – SOLID RESULTS AND CONTINUED COST DISCIPLINE Q4 2023 Performance (YoY) ▪ Adjusted PTPP up 18.9% YoY Reported Adjusted(1) Revenue growth 11.1% 13.6% ▪ Adjusted revenues up 13.6% YoY Expense growth 19.4% 9.3% - Strong quarter for Financial Markets (+31% YoY) PTPP growth(2) (0.1%) 18.9% - Cont
Slide 10: Maintaining Strong NII and NIM
MAINTAINING STRONG NII AND NIM(1) NII and NIM, non-trading - Adjusted(2)(3) ($MM) 1,730 3.00% Adjusted non-trading NII down 1% QoQ 2.19% 2.09% 2.18% 2.14% 2.50% 1,530 2.04% ▪ P&C: up $20M QoQ from both loan and deposit growth 2.00% 1,330 1,373 1,388 1,372 1.50% ▪ FM (non-trading): down $11M QoQ prim
Slide 11: Loans and Deposits
LOANS AND DEPOSITS Loans and BA’s(1) ($B) Total loans of $225B(1), up 9% YoY and 3% QoQ 219.4 225.4 ▪ Personal banking: +2% YoY; +1% QoQ 206.7 210.4 215.8 ▪ Commercial banking: +10% YoY; +4% QoQ ▪ Corporate banking: +21% YoY; +5% QoQ ▪ Credigy ($US): +7% YoY; (3%) QoQ ▪ ABA ($US): +22% YoY; +4% QoQ
Slide 12: Diversified Funding Profile & Sound Liquidity Metrics
DIVERSIFIED FUNDING PROFILE & SOUND LIQUIDITY METRICS Balance Sheet Overview ($B, as at October 31, 2023) Balance sheet reflects our diversified business model $424 $424 Other Assets 30 Other Liabilities 28 ▪ Core banking activities well-funded through Unsecured Funding 44 Cash & Reverse Repos 46 Wh
Slide 13: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) 0.68% ▪ Strong CET1 ratio of 13.5% - Solid organic capital generation of 40 bps (0.28%) (0.35%) - Strong business growth contributing to an 13.49% (0.04%) (0.03%) 13.47% increase of 35 bps in RWA (excluding FX) (2) Q3 23 Net income - Dividends RWA Specified Othe
Slide 14: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 15: Provisions for Credit Losses (PCL)
PROVISIONS FOR CREDIT LOSSES (PCL) FY 2023 Full Year PCL PCL ▪ Total PCL of $397M (18 bps) ($MM) POCI (1) ▪ Impaired (excl. POCI)(2): 11 bps Performing Impaired (excl. POCI) 40 ▪ Performing: 8 bps Total (bps) 175 20 21 17 16 16 Q4 Total PCL 20 $115 ▪ $115M (21 bps), reflecting resilient portfolio mi
Slide 16: Allowance for Credit Losses (ACL)
ALLOWANCE FOR CREDIT LOSSES (ACL) ACL ($MM) Total Allowances + 6% ▪ 1.8x pre-pandemic level $1,377 ▪ Strong coverage of 8.7X LTM Net Charge-Offs $1,297 ▪ Maintaining a prudent level of allowances in $1,235 $1,182 Impaired (1) light of continued uncertainties $1,131 Impaired (1) Impaired (1) $418 Imp
Slide 17: Gross Impaired Loans and Formations (excluding POCI)
GROSS IMPAIRED LOANS AND FORMATIONS (excluding POCI) Gross Impaired Loans (GIL) Excluding POCI Loans(1) ▪ Gross impaired loans (excl. POCI) of $1,024M, ($MM) 45 115 increase of 4 bps QoQ at 45 bps 41 $1,165 39 38 38 $1,024 95 ▪ GIL excl. USSF&I(2): 31 bps (+1 bp YoY) $965 $912 $812 $793 $814 $233 ▪
Slide 18: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province ▪ Uninsured mortgages and HELOC in GTA and (As at October 31, 2023) GVA represent 12% and 2% of the total RESL 55% portfolio and have an average LTV(1) of 50% ▪ Uninsured mortgages and HELOC for condos represent 9% of the total RE
Slide 19: Retail Mortgages Rate Type and Maturity Profile
RETAIL MORTGAGES RATE TYPE AND MATURITY PROFILE (As at October 31, 2023) Canadian Mortgages Distribution by Rate Type ▪ Half of our Canadian Mortgage portfolio has already been repriced, absorbing the impact of rate increases Variable ▪ 28% of mortgage portfolio is variable rate and the Rate monthly
Slide 20: Appendices
APPENDICES
Slide 21: Appendix 1 – FY 2023 Total Bank Results
APPENDIX 1 │ FY 2023 – TOTAL BANK RESULTS Total Bank Summary Results – FY 2023 ($MM) ▪ Adjusted revenues(1) and adjusted Adjusted Results (1) FY 23 FY 22 YoY PTPP(1)(2) up 7% YoY Revenues 10,658 9,934 7% Non-Interest Expenses 5,640 5,230 8% ▪ Adjusted diluted EPS(1) of $9.60 (2) Pre-Tax / Pre-Provis
Slide 22: Appendix 2 – FY 2023 Segment Results
APPENDIX 2 │ FY 2023 – SEGMENT RESULTS P&C Banking Wealth Management ($MM) ($MM) Adjusted Results(1) Reported Results (1) FY 23 FY 22 YoY FY 23 YoY Adjusted Results Reported Results FY 23 FY 22 YoY FY 23 YoY Revenues 2,521 2,375 6% 2,521 6% Revenues 4,516 4,034 12% 4,516 12% Fee-Based 1,432 1,429 -
Slide 23: Appendix 3 – Q4 2023 Total Bank Results
APPENDIX 3 │ Q4 2023 – TOTAL BANK RESULTS Total Bank Summary Results – Q4 2023 ($MM) Adjusted Results (1) Q4 23 Q3 23 Q4 22 QoQ YoY ▪ Adjusted revenues(1) up 14% YoY and Revenues 2,759 2,576 2,429 7% 14% adjusted PTPP(1)(2) up 19% YoY Non-Interest Expenses 1,471 1,392 1,346 6% 9% ▪ Adjusted diluted
Slide 24: Appendix 4 – Personal and Commercial Banking
APPENDIX 4 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q4 2023 ▪ Revenues up 8% YoY, mainly from NII ($MM) growth reflecting margin expansion and (1) balance sheet growth Adjusted Results Q4 23 Q3 23 Q4 22 QoQ YoY - Other income benefiting from favourable Revenues 1,152 1,140 1,071 1% 8%
Slide 25: Appendix 5 – Wealth Management
APPENDIX 5 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q4 2023 ($MM) ▪ Revenues of $638MM, up 4% YoY Adjusted Results(1) Q4 23 Q3 23 Q4 22 QoQ YoY - Solid fee-based revenues up 7% YoY and 2% Revenues 638 629 613 1% 4% QoQ Fee-Based 371 364 347 2% 7% - NII growth of 1% YoY in Q4 contribut
Slide 26: Appendix 6 – Financial Markets
APPENDIX 6 │ FINANCIAL MARKETS Financial Markets Summary Results – Q4 2023 (TEB, $MM) ▪ Strong quarter with revenues of $735MM Adjusted Results(1) Q4 23 Q3 23 Q4 22 QoQ YoY Revenues 735 560 563 31% 31% Global Markets 435 277 304 57% 43% ▪ Global Markets revenues of $435MM led by our C&IB 300 283 259
Slide 27: Appendix 7 – USSF&I – Credigy
APPENDIX 7 │ USSF&I – CREDIGY Credigy Summary Results – Q4 2023 ($MM) ▪ Net interest income up 13% QoQ, driven by pre-payment revenue and favourable impact of Q4 23 Q3 23 Q4 22 QoQ YoY over performance on fair value portfolios Revenues 126 112 88 13% 43% Net Interest Income 126 112 116 13% 9% Non-In
Slide 28: Appendix 8 – USSF&I – ABA
APPENDIX 8 │ USSF&I – ABA ABA Summary Results – Q4 2023 ($MM) ▪ Solid growth in loans and deposits with client Q4 23 Q3 23 Q4 22 QoQ YoY base up 31% YoY Revenues 187 181 179 3% 4% Non-Interest Expenses 68 66 58 3% 17% ▪ Slower revenue growth, at 4% YoY, reflects Pre-Tax / Pre-Provisions 119 115 121
Slide 29: Appendix 9 – Other
APPENDIX 9 │ OTHER Other Segment Summary Results – Q4 2023 ($MM) Adjusted Results(1) Q4 23 Q3 23 Q4 22 ▪ Adjusted PTPP(1)(2) of $(130)MM vs. $(164)MM Revenues (79) (45) (85) in prior year Non-Interest Expenses 51 32 79 (2) (130) (77) (164) - Expenses down YoY mainly reflecting lower Pre-Tax / Pre-Pr
Slide 30: Appendix 10 – Total Loan Portfolio Overview
APPENDIX 10 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category(1) ($B) ▪ Secured lending accounts for 95% As at of Retail loans October 31, 2023 % of Total Retail ▪ Indirect auto loans represent 2.3% of total loans Secured - Mortgage & HELOC 99.9 44% ($5.1B) (2) Secured - Other 1
Slide 31: Appendix 11 – Regional Distribution of Canadian Loans
APPENDIX 11 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at October 31, 2023) Within the Canadian loan portfolio: Maritimes (2) ▪ Limited exposure to unsecured consumer loans Oil and (2.8%) Quebec Ontario Regions (1) BC/MB Territories Total Retail ▪ Modest exposure to unsecured
Slide 32: Appendix 12 – Prudent Provisioning in Uncertain Economic Environment
APPENDIX 12 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 8.7X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs (Excluding POCI) 8.4x 8.6x 8.7x 7.9x 7.8x 7.1x 6.4x 6.2x 5.9x 4.8x 4.5x 4.4x 1.8x 2.6x Q1 20
Slide 33: Appendix 13 – Real Estate and Construction Real Estate
APPENDIX 13 │ REAL ESTATE AND CONSTRUCTION REAL ESTATE Total Portfolio by Sector ($26.0B) Corporate Banking (10%) ▪ Primarily diversified Canadian REIT Short Term Construction (20%) ▪ Mainly residential construction ▪ No US exposure Commercial Banking CRE (70%) ▪ 58% of 5-year growth coming from Res
Slide 34: Appendix 14 – Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 14 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 25 20 15 10 5 0 August, 2023 September, 2023 October, 2023 (5) (10) (15) Trading P&L Trading VaR 34
Slide 35: Appendix 15 – Range of Macroeconomic Scenarios – IFRS 9
APPENDIX 15 │ RANGE OF MACROECONOMIC SCENARIOS – IFRS 9 Canada Real GDP NBC Macroeconomic Forecast: Q4/23 vs. Q3/23 ($ Trillions) (Full Calendar Years) Base Scenario C2023 C2024 C2025 2.30 Real GDP (Annual Average % Change) As at July 31, 2023 1.4 % 0.0 % 1.6 % As at October 31, 2023 1.0 % (0.0) % 1
Slide 36: Appendix 16 – Reconciliation of Non-GAAP Financial Measures
APPENDIX 16 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q4 23 Q4 22 Non- Non- Total (7) Income Net Diluted Total (7) Income Net Diluted Interest PTPP PCL Interest PTPP PCL Revenues taxes Income EPS Revenues taxes Income EPS Segment Expenses Expenses (1) Adjusted Results 2,759 1
Slide 37: Appendix 16 – Reconciliation of Non-GAAP Financial Measures (Cont'd)
APPENDIX 16 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (CONT’D) ($MM, except EPS) FY 2023 FY 2022 Non- Non- Total (8) Income Net Diluted Total (8) Income Net Diluted Interest PTPP PCL Interest PTPP PCL Revenues taxes Income EPS Revenues taxes Income EPS Segment Expenses Expenses Adjusted Result
Slide 38: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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