National Bank Of Canada · TSX:NA
National Bank Of Canada — Q4 2019 Earnings Presentation
27 slides from National Bank Of Canada's earnings presentation, Dec 4, 2019
Slide 1: Investor Presentation Q4|19
INVESTOR PRESENTATION Q4|19 December 4, 2019
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 Economic Review and Outlook section and in the Major Economic Trends section of the 2019 Annual Report, in other filings with Canadian securities
Slide 3: Overview
OVERVIEW Louis Vachon President & Chief Executive Officer
Slide 4: F2019: A Strong Year with Adjusted EPS Up 7%
F2019: A STRONG YEAR WITH ADJUSTED EPS UP 7% ADJUSTED RESULTS (1) Highlights - F2019 ($MM, TEB) 12M 19 12M 18 YoY ▪ Solid performance and record profitability Revenues 7,666 7,411 3% driven by: - Good momentum in all businesses Net Income 2,328 2,232 4% - Positive operating leverage Diluted EPS $6.3
Slide 5: Strong Performance Across All Mid-Term Objectives
STRONG PERFORMANCE ACROSS ALL MID-TERM OBJECTIVES ADJUSTED RESULTS(1) MID-TERM OBJECTIVES F2019 Achieved Growth in diluted EPS 5% to 10% 7.1% ✓ Return on Equity 15% to 20% 18.0% ✓ CET1 Ratio > 10.75% 11.7% ✓ Leverage ratio > 3.75% 4.0% ✓ Dividend payout ratio 40% to 50% 41.6% ✓ (1) For details on Sp
Slide 6: Q4|19: Strong Performance with Adjusted EPS Up 11%
Q4|19: STRONG PERFORMANCE WITH ADJUSTED EPS UP 11% ADJUSTED RESULTS(1) Highlights - Q4|19 ($MM, TEB) Q4 19 Q3 19 Q4 18 QoQ YoY P&C Banking Revenues 2,008 1,946 1,874 3% 7% ▪ Solid performance driven by good volume Net Income 612 606 566 1% 8% growth and positive operating leverage Diluted EPS $1.69
Slide 7: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 8: Transformation Driving Efficiency
TRANSFORMATION DRIVING EFFICIENCY ADJUSTED RESULTS(1) Highlights Total Bank ▪ Continued efficiency ratio ($MM, TEB) Q4 19 Q4 18 YoY 12M 19 12M 18 YoY ($MM, TEB) Revenues Expenses Operating Leverage Efficiency Ratio Q2 19 Q2 18 YoY 6M 19 6M 18 YoY 1 850 1 818 1,8% 1 026 992 3,4% (1,6%) 55,5% 54,6% 0,
Slide 9: Strong Capital Position
STRONG CAPITAL POSITION Total RWA under Basel III Highlights 80,984 83,039 73,654 77,036 79,008 3,972 4,276 ▪ Common Equity Tier 1 ratio at 11.7% 3,964 3,788 3,435 11,319 11,509 10,910 11,096 10,743 ▪ Leverage ratio at 4.0% ▪ Liquidity coverage ratio at 146% 67,254 59,476 62,162 64,124 65,693 ▪ RWA
Slide 10: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 11: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES Quarterly PCL Ratio (bps) Highlights Q4 PCL on impaired loans: ▪ PCL on impaired loans (x-USSF&I) of 16 bps ($59 million) reflecting benign credit conditions ▪ Total impaired PCL of 20 bps ($77million) stable QoQ Q4 PCL on performing loans: ▪ PCL on performing loans (x-U
Slide 12: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS(1) AND FORMATIONS(2) Gross Impaired Loans (GIL) ($MM) Net Formations by Business Segment ($MM) Q4 19 Q3 19 Q2 19 Q1 19 Q4 18 Personal 54 34 36 55 56 Commercial 47 31 40 (43) (4) Financial Markets (4) 36 − 9 − Wealth Management 1 (1) − − 2 Credigy 20 23 27 36 33 ABA Bank 0 2 1 1
Slide 13: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province Highlights (As at October 31, 2019) ▪ Distribution across product and geography remained stable. Insured mortgages account for 39% of the total ▪ Uninsured mortgages and HELOC in GTA and GVA represent 10% and 2% of the total portf
Slide 14: Appendices
NATIONAL BANK Powering your ideas” APPENDICES
Slide 15: Strong Fundamentals in Québec Economy
APPENDIX 1 │STRONG FUNDAMENTALS IN QUÉBEC ECONOMY Jobless rate at historical lows Affordable home prices Jobless rate % - Rest of Canada and Québec Median home price in different cities ($) Household leverage below national average Sound public finances Household debt as a % of disposable income, 20
Slide 16: Personal and Commercial Banking
APPENDIX 2 | PERSONAL AND COMMERCIAL BANKING Highlights YoY ($MM) Q4 19 Q3 19 Q4 18 QoQ YoY Revenues(1) 876 891 849 (2%) 3% ▪ Good revenue growth supported by solid loan and deposit volumes Personal 545 566 530 (4%) 3% Commercial 331 325 319 2% 4% ▪ Positive operating leverage of 2% Operating Expens
Slide 17: Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Highlights YoY ▪ Solid performance with net income ($MM) Q4 19 Q3 19 Q4 18 QoQ YoY up 10% Revenues 446 437 427 2% 4% Fee-based 262 259 247 1% 6% ▪ Favorable markets and positive flows resulted in strong AUM Transaction & Others 69 63 65 10% 6% growth and fee-based reve
Slide 18: Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Highlights YoY ($MM, TEB) Q4 19 Q3 19 Q4 18 QoQ YoY ▪ Record performance in Global Markets, primarily Revenues 495 441 436 12% 14% driven by structured products and securities finance Global Markets 301 269 235 12% 28% ▪ Good performance across C&IB, offset by lower Co
Slide 19: US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL ($MM) Q4 19 Q3 19 Q4 18 QoQ YoY Highlights YoY Revenues 192 174 158 10% 22% ▪ ABA Bank: Credigy 95 95 100 - (5%) - Increased stake from 90% to 100% ABA 90 79 57 14% 58% - Strong growth with earnings more Other 7 - 1 - - than doubling, loans up 52% an
Slide 20: Other
APPENDIX 6 │ OTHER ADJUSTED RESULTS(1) Highlights YoY ($MM, TEB) Q4 19 Q3 19 Q4 18 Revenues (1) 3 4 ▪ Relatively stable pre-tax income ▪ Lower net income reflecting a Operating Expenses 85 67 84 lower tax recovery Provision - - (1) for Credit Losses Pre-tax Income (86) (64) (79) Net Income (71) (48)
Slide 21: Total Loan Portfolio Overview
APPENDIX 7 │TOTAL LOAN PORTFOLIO OVERVIEW Highlights Loan Distribution by Borrower Category As at % of Total ▪ Secured lending accounts for 92% of ($B) October 31, 2019 Retail loans Retail - Secured - Mortgage & HELOC 74.4 49% ▪ Limited exposure to unsecured retail (1) - Secured - Other 8.9 6% and c
Slide 22: Regional Distribution of Canadian Loans
APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Highlights Oil Maritimes(2) Quebec Ontario BC/MB and TOTAL Regions(1) Within the Canadian loan As at October 31, 2019 Territories Retail portfolio: Secured - Mortgage & HELOC 27.1% 13.0% 4.8% 3.6% 1.1% 49.6% ▪ Limited exposure to Secured 3.2% 1.3%
Slide 23: Loan & Deposit Overview
APPENDIX 9 │ LOAN & DEPOSIT OVERVIEW ($B) Loans & BA's Deposits 143.1 145.3 153.3 131.0 133.8 136.7 146.1 146.7 148.7 151.3 53.1 54.0 55.4 56.5 57.2 84.1 85.3 75.4 76.0 78.5 92.9 92.7 93.3 94.9 96.1 55.7 57.7 58.2 59.0 60.1 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Retail Business
Slide 24: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 10 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 24
Slide 25: Trading VaR Trend
APPENDIX 11 │ TRADING VaR TREND ($MM) 25
Slide 26: Specified Items
APPENDIX 12 │ SPECIFIED ITEMS Q4 19 12M 19 Income Income Net Net Before EPS Before EPS Income Income Specified Items ($MM) Taxes Taxes Q3/19(1) Gain on disposal of Fiera Capital shares - - - 79 68 $0.20 Gain on disposal of head office building - - - 50 43 $0.12 Allowance for future vacant premises -
Slide 27: Investor Relations Contact Information
INVESTOR RELATIONS CONTACT INFORMATION W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455 Linda Boulanger, Vice President 514-394-0296 | linda.boulanger@bnc.ca Marianne Ratté, Senior Director 514-412-5437 | marianne.ratte@bnc.ca Arslan Benbakouche, Chief Analyst 514-412-8027
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