National Bank Of Canada · TSX:NA

National Bank Of Canada — Q3 2017 Earnings Presentation

29 slides from National Bank Of Canada's earnings presentation, Aug 30, 2017

  1. Slide 1: Analyst and Investor Presentation Q3-2017 Conference Call

    ye NATIONAL BANK OF CANADA ANALYST AND INVESTOR PRESENTATION Q3-2017 CONFERENCE CALL Wednesday, August 30, 2017 — 1:00 pm 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 the 2016 Annual Report, in other filings with Canadian securities regulators,

  3. Slide 3: Overview

    OVERVIEW Louis Vachon President & Chief Executive Officer

  4. Slide 4: Highlights

    HIGHLIGHTS (millions of dollars) ADJUSTED RESULTS (1) Q3 17 Q2 17 Q3 16 QoQ YoY HIGHLIGHTS Revenues 1,743 1,654 1,610 5% 8%  Adjusted diluted EPS up 5% YoY (2) (3) Net Income 524 492 486 7% 8%  Positive operating leverage of 4.7% Diluted EPS (3) $1.39 $1.30 $1.33 7% 5% Provision for Credit Losses

  5. Slide 5: Segment Snapshot – Q3 2017

    SEGMENT SNAPSHOT – Q3 2017 (millions of dollars) HIGHLIGHTS (YoY) ADJUSTED NET INCOME Q3 17 Q2 17 Q3 16 QoQ YoY P&C Banking 240 233 199 3% 21%  P&C BANKING P&C Banking  Net income up 21% (1) 240 204 199 18% 21%  Revenues up 6% due to increase in excl. sectoral provision adj. loans, deposits, and

  6. Slide 6: Financial Review

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

  7. Slide 7: Transformation Driving Efficiencies

    TRANSFORMATION DRIVING EFFICIENCIES Excluding specified items Taxable equivalent basis (millions of dollars) HIGHLIGHTS Total Bank Q3 17 Q2 17 Q3 16 YoY  Positive operating leverage: +4.7% Revenues 1,743 1,654 1,610 8.3%  P&C: +8.4% Expenses 966 936 932 3.6%  Wealth Management: +7.7%  Financial

  8. Slide 8: Strong Capital Position

    STRONG CAPITAL POSITION TOTAL RISK-WEIGHTED ASSETS COMMON EQUITY TIER 1 UNDER BASEL III UNDER BASEL III EVOLUTION (QoQ) 0.14% 0.40% 69,383 69,156 0.04% 68,530 68,205 68,574 0.09% 3,291 2,807 3,815 2,768 3,263 9,391 9,495 9,760 9,827 9,611 10.77% 11.17% 11.27% 11.18% 11.18% 10.77% 55,848 55,903 55,14

  9. Slide 9: Risk Management

    RISK MANAGEMENT William Bonnell Executive Vice-President, Risk Management

  10. Slide 10: Retail Mortgage and HELOC Portfolio

    RETAIL MORTGAGE AND HELOC PORTFOLIO CANADIAN RETAIL MORTGAGE PORTFOLIO DISTRIBUTION DISTRIBUTION BY CANADIAN PROVINCE 130% 10 As at July 31, 2017 2 2 1 1 2 PCL (bps) 110% 0 55% -10 90% 34% 34% 31% 31% 31% -20 Insured 70% 62% Uninsured & HELOC 21% 22% -30 23% 23% 23% 50% 25% -40 30% 50% 48% 47% 46% -

  11. Slide 11: 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) (millions of dollars) Q3 17 Q2 17 Q1 17 Q4 16 Q3 16 Personal 13 18 23 17 11 Commercial (excluding O&G) 1 22 (11) 24 (23) Oil & Gas 35 (8) (32) 36 29 Corporate Banking - - - - - W

  12. Slide 12: Provision for Credit Losses

    PROVISION FOR CREDIT LOSSES (millions of dollars) 60 HIGHLIGHTS 59 56 58 1 1  Specific provisions for credit losses are 4 6 1 1 1 45 9 11 stable at 18bps 1 18 15 1 7 8 6  $ 6 million transferred from the sectoral allowance  Performance of Credigy and ABA 37 36 37 38 39 portfolios continue to meet

  13. Slide 13: Appendix

    APPENDIX NATIONAL BANK Powering your ideas

  14. Slide 14: Strong Fundamentals in Quebec Economy

    APPENDIX 1 │STRONG FUNDAMENTALS IN QUEBEC ECONOMY RECORD LOW UNEMPLOYMENT RATE STRONG CONSUMER CONFIDENCE 16 120 Index 2007 = 100 15 Shaded area: Recession in Canada 110 14 100 13 Ontario 90 12 11 80 BC 10 70 9 60 Alberta 8 50 7 40 6 5 30 1980 1985 1990 1995 2000 2005 2010 2015 2007 2008 2009 2010 2

  15. Slide 15: Performance Snapshot – YTD 2017

    APPENDIX 2 │ PERFORMANCE SNAPSHOT – YTD 2017 (millions of dollars) ADJUSTED (1) 9M 17 9M 16 YoY HIGHLIGHTS Revenues (2) 5,104 4,647 10%  Adjusted diluted EPS of $4.05, up 11% YoY Expenses 2,867 2,699 6% excluding 2016 sectoral provision Net Income 1,518 1,150 32%  Adjusted revenues up 10% YoY Dilu

  16. Slide 16: Personal and Commercial Banking

    APPENDIX 3 │ PERSONAL AND COMMERCIAL BANKING (millions of dollars) Q3 17 Q2 17 Q3 16 QoQ YoY HIGHLIGHTS YoY Revenues 785 734 739 7% 6%  Net income up 21% YoY due to strong revenue Personal Banking 365 339 344 8% 6% growth, and good cost control Commercial excl. Oil & Gas sector 276 258 258 7% 7% 

  17. Slide 17: Wealth Management

    APPENDIX 4 │ WEALTH MANAGEMENT(1) (millions of dollars) Q3 17 Q2 17 Q3 16 QoQ YoY HIGHLIGHTS YoY  Very good momentum in all business lines Revenues 406 395 363 3% 12%  Revenues up 12% mainly due to: Fee-based 232 222 202 5% 15%  NII growth of 15% driven by deposit growth Transaction & Others 66 7

  18. Slide 18: Financial Markets

    APPENDIX 5 │ FINANCIAL MARKETS HIGHLIGHTS YoY (millions of dollars) Q3 17 Q2 17 Q3 16 QoQ YoY  Revenues up 6% reflecting the strength and Revenues 392 404 370 (3%) 6% diversification of FM’s business model Trading 207 215 181 (4%) 14%  Solid trading revenues driven by securities lending and equity

  19. Slide 19: US Specialty Finance & International

    APPENDIX 6 │ US SPECIALTY FINANCE & INTERNATIONAL (millions of dollars) Q3 17 Q2 17 Q3 16 QoQ YoY HIGHLIGHTS Revenues 147 122 125 20% 18%  Strong growth of USSF&I, representing 9% of overall net income Credigy 117 91 70 29% 67%  Credigy continues to perform above expectations ABA 32 27 17 19% 88%

  20. Slide 20: Loan Portfolio Overview

    APPENDIX 7 │LOAN PORTFOLIO OVERVIEW LOANS PORTFOLIO OVERVIEW (billions of dollars) Q3 17 % of Total HIGHLIGHTS  Modest exposure to unsecured retail Secured - Mortgage & HELOC 65.9 49% Secured - Other 4.8 3% lending Unsecured 9.4 7%  Secured retail loans accounts for 52% Credit Cards 2.0 2% of tota

  21. Slide 21: Regional Distribution of Canadian Loans

    APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS As at July 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 28.3% 2.0% 5.4% 0.0% 18.1% 4.8% 58.6% Ontario 12.9% 0.9% 1.1% 0

  22. Slide 22: 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) 133.2 149.4 148.4 129.8 143.1 126.2 126.9 139.3 124.8 135.3 19.6 28.0 27.2 18.7 19.4 18.7 26.9 19.5 28.1 4.3 5.6 28.8 2.7 3.2 2.

  23. Slide 23: Oil & Gas Sector & Related Segments

    APPENDIX 10 │ OIL & GAS SECTOR & RELATED SEGMENTS OUTSTANDING LOANS – Q3 17 1.9 $B 1.1 $B 1.0 $B IG 61% 0.5 $B IG 72% 0.1 $B 0.1 $B IG 52% IG 100% Producers Services (OFS) Midstream Refinery and Commercial Retail - Unsecured Integrated and Credit Cards Oil and Gas Sector Other Wholesale - Related Se

  24. Slide 24: Producers & Services

    APPENDIX 11 │ PRODUCERS & SERVICES HISTORICAL TREND IN EXPOSURES AT DEFAULT ($B) HIGHLIGHTS  Small increase in Exposure at Default in the sector  Sectoral provision for non-impaired loans represents 7% of total drawn loans and 15% of non-investment grade drawn loans in this portfolio  Comfortable

  25. Slide 25: Daily Trading and Underwriting Revenues vs VaR

    APPENDIX 12 │ DAILY TRADING and UNDERWRITING REVENUES vs VAR Daily Trading and Underwriting Revenues vs Trading VaR - Q3 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-May 8-May 15-May 23-May 30-May 6-Jun 13-Jun 20-Jun 27-Jun 5-Jul 12

  26. Slide 26: VaR Trend

    APPENDIX 13 │ Var TREND Trading VaR Quarterly Average Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 -4.9 -4.9 -5.2 -5.5 -6.7 $ millions Q3 2017 RESULTS CONFERENCE CALL – August 30, 2017 I 26

  27. Slide 27: Comparative Performance – Capital Ratios

    APPENDIX 14 │ COMPARATIVE PERFORMANCE – Capital Ratios CAPITAL RATIOS UNDER BASEL III 15.5% 14.5% 15.9% 14.7% 14.9% Total Total 15.2% 14.2% 14.1% 12.7% 12.5% Tier 1 Tier 1 11.2% 10.8% 11.1% CET1 10.6% 11.1% CET1 Q3 17 Q2 17 Q2 17 Q1 17 Q1 17 NBC NBC Canadian NBC Canadian (1) Peers (1) Peers Common E

  28. Slide 28: Detail of Specified Items

    APPENDIX 15│ DETAIL OF SPECIFIED ITEMS (millions of dollars) Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Wealth Management acquisitions (7) (9) (6) (7) (8) Items related to TMX (1) (2) - (2) - MAV and Other Notes (2) (2) - - - Litigation provisions - (25) - - - Write-off of Intangible Assets - (44) - - - Restruct

  29. Slide 29: 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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