National Bank Of Canada · TSX:NA
National Bank Of Canada — Q3 2019 Earnings Presentation
26 slides from National Bank Of Canada's earnings presentation, Aug 28, 2019
Slide 1: Investor Presentation Q3|19
INVESTOR PRESENTATION Q3|19 August 28, 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 of the Report to Shareholders - Third quarter 2019 and in the Major Economic Trends section of the 2018 Annua
Slide 3: Overview
OVERVIEW Louis Vachon President & Chief Executive Officer
Slide 4: Overview – Q3|19 Adjusted Results
OVERVIEW – Q3|19 ADJUSTED RESULTS(1) Highlights ▪ Solid performance in Q3/19 driven by: ($MM, TEB) Q3 19 Q2 19 Q3 18 QoQ YoY - Favorable backdrop in Canadian and Revenues(2) 1,946 1,850 1,854 5% 5% Québec economies Net Income(2) 606 558 569 9% 7% - Positive momentum in all businesses Diluted EPS(2)
Slide 5: Segment Highlights – Q3|19
SEGMENT HIGHLIGHTS – Q3|19 P&C Banking ▪ Solid performance with good volume growth NET INCOME ($MM) Q3 19 Q2 19 Q3 18 QoQ YoY and disciplined cost management P&C Banking(1) 277 234 250 18% 11% - Higher insurance revenues due to changes in actuarial reserve Wealth Management 126 118 120 7% 5% ▪ Balan
Slide 6: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Specified Items – Q3|19
SPECIFIED ITEMS – Q3|19 Highlights Income ▪ Miscellaneous one-time gains & losses Before Net which largely offset Specified Items ($MM)(1) Taxes Income EPS - Neutral EPS impact in Q3/19 Gain on disposal of Fiera 79 68 $0.20 Capital shares Gain on disposal of head 50 43 $0.12 ▪ Expected pre-tax savin
Slide 8: Transformation Driving Efficiency
TRANSFORMATION DRIVING EFFICIENCY ADJUSTED RESULTS(1) Highlights Total Bank ▪ Significant improvements in all-bank ($MM, TEB) Q3 19 Q2 19 ($MM, TEB) Revenues Expenses Operating Leverage Efficiency Ratio Q2 19 Q2 18 YoY 6M 19 6M 18 YoY 1 850 1 818 1,8% 1 026 992 3,4% (1,6%) 55,5% 54,6% 0,9% ($MM, TEB
Slide 9: Strong Capital Position
STRONG CAPITAL POSITION Highlights Total RWA under Basel III 79,008 80,984 ▪ Common Equity Tier 1 ratio at 11.7% 77,036 73,268 73,654 3,788 3,972 3,964 4,755 3,435 10,910 11,096 11,319 ▪ Leverage ratio at 4.0% 10,539 10,743 ▪ Liquidity coverage ratio at 154% 62,162 64,124 65,693 ▪ RWA growth due to
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 PCL on impaired loans: ▪ Total impaired PCL of $75 millions (20 bps), down 3 bps QoQ and 5 bps YoY, due to strong performance across P&C and Credigy ▪ Excluding USSF&I, PCL on impaired loans of 15 bps which reflects continued benign c
Slide 12: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS(1) AND FORMATIONS(2) Gross Impaired Loans (GIL) ($MM) Highlights ▪ GIL ratio of 44 bps, up 2 bps QoQ and stable YoY ▪ Formations in Financial Markets are from one account, partially offset by lower formations in P&C and Credigy Net Formations by Business Segment ($MM) Q3 19 Q2 1
Slide 13: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province Highlights (As at July 31, 2019) ▪ Distribution across product and geography remained stable. Insured mortgages account for 40% of the total ▪ Uninsured mortgages and HELOC in GTA and GVA represent 10% and 2% of the total portfoli
Slide 14: Appendices
NATIONAL BANK Powering your ideas” APPENDICES
Slide 15: Strong Fundamentals in Québec Economy
APPENDIX 1 │STRONG FUNDAMENTALS IN QUÉBEC ECONOMY Jobless rate at historical lows Affordable home prices Jobless rate % - Rest of Canada and Québec Median home price in different cities ($) 16 15 14 13 12 11 10 9 8 Rest of 7 Canada 6 5 Québec 4 1980 1985 1990 1995 2000 2005 2010 2015 Household lever
Slide 16: Personal and Commercial Banking
APPENDIX 2 | PERSONAL AND COMMERCIAL BANKING Highlights ($MM) Q3 19 Q2 19 Q3 18 QoQ YoY ▪ Solid revenue growth supported by strong volumes Revenues (1) 891 833 850 7% 5% - Higher insurance revenues due Personal 566 525 533 8% 6% to actuarial reserve changes Commercial 325 308 317 6% 3% Operating Exp
Slide 17: Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Highlights ▪ Net income growth of 5% driven ($MM) Q3 19 Q2 19 Q3 18 QoQ YoY by fee-based revenues and good Revenues 437 426 425 3% 3% expense control Fee-based 259 250 248 4% 4% ▪ Positive operating leverage of 1% Transaction & Others 63 64 63 (2%) - Net Interest Incom
Slide 18: Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Highlights ($MM, TEB) Q3 19 Q2 19 Q3 18 QoQ YoY ▪ Solid performance in Global Markets driven by structured products, securities Revenues 441 404 416 9% 6% finance and interest-rate derivatives Global Markets 269 218 216 23% 25% ▪ Lower revenues in C&IB as good lending
Slide 19: US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL Highlights ($MM) Q3 19 Q2 19 Q3 18 QoQ YoY ▪ Strong growth at ABA with Revenues 174 178 146 (2%) 19% earnings doubling, loans up 50% and deposits up 83% Credigy 95 107 100 (11%) (5%) ABA 79 69 47 14% 68% Other - 2 (1) - - ▪ Disciplined growth at Cred
Slide 20: Other
APPENDIX 6 │ OTHER ADJUSTED RESULTS(1) Highlights ▪ Higher revenues from ($MM, TEB) Q3 19 Q2 19 Q3 18 QoQ YoY Treasury in Q3-2018 Revenues 3 9 17 Operating Expenses 67 55 66 22% 2% Provision - - 1 for Credit Losses Net Income (48) (26) (33) 85% 45% (1) Excluding specified items (see p.7) 20
Slide 21: Total Loan Portfolio Overview
APPENDIX 7 │TOTAL LOAN PORTFOLIO OVERVIEW Highlights Loan Distribution by Borrower Category As at ▪ Secured lending accounts for 92% of % of Total ($B) July 31, 2019 Retail loans Retail - Secured - Mortgage & HELOC 73.0 49% ▪ Limited exposure to unsecured retail - Secured - Other (1) 9.0 6% and card
Slide 22: Regional Distribution of Canadian Loans
APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Highlights Oil Maritimes(2) Within the Canadian loan Quebec Ontario BC/MB and TOTAL portfolio: Regions(1) As at July 31, 2019 Territories Retail ▪ Limited exposure to Secured 26.9% 13.0% 4.8% 3.6% 1.1% 49.4% unsecured consumer - Mortgage & HELOC l
Slide 23: Loan & Deposit Overview
APPENDIX 9 │ LOAN & DEPOSIT OVERVIEW ($B) Loans & BA's Deposits 151.3 143.1 142.8 146.1 146.7 148.7 131.0 133.8 136.7 127.1 51.7 53.1 54.0 55.4 56.4 76.1 78.5 84.1 72.8 75.3 91.1 93.0 92.7 93.3 94.9 54.3 55.7 57.7 58.2 59.0 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Retail Business
Slide 24: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 10 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 24
Slide 25: Trading VaR Trend
APPENDIX 11 │ TRADING VaR TREND ($MM) 25
Slide 26: 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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