National Bank Of Canada · TSX:NA
National Bank Of Canada — Q3 2024 Earnings Presentation
33 slides from National Bank Of Canada's earnings presentation, Aug 28, 2024
Slide 1: Investor Presentation Second Quarter 2024
INVESTOR PRESENTATION Second Quarter 2024 May 29, 2024
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 and made orally are forward-looking statements. All such statements are made in accordance with applicable securities legislation in Canada and the United State
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q2 2024 – Strong Financial Performance
Q2 2024 – STRONG FINANCIAL PERFORMANCE Revenues ($MM; YoY) Reported: $2,750; 12% (1) Adjusted : $2,837; 10% ▪ Strong results reflecting disciplined execution against our strategy - EPS of $2.54 PTPP(2) ($MM; YoY) - ROE of 16.9% Reported: $1,278; 18% Adjusted(1): $1,365; 12% PCL ($MM) ▪ Positive oper
Slide 5: Q2 2024 – Strong Results Across Business Segments
Q2 2024 – STRONG RESULTS ACROSS BUSINESS SEGMENTS P&C Banking (YoY) ▪ Solid revenue performance, mainly from balance sheet growth Revenues: 6% ▪ NIM up 2 bps YoY and stable QoQ at 2.36% PTPP(1): 9% ▪ Personal: Loans up 3% YoY and stable QoQ(2) ▪ Commercial: Loans up 12% YoY and 3% QoQ(2) Wealth Mana
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Balanced Approach Driving Positive Operating Leverage
Q2 2024 – BALANCED APPROACH DRIVING POSITIVE OPERATING LEVERAGE Q2 2024 Performance (YoY) Reported Adjusted(1) ▪ Double-digit revenue growth Revenue growth 12.4% 10.0% - Strong organic growth across business segments Expense growth 8.1% 8.1% - Lower revenues from treasury PTPP growth(2) 17.9% 12.3%
Slide 8: Maintaining Strong NII and NIM
MAINTAINING STRONG NII AND NIM NII and NIM ($MM; NIM on Average Interest-Bearing Assets) ▪ Reported net interest income and margin reflect the financing costs to support growth in our trading activities(1) 1,437 1,423 ▪ Adjusted net interest income reflecting: 1,388 1,372 1,280 2.21% 2.17% - Higher
Slide 9: Strong Loan-to-Deposit Ratio of 98%
STRONG LOAN-TO-DEPOSIT RATIO OF 98%(1) Loans and BA’s(2) ($B) Total loans of $235B(2), up 9% YoY and 2% QoQ 234.8 215.8 219.4 225.4 230.2 ▪ Personal banking: +3% YoY; +1% QoQ ▪ Commercial banking: +12% YoY; +3% QoQ ▪ Corporate banking: +9% YoY; +1% QoQ ▪ Credigy ($US): +16% YoY; flat QoQ ▪ ABA ($US)
Slide 10: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio(1) Strong CET1 ratio of 13.2% 0.65% ▪ Organic capital generation remains strong 0.03% (0.27%) (+38 bps) (0.29%) 13.23% 13.11% ▪ Solid RWA expansion (-29 bps, excluding FX), mainly driven by balance sheet growth Q1 24 Net Dividends (2) RWA Other Q2 24 income (2) ex.
Slide 11: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 12: Provisions for Credit Losses (PCL)
PROVISIONS FOR CREDIT LOSSES (PCL) PCL Q2 Total PCL ($MM) ▪ $138M (24 bps), reflecting resilient portfolio mix and prudent provisioning Q2 PCL on Impaired Loans (excl. POCI) ▪ Provision of $114M (20 bps) ▪ Retail: continued normalization ▪ Non-retail: primarily 2 files ▪ USSF&I: ▪ Credigy – normal s
Slide 13: Allowance for Credit Losses (ACL)
ALLOWANCE FOR CREDIT LOSSES (ACL) ACL ($MM) Total Allowances ▪ 1.8x pre-pandemic level $1,377 $1,416 $1,421 ▪ Strong coverage of 4.5x LTM Net Charge-Offs $1,297 ▪ Maintaining a prudent level of allowances in $1,235 Impaired (1) Impaired (1) $418 Impaired (1) $403 light of continued uncertainties $42
Slide 14: 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 $1,267M, ($MM) increase of 6 bps QoQ at 54 bps $1,365 $1,267 ▪ GIL excl. USSF&I(2): 36 bps (up 5 bps QoQ) $1,165 $1,103 $1,024 ▪ Net formations of $310M, inc
Slide 15: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO (As at April 30, 2024) Canadian Distribution by Province ▪ Uninsured mortgages and HELOC in GTA and 54% GVA represent 12% and 2% of the total RESL portfolio and have an average LTV(1) of 54% ▪ Uninsured mortgages and HELOC for condos Uninsured & HELOC represent 9%
Slide 16: Retail Mortgages Rate Type and Maturity Profile
RETAIL MORTGAGES RATE TYPE AND MATURITY PROFILE (As at April 30, 2024) Canadian Mortgages Distribution by Rate Type ▪ More than half of our Canadian Mortgage portfolio has been repriced, absorbing the impact of rate increases ▪ 28% of mortgage portfolio is variable rate and the Variable monthly paym
Slide 17: Appendices
APPENDICES
Slide 18: Appendix 1 – Q2 2024 Total Bank Results
APPENDIX 1 │ Q2 2024 – TOTAL BANK RESULTS Total Bank Summary Results – Q2 2024 ($MM) Reported Results Adjusted Results(1) Q2 24 Q1 24 Q2 23 QoQ YoY Q2 24 Q1 24 Q2 23 QoQ YoY ▪ Diluted EPS of $2.54 Revenues 2,750 2,710 2,446 1% 12% 2,837 2,820 2,578 1% 10% Non-Int. Expenses 1,472 1,449 1,362 2% 8% 1,
Slide 19: Appendix 2 – Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q2 2024 ($MM) ▪ Revenues up 6% YoY, mainly from balance sheet growth Q2 24 Q1 24 Q2 23 QoQ YoY - Average loans and deposits up 6% YoY Revenues 1,131 1,154 1,067 (2%) 6% Personal 624 640 591 (3%) 6% Commercial 507 514 476 (1%) 7% ▪ Ex
Slide 20: Appendix 3 – Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q2 2024 ($MM) ▪ Strong net income of $205MM, up 15% YoY - Continued momentum in fee-based revenues Q2 24 Q1 24 Q2 23 QoQ YoY with strong AUM growth, reflecting strong net Revenues 683 660 617 3% 11% sales and market appreciation Fee-
Slide 21: Appendix 4 – Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q2 2024 ▪ Strong net income of $322MM, up 20% YoY, (TEB, $MM) reflecting well-diversified business mix Q2 24 Q1 24 Q2 23 QoQ YoY ▪ Global Markets revenues of $453MM, up 18% YoY Revenues 766 755 672 1% 14% - Performance from Securitie
Slide 22: Appendix 5 – USSF&I – Credigy
APPENDIX 5 │ USSF&I – CREDIGY Credigy Summary Results – Q2 2024 ($MM) ▪ Average assets (1) up 5% QoQ and 17% YoY Q2 24 Q1 24 Q2 23 QoQ YoY - Strong momentum in investments YTD Revenues 136 125 108 9% 26% - Partly offset by the sale of a US$200MM loan Net Interest Income 126 117 110 8% 15% portfolio
Slide 23: Appendix 6 – USSF&I – ABA
APPENDIX 6 │ USSF&I – ABA ABA Summary Results – Q2 2024 ($MM) ▪ Revenues up 17% YoY in line with balance sheet growth Q2 24 Q1 24 Q2 23 QoQ YoY Revenues 209 194 178 8% 17% - Margin improved sequentially, with strong Non-Interest Expenses 73 65 65 12% 12% growth in demand deposits Pre-Tax / Pre-Provi
Slide 24: Appendix 7 – Other
APPENDIX 7 │ OTHER Other Segment Summary Results – Q2 2024 ($MM) (1) Reported Results Adjusted Results ▪ Net income of $(95)MM in Q2 2024 Q2 24 Q1 24 Q2 23 Q2 24 Q1 24 Q2 23 Revenues (180) (185) (195) (93) (75) (63) Non-Int. Expenses 40 31 20 40 31 20 ▪ Lower revenues from treasury (2) PTPP (220) (2
Slide 25: Appendix 8 – Total Loan Portfolio Overview
APPENDIX 8 │ TOTAL LOAN PORTFOLIO OVERVIEW (As at April 30, 2024) Loan Distribution by Borrower Category(1) ▪ Secured lending accounts for 95% $B % of Total of Retail loans Retail ▪ Indirect auto loans represent 2.5% of total loans Secured - Mortgage & HELOC 101.5 43% (2) ($5.9B) Secured - Other 15.
Slide 26: Appendix 9 – Canadian Loan Portfolios
APPENDIX 9 │ CANADIAN LOAN PORTFOLIOS Geographic distribution (As at April 30, 2024) Within the Canadian loan portfolio: (2) Maritimes Oil and ▪ Limited exposure to unsecured consumer Quebec Ontario Regions (1) BC/MB Territories Total loans (2.8%) Retail Secured Mortgage & HELOC 24.5% 13.3% 3.7% 2.8
Slide 27: Appendix 10 – Prudent Provisioning in Uncertain Economic Environment
APPENDIX 10 │ PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 4.5x NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs (Excluding POCI) 7.8x 8.6x 8.7x 6.2x 7.8x 6.2x 6.6x 4.5x 4.4x 4.5x 3.4x 2.9x 1.8x 2.6x Q1 20
Slide 28: Appendix 11 – Real Estate and Construction Real Estate
APPENDIX 11 │ REAL ESTATE AND CONSTRUCTION REAL ESTATE Total Portfolio by Sector ($28.3B) Corporate Banking (9%) (As at April 30, 2024) ▪ Primarily diversified Canadian REIT Short Term Construction (20%) ▪ Mainly residential construction ▪ No US exposure Commercial Banking CRE (71%) ▪ 59% of 5-year
Slide 29: Appendix 12 – Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 12 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30 25 20 15 10 5 0 February, 2024 March, 2024 April, 2024 (5) (10) (15) (20) Trading P&L Trading VaR 29
Slide 30: Appendix 13 – Diversified Funding Profile & Sound Liquidity Metrics
APPENDIX 13 │ DIVERSIFIED FUNDING PROFILE & SOUND LIQUIDITY METRICS Balance Sheet Overview ($B, as at April 30, 2024) Balance sheet reflects our diversified business $442 $442 model Business & Government Loans 96 Business & Government ▪ Core banking activities well-funded through Deposits 147 divers
Slide 31: Appendix 14 – Range of Macroeconomic Scenarios – IFRS 9
APPENDIX 14 │ RANGE OF MACROECONOMIC SCENARIOS – IFRS 9 Canada Real GDP NBC Macroeconomic Forecast: Q2/24 vs. Q1/24 ($ Trillions) (Full Calendar Years) 2.50 Base Scenario C2024 C2025 Real GDP (Annual Average % Change) 2.40 As at January 31, 2024 (0.2) % 1.4 % As at April 30, 2024 0.6 % 1.2 % 2.30 Un
Slide 32: Appendix 15 – Reconciliation of Non-GAAP Financial Measures
APPENDIX 15 │ RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($MM, except EPS) Q2 24 Q2 23 Non- Non- Total Income Net Diluted Total Income Net Diluted Interest PTPP(2) PCL Interest PTPP(2) PCL Revenues taxes Income EPS Revenues taxes Income EPS Segment Expenses Expenses Reported Results 2,750 1,472 1
Slide 33: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455
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