National Bank Of Canada · TSX:NA
National Bank Of Canada — Q1 2025 Earnings Presentation
38 slides from National Bank Of Canada's earnings presentation, Feb 26, 2025
Slide 1: Investor Presentation First Quarter 2025
INVESTOR PRESENTATION First Quarter 2025 February 26, 2025
Slide 2: Forward-looking statements
Certain statements in this document are forward-looking statements. These statements are made in accordance with applicable securities legislation in Canada and the United States. The forward-looking statements in this document may include, but are not limited to, statements in the messages from man
Slide 3: Overview
OVERVIEW Laurent Ferreira President & Chief Executive Officer
Slide 4: Q1 2025 highlights
Revenues(1) ($MM; YoY) Reported: $3,183; 17% Adjusted(2): $3,230; 19% ▪ Strong earnings growth and returns reflect continued execution PTPP(3) ($MM; YoY) Reported: $1,537; 22% ▪ Solid growth on both sides of the balance sheet Adjusted(2): $1,610; 28% PCL ($MM) ▪ Positive operating leverage Total: $2
Slide 5: Business segment highlights
P&C Banking (YoY) ▪ Revenues up 4% YoY, mainly driven by volume growth ▪ Personal: Loans up 4% YoY(2); personal mortgages up 3% YoY Revenues: 4% ▪ Commercial: Loans up 13% YoY(2); broad-based growth, including continued PTPP(1) 4% momentum in insured residential real estate Wealth Management (YoY) ▪
Slide 6: Financial Review
FINANCIAL REVIEW Marie Chantal Gingras Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Q1 2025 Performance
Q1 2025 Performance (YoY) ▪ Double-digit revenue and PTPP growth in Q1 Reported Adjusted(1) - Organic growth across our business segments Revenue growth 17.5% 19.2% - Strong revenue performance in Financial Markets (+40% Expense growth 13.6% 11.8% YoY) and Wealth Management (+18% YoY) PTPP growth(2)
Slide 8: NII and NIM
NII and NIM ($MM; NIM on Average Interest-Bearing Assets) ▪ Reported net interest income and margin reflect the financing costs to support growth in 1,629 1,672 our trading activities(1) 1,545 1,435 1,420 2.26% 2.26% 2.22% 2.21% 2.17% ▪ Adjusted NII (excl. trading)(2) up 3% QoQ 972 - Solid growth on
Slide 9: Loans and Deposits
Loans(1) ($B) Total loans of $247B(1), up 7% YoY and 1% QoQ 239.5 243.0 246.6 ▪ Personal banking: +4% YoY; flat QoQ 230.2 234.8 ▪ Commercial banking: +13% YoY; +3% QoQ ▪ Corporate banking: (5%) YoY; (5%) QoQ ▪ Credigy (US$): +3% YoY; flat QoQ ▪ ABA (US$): +8% YoY; +2% QoQ Q1 24 Q2 24 Q3 24 Q4 24 Q1
Slide 10: CET1 Ratio
CET1 Ratio(1) ▪ Robust CET1 ratio of 13.6% 0.70% - Strong organic capital generation (43 bps) (0.27%) - Credit Risk RWA up ~$4.2B QoQ ex. FX (-39 bps), in line with solid balance sheet growth 13.71% (0.53%) (0.04%) 13.57% - Market Risk RWA up ~$1.1B QoQ (-11 bps), primarily driven by business growth
Slide 11: Accounting Considerations Related to the Acquisition of CWB
Accounting Considerations Related to the Acquisition of CWB - Preliminary Estimates and Subject to Final PPA(1) Estimated P&L impact P&L treatment (2) (in $MM, unless otherwise noted) Amount Comments Quarterly EPS Period Adjusted Not Adjusted Amortized over 18 months; to be Net fair value mark (amor
Slide 12: CWB Cost and Funding Synergies
Cost and Funding Synergies (~$270MM pre-tax) Additional Revenue Upside Cost Synergies Funding Synergies Incremental NII Incremental Fee (~$175MM pre-tax) (~$95MM pre-tax) Opportunities Income ▪ Technology, operations and ▪ Leverage NA’s rating profile ▪ Expand balance sheet within ▪ Significantly ex
Slide 13: Medium-term objectives and FY2025 outlook
▪ Medium-term growth objective for adjusted EPS(1): 5-10% Strong earnings growth ▪ FY 2025 adjusted EPS(1) outlook : Mid-single digit growth excluding the amortization of the net fair value mark(2) ▪ Medium-term objective for adjusted ROE(1)(3): 15-20% Superior ROE ▪ FY 2025 adjusted ROE(1) outlook
Slide 14: Risk Management
RISK MANAGEMENT Jean-Sébastien Grisé Executive Vice-President and Chief Risk Officer
Slide 15: PCL
PCL Q1 Total PCL ($MM) ▪ $254MM (41 bps), reflecting resilient portfolio mix and prudent provisioning Q1 PCL on Impaired Loans (excl. POCI) ▪ Provision of $196MM (32 bps) ▪ Retail: continued increase as expected ▪ Commercial: primarily driven by a few files ▪ FM: primarily 1 file in manufacturing ▪
Slide 16: ACL
ACL ($MM) Total Allowances +10% ▪ 2.3x pre-pandemic level $1,731 ▪ Strong coverage of 4.3x LTM Net Charge-Offs $1,573 $1,514 ▪ Maintaining a prudent level of allowances in $1,416 $1,421 Impaired (1) light of continued uncertainties Impaired (1) Impaired (1) $602 Impaired (1) $467 $508 Impaired (1) $
Slide 17: Gross Impaired Loans Excluding POCI Loans
Gross Impaired Loans (GIL) Excluding POCI Loans(1) ▪ Gross impaired loans (excl. POCI) of $1,967MM, ($MM) increase of 11 bps QoQ at 79 bps ▪ GIL excl. USSF&I(2): 49 bps (up 8 bps QoQ) ▪ Net formations of $430MM, increase of $90MM QoQ ▪ Retail: driven by consumer credit ▪ Non-retail: a few files in C
Slide 18: Canadian Uninsured and HELOC Portfolio
(As at January 31, 2025) Canadian Distribution by Province ▪ Uninsured mortgages and HELOC in GTA and GVA represent 12% and 2% of the total RESL portfolio and have an average LTV(1) of 55% ▪ Uninsured mortgages and HELOC for condos represent 10% of the total RESL portfolio and have an average LTV(1)
Slide 19: Canadian Mortgages Distribution by Rate Type
(As at January 31, 2025) Canadian Mortgages Distribution by Rate Type ▪ ~70% of our Canadian Mortgage portfolio has been repriced, absorbing the impact of rate increases ▪ 28% of mortgage portfolio is variable rate and the Variable monthly payments are adjusted Rate 28% ▪ 57% of FRM have already ren
Slide 20: Appendices
APPENDICES
Slide 21: Total Bank Summary Results – Q1 2025
│ Total Bank Summary Results – Q1 2025 ($MM) ▪ Strong earnings growth and ROE Reported Results Adjusted Results(1) Q1 25 Q4 24 Q1 24 QoQ YoY Q1 25 Q4 24 Q1 24 QoQ YoY ▪ Positive operating leverage Revenues 3,183 2,944 2,710 8% 17% 3,230 2,895 2,710 12% 19% Non-Int. Expenses 1,646 1,592 1,449 3% 14%
Slide 22: P&C Summary Results – Q1 2025
│ P&C Summary Results – Q1 2025 ($MM) ▪ Revenues up 4% YoY, mainly from balance sheet growth Q1 25 Q4 24 Q1 24 QoQ YoY - Average loans up 7% YoY and average Revenues 1,204 1,190 1,154 1% 4% deposits up 3% YoY Personal 662 662 640 - 3% Commercial 542 528 514 3% 5% ▪ Efficiency ratio of 53% Non-Intere
Slide 23: Wealth Management Summary Results – Q1 2025
│ Wealth Management Summary Results – Q1 2025 ($MM) ▪ Strong net income of $242MM, up 23% YoY Q1 25 Q4 24 Q1 24 QoQ YoY ▪ Revenues of $776MM, up 18% YoY Revenues 776 727 660 7% 18% - Fee-based revenues up 20% YoY, reflecting Fee-Based 450 425 375 6% 20% favorable market performance and solid net Tra
Slide 24: Financial Markets Summary Results – Q1 2025
│ Financial Markets Summary Results – Q1 2025(1) ($MM) ▪ Net income of $417MM, up 35% YoY Q1 25 Q4 24 Q1 24 QoQ YoY ▪ Global Markets revenues of $595MM Revenues 907 637 647 42% 40% - Strong quarter for Securities Finance Global Markets 595 342 343 74% 73% - Strong issuance volumes in Structured C&IB
Slide 25: Credigy Summary Results – Q1 2025
│ Credigy Summary Results – Q1 2025 (US$ MM) ▪ Revenues up 9% YoY Q1 25 Q4 24 Q1 24 QoQ YoY - NII up 13% YoY, primarily driven by asset Revenues 102 106 94 (4%) 9% growth Net Interest Income 99 110 88 (10%) 13% - Non-interest income reflecting favourable mark- Non-Interest Income 3 (4) 6 to-market a
Slide 26: ABA Summary Results – Q1 2025
│ ABA Summary Results – Q1 2025 (US$ MM) ▪ Net income up 13% YoY Q1 25 Q4 24 Q1 24 QoQ YoY Revenues 174 171 144 2% 21% ▪ Loans up 9% and deposits up 19% YoY, with Non-Interest Expenses 59 58 48 2% 23% client base up 31% Pre-Tax / Pre-Provisions 115 113 96 2% 20% - Leading position in digital payment
Slide 27: Other Segment Summary Results – Q1 2025
│ Other Segment Summary Results – Q1 2025 ($MM) ▪ Reported results reflect items related to our (1) acquisition of CWB(3) Reported Results Adjusted Results Q1 25 Q4 24 Q1 24 Q1 25 Q4 24 Q1 24 Revenues (109) 12 (77) (62) (37) (77) ▪ Adjusted results reflect: Non-Int. Expenses 74 104 31 48 93 31 - Low
Slide 28: Loan Distribution by Borrower Category
│ Loan Distribution by Borrower Category(1) (As at January 31, 2025) ▪ Secured lending accounts for 95% of Retail loans $B % of Total Retail ▪ Indirect auto loans represent 2.6% of total loans Secured - Mortgage & HELOC 106.3 43% ($6.5B) (2) Secured - Other 16.2 7% Unsecured 3.6 1% ▪ Limited exposur
Slide 29: Geographic distribution
│ Geographic distribution (As at January 31, 2025) Within the Canadian loan portfolio: Maritimes (2) Oil and ▪ Limited exposure to unsecured consumer Quebec Ontario Regions (1) BC/MB Territories Total loans (2.7%) Retail Secured Mortgage & HELOC 24.4% 13.4% 3.7% 2.7% 1.0% 45.2% ▪ Modest exposure to
Slide 30: Strong Performing ACL Coverage
│ Strong Performing ACL Coverage Total Allowances Cover 4.3x NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs (Excluding POCI) 6.6x 4.5x 4.6x 3.4x 4.1x 4.3x 2.9x 2.7x 2.4x 2.1x 2.6x 1.8x Q1 20 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 Q1 20 Q1 24 Q2 24 Q3 24 Q4 24 Q1 25 ABA: Histo
Slide 31: Total Portfolio by Sector
│ Total Portfolio by Sector ($31.9B) Corporate Banking (8%) (As at January 31, 2025) ▪ Primarily diversified Canadian REIT Short Term Construction (19%) ▪ Mainly residential construction ▪ No US exposure Commercial Banking CRE (73%) ▪ 62% of 5-year growth coming from Residential Insured ▪ 55% reside
Slide 32: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 12 | DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) January, 2025 0. Ne (aes Trading P&L Trading VaR 32 | i
Slide 33: Balance Sheet Overview
│ Balance Sheet Overview ($B, as at January 31, 2025) Balance sheet reflects our diversified business $484 $484 model ▪ Core banking activities well-funded through Business & Government Loans 100 Business & (2) Government Deposits 164 diversified and resilient sources - Diversified deposit base acro
Slide 34: NBC Macroeconomic Forecast
│ Canada Real GDP NBC Macroeconomic Forecast: Q1 25 vs. Q4 24 ($ Trillions) (Full Calendar Years) 2.60 Base Scenario C2025 C2026 Real GDP (Annual Average % Change) 2.50 As at October 31, 2024 1.3 % 2.1 % As at January 31, 2025 1.4 % 1.5 % 2.40 Unemployment Rate (Average %) 2.30 As at October 31, 202
Slide 35: Illustrative schedule for dividends on preferred shares and distributions
│ Illustrative schedule for dividends on preferred shares and distributions on other equity instruments(1) ($MM, as at February 26, 2025) ▪ Preferred shares: No. of shares Dividend per - NA First Preferred Shares Series 32 were or LRCN share or interest rate per LRCN FY 24 Q1 25 Q2 25E Q3 25E Q4 25E
Slide 36: CWB Acquisition Opening Balance Sheet (Preliminary)
APPENDIX 16 | CWB ACQUISITION OPENING BALANCE SHEET (PRELIMINARY) The following table presents the estimated acquisition-date fair values of the assets acquired and liabilities assumed and consideration transferred. During the measurement period, which can last up to 12 months from the acquisition d
Slide 37: Non-GAAP reconciliation of specified items
│ ($MM, except EPS) Q1 25 Q4 24 Non- Non- Total Income Net Diluted Total Income Net Diluted Revenues Interest PTPP(6) PCL taxes Income EPS Revenues Interest PTPP(6) PCL taxes Income EPS Segment Expenses Expenses Reported Results 3,183 1,646 1,537 254 286 997 $2.78 2,944 1,592 1,352 162 235 955 $2.66
Slide 38: Investor Relations Contact Information
Investor Relations Contact Information W: —www.nbc.ca/investorrelations a) investorrelations@nbc.ca
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