National Bank Of Canada · TSX:NA
National Bank Of Canada — Q3 2021 Earnings Presentation
31 slides from National Bank Of Canada's earnings presentation, Aug 25, 2021
Slide 1: Investor Presentation Third Quarter 2021
INVESTOR PRESENTATION Third Quarter 2021 August 25, 2021
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES Caution Regarding Forward-Looking Statements From time to time, the Bank makes written forward-looking statements such as those contained in this document, in other filings with Canadian securities regulators, and in other communications. In
Slide 3: Overview
OVERVIEW Louis Vachon President & Chief Executive Officer
Slide 4: Q3 2021 – Strong Performance Across the Bank
Q3 2021 – STRONG PERFORMANCE ACROSS THE BANK Revenues(1) PTPP(2) ▪ Strong business performance $2,301 MM $1,085 MM - Revenues up 14% YoY(1) +14% YoY +15% YoY - PTPP up 15% YoY(2) - Positive operating leverage ▪ PCL recovery on strong portfolio performance and improving Total PCL EPS economic environ
Slide 5: Q3 2021 – Continued Organic Growth in All Segments
Q3 2021 – CONTINUED ORGANIC GROWTH IN ALL SEGMENTS P&C Banking ▪ Strong growth on both sides of the balance sheet Revenues: +10% YoY ▪ Average loans up 11% YoY and 4% QoQ driven by both Personal and Commercial PTPP(1): +18% YoY ▪ Momentum in client activity Wealth Management ▪ Strong organic growth
Slide 6: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 7: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES PCL Q3 2021 ($MM) 35 Impaired Total PCL 27 Performing ▪ PCL recovery of $43M (-10bps), reflecting 173 19 $143 POCI Total (bps) 20 continued strong portfolio performance and 1 improved economic outlook 123 $110 (10) 0 PCL on Impaired Loans $88 $81 -20 ▪ $34M (8bps), meani
Slide 8: Allowance for Credit Losses
ALLOWANCE FOR CREDIT LOSSES ACL Q3 21 ($MM) Total Allowances ▪ Declined by 5% ($70M) QoQ + 76% - 5% ▪ Remain >60% above pre-pandemic level $1,354 $1,309 ▪ Maintaining prudent level of allowances in PCL ($43) $1,239 light of continued uncertainty Impaired Impaired NCO and other (1) $357 $382 ($27) Im
Slide 9: Prudent Provisioning in Uncertain Economic Environment
PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 6.6X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 3.8x 6.4x 6.6x 5.9x 3.3x 5.4x 3.0x 4.7x 2.8x 2.8x 2.8x 4.1x 2.6x 1.8x Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 21
Slide 10: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) 49 49 ▪ Gross impaired loans of 39bps ($699M), a 45 50 42 decline of 3bps QoQ and 10bps YoY $1 000M 39 40 $794 $817 $757 $731 $ 800M $699 30 ▪ Continued low net formations $ 600M 20 - Financial Markets had one new formation in $
Slide 11: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at July 31, 2021) ▪ Insured mortgages account for 34% of the total RESL portfolio 54% ▪ Distribution across product and geography remained stable ▪ Uninsured mortgages and HELOC in GTA and 71% Uninsured & HELOC GVA represent 1
Slide 12: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 13: Balanced Approach Between Growth, Investment and Cost Management
BALANCED APPROACH BETWEEN GROWTH, INVESTMENT AND COST MANAGEMENT Revenue Growth: ▪ Strong performance across the Bank 13.9%(1) Q3 2021 YoY ▪ Positive operating leverage and continued discipline in cost management Expense Growth: 13.2% Q3 2021 YoY ▪ Expense growth reflecting the combined effect of th
Slide 14: Strong Capital Position
STRONG CAPITAL POSITION CET1 Ratio 0.56% ▪ Maintaining a solid CET1 ratio of 12.2%(1) while generating strong organic growth (0.36%) (0.12%) (0.04%) 12.19% 12.15% ▪ Continued strong net income generation ▪ RWA growth primarily driven by strong volume growth in Commercial Banking and counterparty cre
Slide 15: Strong Capital and Liquidity Positions
STRONG CAPITAL AND LIQUIDITY POSITIONS Capital and Capital Ratios ($MM) ▪ ▪Our Our capital capital levels levels remain remain strong strong Q3 21 Q2 21 Q1 21 Capital ▪ ▪Total Total capital capital ratio ratio of of 16%15.8% CET1 $12,574 $11,997 $11,563 - Redemption of Series 36 preferred shares Tie
Slide 16: Appendices
APPENDICES
Slide 17: Appendix 1 – Total Bank Q3 21 Results
APPENDIX 1 │ TOTAL BANK – Q3 21 RESULTS Total Bank Summary Results – Q3 2021 ($MM, TEB) ▪ Revenues up 14% YoY and PTPP up 15% Q3 21 Q2 21 Q3 20 QoQ YoY YoY(1) Revenues 2,301 2,282 2,021 1% 14% - Average loans up 9% YoY Non-Interest Expenses 1,216 1,199 1,074 1% 13% - Average deposits up 14% YoY Pre-
Slide 18: Appendix 2 – Personal and Commercial Banking
APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q3 2021 ($MM) ▪ Revenues up 10% YoY: Q3 21 Q2 21 Q3 20 QoQ YoY - Continued growth on both sides of the Revenues 937 902 851 4% 10% balance sheet Personal 563 542 535 4% 5% - Targeted opportunities in commercial real Commercial 374 36
Slide 19: Appendix 3 – Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q3 2021 ($MM) ▪ Continued strength across Wealth Q3 21 Q2 21 Q3 20 QoQ YoY Management, with net earnings up Revenues 547 541 451 1% 21% Fee-Based 339 318 266 7% 27% 30% YoY Transaction & Others 96 112 79 (14%) 22% - Fee-based revenue
Slide 20: Appendix 4 – Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q3 2021 ($MM, TEB) ▪ Solid performance in Financial Markets led Q3 21 Q2 21 Q3 20 QoQ YoY by C&IB Revenues 520 567 503 (8%) 3% Global Markets 279 269 302 4% (8%) ▪ C&IB: Revenues up 20% YoY, with a strong C&IB 241 298 201 (19%) 20% p
Slide 21: Appendix 5 – US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q3 2021 ($MM) ABA Bank ABA Bank Summary Results Q3 21 Q2 21 Q3 20 QoQ YoY Revenues 131 121 105 8% 25% ▪ Continued growth with revenues up 25% Non-Interest Expenses 42 42 42 - - YoY, loans up 29% and deposits up 34% Pre-Tax /
Slide 22: Appendix 6 – Other
APPENDIX 6 │ OTHER Other Segment Summary Results – Q3 2021 ($MM, TEB) ▪ Higher revenues YoY from gains on Q3 21 Q2 21 Q3 20 investments reflecting favorable markets Revenues 49 35 6 Non-Interest Expenses 108 103 44 ▪ Non-interest expenses up YoY: Pre-Tax / Pre-Provisions (59) (68) (38) PCL - - - - H
Slide 23: Appendix 7 – Total Loan Portfolio Overview
APPENDIX 7 │ TOTAL LOAN PORTFOLIO OVERVIEW Loan Distribution by Borrower Category ($B) ▪ Secured lending accounts for 94% As at of Retail loans July 31, 2021 % of Total Retail ▪ Indirect auto loans represent 1.7% of total Secured - Mortgage & HELOC 87.4 49% loans ($3.0B) Secured - Other (1) 10.4 6%
Slide 24: Appendix 8 – Regional Distribution of Canadian Loans
APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at July 31, 2021) Within the Canadian loan portfolio: Maritimes (2) ▪ Limited exposure to unsecured consumer Oil and loans (3.2%) (1) Quebec Ontario Regions BC/MB Territories Total Retail ▪ Modest exposure to unsecured cons
Slide 25: Appendix 9 – Limited Exposure to COVID-19 Most Impacted Industries
APPENDIX 9 │ LIMITED EXPOSURE TO COVID-19 MOST IMPACTED INDUSTRIES ▪ Exposure to COVID-19 key impacted sectors remains modest at 3.4% of total gross loans Gross Loans % of ($MM) Book Non-Food / Non-Pharmacy Retailers Car Dealerships $532 0.3% n Increase of 3% QoQ / Typically secured by real estate /
Slide 26: Appendix 10 – Oil & Gas and Pipelines Sector
APPENDIX 10 │ OIL & GAS AND PIPELINES SECTOR O&G Producers and Services Exposure Gross Loans in $MM and % of Total Loans ▪ O&G producers and services exposure significantly reduced $3,956 - 51% reduction in outstanding loans: down from $4B in Q1/15 to $1.9B in Q3/21 (vs $2.1B in Q2/21) - Reduction a
Slide 27: Appendix 11 – Commercial Real Estate Portfolio
APPENDIX 11 │ COMMERCIAL REAL ESTATE PORTFOLIO (As at July 31, 2021) Total CRE Portfolio Commercial Banking share Total CRE Portfolio of $14.2B $14.2B (7.9% of total loans) $12.5B (6.9% of total loans) ▪ Corporate Banking accounts for 12% of portfolio, primarily public REITs, well diversified across
Slide 28: Appendix 12 – Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 12 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 30 25 20 15 10 5 0 May-2021 June-2021 July-2021 (5) (10) (15) Trading P&L Trading VaR 28
Slide 29: Appendix 13 – Loan & Deposit Overview
APPENDIX 13 │ LOAN & DEPOSIT OVERVIEW Loans and BA’s(1) Deposits(2) ($B) ($B) 171.6 178.9 161.8 164.7 167.7 184.8 186.1 191.1 176.3 66.4 168.5 61.8 63.1 61.3 60.7 116.3 117.6 121.7 102.3 108.8 104.1 105.9 108.6 112.6 100.5 66.2 67.5 68.6 68.5 69.4 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q3 20 Q4 20 Q1 21 Q2 2
Slide 30: Appendix 14 – Range of Macroeconomic Scenarios - IFRS9
APPENDIX 14 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q3/21 vs. Q2/21 ($ Trillions) (Full Calendar Years) Base Scenario C2021 C2022 Real GDP (Annual Average % Change) As at Apr. 30, 2021 5.4% 4.0% As at Jul. 31, 2021 6.0% 4.0% Unemployment Rate (Average %
Slide 31: Investor Relations Contact Information
Investor Relations Contact Information W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455 Linda Boulanger, Senior Vice-President 514-394-0296 | linda.boulanger@bnc.ca Marianne Ratté, Senior Director 514-412-5437 | marianne.ratte@bnc.ca Arslan Benbakouche, Senior Manager 514-
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