National Bank Of Canada · TSX:NA

National Bank Of Canada — Q2 2021 Earnings Presentation

31 slides from National Bank Of Canada's earnings presentation, May 28, 2021

  1. Slide 1: Investor Presentation Second Quarter 2021

    INVESTOR PRESENTATION Second Quarter 2021 May 28, 2021

  2. 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

  3. Slide 3: Overview

    OVERVIEW Louis Vachon President & Chief Executive Officer

  4. Slide 4: Q2 2021 – Continued Momentum Across the Bank

    Q2 2021 – CONTINUED MOMENTUM ACROSS THE BANK Revenues(1) PTPP(2)  Strong business performance $2,282 MM $1,083 MM - Revenues up 8% YoY(1) +8% YoY +9% YoY - PTPP up 9% YoY(2) - Positive operating leverage  Low PCL on strong portfolio performance and improving Total PCL EPS economic environment $5 M

  5. Slide 5: Q2 2021 – Segment Highlights

    Q2 2021 – SEGMENT HIGHLIGHTS P&C Banking  Strong growth on both sides of the balance sheet Revenues: +7% YoY  Continued momentum in housing market with mortgages up 9% YoY PTPP(1): +12% YoY  Targeted opportunities in commercial real estate in the residential insured segment Wealth Management  Fa

  6. Slide 6: Risk Management

    RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management

  7. Slide 7: Provisions for Credit Losses

    PROVISIONS FOR CREDIT LOSSES Total PCL PCL Q2 2021  Meaningfully lower at $5M (1bp), reflecting continued strong portfolio ($MM) $504 performance and improved economic outlook Impaired & POCI PCL on Impaired Loans Performing  $67M (16bps), lower QoQ $391  New provisions at FM related to one accou

  8. Slide 8: Allowance for Credit Losses

    ALLOWANCE FOR CREDIT LOSSES ACL Q2 21 Total Allowances: ($MM)  Declined by 3% ($45M) QoQ to $1.3B  Remain 70% above pre-pandemic level and + 76% - 3% 7% higher YoY $1,354 PCL $5  Maintaining prudent level of allowances in $1,211 $1,309 light of continued uncertainty 2 Impaired NCO and other $357

  9. Slide 9: Prudent Provisioning in Uncertain Economic Environment

    PRUDENT PROVISIONING IN UNCERTAIN ECONOMIC ENVIRONMENT Strong Performing ACL Coverage Total Allowances Cover 6.4X NCOs Performing ACL / LTM PCL on Impaired Loans Total ACL / LTM Net Charge-Offs 6.4x 3.3x 5.9x 3.0x 5.4x 2.8x 2.8x 2.8x 4.7x 4.1x 2.6x 1.8x Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 21 Q1 20 Q2 2

  10. Slide 10: Gross Impaired Loans and Formations

    GROSS IMPAIRED LOANS AND FORMATIONS Gross Impaired Loans(1) (GIL) ($MM) 48 49 49  Gross impaired loans of 42bps ($731M), a 45 50 decline of 3bps QoQ and 6bps YoY 42 $ 900M $817 $780 $794 40 $ 800M $757 $731 $ 700M 30  Continued low net formations $ 600M $462 $444 $467 20 - Financial Markets had on

  11. Slide 11: Retail Mortgage and HELOC Portfolio

    RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province (As at April 30, 2021)  Insured mortgages account for 35% of the total RESL portfolio 55% Uninsured & HELOC Insured  Distribution across product and geography remained stable  Uninsured mortgages and HELOC in GTA and 70% GVA re

  12. Slide 12: Financial Review

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

  13. Slide 13: Balanced Approach Between Growth, Investment and Cost Management

    BALANCED APPROACH BETWEEN GROWTH, INVESTMENT AND COST MANAGEMENT Revenue Growth:  Strong PTPP growth reflecting our diversified business model and disciplined approach to cost management 8.0%(1) Q2 2021 YoY  Positive operating leverage of 1.0% Expense Growth: 7.0% Q2 2021 YoY  Expense growth refl

  14. Slide 14: Strong Capital Position

    STRONG CAPITAL POSITION CET1 Ratio 0.54% 0.04%  Strong CET1 ratio of 12.2%(2) (0.30%) (0.03%) 12.15% 11.90%  Continued strong net income generation - Favorable impact from performing loans reserve releases (5 bps)  RWA growth primarily driven by credit risk on strong growth in commercial and corp

  15. Slide 15: Strong Capital and Liquidity Positions

    STRONG CAPITAL AND LIQUIDITY POSITIONS Capital and Capital Ratios ($MM)  Our capital levels remain strong Q2 21 Q1 21 Q4 20  Our capital levels remain strong Capital  Total capital ratio of 16%  Total capital ratio of 16.4% CET1 $11,997 $11,563 $11,167  Strong liquidity coverage ratio of 161% $

  16. Slide 16: Appendices

    APPENDICES

  17. Slide 17: Total Bank – Q2 Results

    APPENDIX 1 │ TOTAL BANK – Q2 21 RESULTS Total Bank Summary Results – Q2 2021 ($MM, TEB)  Revenues up 8% YoY and PTPP up 9% Q2 21 Q1 21 Q2 20 QoQ YoY YoY(1) Revenues 2,282 2,281 2,112 - 8% - Average loans up 5% YoY Non-Interest Expenses 1,199 1,180 1,121 2% 7% - Average deposits up 14% YoY Pre-Tax /

  18. Slide 18: Personal and Commercial Banking

    APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING P&C Summary Results – Q2 2021 ($MM)  Revenues up 7% YoY: Q2 21 Q1 21 Q2 20 QoQ YoY - Solid growth on both sides of the balance Revenues 902 902 846 - 7% sheet Personal 542 554 523 (2%) 4% - Continued momentum in real estate across Commercial 360 348 323

  19. Slide 19: Wealth Management

    APPENDIX 3 │ WEALTH MANAGEMENT Wealth Management Summary Results – Q2 2021 ($MM)  Strong quarter with net earnings up Q2 21 Q1 21 Q2 20 QoQ YoY 17% YoY driven by: Revenues 541 519 475 4% 14% Fee-Based - Favorable markets 318 302 267 5% 19% Transaction & Others 112 107 98 5% 14% - Strong net sales N

  20. Slide 20: Financial Markets

    APPENDIX 4 │ FINANCIAL MARKETS Financial Markets Summary Results – Q2 2021 ($MM, TEB)  Strong performance in Financial Markets Q2 21 Q1 21 Q2 20 QoQ YoY with record quarter for C&IB Revenues 567 577 598 (2%) (5%) Global Markets 269 355 396 (24%) (32%)  C&IB: Revenues up 48% YoY, with C&IB 298 222

  21. Slide 21: US Specialty Finance & International

    APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL USSF&I Summary Results – Q2 2021 ($MM) ABA Bank ABA Bank Summary Results Q2 21 Q1 21 Q2 20 QoQ YoY  Continued momentum with revenues up Revenues 121 119 99 2% 22% 22% YoY, loans up 26% and deposits up Non-Interest Expenses (1) 42 44 47 (5%) (11%) 35

  22. Slide 22: Other

    APPENDIX 6 │ OTHER Other Segment Summary Results – Q2 2021 ($MM, TEB)  Stable net income loss YoY Q2 21 Q1 21 Q2 20 Revenues 35 9 10  Higher revenues from gains on Non-Interest Expenses 103 76 70 investments reflecting favorable markets Pre-Tax / Pre-Provisions (68) (67) (60) PCL - - 5  Non-inter

  23. Slide 23: 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 April 30, 2021 % of Total Retail  Indirect auto loans represent 1.7% of total Secured - Mortgage & HELOC 84.8 49% loans ($2.9B) Secured - Other (1) 8.9 5%

  24. Slide 24: Regional Distribution of Canadian Loans

    APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Prudent Positioning (As at April 30, 2021) Within the Canadian loan portfolio:  Limited exposure to unsecured consumer (2) Maritimes Oil and Quebec Ontario Regions (1) BC/MB Territories Total loans (3.4%) Retail  Modest exposure to unsecured con

  25. Slide 25: 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 $518 0.3%  Decrease of 5% QoQ / Typically secured by real estate /

  26. Slide 26: 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 $3,956 significantly reduced - 47% reduction in outstanding loans: down from $4B in Q1/15 to $2.1B in Q2/21 (vs $2.3B in Q1/21) $2,108 - Redu

  27. Slide 27: Commercial Real Estate Portfolio

    APPENDIX 11 │ COMMERCIAL REAL ESTATE PORTFOLIO (As at April 30, 2021) Total CRE Portfolio Commercial Banking share Total CRE Portfolio of $13.0B $13.0B (7.5% of total loans) $11.4B (6.6% of total loans)  Corporate Banking accounts for 13% of portfolio, primarily public REITs, well diversified acros

  28. Slide 28: 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-2021 March-2021 April-2021 (5) (10) (15) Trading P&L Trading VaR 28

  29. Slide 29: Loan & Deposit Overview

    APPENDIX 13 │ LOAN & DEPOSIT OVERVIEW Loans and BA’s(1) Deposits(2) ($B) ($B) 184.8 186.1 176.3 167.7 171.6 168.5 162.7 161.8 164.7 158.9 61.8 63.1 64.2 61.3 60.7 116.3 117.6 102.3 108.8 95.0 98.5 100.5 104.1 105.9 108.6 63.9 66.2 67.5 68.6 68.5 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q2 20 Q3 20 Q4 20 Q1 21

  30. Slide 30: Range of Macroeconomic Scenarios - IFRS9

    APPENDIX 14 │ RANGE OF MACROECONOMIC SCENARIOS - IFRS9 Canada Real GDP NBC Macroeconomic Forecast: Q2/21 vs. Q1/21 ($ Trillions) (Full Calendar Years) 2.40 Base Scenario C2021 C2022 2.30 Real GDP (Annual Average % Change) 2.20 As at Jan. 31, 2021 4.3% 3.2% 2.10 As at Apr. 31, 2021 5.4% 4.0% 2.00 Une

  31. 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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