National Bank Of Canada · TSX:NA
National Bank Of Canada — Q4 2001 Earnings Presentation
31 slides from National Bank Of Canada's earnings presentation, Dec 6, 2001
Slide 1: National Bank of Canada Investor Presentation: Q4 2001 and Year End Results
National Bank of Canada Investor Presentation Q4 2001 and Year End Results Conference Call December 6th, 2001 www.nbc.ca/investorrelations
Slide 2: 2001: Strong performance despite recent slow economic environment
2001: Strong performance despite recent slow economic environment Year end facts: 9 Solid and diversified banking model: 9 Cash ROE 16% 9 17.2% cash continued operations 9 Stable and profitable Retail banking growth 9 Financial Markets: high level of profit reflects excellent positioning 9 Core capi
Slide 3: Delivering on growth strategy
Delivering on growth strategy Strategic focus YTD 2001 Objective 1: Growth in income before goodwill charges + 10%/year 10% Objective 2: Return on common shareholders’ equity before goodwill charges between 15.5% - 17.5% 16% Objective 3: Expense ratio at 60% in 2003 62.7% (1) (1) Continued operation
Slide 4: Key yearly figures
Key yearly figures Continued operations (Millions $) Cash Basis 2001 2000 Evolution Revenues from continued operations (TEB) $3,171 $3,036 4.4% Non recurring items $76 $136 Total revenues (TEB) $3,247 $3,172 2.4% Net income $627 $499 25.7% Net income excluding non recurring items $580 $490 18.4% EPS
Slide 5: Strong fundamentals
Strong fundamentals Continued operations, cash basis Earnings per Share Total Revenues and Net Income (Millions $) $4.00 $3,700 $700 $3.50 Net Income $3,200 $600 CAGR : 17.1% $3.00 CAGR 14.5% $2.87 Total revenues $2,700 $500 $2.44 CAGR : 8.7% $2.50 $1.98 $2.08 $2,200 $400 $2.00 $1.67 $1,700 $300 $1.
Slide 6: Common share dividend
Common share dividend Per common share dividend Dividend Yield $1.00 5.00% 3.91% $0.90 4.00% 3.38% $0.82 CAGR 9.0% 2.85% 2.86% 3.01% $0.80 3.00% $0.75 $0.70 $0.70 $0.66 2.00% $0.60 $0.58 1.00% $0.50 0.00% 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 Yield calculation: closing price/trailing fou
Slide 7: Key quarterly figures
Key quarterly figures Continued operations - Cash Basis (Millions $) Evolution Q4 01 Q3 01 Q4 00 Q4 vs Q3 01 Q4 vs Q4 00 Revenues from continued operations (TEB) $799 $812 $760 -1.6% 5.1% Non recurring items $76 - - Total revenues (TEB) $875 $812 $760 7.8% 15.1% Net income $163 $174 $132 -6.3% 23.5%
Slide 8: Earnings growth
Earnings growth Continued operations - Cash Basis For year ending October 31st, 2001 Earnings growth 2001/2000 Composition of earnings contribution Financial Markets 14% Commercial 35% Canada 22% Wealth Management Personal 11% Banking 18% -15% -5% 5% 15% 25% Personal Banking Wealth Management Commer
Slide 9: Continued capital discipline
Continued capital discipline As at October 31 13.1% 11.4% 3.5% • Securitization of $980 M of 2.7% indirect loans 1.1% Tier 1 1.0% 1.1% • Securitization of $50 M of 1.1% 9.6% Tier 1 credit cards 8.7% 6.6% 7.4% • Redemption of Series 10 preferred shares 2000 2001 Tangible equity Non-cum. Pref. shares
Slide 10: Value at Risk
Value at Risk Daily VaR - Global Trading - YTD - in CAD$ (Maximum 1-day loss at 99%) THOUSANDS 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - May-01 June-01 July-01 August-01 September-01 October-01 10
Slide 11: Strategic efforts paying off
Personal Banking and Wealth Management Strategic efforts paying off 9 Focus 9 Accomplishment 9 Realignment of core activities to 9 Closing of GPS transaction exit non profitable business lines 9 Focus 9 Accomplishment 9 High-Touch branch approach 9 Branch refocus on quality of client and advisory se
Slide 12: Financial Performance
Personal Banking and Wealth Management Financial Performance For the period ending October 31 in millions of dollars Fourth Quarter Fiscal Year Total Revenues Net income Total Revenues Net income 268.5 274.6 490.2 478.9 68.1 61.5 1,910.1 1,930.3 11.1 76.6 68.3 156.9 141.3 13.0 668.2 601.0 333.3 337.
Slide 13: Asset under management growth
Personal Banking and Wealth Management Asset under management growth As at October 31, 2001 in billions of dollars 61.5 60.8 21.9 9.2 9.1 21.3 31.0 29.8 21.3 21.9 2000 2001 2000 2001 Deposits Full brokerage Others Deposits Others include Mutual Funds, Discount Brokerage and Trust Services 13
Slide 14: Specialized Sales Force dynamism
Personal Banking and Wealth Management Specialized Sales Force dynamism 9 Objectives 9 Create unit responsible for distribution of Wealth Management products and services 9 Key strategy 9 Leverage current sales force and realign resources towards client centric structure 9 Actions taken 9 Geographic
Slide 15: Financial Performance
Commercial Banking Canada Financial Performance For the period ending October 31 in millions of dollars Fourth Quarter Fiscal Year Total Revenues Net income Total Revenues Net income 97.0 410.0 96.0 390.0 95.0 370.0 350.0 94.0 330.0 93.0 96.3 96.0 385.8 119.7 32.6 310.0 378.6 110.1 92.0 24.9 290.0 9
Slide 16: Loans and BA's
Commercial Banking Canada Loans and BA’s As at October 31 in billions $ • Steady Quebec market share • In quarter, renewed activity in 9.4 8.9 oil sector • Continued efforts on pricing and fees 2000 2001 16
Slide 17: Sale of US Commercial lending portfolio
Commercial Banking Portfolio Sale of US Commercial lending portfolio Expected to close in Q1 02 9 Summary of transaction: 9 Sale of US Commercial Lending business to PNC Financial Services Group, a US $1.6 billion in loans outstanding 9 National Bank and PNC will collaborate to liquidate the discont
Slide 18: Satisfactory performance despite volatile environment
Financial Markets Satisfactory performance despite volatile environment 9 Sharp market movement (rate and equity) 9 Lower capital market activity 9 Fair demand for corporate finance services 18
Slide 19: Financial Performance
Financial Markets Financial Performance For the period ending October 31 in millions of dollars Fourth Quarter Fiscal Year Total Revenues Net income Total Revenues Net income 57.6 57.1 216.5 208.2 780.0 191.1 175.6 686.9 3.5 13.8 21.4 63.3 272.1 20.1 81.6 81.5 21.0 313.8 75.3 55.6 212.4 46.6 55.6 17
Slide 20: Corporate Banking achievements
Financial Markets Corporate Banking achievements For the period ending October 31 in millions of dollars Fourth Quarter Fiscal Year Total Revenues Net income Total Revenues Net income 23.0 90.0 200.0 50.0 21.0 80.0 19.0 70.0 40.0 150.0 17.0 60.0 30.0 15.0 50.0 55.6 21.4 100.0 212.4 46.6 13.0 21.0 17
Slide 21: Composition of revenue
Financial Markets Composition of revenue As at October 31, 2001 Merchant Banking & other investment Fixed Income securities 8% 8% Institutional Equities 5% Market Makers 6% Treasury 37% Corporate & Investment Banking 36% 21
Slide 22: Revenue consistency
Financial Markets Revenue consistency in millions of dollars 267 235 192 183 71 37 Trading revenues Capital Markets Fees Investment gains 2000 2001 22
Slide 23: Enhancing credit management capabilities
Risk Management Enhancing credit management capabilities 9 Extending credit rating scale to improve risk adjusted pricing 9 Exposure limited in volatile industry sectors 9 Close monitoring of portfolio segmentation 23
Slide 24: Higher Q4 credit losses
Risk Management Higher Q4 01 credit losses in millions of dollars 136 38 2001: $325 M 2000: $200 M 72 62 59 59 46 46 5 46 13 17 98 6 6 53 52 57 40 46 40 42 46 19 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Canada US 24
Slide 25: Level of provisioning for credit losses
Risk Management Level of provisioning for credit losses Including discontinued operations % of Loan losses as a % of loans and BA’S 0.67% 0.66% Big 5 National Bank Reference to Big 5 includes TD, Royal Bank, CIBC, Bank of Montreal and Scotia 25
Slide 26: Net impaired loans
Risk Management Net impaired loans Millions $ Q4 01 Q3 01 Q4 00 Gross impaired loans $932 $947 $957 Net impaired loans Individuals and small business 211 201 194 Commercial Canada 211 178 233 Corporate 15 23 23 Real Estate 32 50 38 Discontinued operations 117 125 52 Treasury 2 3 3 Other 3 1 1 Sub-to
Slide 27: Diverse portfolio composition
Risk Management Diverse portfolio composition Continued operations Total Loans and BAs* As at October 31, 2001 Credit card 3% Consumer Commercial 14% 21% Small Business 5% Corporate 16% Mortgage 41% * Adjusted for Securitization 27
Slide 28: Business portfolio diversification
Risk Management Business portfolio diversification as at September 30 2001, excluding Repo ’s Agricultural Non-residential 3% mortgages 2% Financial institutions 7% Mortgages 29% Manufacturing 14% Construction and real estate 3% Transportation and communication 3% Mines, quaries and energy Governmen
Slide 29: Industry exposure
Risk Management Industry exposure Loans and BAs as at October 31st, 2001 (in millions $) % of Total Total Loans Loans & BAs Telecommunication and Cable 571 1.19% Aerospace 419 0.87% Insurance 56 0.12% Automotive parts & accessories 419 0.87% Hotel/Touring 112 0.23% 29
Slide 30: Well positioned for 2002
National Bank of Canada Well positioned for 2002 9 Weathering the economic storm... 9 High capital and general reserve levels 9 Concentrating on productivity improvements 9 Solid risk management 9 Benefiting from focused activities 30
Slide 31: National Bank of Canada
NATIONAL BANK OF CANADA This presentation may contain certain forward looking statements about the operations, objectives and strategies of the National Bank of Canada. Such statements are subject to risk and uncertainties. Actual results may differ materially due to a variety of factors, including
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