National Bank Of Canada · TSX:NA
National Bank Of Canada — Q2 2019 Earnings Presentation
26 slides from National Bank Of Canada's earnings presentation, May 30, 2019
Slide 1: Investor Presentation Q2|19
INVESTOR PRESENTATION Q2|19 May 30, 2019
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION REGARDING FORWARD-LOOKING STATEMENTS From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Economic Review and Outlook section of this Report to Shareholders and in the Major Economic Trends section of the 2018 Annual Report, in other f
Slide 3: Overview
OVERVIEW Louis Vachon President & Chief Executive Officer
Slide 4: Overview – Q2|19
OVERVIEW – Q2|19 Highlights ▪ Solid performance with EPS up 5% ($MM, TEB) Q2 19 Q1 19 Q2 18 QoQ YoY Revenues 1,850 1,862 1,818 (1%) 2% ▪ Credit quality remains strong Net Income 558 552 547 1% 2% ▪ Industry-leading ROE Diluted EPS $1.51 $1.50 $1.44 1% 5% ▪ Strong capital position PCL 84 88 91 (5%) (
Slide 5: Segment Highlights – Q2|19
SEGMENT HIGHLIGHTS – Q2|19 P&C Banking ▪ Strong performance with net earnings up 9% NET INCOME ($MM) Q2 19 Q1 19 Q2 18 QoQ YoY ▪ Disciplined cost management with operating P&C Banking 234 246 215 (5%) 9% leverage at 3% Wealth Management 118 125 112 (6%) 5% Wealth Management Financial Markets 160 170
Slide 6: Financial Review
FINANCIAL REVIEW Ghislain Parent Chief Financial Officer and Executive Vice-President, Finance
Slide 7: Transformation Driving Efficiency
TRANSFORMATION DRIVING EFFICIENCY Highlights Total Bank ▪ Targeting positive operating leverage in ($MM, TEB) Q2 19 Q1 19 ($MM, TEB) Revenues Expenses Operating Leverage Efficiency Ratio Q2 19 Q2 18 YoY 6M 19 6M 18 YoY 1 850 1 818 1,8% 1 026 992 3,4% (1,6%) 55,5% 54,6% 0,9% ($MM, TEB) Revenues Expen
Slide 8: Strong Capital Position
STRONG CAPITAL POSITION Highlights Total RWA under Basel III 79,008 ▪ Common Equity Tier 1 ratio at 11.5% 77,036 72,834 73,268 73,654 3,964 3,788 - Pro forma impact of +25 bps from Fiera 3,435 4,055 4,755 10,910 11,096 transaction in Q3 10,402 10,539 10,743 ▪ Total capital ratio at 16.2% 62,162 64,1
Slide 9: Risk Management
RISK MANAGEMENT William Bonnell Executive Vice-President Risk Management
Slide 10: Provisions for Credit Losses
PROVISIONS FOR CREDIT LOSSES Quarterly PCL Ratio (bps) Highlights PCL on impaired loans: ▪ $84 million (23 bps), increased by 2 bps QoQ ▪ Higher provisions in Commercial Banking, following Q1’s unusually low level, partially offset by lower provisions in Credigy ▪ Excluding USSF&I, PCL on impaired l
Slide 11: Gross Impaired Loans and Formations
GROSS IMPAIRED LOANS(1) AND FORMATIONS(2) Gross Impaired Loans (GIL) ($MM) Highlights ▪ GIL ratio of 42 bps, up 1 bp QoQ and stable YoY. ▪ Higher formations in Commercial Banking partially offset by lower formations in Personal Banking and Credigy Net Formations by Business Segment ($MM) Q2 19 Q1 19
Slide 12: Retail Mortgage and HELOC Portfolio
RETAIL MORTGAGE AND HELOC PORTFOLIO Canadian Distribution by Province Highlights (As at April 30, 2019) ▪ Distribution across product and geography remained stable. Insured mortgages account for 40% of the total ▪ Uninsured mortgages and HELOC in GTA and GVA represent 10% and 2% of the total portfol
Slide 13: Appendices
NATIONAL BANK Powering your ideas” APPENDICES
Slide 14: Strong Fundamentals in Québec Economy
APPENDIX 1 │STRONG FUNDAMENTALS IN QUÉBEC ECONOMY Jobless rate at historical lows Affordable home prices Jobless rate % - Rest of Canada and Québec Median home price in different cities ($) Household leverage below national average Sound public finances Household debt as a % of disposable income, 20
Slide 15: Personal and Commercial Banking
APPENDIX 2 | PERSONAL AND COMMERCIAL BANKING Highlights ($MM) Q2 19 Q1 19 Q2 18 QoQ YoY ▪ Strong performance with good Revenues 833 852 795 (2%) 5% revenue growth and good cost control Personal 525 527 501 - 5% ▪ Solid loan and deposit volume growth Commercial 308 325 294 (5%) 5% ▪ Robust operating
Slide 16: Wealth Management
APPENDIX 3 │ WEALTH MANAGEMENT Highlights ▪ Good revenue and earnings ($MM) Q2 19 Q1 19 Q2 18 QoQ YoY growth driven by good volume Revenues 426 434 413 (2%) 3% growth and favorable market Fee-based 250 242 242 3% 3% conditions Transaction & Others 64 64 62 - 3% ▪ Sequential decline in NII driven Net
Slide 17: Financial Markets
APPENDIX 4 │ FINANCIAL MARKETS Highlights ▪ Solid performance in Corporate and ($MM, TEB) Q2 19 Q1 19 Q2 18 QoQ YoY Investment Banking Revenues 404 410 437 (1%) (8%) - Strong growth in lending book Global Markets 218 251 265 (13%) (18%) - Good new issue business Corporate & Investment Banking 189 16
Slide 18: US Specialty Finance & International
APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL Highlights ($MM) Q2 19 Q1 19 Q2 18 QoQ YoY ▪ Strong growth at ABA with Revenues 178 171 174 4% 2% earnings up 81%, loans up 53%, Credigy 107 105 129 2% (17%) and deposits up 80% ABA 69 65 45 6% 53% Other 2 1 - - - ▪ Disciplined growth at Credigy Oper
Slide 19: Other
APPENDIX 6 │ OTHER Highlights ($MM, TEB) Q2 19 Q1 19 Q2 18 QoQ YoY ▪ Higher contribution from Treasury YoY, partly offset by Revenues 9 (5) (1) technology investments to Operating Expenses 55 60 49 (8%) 12% support transformation plan Provision - - - ▪ Higher contribution from for Credit Losses Trea
Slide 20: Total Loan Portfolio Overview
APPENDIX 7 │TOTAL LOAN PORTFOLIO OVERVIEW Highlights Loan Distribution by Borrower Category As at % of Total ▪ Secured lending accounts for ($B) April 30, 2019 92% of Retail loans Retail - Secured - Mortgage & HELOC 71.9 49% ▪ Limited exposure to unsecured (1) - Secured - Other 8.8 6% retail and car
Slide 21: Regional Distribution of Canadian Loans
APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS Highlights Maritimes(2) Oil Quebec Ontario BC/MB and TOTAL Regions(1) As at April 30, 2019 Territories Within the Canadian loan Retail portfolio: Secured 26.9% 13.1% 4.8% 3.7% 1.1% 49.6% - Mortgage & HELOC ▪ Limited exposure to Secured unsecured c
Slide 22: Oil & Gas and Pipelines Sector
APPENDIX 9 │ OIL & GAS AND PIPELINES SECTOR Outstanding Loans ($B) Highlights ▪ Producers and Services, Pipelines 6% 5% and Refinery & Integrated are now presented as one sector Producers (IG = 61%) $4.0B Midstream (IG = 92%) ▪ 61% of outstanding loans to 27% IG 71% Refinery & Integrated (IG = 100%)
Slide 23: Loan & Deposit Overview
APPENDIX 10 │ LOAN & DEPOSIT OVERVIEW ($B) Loans & BA's Deposits 131.0 133.8 136.7 142.8 146.1 146.7 148.7 125.0 127.1 139.9 51.8 53.1 54.0 55.4 50.0 76.0 78.5 71.1 72.8 75.4 89.9 91.1 92.9 92.7 93.3 54.0 54.3 55.7 57.7 58.2 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q2-2018 Q3-2018 Q4-2018 Q1-2019 Q2-
Slide 24: Daily Trading and Underwriting Revenues vs. VaR
APPENDIX 11 │ DAILY TRADING AND UNDERWRITING REVENUES VS. VAR ($MM) 24
Slide 25: Trading VaR Trend
APPENDIX 12 │ TRADING VaR TREND ($MM) 25
Slide 26: Investor Relations Contact Information
INVESTOR RELATIONS CONTACT INFORMATION W: www.nbc.ca/investorrelations investorrelations@nbc.ca 1-866-517-5455 Linda Boulanger, Vice President 514-394-0296 | linda.boulanger@bnc.ca Marianne Ratté, Senior Director 514-412-5437 | marianne.ratte@bnc.ca Arslan Benbakouche, Chief Analyst 514-412-8027
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