National Bank Of Canada · TSX:NA

National Bank Of Canada — Q4 2018 Earnings Presentation

30 slides from National Bank Of Canada's earnings presentation, Dec 5, 2018

  1. Slide 1: Analyst and Investor Presentation Q4-2018 Conference Call

    NATIONAL BANK OF CANADA ANALYST AND INVESTOR PRESENTATION Q4-2018 CONFERENCE CALL Wednesday, December 5, 2018 — 1:00 pm ia NATIONAL | BANK | yourideas

  2. 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 Major Economic Trends section of this Annual Report, in other filings with Canadian securities regulators, and in other communications, for the p

  3. Slide 3: Overview

    OVERVIEW Louis Vachon President & Chief Executive Officer

  4. Slide 4: F2018: Record Earnings of $2.2B, Up 10% YoY

    F2018: RECORD EARNINGS OF $2.2B, UP 10% YOY (millions of dollars) HIGHLIGHTS ADJUSTED RESULTS (1) 12M 18 12M 17 YoY  Strong performance in all sectors Revenues 7,420 6,864 8% Net Income 2,249 2,049 10%  F2019 target operating leverage: 1 – 2% Diluted EPS $5.99 $5.45 10%  Industry leading ROE of 1

  5. Slide 5: Solid Growth in All Business Segments

    SOLID GROWTH IN ALL BUSINESS SEGMENTS (millions of dollars) ADJUSTED NET INCOME Q4 18 QoQ YoY 12M 18 12M 17 YoY SEGMENT HIGHLIGHTS Q4 18 P&C Banking 257 4% 10% 948 903 5% / 8%(1)  P&C BANKING – Net income up 10% Wealth Management 127 (2%) 10% 506 431 17%  Strong momentum in Retail and Commercial 

  6. Slide 6: Mid-Term Objectives

    MID-TERM OBJECTIVES Excluding specified items MID-TERM OBJECTIVES F2018 Results Achieved Growth in diluted earnings per share 5% to 10% 10%  Return on common shareholders' equity 15% to 20% 18.5%  Common Equity Tier 1 capital ratio > 10.75% 11.7%  Leverage ratio > 3.75% 4.0%  Dividend payout rat

  7. Slide 7: Financial Review

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

  8. Slide 8: Transformation Driving Efficiencies

    TRANSFORMATION DRIVING EFFICIENCIES Excluding specified items Taxable equivalent basis (millions of dollars) F2018 HIGHLIGHTS Total Bank 12M 18 12M 17 YoY  Exceeded our target operating leverage of Revenues 7,420 6,864 8.1% close to 2% for F2018 Expenses 4,052 3,838 5.6%  Strong operating leverage

  9. Slide 9: Strong Capital Position

    STRONG CAPITAL POSITION TOTAL RISK-WEIGHTED ASSETS COMMON EQUITY TIER 1 UNDER BASEL III UNDER BASEL III EVOLUTION (QoQ) 72,834 73,268 73,654 70,173 71,179 4,055 4,755 3,435 3,097 3,336 0.42% 10,402 10,539 10,743 10,039 10,218 0.26% 0.05% 11.58% 11.58% 11.74% 11.69% 11.69% 57,037 57,625 58,377 57,974

  10. Slide 10: Risk Management

    RISK MANAGEMENT William Bonnell Executive Vice-President, Risk Management

  11. Slide 11: Provision for Credit Losses

    PROVISION FOR CREDIT LOSSES IFRS 9 PCL (millions of dollars) Q4 18 Q3 18 Q2 18 Q1 18 Q4 17 HIGHLIGHTS Stage 3 Total Total Total Total Personal 40 41 35 45 44 36 Stable credit performance in Q4: Commercial 9 9 26 13 13 14  Provisions on impaired loans of 23 bps, Wealth Management 2 2 - - 1 1 improve

  12. Slide 12: Impaired Loans and BAs and Formation

    IMPAIRED LOANS AND BA’S(1) AND FORMATION (millions of dollars) IMPAIRED LOANS AND BA’S IMPAIRED LOANS AND BA’S FORMATION(2) IFRS 9 (millions of dollars) Q4 18 Q3 18 Q2 18 Q1 18 Q4 17 Personal 53 43 36 48 17 Commercial (4) 48 30 8 (5) Financial Markets - - - - - Wealth Management 5 1 2 2 2 Credigy 33

  13. Slide 13: Retail Mortgage and HELOC Portfolio

    RETAIL MORTGAGE AND HELOC PORTFOLIO CANADIAN RETAIL MORTGAGE PORTFOLIO DISTRIBUTION DISTRIBUTION BY CANADIAN PROVINCE As at October 31, 2018 IFRS 9 PCL (bps) 62% 53% 68% 48% 55% (1) Uninsured and HELOC - Average LTV (1) Average LTV are updated using Teranet-National Bank sub-indices by area and prop

  14. Slide 14: Appendix

    APPENDIX NATIONAL Powering BANK your ideas”

  15. Slide 15: Strong Fundamentals in Québec Economy

    APPENDIX 1 │STRONG FUNDAMENTALS IN QUÉBEC ECONOMY QUÉBEC: JOBLESS RATE STANDS AT 5.2% IN OCTOBER 2018 GLOBAL PERSPECTIVE ON HOME PRICES 16 Price per square feet in USD for downtown living* (Summer 2018) % 15 14 13 12 11 10 9 8 Rest of Canada 7 6 5 QC 4 1980 1985 1990 1995 2000 2005 2010 2015 Source:

  16. Slide 16: Personal and Commercial Banking

    APPENDIX 2 │ PERSONAL AND COMMERCIAL BANKING (millions of dollars) Q4 18 QoQ YoY 12M 18 12M 17 YoY HIGHLIGHTS Q4 18 Revenues 831 - 6% 3,239 3,057 6%  Net income up 10% YoY due to good Personal 512 (1%) 4% 2,016 1,941 4% revenue growth and good cost control Commercial 319 1% 9% 1,223 1,116 10%  Goo

  17. Slide 17: Wealth Management

    APPENDIX 3 │ WEALTH MANAGEMENT(1) (millions of dollars) Q4 18 QoQ YoY 12M 18 12M 17 YoY HIGHLIGHTS Q4 18 Revenues 447 1% 8% 1,768 1,613 10%  Net income up 10% driven by all business lines and strong operating leverage Fee-based 248 - 6% 987 906 9%  Fee-based revenues growth driven by Transaction &

  18. Slide 18: Financial Markets

    APPENDIX 4 │ FINANCIAL MARKETS (millions of dollars) Q4 18 QoQ YoY 12M 18 12M 17 YoY HIGHLIGHTS Revenues 436 5% 6% 1,743 1,618 8%  Strong year in equity financing, institutional flow and structured Global Markets 231 9% 2% 955 893 7% products Corporate Banking 101 4% 12% 377 327 15%  Solid perform

  19. Slide 19: US Specialty Finance & International

    APPENDIX 5 │ US SPECIALTY FINANCE & INTERNATIONAL (millions of dollars) Q4 18 QoQ YoY 12M 18 12M 17 YoY HIGHLIGHTS Revenues 158 8% 3% 639 541 18% Credigy 100 0% (10%) 446 409 9%  ABA’s revenues up 50% due to strong loan ABA 57 21% 50% 192 125 54% and deposit volume growth Other 1 - (80%) 1 7 (86%)

  20. Slide 20: Other

    APPENDIX 6 │ OTHER(1) Taxable equivalent basis (millions of dollars) Q4 18 Q4 17 12M 18 12M 17 HIGHLIGHTS Revenues 4 (7) 31 35  Operating expense growth due to technology investments and business Operating Expenses 90 77 303 249 development initiatives Provision for Credit Losses (1) - - 40 Net Inc

  21. Slide 21: Loan Portfolio Overview

    APPENDIX 7 │LOAN PORTFOLIO OVERVIEW HIGHLIGHTS (billions of dollars) Q4 18 % of Total Secured - Mortgage & HELOC 70.6 48%  Secured lending accounts for Secured - Other (2) 9.1 7% 92% of Retail loans Unsecured 5.3 4% Credit Cards 2.1 1%  Modest exposure to unsecured Total Retail 87.0 60% consumer l

  22. Slide 22: Regional Distribution of Canadian Loans

    APPENDIX 8 │ REGIONAL DISTRIBUTION OF CANADIAN LOANS As at October 31, 2018 RETAIL WHOLESALE Secured Corporate Unsecured and Oil & Gas Mortgages & Secured Others Commercial Banking and Credit Card Sector REGION HELOC Other (1) Quebec 27.1% 3.4% 3.6% 0.0% 17.8% 5.3% Ontario 13.1% 1.4% 0.6% 0.1% 3.8%

  23. Slide 23: Real Estate Secured Lending

    APPENDIX 9 │REAL ESTATE SECURED LENDING (billions of dollars) AVERAGE BALANCE Personal Personal + Wealth Management Q4-18 Q3-18 Q4-17 QoQ YoY Q4-18 Q3-18 Q4-17 QoQ YoY Residential Mortgages 39.8 39.4 38.6 1% 3% 41.3 40.6 39.6 2% 4% HELOC - amortizing 9.6 9.2 8.5 4% 12% 11.2 10.7 9.7 4% 16% Real Esta

  24. Slide 24: Oil and Gas Sector (Producers & Services)

    APPENDIX 10 │ OIL AND GAS SECTOR (PRODUCERS & SERVICES) HISTORICAL TREND IN EXPOSURES AT DEFAULT ($B) HIGHLIGHTS  Producers & Services portfolio has been rebalanced since 2015  Outstanding loans in this portfolio represent 1.7% of total loans, reduced from peak of 3.6% in 2015  Limited WCS exposu

  25. Slide 25: Oil and Gas Sector & Related Segments

    APPENDIX 11 │ OIL AND GAS SECTOR & RELATED SEGMENTS OUTSTANDING LOANS – Q4 18 2.3 $B 1.3 $B 1.3 $B IG 61% IG 94% 0.2 $B 0.2 $B 0.2 $B IG 53% IG 100% Producers Services (OFS) Midstream Refinery and Oil Regions - Oil Regions - Other Integrated Commercial Retail Oil and Gas Sector Other Wholesale - Rel

  26. Slide 26: Balance Sheet Overview (Banking Book & Other)

    APPENDIX 12 │ BALANCE SHEET OVERVIEW (Banking Book & Other) (billions of dollars) LENDING – LOANS AND BAs (MONTH END BALANCE) FUNDING – DEPOSITS AND BAs (MONTH END BALANCE) 142.8 146.1 139.9 5.7 166.9 136.5 136.4 5.6 159.5 162.0 5.9 5.7 5.9 16.5 152.3 150.9 14.6 15.2 29.2 13.6 13.1 28.0 28.6 8.1 8.6

  27. Slide 27: Daily Trading and Underwriting Revenues vs VaR

    APPENDIX 13 │ DAILY TRADING and UNDERWRITING REVENUES vs VAR Q4 2018 RESULTS CONFERENCE CALL – December 5, 2018 I 27

  28. Slide 28: VaR Trend

    APPENDIX 14 │ VaR TREND Q4 2018 RESULTS CONFERENCE CALL – December 5, 2018 I 28

  29. Slide 29: Detail of Specified Items

    APPENDIX 15│ DETAIL OF SPECIFIED ITEMS (millions of dollars) Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Wealth Management acquisitions (7) (7) (5) (4) (4) Items related to TMX - Income Before Income Taxes (7) (7) (5) (4) (4) Income Taxes 1 1 1 - 1 Net Income (6) (6) (4) (4) (3) EPS Impact (0.02) (0.02) (0.01) (0

  30. Slide 30: Investor Relations Contact Information

    INVESTOR RELATIONS CONTACT INFORMATION Website: www.nbc.ca/investorrelations E-mail: investorrelations@nbc.ca Toll-free: 1-866-517-5455 Linda Boulanger Arslan Benbakouche Vice President Chief Analyst 514-394-0296 514-412-8027 linda.boulanger@bnc.ca arslan.benbakouche@bnc.ca Marie-Claude Jarry Cather

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