Information  X 
Enter a valid email address

Nat Bank of Canada (32SS)

  Print      Mail a friend

Thursday 27 February, 2020

Nat Bank of Canada

Press Release Q1 2020

RNS Number : 3841E
National Bank of Canada
27 February 2020
 

 

Regulatory Announcement

National Bank of Canada

February 27, 2020

Q1 2020 Results

National Bank of Canada (the "Bank") announces publication of its First Quarter 2020 Release. The First Quarter Results have been uploaded to the National Storage Mechanism and will shortly be available at www.morningstar.co.uk/uk/nsm and is available on the Bank's website at https://www.nbc.ca/en/about-us/investors/investor-relations/quarterly-results.html

To view the full PDF of this First Quarter 2020 Release, please click on the following link:

  http://www.rns-pdf.londonstockexchange.com/rns/3841E_1-2020-2-27.pdf

 

 

 

National Bank reports its results for the First Quarter of 2020

 

The financial information reported in this document is based on the unaudited interim condensed consolidated financial statements for the quarter ended January 31, 2020 and is prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), unless otherwise indicated. IFRS represent Canadian generally accepted accounting principles (GAAP). All amounts are presented in Canadian dollars.

 

MONTREAL, February 27, 2020 - For the first quarter of 2020, National Bank is reporting net income of $610 million, an 11% increase from $552 million in the first quarter of 2019. First-quarter diluted earnings per share stood at $1.67, up 11% from $1.50 in the first quarter of 2019. These increases were driven by sound net income growth across all the business segments. At $620 million, first-quarter net income excluding specified items grew 12% from $552 million in the same quarter of 2019. First-quarter diluted earnings per share excluding specified items stood at $1.70, a 13% increase from $1.50 in the same quarter of 2019. The specified items are described on page 4.

 

Commenting on the Bank's financial results for the first quarter of 2020, Louis Vachon, President and Chief Executive Officer of National Bank of Canada, highlighted "the solid performance of each business segment." He added, "the Bank is maintaining its strategy of balancing volume growth with disciplined cost management and prudent risk management."

 

 

Highlights

 

(millions of Canadian dollars)

 

 

Quarter ended January 31

 

 

 

 

 

2020

 

 

 

2019

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

610

 

 

 

552

 

 

11

 

Diluted earnings per share (dollars)

 

$

1.67

 

 

$

1.50

 

 

11

 

Return on common shareholders' equity

 

 

18.0

%

 

 

17.2

%

 

 

 

Dividend payout ratio

 

 

41.4

%

 

 

41.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding specified items (1)

 

 

 

 

 

 

 

 

 

 

 

Net income excluding specified items

 

 

620

 

 

 

552

 

 

12

 

Diluted earnings per share excluding specified items (dollars)

 

$

1.70

 

 

$

1.50

 

 

13

 

Return on common shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

excluding specified items

 

 

18.3

%

 

 

17.2

%

 

 

 

Dividend payout ratio excluding specified items

 

 

41.1

%

 

 

41.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at January 31,

2020

 

 

 

As at October 31,

2019

 

 

 

 

CET1 capital ratio under Basel III

 

 

11.7

%

 

 

11.7

%

 

 

 

Leverage ratio under Basel III

 

 

4.0

%

 

 

4.0

%

 

 

 

 

(1)  See the Financial Reporting Method section on page 4 for additional information on non-GAAP financial measures.

 

 

 

Personal and Commercial

 

Net income totalled $251 million in the first quarter of 2020, up 4% from $242 million in the first quarter of 2019.

At $880 million, the 2020 first-quarter total revenues rose $29 million or 3% year over year.

Rising 4% from a year ago, personal lending experienced growth, particularly due to mortgage lending, while commercial lending grew 6% from a year ago.

The net interest margin stood at 2.21% in the first quarter of 2020 compared to 2.22% in the first quarter of 2019.

First-quarter non-interest expenses were up 1% year over year.

At 53.2%, the first-quarter efficiency ratio improved from 54.4% in the first quarter of 2019.

 

 

Wealth Management

 

Net income totalled $135 million in the first quarter of 2020, up 10% from $123 million in the same quarter of 2019.

First-quarter total revenues amounted to $465 million compared to $434 million in first quarter 2019, a $31 million or 7% increase driven mainly by growth in fee-based revenues.

First-quarter non-interest expenses stood at $282 million, up 6% from $267 million in the first quarter of 2019.

At 60.6%, the first-quarter efficiency ratio improved from 61.5% in the first quarter of 2019.

 

 

Financial Markets

 

Net income totalled $184 million in the first quarter of 2020, a 10% increase from $168 million in the same quarter of 2019.

First-quarter total revenues on a taxable equivalent basis(1) amounted to $458 million, a $48 million or 12% year-over-year increase attributable mainly to the global markets revenue category.

First-quarter non-interest expenses stood at $199 million compared to $178 million in the first quarter of 2019.

At 43.4%, the efficiency ratio on a taxable equivalent basis(1) remained stable compared to the first quarter of 2019.

 

 

U.S. Specialty Finance and International

 

Net income totalled $85 million in the first quarter of 2020, a 42% increase from $60 million in the first quarter of 2019.

The 2020 first-quarter total revenues amounted to $195 million, a 14% year-over-year increase owing to revenue growth at the ABA Bank subsidiary.

First-quarter non-interest expenses stood at $78 million, a $10 million year-over-year increase attributable to expansion of ABA Bank's banking network.

 

 

Other

 

The Other heading posted a net loss of $45 million in the first quarter of 2020 versus a $41 million net loss in the same quarter of 2019.

 

 

Capital Management

 

As at January 31, 2020, the Common Equity Tier 1 (CET1) capital ratio under Basel III was 11.7%, stable compared to October 31, 2019.

As at January 31, 2020, the Basel III leverage ratio was 4.0%, stable compared to October 31, 2019.

 

Dividends

 

On February 26, 2020, the Board of Directors declared regular dividends on the various series of first preferred shares and a dividend of 71 cents per common share, payable on May 1, 2020 to shareholders of record on March 30, 2020.

 



 

 

(1)  See the Financial Reporting Method section on page 4 for additional information on non-GAAP financial measures.

 

Highlights

 

(millions of Canadian dollars, except per share amounts)

 

Quarter ended January 31

 

 

 

 

2020

 

 

 

2019

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating results

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

1,923

 

 

 

1,799

 

 

7

 

Net income

 

 

610

 

 

 

552

 

 

11

 

Net income attributable to the Bank's shareholders

 

 

594

 

 

 

536

 

 

11

 

Return on common shareholders' equity

 

 

18.0

%

 

 

17.2

%

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.69

 

 

$

1.51

 

 

12

 

 

Diluted

 

 

1.67

 

 

 

1.50

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating results on a taxable equivalent basis

 

 

 

 

 

 

 

 

 

 

 

 

and excluding specified items(1)

 

 

 

 

 

 

 

 

 

 

 

Total revenues on a taxable equivalent basis

 

 

2,010

 

 

 

1,862

 

 

8

 

Net income excluding specified items

 

 

620

 

 

 

552

 

 

12

 

Return on common shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

excluding specified items

 

 

18.3

%

 

 

17.2

%

 

 

 

Efficiency ratio on a taxable equivalent basis and

 

 

 

 

 

 

 

 

 

 

 

 

excluding specified items

 

 

53.6

%

 

 

55.1

%

 

 

 

Earnings per share excluding specified items(1)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.72

 

 

$

1.51

 

 

14

 

 

Diluted

 

 

1.70

 

 

 

1.50

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common share information

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

$

0.71

 

 

$

0.65

 

 

 

 

Book value

 

 

37.58

 

 

 

34.85

 

 

 

 

Share price

 

 

 

 

 

 

 

 

 

 

 

 

High

 

 

74.22

 

 

 

61.80

 

 

 

 

 

Low

 

 

68.25

 

 

 

54.97

 

 

 

 

 

Close

 

 

73.43

 

 

 

61.80

 

 

 

 

Number of common shares (thousands)

 

 

335,818

 

 

 

335,500

 

 

 

 

Market capitalization

 

 

24,659

 

 

 

20,734

 

 

 

 

 

(millions of Canadian dollars)

As at

January 31,

2020

 

 

As at

October 31,

2019

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Balance sheet and off-balance-sheet

 

 

 

 

 

 

 

 

 

Total assets

 

289,191

 

 

281,458

 

 

3

 

Loans and acceptances, net of allowances

 

156,151

 

 

153,251

 

 

2

 

Deposits

 

197,504

 

 

189,566

 

 

4

 

Equity attributable to common shareholders

 

12,621

 

 

12,328

 

 

2

 

Assets under administration and under management 

 

606,804

 

 

565,396

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory ratios under Basel III

 

 

 

 

 

 

 

 

 

Capital ratios

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 (CET1)

 

11.7

%

 

11.7

%

 

 

 

 

Tier 1

 

14.9

%

 

15.0

%

 

 

 

 

Total

 

16.0

%

 

16.1

%

 

 

 

Leverage ratio

 

4.0

%

 

4.0

%

 

 

 

Liquidity coverage ratio (LCR)

 

144

%

 

146

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other information

 

 

 

 

 

 

 

 

 

Number of employees - Worldwide

 

26,314

 

 

25,487

 

 

3

 

Number of branches in Canada 

 

416

 

 

422

 

 

(1)

 

Number of banking machines in Canada

 

933

 

 

939

 

 

(1)

 

 

(1)  See the Financial Reporting Method section on page 4 for additional information on non-GAAP financial measures.

 

Financial Reporting Method 

 

As stated in Note 2 to its audited annual consolidated financial statements for the year ended October 31, 2019, the Bank adopted IFRS 16 on November 1, 2019. As permitted by the IFRS 16 transitional provisions, the Bank elected to apply IFRS 16 using the modified retrospective basis, with no restatement of comparative periods. Note 2 to the unaudited interim condensed consolidated financial statements for the quarter ended January 31, 2020, presents the impacts of IFRS 16 adoption on the Bank's Consolidated Balance Sheet as at November 1, 2019 and additional information on adoption of IFRS 16. Since interim consolidated financial statements do not include all of the annual financial statement disclosures required under IFRS, they should be read in conjunction with the audited annual consolidated financial statements and accompanying notes for the year ended October 31, 2019.

 

 

Non-GAAP Financial Measures

 

The Bank uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance with GAAP, which are based on IFRS. Presenting non-GAAP financial measures helps readers to better understand how management analyzes results, shows the impacts of specified items on the results of the reported periods, and allows readers to assess results without the specified items if they consider such items not to be reflective of the underlying performance of the Bank's operations. Securities regulators require companies to caution readers that non-GAAP financial measures do not have standardized meanings under GAAP and therefore may not be comparable to similar measures used by other companies.

 

Like many other financial institutions, the Bank uses the taxable equivalent basis to calculate net interest income, non-interest income, and income taxes. This calculation method consists of grossing up certain tax-exempt income (particularly dividends) by the income tax that would have been otherwise payable. An equivalent amount is added to income taxes. This adjustment is necessary in order to perform a uniform comparison of the return on different assets regardless of their tax treatment.


 

Financial Information

 

(millions of Canadian dollars, except per share amounts)

 

Quarter ended January 31

 

 

 

 

2020

 

 

 

2019

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income excluding specified items(1)

 

 

 

 

 

 

 

 

 

 

 

Personal and Commercial

 

 

251

 

 

 

242

 

4

 

 

Wealth Management

 

 

135

 

 

 

123

 

10

 

 

Financial Markets

 

 

184

 

 

 

168

 

10

 

 

U.S. Specialty Finance and International

 

 

85

 

 

 

60

 

42

 

 

Other

 

 

(35)

 

 

 

(41)

 

 

 

Net income excluding specified items

 

 

620

 

 

 

552

 

12

 

 

Charge related to Maple(2)

 

 

(10)

 

 

 

 

 

 

Net income

 

 

610

 

 

 

552

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share excluding specified items

 

$

1.70

 

 

$

1.50

 

13

 

 

Charge related to Maple(2)

 

 

(0.03)

 

 

 

 

 

 

Diluted earnings per share

 

$

1.67

 

 

$

1.50

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on common shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

Including specified items

 

 

18.0

%

 

 

17.2

%

 

 

 

Excluding specified items

 

 

18.3

%

 

 

17.2

%

 

 

 

(1)  For the quarter ended January 31, 2019, certain amounts have been reclassified.

(2)  During the quarter ended January 31, 2020, the Bank recorded a charge of $13 million ($10 million net of income taxes) related to Maple Financial Group Inc. (Maple) in the Other heading of segment results following the event that occurred in December 2019, as described in the Contingent Liabilities section on page 16 of the Report to Shareholders for the first quarter of 2020.

 

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 the Report to Shareholders - First quarter 2020 and in the 2019 Annual Report, in other filings with Canadian securities regulators, and in other communications, for the purpose of describing the economic environment in which the Bank will operate during fiscal 2020 and the objectives it hopes to achieve for that period. These forward-looking statements are made in accordance with current securities legislation in Canada and the United States. They include, among others, statements with respect to the economy-particularly the Canadian and U.S. economies-market changes, observations regarding the Bank's objectives and its strategies for achieving them, Bank-projected financial returns and certain risks faced by the Bank. These forward-looking statements are typically identified by future or conditional verbs or words such as "outlook," "believe," "anticipate," "estimate," "project," "expect," "intend," "plan," and similar terms and expressions.

 

By their very nature, such forward-looking statements require assumptions to be made and involve inherent risks and uncertainties, both general and specific. Assumptions about the performance of the Canadian and U.S. economies in 2020 and how that will affect the Bank's business are among the main factors considered in setting the Bank's strategic priorities and objectives and in determining its financial targets, including provisions for credit losses. In determining its expectations for economic growth, both broadly and in the financial services sector in particular, the Bank primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.

 

There is a strong possibility that express or implied projections contained in these forward-looking statements will not materialize or will not be accurate. The Bank recommends that readers not place undue reliance on these statements, as a number of factors, many of which are beyond the Bank's control, could cause actual future results, conditions, actions or events to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include credit risk, market risk, liquidity and funding risk, operational risk, regulatory compliance risk, reputation risk, strategic risk and environmental risk, all of which are described in more detail in the Risk Management section beginning on page 58 of the 2019 Annual Report, and more specifically, general economic environment and financial market conditions in Canada, the United States and certain other countries in which the Bank conducts business, including regulatory changes affecting the Bank's business; changes in the accounting policies the Bank uses to report its financial condition, including uncertainties associated with assumptions and critical accounting estimates; tax laws in the countries in which the Bank operates, primarily Canada and the United States (including the U.S. Foreign Account Tax Compliance Act (FATCA)); changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted; changes to the credit ratings assigned to the Bank; potential disruptions to the Bank's information technology systems, including evolving cyberattack risk and possible impacts of catastrophic events affecting local and global economies, including public health emergencies and natural disasters. 

 

The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management section of the 2019 Annual Report. Investors and others who rely on the Bank's forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

 

The forward-looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.

 

 

Disclosure of the First Quarter 2020 results

 

Conference Call

A conference call for analysts and institutional investors will be held on Thursday, February 27, 2020 at 1:00 p.m. EST.

Access by telephone in listen-only mode: 1-800-806-5484 or 416-340-2217. The access code is 1995846#.

A recording of the conference call can be heard until March 27, 2020 by dialing 1-800-408-3053 or 905-694-9451. The access code is 1511461#.

 

Webcast

The conference call will be webcast live at nbc.ca/investorrelations .

A recording of the webcast will also be available on National Bank's website after the call.

 

Financial Documents

The Report to Shareholders (which includes the quarterly consolidated financial statements) is available at all times on National Bank's website at nbc.ca/investorrelations .

The Report to Shareholders, the Supplementary Financial Information, the Supplementary Regulatory Capital and Pillar 3 Disclosure, and a slide presentation will be available on the Investor Relations page of National Bank's website the morning of the conference call.

 

   

 

 

For more

information:

 

 

Ghislain Parent

Chief Financial Officer and

Executive Vice-President -

Finance

514-394-6807

 

 

Jean Dagenais

Senior Vice-President -

Finance

514-394-6233

 

 

Linda Boulanger

Vice-President -

Investor Relations

514-394-0296

 

 

Claude Breton

Vice-President -

Communications

and Corporate

Social Responsibility

514-394-8644

 

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
QRFEADAXAEAEEFA

a d v e r t i s e m e n t