The financial information in this press release is based on the
unaudited interim consolidated financial statements for the first
quarter ended January 31, 2013. Additional information about National
Bank of Canada, including the Annual Information Form, can be obtained
from the SEDAR website at sedar.com or on Bank's website at nbc.ca.
Highlights:
-
$364 million in net income for the first quarter of 2013, up 4% from
$351 million in the same quarter of 2012;
-
Diluted earnings per share of $2.03 for the first quarter of 2013, up 2%
from $1.99 in the same quarter of 2012;
-
Return on equity of 20.0%;
-
As at January 31, 2013, the Common Equity Tier 1 (CET1) capital ratio
under Basel III was 7.9% versus a pro forma CET1 ratio under Basel III
of 7.3% as at October 31, 2012.
Highlights Excluding Specified Items(1):
-
A record $361 million in net income for the first quarter of 2013, up 2%
from $353 million in the same quarter of 2012;
-
Record diluted earnings per share of $2.02 for the first quarter of
2013, up 1% from $2.00 in the same quarter of 2012;
-
Return on equity of 19.8%.
MONTREAL, Feb. 28, 2013 /CNW Telbec/ - National Bank reports
$364 million in net income for the first quarter of 2013, a 4% increase
from $351 million in the first quarter of 2012. Diluted earnings per
share for the quarter ended January 31, 2013 stood at $2.03, up 2% from
$1.99 in the same quarter of 2012.
Excluding the specified items described on page 5, this quarter's net
income was a record amount of $361 million, up 2% from $353 million in
the same quarter of 2012, and the quarter's diluted earnings per share
was a record $2.02, up 1% from $2.00 in the same quarter of 2012.
"The first quarter results were driven by excellent performance in the
Wealth Management segment and the Personal and Commercial segment,
whose earnings rose 24% and 5%, respectively," said Louis Vachon,
President and Chief Executive Officer of the Bank. "The Bank is
continuing to invest in improvements to client service delivery and
operational effectiveness—key advantages in periods of moderate
economic growth. Furthermore, the Bank will maintain its sound
management of costs, risk and capital," added Mr. Vachon.
Financial Indicators
|
|
|
|
Results
|
|
|
|
|
|
excluding
|
|
|
|
Results
|
|
specified
|
|
|
|
Q1 2013
|
|
items
|
(1)
|
|
|
|
|
|
|
|
Growth in diluted earnings per share
|
2
|
%
|
1
|
%
|
|
Return on common shareholders' equity
|
20.0
|
%
|
19.8
|
%
|
|
Dividend payout ratio
|
33
|
%
|
40
|
%
|
|
CET1 capital ratio under Basel III
|
7.9
|
%
|
|
|
|
(1)
|
See the Financial Reporting Method section on page 5.
|
Results by Segment
The Bank's segment reporting is consistent with that adopted for the
year beginning November 1, 2012, with the following changes having been
made to better reflect how management monitors performance. The
distribution of banking products through independent networks has been
reclassified from the Personal and Commercial segment to the Wealth
Management segment. Banking activities with energy sector companies
have been transferred from the Financial Markets segment to the
Personal and Commercial segment. These changes had no impact on the
Bank's consolidated results.
Personal and Commercial
In the Personal and Commercial segment, first-quarter net income
totalled $178 million compared to $169 million in the first quarter of
2012, a 5% year-over-year increase that came from sustained growth in
business activity and a stringent control of non-interest expenses. The
segment's first-quarter total revenues increased by $16 million as net
interest income rose by $3 million and non-interest income by
$13 million. The higher net interest income came mainly from growth in
personal loan volume, tempered by a narrower net interest margin, which
was 2.14% in the first quarter of 2013 compared to 2.34% in the same
quarter of 2012, mainly due to a decline in loan spreads. The growth in
non-interest income was mainly due to credit fees and insurance
revenues.
Personal Banking's total revenues rose $8 million, mainly due to higher
loan volume, especially consumer loans and home equity lines of credit,
partly offset by narrower net interest margins. Credit fees and
insurance revenues were also up. Commercial Banking's total revenues
rose $8 million, owing mainly to higher credit fees, particularly on
acceptances.
The Personal and Commercial segment's first-quarter non-interest
expenses increased $5 million or 1% year over year. At 55%, the
efficiency ratio for the first quarter of 2013 improved by 1% when
compared to the same quarter of 2012. Provisions for credit losses were
reduced by $1 million, as lower provisions for losses on business loans
and credit card receivables were more significant than the higher
provisions on personal credit losses.
Wealth Management
In the Wealth Management segment, net income totalled $51 million in the
first quarter of 2013, up 24% from $41 million in the same quarter of
2012. First-quarter total revenues amounted to $275 million versus
$262 million in the first quarter of 2012, a 5% increase that was
mainly due to a greater volume of fee-based service transactions,
growth in assets under administration and under management, and the
CashPerformer account.
At $205 million, first-quarter non-interest expenses remained stable
year over year.
Financial Markets
In the Financial Markets segment, net income totalled $115 million for
the first quarter of 2013, down $6 million from $121 million in the
same quarter of 2012. On a taxable equivalent basis, the segment's
first-quarter total revenues amounted to $303 million compared to
$337 million in the first quarter of 2012, mainly attributable to net
gains on available-for-sale securities, which were $29 million lower
given the investing activity gains that had been realized in the first
quarter of 2012. Banking service revenues rose 26%, mainly due to
greater financing needs of clients carrying out acquisitions, while
other income was down $7 million, mainly due to a lower share in the
income of an associate.
For the first quarter of 2013, non-interest expenses were down
$12 million year over year as a result of variable compensation. During
the first quarter of 2013, $13 million in credit losses was recovered,
whereas in the same quarter of 2012, no provisions for credit losses
had been taken.
Other
For the Other heading of segment results, first-quarter net income totalled
$20 million, stable when compared to the same quarter of 2012. The
specified items for the first quarter of 2013, net of income taxes,
included $9 million in revenues related to holding restructured notes
compared to $3 million in the first quarter of 2012. Excluding
specified items, net income was down $5 million, mainly due to a lower
contribution from Treasury in the first quarter of 2013.
Capital
The Bank considers credit risk, operational risk and market risk in its
approach to managing capital. The Bank uses the Advanced Internal
Rating-Based Approach to manage credit risk and the Standardized
Approach for operational risk. For market risk, the Bank mainly uses an
approach based on internal models but uses the Standardized Approach
for certain exposures. Additional information is provided in the
Capital Management section on pages 54 to 56 of the 2012 Annual Report.
The new regulatory framework, referred to as Basel III, sets out
transitional arrangements for the period of 2013 to 2019. However, OSFI
is requiring Canadian banks to meet the 2019 minimum requirements as of
the first quarter of 2013 for Common Equity Tier 1 (CET1) and by the
first quarter of 2014 for Tier 1 capital and total capital. These
target ratios, called "all-in" ratios, will be presented alongside the
ratios calculated on a transitional basis for each quarter until the
start of 2019. Because the Bank must comply with the «all-in» ratios,
it must maintain, as of the first quarter of 2013, a CET1 ratio of at
least 7.0%, 4.5% for common equity and 2.5% for a capital conservation
buffer.
In addition to regulatory capital ratios, OSFI also requires banks to
meet an assets-to-capital multiple test. The assets-to-capital multiple
is calculated by dividing the Bank's total assets, including certain
off-balance-sheet items, by its regulatory capital.
According to OSFI's capital adequacy guidelines, financial institutions
could elect to phase in the impact of converting to IFRS on their
regulatory capital. The Bank had decided to use this election and
phased in the IFRS-conversion impact on a straight-line basis over a
five-quarter period starting from the first quarter of 2012 up to and
including the first quarter of 2013.
As at January 31, 2013, the CET1 capital ratio under Basel III, on an
"all-in" basis, was 7.9% versus a pro forma CET1 ratio under Basel III
of 7.3% as at October 31, 2012. The higher CET1 ratio is essentially
due to a delay in implementing the new Credit Valuation Adjustment
(CVA) charge, to the common share issuance related primarily to
exercised stock options, and to net income, net of dividends. The Tier
1 capital ratio and the total capital ratio, under Basel III on an
"all-in" basis, were 10.8% and 14.5%, respectively as at January 31,
2013 versus the respective pro forma ratios of 10.1% and 14.1% as at
October 31, 2012.
The risk-weighted assets calculated under the rules of Basel III on an
"all-in" basis, totalled $59.4 billion as at January 31, 2013 versus
$62.2 billion on a pro forma basis as at October 31, 2012, the decrease
being attributable to the delay in implementing the CVA.
HIGHLIGHTS
(millions of Canadian dollars)
|
Quarter ended January 31
|
|
2013
|
|
|
|
2012
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating results
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
1,235
|
|
|
$
|
1,243
|
|
|
(1)
|
|
Net income
|
|
364
|
|
|
|
351
|
|
|
4
|
|
Net income attributable to the Bank's shareholders
|
|
344
|
|
|
|
332
|
|
|
4
|
|
Return on common shareholders' equity
|
|
20.0
|
%
|
|
|
21.9
|
%
|
|
|
|
Earnings per share (dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.05
|
|
|
$
|
2.00
|
|
|
2
|
|
|
Diluted
|
|
2.03
|
|
|
|
1.99
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING SPECIFIED ITEMS(1)
|
|
|
|
|
|
|
|
|
|
|
Operating results
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
1,225
|
|
|
$
|
1,238
|
|
|
(1)
|
|
Net income
|
|
361
|
|
|
|
353
|
|
|
2
|
|
Net income attributable to the Bank's shareholders
|
|
341
|
|
|
|
334
|
|
|
2
|
|
Return on common shareholders' equity
|
|
19.8
|
%
|
|
|
22.1
|
%
|
|
|
|
Earnings per share (dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
2.04
|
|
|
$
|
2.01
|
|
|
1
|
|
|
Diluted
|
|
2.02
|
|
|
|
2.00
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share (dollars)
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
|
$
|
0.83
|
|
|
$
|
0.75
|
|
|
|
|
Book value
|
|
41.38
|
|
|
|
36.87
|
|
|
|
|
Stock trading range
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
80.04
|
|
|
|
77.94
|
|
|
|
|
|
Low
|
|
75.06
|
|
|
|
63.27
|
|
|
|
|
|
Close
|
|
79.32
|
|
|
|
75.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at January 31,
2013
|
|
|
As at October 31,
2012
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial position
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
183,796
|
|
|
|
177,903
|
|
|
3
|
|
Loans and acceptances
|
|
92,721
|
|
|
|
90,922
|
|
|
2
|
|
Deposits
|
|
93,899
|
|
|
|
93,249
|
|
|
1
|
|
Subordinated debt and equity
|
|
10,939
|
|
|
|
10,710
|
|
|
2
|
|
Capital ratios under Basel III(2)
|
|
|
|
|
|
|
|
|
|
|
|
Common Equity Tier 1 (CET1)
|
|
7.9
|
%
|
|
|
7.3
|
%
|
|
|
|
|
Tier 1
|
|
10.8
|
%
|
|
|
10.1
|
%
|
|
|
|
|
Total
|
|
14.5
|
%
|
|
|
14.1
|
%
|
|
|
|
Capital ratios under Basel I
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1
|
|
11.2
|
%
|
|
|
11.0
|
%
|
|
|
|
|
Total
|
|
15.0
|
%
|
|
|
14.6
|
%
|
|
|
|
Impaired loans, net of individual and collective allowance
|
|
(202)
|
|
|
|
(190)
|
|
|
|
|
|
As a % of loans and acceptances
|
|
(0.2)
|
%
|
|
|
(0.2)
|
%
|
|
|
|
Assets under administration/management
|
|
242,096
|
|
|
|
232,027
|
|
|
|
|
Total personal savings
|
|
152,210
|
|
|
|
149,774
|
|
|
|
|
Interest coverage
|
|
12.35
|
|
|
|
12.23
|
|
|
|
|
Asset coverage
|
|
3.56
|
|
|
|
3.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
|
|
|
|
|
|
Number of employees
|
|
19,858
|
|
|
|
19,920
|
|
|
−
|
|
Number of branches in Canada
|
|
452
|
|
|
|
451
|
|
|
−
|
|
Number of banking machines
|
|
922
|
|
|
|
923
|
|
|
−
|
|
(1)
|
See the Financial Reporting Method section on page 5.
|
|
(2)
|
Ratios are presented on an "all-in" basis and the October 31, 2012
ratios are presented on a pro forma basis.
|
FINANCIAL REPORTING METHOD
(millions of Canadian dollars)
When assessing its results, the Bank uses certain measures that do not
comply with International Financial Reporting Standards (IFRS), as
issued by the International Accounting Standards Board (IASB) and set
out in the Canadian Institute of Chartered Accountants Handbook.
Securities regulators require companies to caution readers that net
income and other measures adjusted using non-IFRS criteria are not
standard under IFRS and cannot be easily compared with similar measures
used by other companies.
FINANCIAL INFORMATION
|
Quarter ended January 31
|
|
2013
|
|
|
|
2012
|
|
|
%
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding specified items
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal and Commercial
|
|
178
|
|
|
|
169
|
|
|
|
5
|
|
|
Wealth Management
|
|
56
|
|
|
|
46
|
|
|
|
22
|
|
|
Financial Markets
|
|
115
|
|
|
|
121
|
|
|
|
(5)
|
|
|
Other
|
|
12
|
|
|
|
17
|
|
|
|
|
|
Net income excluding specified items
|
|
361
|
|
|
|
353
|
|
|
|
2
|
|
|
Less: Acquisition-related items(1)
|
|
(6)
|
|
|
|
(5)
|
|
|
|
|
|
|
Plus: Items related to holding restructured notes(2)
|
|
9
|
|
|
|
3
|
|
|
|
|
|
Net income
|
|
364
|
|
|
|
351
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share excluding specified items
|
$
|
2.02
|
|
|
$
|
2.00
|
|
|
|
1
|
|
|
Less: Acquisition-related items(1)
|
|
(0.04)
|
|
|
|
(0.03)
|
|
|
|
|
|
|
Plus: Items related to holding restructured notes(2)
|
|
0.05
|
|
|
|
0.02
|
|
|
|
|
|
Diluted earnings per share
|
$
|
2.03
|
|
|
$
|
1.99
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Including specified items
|
|
20.0
|
%
|
|
|
21.9
|
%
|
|
|
|
|
|
Excluding specified items
|
|
19.8
|
%
|
|
|
22.1
|
%
|
|
|
|
|
(1)
|
For the first quarter ended January 31, 2013, the acquisition-related
items consisted of: $6 million ($4 million net of income taxes) in
charges incurred for the Wealth Management acquisitions (2012:
$8 million, $5 million net of income taxes), made up essentially of
retention bonuses; the Bank's $1 million share ($1 million net of
income taxes) in the integration charges incurred by Fiera; and the
Bank's $1 million share ($1 million net of income taxes) in intangible
asset amortization and integration charges related to its interest in
TMX.
|
|
(2)
|
During the quarter ended January 31, 2013, $12 million in revenues
($9 million net of income taxes) was recorded to reflect a change in
the fair value of commercial paper not included in the Pan-Canadian
restructuring plan (2012: $5 million, $3 million net of income taxes).
|
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
From time to time, National Bank of Canada (the Bank) makes written and
oral forward-looking statements, such as those contained in the Major
Economic Trends and the Outlook for National Bank sections of the 2012
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 2013 and the
objectives it has set for itself for that period. These forward-looking
statements are made in accordance with the current securities
legislation. 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 2013 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
risk, operational risk, regulatory risk, reputation risk, and
environmental risk (all of which are described in greater detail in the
Risk Management section that begins on page 57 of the 2012 Annual
Report); the general economic environment, and financial market
conditions in Canada, the United States and certain other countries in
which the Bank conducts business, including the effects of the debt
crisis in certain European countries; the lowering of the U.S.
long-term sovereign debt rating by Standard & Poor's; the lowering of
the sovereign debt rating of certain European countries and the impact
of changes that affect the Bank's credit ratings; the situation with
respect to the restructured notes of the master asset vehicle (MAV)
conduits, in particular the realizable value of underlying assets;
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; and changes to capital and liquidity guidelines and to the
manner in which they are to be presented and interpreted.
The foregoing list of risk factors is not exhaustive. Additional
information about these factors can be found in the Risk Management and
Other Risk Factors sections of the 2012 Annual Report. Investors and
others who base themselves 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. The Bank also
cautions readers not to place undue reliance on these forward-looking
statements.
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 FIRST QUARTER 2013 RESULTS
Conference Call
-
A conference call for analysts and institutional investors will be held
on Friday, March 1, 2013 at 8:00 a.m. ET.
-
Access by telephone in listen-only mode: 1-866-898-9628 or 416-340-2217.
-
A recording of the conference call can be heard until March 12, 2013 by
dialing 1-800-408-3053 or 905-694-9451.
The access code is 5955220#.
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 quarterly financial statements are available at all times on
National Bank's website at nbc.ca/investorrelations.
-
The Report to Shareholders, Supplementary Financial Information and a
slide presentation will be available on the Investor Relations page of
National Bank's website shortly before the start of the conference
call.
SOURCE: National Bank of Canada
