With more than US $925 million in assets, some 1,300 employees and 35 branches,
ABA Bank will immediately be accretive to National Bank earnings
MONTREAL, May 9, 2016 /CNW Telbec/ - National Bank announces an
additional investment of US $103 million to acquire controlling interest in Advanced Bank of Asia
Limited (ABA Bank of Cambodia). National Bank initially purchased a 10% interest in ABA Bank in
2014, and made subsequent investments that brought its stake to 42% in 2015. National Bank now holds a 90 % interest in ABA Bank.
To date, National Bank has invested a total of US $148 million in ABA Bank as part of its
international growth strategy aimed at building a presence in high growth emerging markets.
Founded in 1996, ABA Bank is one of Cambodia's major financial institutions. With more than
US $925 million in assets, some 1,300 employees and 35 branches, ABA Bank offers financial products and services to individual
and business clients.
"National Bank is proud to become the majority shareholder of ABA Bank, a well established financial institution," said
Louis Vachon, President and CEO of National Bank of Canada. "ABA
Bank is positioned to take advantage of the country's long-term growth prospects and to contribute to increased utilization of
financial services by individuals and commercial businesses in the region."
National Bank estimates that ABA Bank will add $0.17 to its diluted earnings per share in fiscal
2016, including a $0.12 gain from the re-valuation of its earlier investment. This transaction will
reduce National Bank's common equity Tier 1 ratio (according to Basel III) by around 18 basis points in the third quarter of fiscal
2016. National Bank is targeting a common equity tier 1 ratio of approximately 9.7% at the end of the third quarter. National Bank
does not expect any new, significant strategic international investments within the next 12 months as the focus will be on
consolidating existing operations.
An Investor Day covering our international emerging markets investments will be held in Toronto
on September 16, 2016 and at which senior executives from ABA Bank will be among the speakers.
Forward looking information
Certain statements in this press release are forward-looking statements made in accordance with current securities
legislation in Canada and the United States. These
forward-looking statements include, but are not limited to, statements about the expected effects of the proposed transaction.
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 2016 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 or ABA 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, but are not limited to, 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 55 of the Bank's 2015 Annual Report), general economic environment and financial
market conditions in Canada, the United States and certain other
countries in which the Bank conducts business, including the volatility and level of various commodity prices, the occurrence of
natural catastrophes, regulatory changes affecting the Bank's business, capital and liquidity; 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; and potential disruptions to the Bank's information technology systems, including evolving cyber attack risk.
These factors also include, but are not limited to, the possibility that the anticipated benefits of the transaction are not
realized when expected or at all as a result of changes in general economic and market conditions in the areas where the Bank and
ABA Bank do business; the impact of changes in the laws and regulations regulating financial services and enforcement thereof; the
effects of competition in the markets in which the Bank and ABA Bank operate; judicial or regulatory judgments and legal
proceedings; the Bank's ability to complete the integration of ABA Bank's activities successfully; strategic risk related to our
international activities, reputational risks and the reaction of ABA Bank customers and employees to the transaction; diversion of
management time on transaction-related issues; and increased exposure to exchange rate and interest rate fluctuations. Other
unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such
forward-looking statements should therefore be construed in the light of such factors.
Assumptions about ABA Bank's revenues and expenses, potential for earnings growth as well as costs associated with the
transaction and expected synergies, were material factors the Bank considered in estimating the impact on its Basel III Common
Equity Tier 1 ratio and the estimate of the acquired business being accretive to the Bank's diluted earnings per share in
2016.
The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk
Management section beginning at page 55 of the Bank's 2015 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 press release is presented for the purpose of interpreting the information
contained herein and may not be appropriate for other purposes.
About National Bank of Canada
With $219 billion in assets as at January 31, 2016, National Bank of Canada, together with its subsidiaries, forms one of Canada's leading
integrated financial groups. The Bank has close to 20,000 employees and is widely recognized as a top employer. Its securities are
listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank's activities at nbc.ca or via social media such as Facebook, LinkedIn and Twitter.
SOURCE National Bank of Canada
