The financial information reported herein is based on the unaudited interim condensed consolidated financial statements for
the quarter ended January 31, 2017 and prepared in accordance with International Financial
Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). All amounts are presented in
Canadian dollars.
MONTREAL, March 1, 2017 /CNW Telbec/ - National Bank is
reporting net income of $497 million for the first quarter of 2017 compared to $261 million in
the same quarter of 2016, a $236 million increase that is explained by the Bank's write-off of its
equity interest in associate Maple Financial Group Inc. during the first quarter of 2016 and by net income growth generated by
its main business segments. Diluted earnings per share stood at $1.34 in the first quarter of 2017
compared to $0.67 in the same quarter of 2016.
The Bank's 2017 first-quarter net income excluding specified items totalled $502 million, up 18%
from $427 million in the first quarter of 2016, and first-quarter diluted earnings per share
excluding specified items stood at $1.35, up 15% from $1.17 in the
same quarter of 2016. The specified items are described on page 4.
"For the first quarter of 2017, the Bank's excellent performance was driven by strong revenue growth in both the Wealth
Management and Financial Markets segments and by efficiency initiatives undertaken in the Personal and Commercial segment," said
Louis Vachon, President and Chief Executive Officer of National Bank. "Furthermore, our credit
quality remains solid and our Common Equity Tier 1 (CET1) capital ratio stood at 10.6%."
|
|
|
|
Highlights
|
|
|
|
|
|
|
(millions of Canadian dollars)
|
|
Quarter ended January 31
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
|
Net income
|
|
497
|
|
|
261
|
|
90
|
|
Diluted earnings per share (dollars)
|
$
|
1.34
|
|
$
|
0.67
|
|
100
|
|
Return on common shareholders' equity
|
|
18.4
|
%
|
|
9.5
|
%
|
|
|
Dividend payout ratio
|
|
55
|
%
|
|
51
|
%
|
|
|
|
|
|
|
|
|
|
|
Excluding specified items (1)
|
|
|
|
|
|
|
|
|
Net income excluding specified items
|
|
502
|
|
|
427
|
|
18
|
|
Diluted earnings per share excluding specified items
(dollars)
|
$
|
1.35
|
|
$
|
1.17
|
|
15
|
|
Return on common shareholders' equity excluding specified items
|
|
18.6
|
%
|
|
16.6
|
%
|
|
|
Dividend payout ratio excluding specified items
|
|
48
|
%
|
|
44
|
%
|
|
|
|
|
|
|
|
|
|
|
As at January 31,
2017
|
|
As at October 31,
2016
|
|
|
|
CET1 capital ratio under Basel III
|
|
10.6
|
%
|
|
10.1
|
%
|
|
|
Leverage ratio under Basel III
|
|
3.8
|
%
|
|
3.7
|
%
|
|
|
|
|
(1)
|
See the Financial Reporting Method section on page 4 for additional
information on non-IFRS financial measures.
|
Personal and Commercial
- Net income totalled $213 million in the first quarter of 2017, up 18% from $180 million in the first quarter of 2016.
- At $755 million, the 2017 first-quarter total revenues rose $31
million or 4% year over year.
- Rising 6%, personal lending experienced sustained growth, largely due to mortgage lending, while commercial lending grew 3%
from a year ago.
- The segment's net interest margin was 2.24% in the first quarter of 2017 versus 2.25% in the first quarter of 2016 as well
as the preceding quarter.
- The segment recorded first-quarter provisions for credit losses of $52 million, $10 million less than in the first quarter of 2016.
- The 2017 first-quarter non-interest expenses were down 1% year over year.
- At 54.6%, the efficiency ratio improved from 57.5% in the first quarter of 2016.
Wealth Management
- Net income totalled $101 million in the first quarter of 2017, a 31% increase from
$77 million in the same quarter of 2016.
- The 2017 first-quarter total revenues amounted to $397 million compared to $356 million in the first quarter of 2016, a $41 million or 12% increase owing
to growth across all of the segment's revenue categories.
- The 2017 first-quarter non-interest expenses stood at $259 million compared to $251 million in the first quarter of 2016.
- The efficiency ratio excluding specified items(1) was 63.9%, an improvement from 68.2% in the first quarter of
2016.
Financial Markets
- Net income totalled $183 million in the first quarter of 2017 compared to $4 million in the same quarter of 2016, an increase explained by the write-off of the Bank's equity interest
in associate Maple Financial Group Inc. during the first quarter of last year.
- The segment's first-quarter net income excluding specified items(1) totalled $183
million, up 23% from $149 million in the first quarter of 2016.
- Total revenues on a taxable equivalent basis and excluding specified items(1) amounted to $419 million, a $71 million year-over-year increase driven primarily by trading
activity revenues and financial market fees.
- The 2017 first-quarter non-interest expenses stood at $170 million, a $26 million year-over-year increase associated with revenue growth.
- The efficiency ratio was 40.6% compared to 41.4% in the first quarter of 2016.
U.S. Specialty Finance and International
- Net income totalled $38 million in the first quarter of 2017 compared to $40 million in the same quarter of 2016.
- The 2017 first-quarter total revenues amounted to $118 million, a $10
million year-over-year increase owing mainly to the revenues generated by the Advanced Bank of Asia Limited
subsidiary.
- At $56 million, the 2017 first-quarter non-interest expenses rose $8
million year over year.
Other
- The Other heading posted a 2017 first-quarter net loss of $38 million versus a net
loss of $40 million in the same quarter of 2016. This change essentially reflects a greater
contribution by treasury activities, partly offset by higher non-interest expenses.
Capital Management
- As at January 31, 2017, the Common Equity Tier 1 (CET1) capital ratio under Basel III was
10.6% compared to 10.1% as at October 31, 2016, an increase resulting essentially from net
income, net of dividends, common share issuances under the stock option plan and remeasurements of the pension plans.
- As at January 31, 2017, the Basel III leverage ratio was 3.8%, essentially unchanged from
October 31, 2016.
|
(1)
|
See the Financial Reporting Method section on page 4 for additional
information on non-IFRS financial measures.
|
|
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except per share amounts)
|
|
|
|
|
Quarter ended January 31
|
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
Operating results
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
1,633
|
|
|
1,289
|
|
27
|
|
Net income
|
|
|
497
|
|
|
261
|
|
90
|
|
Net income attributable to the Bank's shareholders
|
|
|
478
|
|
|
239
|
|
100
|
|
Return on common shareholders' equity
|
|
|
18.4
|
%
|
|
9.5
|
%
|
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.35
|
|
$
|
0.68
|
|
99
|
|
Diluted
|
|
|
1.34
|
|
|
0.67
|
|
100
|
|
|
|
|
|
|
|
|
|
|
Operating results on a taxable equivalent basis (1) and excluding specified items (2)
|
|
|
|
|
|
|
|
|
|
Total revenues on a taxable equivalent basis and excluding specified
items
|
|
|
1,707
|
|
|
1,530
|
|
12
|
|
Net income excluding specified items
|
|
|
502
|
|
|
427
|
|
18
|
|
Return on common shareholders' equity excluding specified items
|
|
|
18.6
|
%
|
|
16.6
|
%
|
|
|
Efficiency ratio on a taxable equivalent basis and excluding specified
items
|
|
|
56.5
|
%
|
|
58.6
|
%
|
|
|
Earnings per share excluding specified items
(2)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.37
|
|
$
|
1.18
|
|
16
|
|
Diluted
|
|
|
1.35
|
|
|
1.17
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
Common share information
|
|
|
|
|
|
|
|
|
|
Dividends declared
|
|
$
|
0.56
|
|
$
|
0.54
|
|
|
|
Book value
|
|
|
29.51
|
|
|
27.77
|
|
|
|
Share price
|
|
|
|
|
|
|
|
|
|
High
|
|
|
56.60
|
|
|
44.11
|
|
|
|
Low
|
|
|
46.83
|
|
|
35.83
|
|
|
|
Close
|
|
|
56.17
|
|
|
39.97
|
|
|
|
Number of common shares (thousands)
|
|
|
340,810
|
|
|
337,535
|
|
|
|
Market capitalization
|
|
|
19,143
|
|
|
13,491
|
|
|
|
(millions of Canadian dollars)
|
As at January 31,
2017
|
|
As at October 31,
2016
|
|
% Change
|
|
|
|
|
|
|
|
Balance sheet and off-balance-sheet
|
|
|
|
|
|
|
Total assets
|
234,119
|
|
232,206
|
|
1
|
|
Loans and acceptances
|
126,881
|
|
126,178
|
|
1
|
|
Impaired loans, net of total allowances
|
(344)
|
|
(289)
|
|
|
|
As a % of average loans and acceptances
|
(0.3)
|
%
|
(0.2)
|
%
|
|
|
Deposits(3)
|
144,729
|
|
142,066
|
|
2
|
|
Equity attributable to common shareholders
|
10,058
|
|
9,642
|
|
4
|
|
Assets under administration and under management
|
411,236
|
|
397,342
|
|
3
|
|
|
|
|
|
|
|
Earnings coverage
|
9.30
|
|
7.84
|
|
|
|
Asset coverage
|
10.50
|
|
10.04
|
|
|
|
|
|
|
|
|
|
Regulatory ratios under Basel III
|
|
|
|
|
|
|
Capital ratios(4)
|
|
|
|
|
|
|
Common Equity Tier 1 (CET1)
|
10.6
|
%
|
10.1
|
%
|
|
|
Tier 1
|
14.1
|
%
|
13.5
|
%
|
|
|
Total
|
15.9
|
%
|
15.3
|
%
|
|
|
Leverage ratio(4)
|
3.8
|
%
|
3.7
|
%
|
|
|
Liquidity coverage ratio (LCR)
|
139
|
%
|
134
|
%
|
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
|
|
Number of employees
|
21,298
|
|
21,770
|
|
(2)
|
|
Number of branches in Canada
|
448
|
|
450
|
|
−
|
|
Number of banking machines in Canada
|
941
|
|
938
|
|
−
|
|
|
(1)
|
See the Consolidated Results section on page 6 of the Report to
Shareholders for the quarter ended January 31, 2017.
|
|
(2)
|
See the Financial Reporting Method section on page 4 for additional
information on non-IFRS financial measures.
|
|
(3)
|
An amount of $2.2 billion classified in Due to clients, dealers and
brokers on the Consolidated Balance Sheet as at October 31, 2016 is now reported in Deposits.
|
|
(4)
|
The ratios are calculated using the "all-in" methodology.
|
FINANCIAL REPORTING
METHOD
The Bank's unaudited interim condensed consolidated financial statements have been prepared in accordance with IFRS, as issued
by the IASB. The Bank also uses non-IFRS financial measures when assessing its results and measuring Bank-wide performance.
Presenting such information 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 financial performance of its operations. 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.
The presentation of segment disclosures is consistent with the presentation adopted by the Bank for the fiscal year beginning
November 1, 2016. This presentation reflects the fact that the activities of subsidiary Credigy Ltd., which had
previously been presented in the Financial Markets segment, and that the activities of subsidiary Advanced Bank of Asia Limited
(ABA Bank) and of other international investments, which had previously been presented in the Other heading, are now
presented in the U.S. Specialty Finance and International (USSF&I) segment. The Bank made this change to better align the
monitoring of its activities with its management structure.
|
Financial Information
|
|
|
|
|
(millions of Canadian dollars, except per share amounts)
|
|
|
Quarter ended January 31
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
Net income excluding specified items
|
|
|
|
|
|
|
|
|
Personal and Commercial
|
|
213
|
|
|
180
|
|
18
|
|
Wealth Management
|
|
106
|
|
|
84
|
|
26
|
|
Financial Markets
|
|
183
|
|
|
149
|
|
23
|
|
U.S. Specialty Finance and International
|
|
38
|
|
|
40
|
|
(5)
|
|
Other
|
|
(38)
|
|
|
(26)
|
|
|
|
Net income excluding specified items
|
|
502
|
|
|
427
|
|
18
|
|
Items related to holding restructured notes(1)
|
|
−
|
|
|
(1)
|
|
|
|
Acquisition-related items(2)
|
|
(5)
|
|
|
(20)
|
|
|
|
Write-off of an equity interest in an associate(3)
|
|
−
|
|
|
(145)
|
|
|
|
Net income
|
|
497
|
|
|
261
|
|
90
|
|
|
|
|
|
|
|
|
Diluted earnings per share excluding specified items
|
$
|
1.35
|
|
$
|
1.17
|
|
15
|
|
Acquisition-related items(2)
|
|
(0.01)
|
|
|
(0.06)
|
|
|
|
Write-off of an equity interest in an associate(3)
|
|
−
|
|
|
(0.43)
|
|
|
|
Premium paid on preferred shares redeemed for
cancellation(4)
|
|
−
|
|
|
(0.01)
|
|
|
|
Diluted earnings per share
|
$
|
1.34
|
|
$
|
0.67
|
|
100
|
|
|
|
|
|
|
|
|
Return on common shareholders' equity
|
|
|
|
|
|
|
|
|
Including specified items
|
|
18.4
|
%
|
|
9.5
|
%
|
|
|
Excluding specified items
|
|
18.6
|
%
|
|
16.6
|
%
|
|
|
|
|
(1)
|
During the quarter ended January 31, 2016, the Bank recorded $2 million in
financing costs ($1 million net of income taxes) related to holding restructured notes.
|
|
(2)
|
During the quarter ended January 31, 2017, the Bank recorded $6 million in
acquisition-related charges ($5 million net of income taxes) (2016: $27 million, $20 million net of income taxes). These
charges consisted mostly of retention bonuses and also included the Bank's share in the integration costs incurred by
Fiera Capital Corporation (Fiera Capital) as well as the Bank's share in the charges related to its equity interest in
TMX Group Limited (TMX), particularly goodwill and intangible asset impairment losses of $18 million ($13 million net of
income taxes) recorded during the quarter ended January 31, 2016.
|
|
(3)
|
During the quarter ended January 31, 2016, the Bank had written off its
equity interest in associate Maple Financial Group Inc. (Maple) in an amount of $164 million ($145 million net of income
taxes) following the February 6, 2016 event described in the Analysis of the Consolidated Balance Sheet section on page
35 of the 2016 Annual Report.
|
|
(4)
|
During the quarter ended January 31, 2016, a $3 million premium was paid on
the Series 20 First Preferred Shares redeemed for cancellation.
|
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Outlook for
National Bank and the Major Economic Trends sections of the 2016 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 2017 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 2017 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 48 of the 2016 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 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.
The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk
Management section of the 2016 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 FIRST QUARTER 2017 RESULTS
Conference Call
- A conference call for analysts and institutional investors will be held on Wednesday, March 1,
2017 at 1:00 p.m. EST.
- Access by telephone in listen-only mode: 1-866-862-3930 or 416‑695‑7806. The access code is 6710780#.
- A recording of the conference call can be heard until March 30, 2017 by dialing
1-800-408-3053 or 905-694-9451. The access code is 4525841#.
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
Disclosure, 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
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