The financial information reported in this document is based on the unaudited interim condensed consolidated financial
statements for the quarter and six-month period ended April 30, 2017 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, May 31, 2017 /CNW Telbec/ - For the second
quarter of 2017, National Bank is reporting net income of $484 million, a $274 million increase from $210 million in the second quarter of 2016. This increase is a result of the
sectoral provision for credit losses of $183 million, net of income taxes, recorded for the oil and
gas producer and service company loan portfolio in the second quarter of 2016 and of growth in net income across all the business
segments. Diluted earnings per share stood at $1.28 in the second quarter of 2017 compared to
$0.52 in the second quarter of 2016.
Net income excluding specified items totalled $492 million in the second quarter of 2017
compared to $237 million in the second quarter of 2016, and diluted earnings per share excluding
specified items stood at $1.30 for the quarter ended April 30, 2017
compared to $0.60 in the same quarter of 2016. The specified items are described on page 4.
For the first six months of 2017, the Bank's net income totalled $981 million versus
$471 million in the same period of 2016, and its 2017 first-half diluted earnings per share stood
at $2.62 versus $1.19 in the same period of 2016. These increases
were generated by net income growth across all the business segments, the sectoral provision that had been recorded in the second
quarter of 2016, and the write-off of the Bank's equity interest in associate Maple Financial Group Inc. in the first quarter of
2016. Net income excluding specified items for the six months ended April 30, 2017 totalled
$994 million, a 50% increase from $664 million in the same six-month period of 2016. Diluted earnings per share
excluding specified items stood at $2.65 for the six months ended April 30, 2017 compared to
$1.77 for the first six months of fiscal 2016.
"Each business segment posted double-digit earnings growth, contributing to the Bank's excellent performance for the second
quarter of 2017," said Louis Vachon, President and Chief Executive Officer of National Bank.
"Furthermore, the Bank increased its quarterly common share dividend by 2 cents per share or 3.6%
to 58 cents per share and continues to strengthen its Common Equity Tier 1 (CET1) capital
ratio."
|
|
|
|
|
|
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars)
|
|
Quarter ended April 30
|
|
|
|
|
Six months ended April 30
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
2017
|
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
484
|
|
|
210
|
|
130
|
|
981
|
|
|
471
|
|
108
|
Diluted earnings per share (dollars)
|
$
|
1.28
|
|
$
|
0.52
|
|
146
|
$
|
2.62
|
|
$
|
1.19
|
|
120
|
Return on common shareholders' equity
|
|
17.9
|
%
|
|
7.7
|
%
|
|
|
18.1
|
%
|
|
8.6
|
%
|
|
Dividend payout ratio
|
|
47
|
%
|
|
61
|
%
|
|
|
47
|
%
|
|
61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding specified items (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income excluding specified items
|
|
492
|
|
|
237
|
|
108
|
|
994
|
|
|
664
|
|
50
|
Diluted earnings per share excluding specified items
(dollars)
|
$
|
1.30
|
|
$
|
0.60
|
|
117
|
$
|
2.65
|
|
$
|
1.77
|
|
50
|
Return on common shareholders' equity excluding specified items
|
|
18.2
|
%
|
|
8.9
|
%
|
|
|
18.4
|
%
|
|
12.8
|
%
|
|
Dividend payout ratio excluding specified items
|
|
42
|
%
|
|
50
|
%
|
|
|
42
|
%
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at April 30,
2017
|
|
|
As at October 31,
2016
|
|
|
CET1 capital ratio under Basel III
|
|
|
|
|
|
|
|
|
10.8
|
%
|
|
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-GAAP financial measures.
|
Personal and Commercial
- Net income totalled $233 million in the second quarter of 2017 compared to a second-quarter
net loss of $13 million last year due to the sectoral provision for credit losses recorded for
the oil and gas producer and service company loan portfolio. Net income excluding the impact of the sectoral
provision(1) totalled $204 million in the second quarter of 2017, up $34 million or 20% from $170 million in the second quarter of 2016.
- At $734 million, the segment's 2017 second-quarter total revenues rose $36 million or 5% year over year.
- Rising 5% from a year ago, personal lending experienced sustained growth, particularly due to mortgage lending, while
commercial lending (excluding oil and gas producers and service companies) grew 6% from a year ago.
- The net interest margin was 2.24% in the second quarter of 2017 versus 2.21% in the second quarter of 2016.
- The 2017 second-quarter non-interest expenses were up 2% year over year.
- At 55.9%, the efficiency ratio improved from 57.4% in the second quarter of 2016.
Wealth Management
- Net income totalled $99 million in the second quarter of 2017, a 27% increase from
$78 million in the same quarter of 2016.
- The 2017 second-quarter total revenues amounted to $393 million compared to $353 million in the same quarter of 2016, a $40 million or 11% increase driven
by growth in net interest income and fee-based revenues.
- Second-quarter non-interest expenses stood at $258 million compared to $244 million in the second quarter of 2016.
- The efficiency ratio excluding specified items(2) was 64.1%, an improvement from 67.3% in the second quarter of
2016.
Financial Markets
- Net income totalled $175 million in the second quarter of 2017, a 17% increase from
$149 million in the same quarter of 2016.
- Total revenues on a taxable equivalent basis amounted to $404 million, a $46 million or 13% year-over-year increase driven primarily by trading activity revenues and gains on
available-for-sale securities.
- Non-interest expenses for the second quarter of 2017 stood at $165 million, a $10 million year-over-year increase associated with revenue growth.
- The efficiency ratio was 40.8%, an improvement from 43.3% in the second quarter of 2016.
U.S. Specialty Finance and International
- Net income totalled $40 million in the second quarter of 2017, an $18
million increase from $22 million in the same quarter of 2016.
- The 2017 second-quarter total revenues amounted to $122 million, a $46
million year-over-year increase owing to the revenues generated by subsidiaries Credigy Ltd. and Advanced Bank of Asia
Limited (ABA Bank).
- Second-quarter non-interest expenses stood at $55 million, a $14
million year-over-year increase attributable essentially to ABA Bank's expenses, which have been consolidated into the
Bank's results since the third quarter of 2016.
Other
- The Other heading posted a net loss of $63 million in the second quarter of 2017
versus a $26 million net loss in the same quarter of 2016. This change was mainly due to a
$40 million increase in the collective allowance for credit risk on non-impaired loans resulting
from growth in the Bank's overall credit portfolio as well as to an increase in non-interest expenses.
Capital Management
- As at April 30, 2017, the Common Equity Tier 1 (CET1) capital ratio under Basel III was 10.8%
compared to 10.1% as at October 31, 2016, an increase resulting essentially from net income, net
of dividends.
- As at April 30, 2017, the Basel III leverage ratio was 3.8%, essentially unchanged from
October 31, 2016.
(1)
|
For additional information on the impact of the sectoral provision, refer
to the Personal and Commercial segment results on page 9 of the Report to Shareholders for the quarter ended
April 30, 2017.
|
(2)
|
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 April 30
|
|
|
|
Six months ended April 30
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
2017
|
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
1,597
|
|
|
1,425
|
|
12
|
|
3,230
|
|
|
2,714
|
|
19
|
Net income
|
|
484
|
|
|
210
|
|
130
|
|
981
|
|
|
471
|
|
108
|
Net income attributable to the Bank's shareholders
|
|
462
|
|
|
193
|
|
139
|
|
940
|
|
|
432
|
|
118
|
Return on common shareholders' equity
|
|
17.9
|
%
|
|
7.7
|
%
|
|
|
18.1
|
%
|
|
8.6
|
%
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.30
|
|
$
|
0.52
|
|
150
|
$
|
2.65
|
|
$
|
1.20
|
|
121
|
|
Diluted
|
|
1.28
|
|
|
0.52
|
|
146
|
|
2.62
|
|
|
1.19
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating results on a taxable equivalent basis
(1) and excluding specified items (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues on a taxable equivalent basis
and excluding specified items
|
|
1,654
|
|
|
1,507
|
|
10
|
|
3,361
|
|
|
3,037
|
|
11
|
Net income excluding specified items
|
|
492
|
|
|
237
|
|
108
|
|
994
|
|
|
664
|
|
50
|
Return on common shareholders' equity excluding specified items
|
|
18.2
|
%
|
|
8.9
|
%
|
|
|
18.4
|
%
|
|
12.8
|
%
|
|
Efficiency ratio on a taxable equivalent basis
and excluding specified items
|
|
56.6
|
%
|
|
57.8
|
%
|
|
|
56.6
|
%
|
|
58.2
|
%
|
|
Earnings per share excluding specified items
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.32
|
|
$
|
0.61
|
|
116
|
$
|
2.69
|
|
$
|
1.78
|
|
51
|
|
Diluted
|
|
1.30
|
|
|
0.60
|
|
117
|
|
2.65
|
|
|
1.77
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
|
$
|
0.56
|
|
$
|
0.54
|
|
|
$
|
1.12
|
|
$
|
1.08
|
|
|
Book value
|
|
|
|
|
|
|
|
|
29.97
|
|
|
27.75
|
|
|
Share price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
58.75
|
|
|
45.56
|
|
|
|
58.75
|
|
|
45.56
|
|
|
|
Low
|
|
52.94
|
|
|
35.95
|
|
|
|
46.83
|
|
|
35.83
|
|
|
|
Close
|
|
53.05
|
|
|
44.84
|
|
|
|
53.05
|
|
|
44.84
|
|
|
Number of common shares (thousands)
|
|
341,524
|
|
|
337,418
|
|
|
|
341,524
|
|
|
337,418
|
|
|
Market capitalization
|
|
18,118
|
|
|
15,130
|
|
|
|
18,118
|
|
|
15,130
|
|
|
(millions of Canadian dollars)
|
As at April 30,
2017
|
|
As at October 31,
2016
|
|
%
Change
|
|
|
|
|
|
|
|
Balance sheet and off-balance-sheet
|
|
|
|
|
|
Total assets
|
239,020
|
|
232,206
|
|
3
|
Loans and acceptances
|
129,765
|
|
126,178
|
|
3
|
Impaired loans, net of total allowances
|
(340)
|
|
(289)
|
|
|
|
As a % of average loans and acceptances
|
(0.3)
|
%
|
(0.2)
|
%
|
|
Deposits(3)
|
151,160
|
|
142,066
|
|
6
|
Equity attributable to common shareholders
|
10,235
|
|
9,642
|
|
6
|
Assets under administration and under management
|
425,847
|
|
397,342
|
|
7
|
|
|
|
|
|
|
|
Earnings coverage
|
13.44
|
|
7.84
|
|
|
|
|
|
|
|
|
|
Regulatory ratios under Basel III
|
|
|
|
|
|
Capital ratios(4)
|
|
|
|
|
|
|
Common Equity Tier 1 (CET1)
|
10.8
|
%
|
10.1
|
%
|
|
|
Tier 1
|
14.2
|
%
|
13.5
|
%
|
|
|
Total
|
14.5
|
%
|
15.3
|
%
|
|
Leverage ratio(4)
|
3.8
|
%
|
3.7
|
%
|
|
Liquidity coverage ratio (LCR)
|
139
|
%
|
134
|
%
|
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
|
Number of employees
|
21,290
|
|
21,770
|
|
(2)
|
Number of branches in Canada
|
445
|
|
450
|
|
(1)
|
Number of banking machines in Canada
|
944
|
|
938
|
|
1
|
|
|
(1)
|
See the Consolidated Results section on page 6 of the Report to
Shareholders for the quarter ended April 30, 2017.
|
(2)
|
See the Financial Reporting Method section on page 4 for additional
information on non-GAAP 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 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.
Non-GAAP Measures
The Bank uses a number of financial measures when assessing its results and measuring Bank-wide 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 measures do not have a standardized meaning under GAAP and therefore may not be comparable to similar measures used
by other companies.
Financial Information
|
|
|
|
|
|
|
|
(millions of Canadian dollars, except per share amounts)
|
Quarter ended April 30
|
|
Six months ended April 30
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
2017
|
|
|
2016
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income excluding specified items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal and Commercial
|
|
233
|
|
|
(13)
|
|
|
|
446
|
|
|
167
|
|
167
|
|
Wealth Management
|
|
105
|
|
|
84
|
|
25
|
|
211
|
|
|
168
|
|
26
|
|
Financial Markets
|
|
175
|
|
|
149
|
|
17
|
|
358
|
|
|
298
|
|
20
|
|
U.S. Specialty Finance and International
|
|
40
|
|
|
22
|
|
82
|
|
78
|
|
|
62
|
|
26
|
|
Other
|
|
(61)
|
|
|
(5)
|
|
|
|
(99)
|
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income excluding specified items
|
|
492
|
|
|
237
|
|
108
|
|
994
|
|
|
664
|
|
50
|
|
Items related to holding restructured notes(1)
|
|
−
|
|
|
(3)
|
|
|
|
−
|
|
|
(4)
|
|
|
|
Acquisition-related items(2)
|
|
(8)
|
|
|
(6)
|
|
|
|
(13)
|
|
|
(26)
|
|
|
|
Write-off of an equity interest in an associate(3)
|
|
−
|
|
|
−
|
|
|
|
−
|
|
|
(145)
|
|
|
|
Impact of changes to tax measures(4)
|
|
−
|
|
|
(18)
|
|
|
|
−
|
|
|
(18)
|
|
|
Net income
|
|
484
|
|
|
210
|
|
130
|
|
981
|
|
|
471
|
|
108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share excluding specified items
|
$
|
1.30
|
|
$
|
0.60
|
|
117
|
$
|
2.65
|
|
$
|
1.77
|
|
50
|
|
Items related to holding restructured notes(1)
|
|
−
|
|
|
(0.01)
|
|
|
|
−
|
|
|
(0.01)
|
|
|
|
Acquisition-related items(2)
|
|
(0.02)
|
|
|
(0.02)
|
|
|
|
(0.03)
|
|
|
(0.08)
|
|
|
|
Write-off of an equity interest in an associate(3)
|
|
−
|
|
|
−
|
|
|
|
−
|
|
|
(0.43)
|
|
|
|
Impact of changes to tax measures(4)
|
|
−
|
|
|
(0.05)
|
|
|
|
−
|
|
|
(0.05)
|
|
|
|
Premium paid on preferred shares redeemed for
cancellation(5)
|
|
−
|
|
|
−
|
|
|
|
−
|
|
|
(0.01)
|
|
|
Diluted earnings per share
|
$
|
1.28
|
|
$
|
0.52
|
|
146
|
$
|
2.62
|
|
$
|
1.19
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on common shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Including specified items
|
|
17.9
|
%
|
|
7.7
|
%
|
|
|
18.1
|
%
|
|
8.6
|
%
|
|
|
Excluding specified items
|
|
18.2
|
%
|
|
8.9
|
%
|
|
|
18.4
|
%
|
|
12.8
|
%
|
|
|
|
(1)
|
During the quarter ended April 30, 2016, the Bank recorded $3 million in
financing costs ($3 million net of income taxes) related to holding restructured notes. During the six-month period ended
April 30, 2016, these financing costs amounted to $5 million ($4 million net of income taxes).
|
(2)
|
During the quarter ended April 30, 2017, the Bank recorded $9 million in
acquisition-related charges ($8 million net of income taxes) (2016: $7 million, $6 million net of income taxes). For the
six-month period ended April 30, 2017, these charges amounted to $15 million ($13 million net of income taxes) compared
to $34 million ($26 million net of income taxes) for the same six-month period of 2016. 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 in the first quarter of 2016.
|
(3)
|
During the six-month period ended April 30, 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 April 30, 2016, an $18 million tax provision was
recorded to reflect the impact of substantively enacted changes to tax measures.
|
(5)
|
During the six-month period ended April 30, 2016, a $3 million premium was
paid on the Series 20 First Preferred Shares redeemed for cancellation.
|
CAUTION REGARDING FORWARD-LOOKING STATMENTS
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 THE SECOND QUARTER 2017 RESULTS
Conference Call
- A conference call for analysts and institutional investors will be held on Wednesday, May 31,
2017 at 1:00 p.m. EDT.
- Access by telephone in listen-only mode: 1-866-862-3930 or 416-695-7806. The access code is 2448130#.
- A recording of the conference call can be heard until June 29, 2017 by dialing 1-800-408-3053
or 905-694-9451. The access code is 7041610#.
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 Press Release (which includes the quarterly consolidated financial statements) is available at all times on
National Bank's website at nbc.ca/investorrelations.
- The Press Release, 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
View original content: http://www.newswire.ca/en/releases/archive/May2017/31/c4913.html