REG - Nat Bank of Canada - Press Release Q1 2025
26/02/2025 13:30
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RNS Number : 5718Y National Bank of Canada 26 February 2025
Regulatory Announcement
Q1 2025 Results
National Bank of Canada (the "Bank") announces publication of its First
Quarter 2025 Release. The First Quarter Results have been uploaded to the
National Storage Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and is available on
the Bank's website at
https://www.nbc.ca/about-us/investors/quarterly-results.html
(https://www.nbc.ca/about-us/investors/quarterly-results.html)
To view the full PDF of this First Quarter 2025 Release, please click on the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/5718Y_1-2025-2-26.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5718Y_1-2025-2-26.pdf)
National Bank reports its results for the First Quarter of 2025
The financial information reported in this document is based on the unaudited
interim condensed Consolidated Financial Statements for the quarter ended
January 31, 2025 and is prepared in accordance with International Financial
Reporting Standards (IFRS® Accounting Standards) as issued by the
International Accounting Standards Board (IASB), unless otherwise indicated.
IFRS Accounting Standards represent Canadian generally accepted accounting
principles (GAAP). All amounts are presented in Canadian dollars.
MONTREAL, February 26, 2025 - For the first quarter of 2025, National Bank is
reporting net income of $997 million, up 8% from $922 million in the first
quarter of 2024. First-quarter diluted earnings per share stood at $2.78
compared to $2.59 in the first quarter of 2024. These increases were driven by
total revenue growth in all of the business segments, partly offset by
increases in non-interest expenses and provisions for credit losses. The
Bank's income before provisions for credit losses and income taxes totalled
$1,537 million in the first quarter of 2025 compared to $1,261 million in the
first quarter of 2024, a 22% increase owing to good performance in all of the
business segments, in particular, in Financial Markets and Wealth Management.
Adjusted net income((1)), which excludes specified items((1)) related to the
acquisition of Canadian Western Bank (CWB), totalled $1,050 million in the
first quarter of 2025 from net income of $922 million in the same quarter of
2024. Adjusted diluted earnings per share((1)) stood at $2.93, up 13% compared
to $2.59 in the first quarter of 2024.
"The Bank generated strong first quarter financial results, reflecting solid
execution across business segments and our diversified earnings power. We were
also pleased to recently complete the acquisition of Canadian Western Bank,
marking a significant step forward in the acceleration of our domestic growth
and toward extending the depth of our banking capabilities to the benefit of
all our clients," said Laurent Ferreira, CEO. "In a context of heightened
macroeconomic and geopolitical uncertainty and an evolving credit cycle, we
remain committed to maintaining our usual discipline regarding credit, capital
and costs," concluded Mr. Ferreira.
Highlights
(millions of Canadian dollars) Quarter ended January 31
2025 2024((2)) % Change
Net income 997 922 8
Diluted earnings per share (dollars) $ 2.78 $ 2.59 7
Income before provisions for credit losses and income taxes 1,537 1,261 22
Return on common shareholders' equity((3)) 16.7 % 17.1 %
Dividend payout ratio((3)) 40.1 % 43.1 %
Operating results - Adjusted((1))
Net income - Adjusted 1,050 922 14
Diluted earnings per share - Adjusted (dollars) $ 2.93 $ 2.59 13
Income before provisions for credit losses and income taxes - Adjusted 1,610 1,261 28
As at As at
January 31, October 31, 2024
2025
CET1 capital ratio under Basel III((4)) 13.6 % 13.7 %
Leverage ratio under Basel III((4)(5)) 4.3 % 4.4 %
(1) See the Financial Reporting Method section on pages 3 to 5 for
additional information on non-GAAP financial measures.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes. For additional information, see the Financial Reporting Method section.
(3) For details on the composition of these measures, see the
Glossary section on pages 47 to 50 in the Report to Shareholders - First
Quarter 2025, which is available on the Bank's website at nbc.ca or the SEDAR+
website at sedarplus.ca.
(4) For additional information on capital management measures, see
the Financial Reporting Method section on pages 4 to 9 in the Report to
Shareholders - First Quarter 2025, which is available on the Bank's website at
nbc.ca or the SEDAR+ website at sedarplus.ca.
(5) Ratio as at January 31, 2025 includes the redemption of the
Series 32 preferred shares completed on February 17, 2025.
Personal and Commercial
- Net income totalled $290 million in the first quarter of 2025
versus $339 million in the first quarter of 2024, a 14% decrease due to a
significant increase in provisions for credit losses.
- At $1,204 million, first-quarter total revenues rose $50 million
or 4% year over year, mainly due to an increase in net interest income (driven
by growth in loan and deposit volumes), partly offset by a lower net interest
margin.
- Compared to a year ago, personal lending grew 4% and commercial
lending grew 13%.
- The net interest margin((1)) stood at 2.28% in the first quarter
of 2025, down from 2.36% in the first quarter of 2024.
- First-quarter non-interest expenses stood at $641 million, up 4%
year over year.
- Provisions for credit losses rose $91 million year over year,
mainly due to an increase in provisions for credit losses on impaired loans.
- At 53.2%, the first-quarter efficiency ratio((1)) was relatively
stable compared to 53.3% in the first quarter of 2024.
Wealth Management
- Net income totalled $242 million in the first quarter of 2025, a
23% increase from $196 million in the first quarter of 2024.
- First-quarter total revenues amounted to $776 million compared to
$660 million in first-quarter 2024, a $116 million or 18% increase driven
mainly by growth in fee-based revenues and net interest income.
- First-quarter non-interest expenses stood at $441 million versus
$390 million in first-quarter 2024, a 13% increase associated with revenue
growth.
- At 56.8%, the first-quarter efficiency ratio((1)) improved from
59.1% in the first quarter of 2024.
Financial Markets
- Net income totalled $417 million in the first quarter of 2025, up
35% from $308 million in the first quarter of 2024.
- First-quarter total revenues amounted to $907 million, a 40%
increase that was mainly due to growth in global markets revenues.
- First-quarter non-interest expenses stood at $367 million compared
to $313 million in first-quarter 2024, an increase that was mainly due to the
increase in variable compensation.
- First-quarter provisions for credit losses stood at $36 million
compared to $17 million in the first quarter of 2024, due to the provisions
for credit losses on impaired loans.
- At 40.5%, the efficiency ratio((1)) improved from 48.4% in the
first quarter of 2024.
U.S. Specialty Finance and International
- Net income totalled $183 million in the first quarter of 2025, up
22% from $150 million in the first quarter of 2024.
- First-quarter total revenues amounted to $405 million, a 24%
year-over-year increase driven mainly by revenue growth at both the Credigy
and ABA Bank subsidiaries.
- First-quarter non-interest expenses stood at $123 million, a 23%
year-over-year increase mainly attributable to business growth at ABA Bank.
- First-quarter provisions for credit losses were up $15 million
year over year, with the increase being attributable to both Credigy and ABA
Bank.
- At 30.4%, the efficiency ratio((1)) improved from 30.7% in the
first quarter of 2024.
-
Other
- There was a net loss of $135 million in the first quarter of 2025
compared to a net loss of $71 million in the same quarter of 2024, a change
that essentially came from a smaller contribution from Treasury activities, a
year-over-year increase in non-interest expenses (notably due to higher
compensation and employee benefits), as well as the unfavourable impact of
specified items((2)) on net loss in the first quarter of 2025.
CWB Acquisition
- On February 3, 2025, the Bank completed its acquisition of CWB, a
diversified financial services institution based in Edmonton, Alberta, in
which the Bank already held a 5.9% stake. This transaction will enable the
Bank to accelerate its growth across Canada. This business combination
brings together two complementary Canadian banks with growing businesses,
thereby enhancing customer service by offering a full range of products and
services nationwide, with a regionally focused service model.
Capital Management
- As at January 31, 2025, the Common Equity Tier 1 (CET1) capital
ratio under Basel III((3)) stood at 13.6%, a decrease from 13.7% as at October
31, 2024.
- As at January 31, 2025, the Basel III((3)(4)) leverage ratio was
4.3%, a decrease from 4.4% as at October 31, 2024.
Dividends
- On February 25, 2025, the Board of Directors declared regular
dividends on the various series of first preferred shares and a dividend
of $1.14 per common share, payable on May 1, 2025 to shareholders of record
on March 31, 2025.
(1) For details on the composition of these measures, see the
Glossary section on pages 47 to 50 in the Report to Shareholders - First
Quarter 2025, which is available on the Bank's website at nbc.ca or the SEDAR+
website at sedarplus.ca.
(2) See the Financial Reporting Method section on pages 3 to 5 for
additional information on non-GAAP financial measures.
(3) For additional information on capital management measures, see
the Financial Reporting Method section on pages 4 to 9 in the Report to
Shareholders - First Quarter 2025, which is available on the Bank's website at
nbc.ca or the SEDAR+ website at sedarplus.ca.
(4) Ratio as at January 31, 2025 includes the redemption of the
Series 32 preferred shares completed on February 17, 2025.
Financial Reporting Method
The Bank's Consolidated Financial Statements are prepared in accordance with
IFRS Accounting Standards, as issued by the IASB. The financial statements
also comply with section 308(4) of the Bank Act (Canada), which states that,
except as otherwise specified by the Office of the Superintendent of Financial
Institutions (Canada) (OSFI), the Consolidated Financial Statements are to be
prepared in accordance with IFRS Accounting Standards, which represent
Canadian GAAP. None of the OSFI accounting requirements are exceptions to IFRS
Accounting Standards.
Effective November 1, 2024, the Bank discontinued taxable equivalent basis
(TEB) reporting for revenues and income taxes. Using the TEB method is less
relevant since the introduction of the Pillar 2 rules (global minimum tax)
during the first quarter of 2025 and Bill C-59 in relation to the taxation of
certain Canadian dividends during fiscal 2024. This change has no impact on
net income previously disclosed. Data for the 2024 periods were adjusted to
reflect this change.
Non-GAAP and Other 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. Regulation 52-112 Respecting Non-GAAP and
Other Financial Measures Disclosure (Regulation 52-112) prescribes disclosure
requirements that apply to the following measures used by the Bank:
· non-GAAP financial measures;
· non-GAAP ratios;
· supplementary financial measures;
· capital management measures.
Non-GAAP Financial Measures
The Bank uses non-GAAP financial measures that do not have standardized
meanings under GAAP and that therefore may not be comparable to similar
measures used by other companies. 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 better assess results without the specified items if they consider
such items not to be reflective of the underlying performance of the Bank's
operations.
The key non-GAAP financial measures used by the Bank to analyze its results
are described below, and a quantitative reconciliation of these measures is
presented in the tables in the Reconciliation of Non-GAAP Financial Measures
section on pages 4 and 5. It should be noted that, for the quarter ended
January 31, 2025, after the acquisition of Canadian Western Bank (CWB) was
completed, several acquisition-related items have been excluded from results
since, in the opinion of management, they are not reflective of the underlying
performance of the Bank's operations, in particular, the amortization of the
subscription receipt issuance costs of $28 million ($20 million net of income
taxes); a gain of $4 million ($3 million net of income taxes) resulting from
the remeasurement at fair value of the CWB common shares already held by the
Bank; the impact of managing fair value changes, which is a loss of $23
million ($17 million net of income taxes), and acquisition and integration
charges of $26 million ($19 million net of income taxes). For the quarter
ended January 31, 2024, no specified items had been excluded from results.
For additional information on non-GAAP financial measures, non-GAAP ratios,
supplementary financial measures, and capital management measures, see the
Financial Reporting Method section and the Glossary section, on pages 4 to 9
and 47 to 50, respectively, of the Report to Shareholders - First quarter of
2025, which is available on the Bank's website at nbc.ca or the SEDAR+ website
at sedarplus.ca.
Reconciliation of Non-GAAP Financial Measures
Presentation of Results - Adjusted
(millions of Canadian dollars) Quarter ended January 31
2025 2024((1))
Personal and Commercial Wealth Management Financial Markets USSF&I Other
Total Total
Operating results
Net interest income 944 227 (509) 370 (60) 972 751
Non-interest income 260 549 1,416 35 (49) 2,211 1,959
Total revenues 1,204 776 907 405 (109) 3,183 2,710
Non-interest expenses 641 441 367 123 74 1,646 1,449
Income before provisions for credit losses and income taxes 563 335 540 282 (183) 1,537 1,261
Provisions for credit losses 162 2 36 51 3 254 120
Income before income taxes (recovery) 401 333 504 231 (186) 1,283 1,141
Income taxes (recovery) 111 91 87 48 (51) 286 219
Net income 290 242 417 183 (135) 997 922
Items that have an impact on results
Net interest income
Amortization of the subscription receipt issuance costs((2)) − − − − (28) (28) −
Impact on net interest income − − − − (28) (28) −
Non-interest income
Gain on the fair value remeasurement of an equity interest((3)) − − − − 4 4 −
Management of the fair value changes related to the CWB acquisition((4)) − − − − (23) (23) −
Impact on non-interest income − − − − (19) (19) −
Non-interest expenses
CWB acquisition and integration charges((5)) − − − − 26 26 −
Impact on non-interest expenses − − − − 26 26 −
Income taxes
Income taxes on the amortization of the subscription receipt issuance − − − − (8) (8) −
costs((2))
Income taxes on the gain on the fair value remeasurement − − − − 1 1 −
of an equity interest((3))
Income taxes on management of the fair value changes related to the − − − − (6) (6) −
CWB acquisition((4))
Income taxes on the CWB acquisition and integration charges((5)) − − − − (7) (7) −
Impact on income taxes − − − − (20) (20) −
Impact on net income − − − − (53) (53) −
Operating results - Adjusted
Net interest income - Adjusted 944 227 (509) 370 (32) 1,000 751
Non-interest income - Adjusted 260 549 1,416 35 (30) 2,230 1,959
Total revenues - Adjusted 1,204 776 907 405 (62) 3,230 2,710
Non-interest expenses - Adjusted 641 441 367 123 48 1,620 1,449
Income before provisions for credit losses and income taxes - Adjusted 563 335 540 282 (110) 1,610 1,261
Provisions for credit losses 162 2 36 51 3 254 120
Income before income taxes (recovery) - Adjusted 401 333 504 231 (113) 1,356 1,141
Income taxes (recovery) - Adjusted 111 91 87 48 (31) 306 219
Net income - Adjusted 290 242 417 183 (82) 1,050 922
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) During the quarter ended January 31, 2025, the Bank recorded
an amount of $28 million ($20 million net of income taxes) to reflect the
amortization of the issuance costs of the subscription receipts issued as part
of the agreement to acquire CWB (for additional information, see Notes 8 and
10 to the unaudited interim condensed Consolidated Financial Statements in the
Report to Shareholders - First quarter of 2025, which is available on the
Bank's website at nbc.ca or the SEDAR+ website at sedarplus.ca).
(3) During the quarter ended January 31, 2025, the Bank recorded a
gain of $4 million ($3 million net of income taxes) upon the remeasurement at
fair value of the interest already held in CWB as at January 31, 2025.
(4) During the quarter ended January 31, 2025, the Bank recorded a
mark-to-market loss of $23 million ($17 million net of income taxes) on
interest rate swaps used to manage the fair value changes of CWB's assets and
liabilities that resulted in volatility of goodwill and capital on closing of
the transaction. For additional information, see the Events After the
Consolidated Balance Sheet Date section.
(5) During the quarter ended January 31, 2025, the Bank recorded
acquisition and integration charges of $26 million ($19 million net of income
taxes) related to the CWB transaction.
Presentation of Basic and Diluted Earnings Per Share - Adjusted
(Canadian dollars) Quarter ended January 31
2025 2024
Basic earnings per share $ 2.81 $ 2.61
Amortization of the subscription receipt issuance costs((1)) 0.06 −
Gain on the fair value remeasurement of an equity interest((2)) (0.01) −
Management of the fair value changes related to the CWB acquisition((3)) 0.05 −
CWB acquisition and integration charges((4)) 0.05 −
Basic earnings per share - Adjusted $ 2.96 $ 2.61
Diluted earnings per share $ 2.78 $ 2.59
Amortization of the subscription receipt issuance costs((1)) 0.06 −
Gain on the fair value remeasurement of an equity interest((2)) (0.01) −
Management of the fair value changes related to the CWB acquisition((3)) 0.05 −
CWB acquisition and integration charges((4)) 0.05 −
Diluted earnings per share - Adjusted $ 2.93 $ 2.59
(1) During the quarter ended January 31, 2025, the Bank recorded
an amount of $28 million ($20 million net of income taxes) to reflect the
amortization of the issuance costs of the subscription receipts issued as part
of the agreement to acquire CWB (for additional information, see Notes 8 and
10 to the unaudited interim condensed Consolidated Financial Statements in the
Report to Shareholders - First quarter of 2025, which is available on the
Bank's website at nbc.ca or the SEDAR+ website at sedarplus.ca).
(2) During the quarter ended January 31, 2025, the Bank recorded a
gain of $4 million ($3 million net of income taxes) upon the remeasurement at
fair value of the interest already held in CWB as at January 31, 2025.
(3) During the quarter ended January 31, 2025, the Bank recorded a
mark-to-market loss of $23 million ($17 million net of income taxes) on
interest rate swaps used to manage the fair value changes of CWB's assets and
liabilities that resulted in volatility of goodwill and capital on closing of
the transaction. For additional information, see the Events After the
Consolidated Balance Sheet Date section.
(4) During the quarter ended January 31, 2025, the Bank recorded
acquisition and integration charges of $26 million ($19 million net of income
taxes) related to the CWB transaction.
Highlights
(millions of Canadian dollars, except per share amounts) Quarter ended January 31
2025 2024((1)) % Change
Operating results
Total revenues 3,183 2,710 17
Income before provisions for credit losses and income taxes 1,537 1,261 22
Net income 997 922 8
Return on common shareholders' equity((2)) 16.7 % 17.1 %
Operating leverage((2)) 3.9 % 1.6 %
Efficiency ratio((2)) 51.7 % 53.5 %
Earnings per share
Basic $ 2.81 $ 2.61 8
Diluted $ 2.78 $ 2.59 7
Operating results - Adjusted((3))
Total revenues - Adjusted((3)) 3,230 2,710 19
Income before provisions for credit losses 1,610 1,261 28
and income taxes - Adjusted((3))
Net income - Adjusted((3)) 1,050 922 14
Return on common shareholders' equity - Adjusted((4)) 17.6 % 17.1 %
Operating leverage - Adjusted((4)) 7.4 % 1.6 %
Efficiency ratio - Adjusted((4)) 50.2 % 53.5 %
Diluted earnings per share - Adjusted((3)) $ 2.93 $ 2.59 13
Common share information
Dividends declared $ 1.14 $ 1.06 8
Book value((2)) $ 68.15 $ 61.18
Share price
High $ 140.76 $ 103.38
Low $ 128.79 $ 86.50
Close $ 128.99 $ 102.83
Number of common shares (thousands) 341,085 339,166
Market capitalization 43,997 34,876
(millions of Canadian dollars) As at As at % Change
January 31, October 31,
2025 2024
Balance sheet and off-balance-sheet
Total assets 483,833 462,226 5
Loans, net of allowances 246,620 243,032 1
Deposits 351,095 333,545 5
Equity attributable to common shareholders 23,245 22,400 4
Assets under administration((2)) 820,125 766,082 7
Assets under management((2)) 165,502 155,900 6
Regulatory ratios under Basel III((5))
Capital ratios
Common Equity Tier 1 (CET1) 13.6 % 13.7 %
Tier 1((6)) 15.5 % 15.9 %
Total((6)) 17.1 % 17.0 % ( )
Leverage ratio((6)) 4.3 % 4.4 % ( )
TLAC ratio((5)) 31.2 % 31.2 % ( )
TLAC leverage ratio((5)) 8.7 % 8.6 % ( )
Liquidity coverage ratio (LCR)((5)) 154 % 150 % ( )
Net stable funding ratio (NSFR)((5)) 123 % 122 %
Other information ( )
Number of employees - Worldwide (full-time equivalent) 29,508 29,196 1
Number of branches in Canada 362 368 (2)
Number of banking machines in Canada 937 940 −
(1) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(2) For details on the composition of these measures, see the
Glossary section on pages 47 to 50 in the Report to Shareholders - First
Quarter 2025, which is available on the Bank's website at nbc.ca or the SEDAR+
website at sedarplus.ca.
(3) See the Financial Reporting Method section on pages 3 to 5 for
additional information on non-GAAP financial measures.
(4) For additional information on non-GAAP ratios, see the
Financial Reporting Method section on pages 4 to 9 in the Report to
Shareholders - First Quarter 2025, which is available on the Bank's website at
nbc.ca or the SEDAR+ website at sedarplus.ca.
(5) For additional information on capital management measures, see
the Financial Reporting Method section on pages 4 to 9 in the Report to
Shareholders - First Quarter 2025, which is available on the Bank's website at
nbc.ca or the SEDAR+ website at sedarplus.ca.
(6) Ratios as at January 31, 2025 include the redemption of the
Series 32 preferred shares completed on February 17, 2025.
Events After the Consolidated Balance Sheet Date
Canadian Western Bank (CWB) Acquisition
On February 3, 2025, the Bank completed the acquisition of CWB, a diversified
financial services institution based in Edmonton, Alberta, in which the Bank
had already been holding a 5.9% equity interest. This transaction will enable
the Bank to accelerate its growth across Canada. The business combination
brings together two complementary Canadian banks with growing businesses,
thereby enhancing customer service by offering a full range of products and
services nationwide, with a regionally focused service model.
The total consideration transferred of $6.8 billion included $5.3 billion for
100% of the common shares of CWB acquired by way of a share exchange at an
exchange ratio of 0.450 of a common share of the National Bank for each CWB
common share, other than those held by the National Bank, $1.4 billion for the
settlement of pre-existing relationships and $0.1 billion for the issuance of
replacement share-based payment awards. The fair value of the Bank's common
shares issued was determined on the basis of the share price on the Toronto
Stock Exchange (TSX) at closing on January 31, 2025 being a price of $128.99
per share. At acquisition date, the Bank obtained a 100% interest in the CWB
voting shares and the 5.9% previously held interest was remeasured to its fair
value of $0.3 billion. The non-controlling interest in CWB recognized at
acquisition date was measured at a fair value of $0.6 billion and represents
CWB's preferred shares and Limited Recourse Capital Notes (LRCN) outstanding
on that date. Total purchase consideration amounted to $7.7 billion.
Based on the estimated fair values, the preliminary purchase price allocation
assigns $45.5 billion to assets and $37.8 billion to liabilities at
acquisition date. Estimated goodwill of $1.6 billion reflects the expected
expense synergies from our Personal and Commercial and Wealth Management
banking services operations and the expected growth of the technology
platforms. Goodwill is not deductible for tax purposes. The results of CWB
will be consolidated in the Bank's financial statements as of February 3,
2025.
Prior to the closing of the CWB acquisition, the Bank had entered into
interest rate swaps to hedge its exposure to changes in goodwill and capital
due to changes in interest rates. On the closing date, swaps that were not
designated in hedging relationships were neutralized while others were
de-designated from hedging relationships. These operations economically offset
the changes in fair value of the assets and liabilities of CWB and resulted in
the subsequent amortization of the hedges.
Issuance of Common Shares
On February 3, 2025, the Bank issued a total of 50,272,878 common shares, for
a total proceed of $6.3 billion, which increased Common share capital by
$6.3 billion. This issuance includes 41,010,378 common shares at a price of
$128.99 per share from the share exchange and 9,262,500 common shares at a
price of $112.30 per share from the automatic exchange of subscription
receipts. For additional information on subscription receipts, see Note 10 to
the unaudited interim condensed Consolidated Financial Statements in the
Report to Shareholders - First quarter of 2025, which is available on the
Bank's website at nbc.ca or the SEDAR+ website at sedarplus.ca.
Exchange of Preferred Shares and Redemption of Other Equity Instruments
As of February 4, 2025, certain amendments previously approved by the holders
of the outstanding first preferred shares and LRCN of CWB, which permit the
exchange of the first preferred shares of CWB for substantially equivalent
first preferred shares of National Bank and the early redemption of the LRCN,
were implemented.
On February 20, 2025, all the issued and outstanding Series 5 and Series 9
First Preferred Shares of CWB were exchanged for substantially equivalent
Series 47 and Series 49 First Preferred Shares of National Bank, which are
non-cumulative 5-year rate-reset bearing interest at 6.371% and 7.651%. The
Bank exchanged 10,000,000 preferred shares for a total amount of
$268 million, which reduced the Non-controlling interest by $268 million,
increased Preferred Share capital by $264 million and increased Retained
earnings by $4 million. Consent fees related to the exchange amounting to $2
million, net of income taxes, were recorded in Retained earnings. Given the
Series 47 and Series 49 preferred shares meet the non-viability contingent
capital requirements (NVCC), these shares are eligible for regulatory capital
purposes under the Basel III rules. Also, the Bank redeemed 175,000 LRCN -
Series 1 and 150,000 LRCN - Series 2 of CWB for a total amount of
$335 million, including consent fees, which reduced the Non-controlling
interest by $325 million and decreased Retained earnings by $7 million, net
of income taxes.
Redemption of Preferred Shares
On February 17, 2025, the first business day after the February 15, 2025 set
redemption date, the Bank redeemed all of the issued and outstanding
Non-Cumulative 5-Year Rate Reset Series 32 First Preferred Shares. Pursuant to
the share conditions, the redemption price was $25.00 per share plus the
periodic dividends declared and unpaid. The Bank redeemed 12,000,000 Series 32
preferred shares for a total amount of $300 million, which reduced Preferred
share capital.
Caution Regarding Forward-Looking Statements
Certain statements in this document are forward-looking statements. These
statements are made in accordance with applicable securities legislation in
Canada and the United States. The forward-looking statements in this document
may include, but are not limited to, statements in the messages from
management, as well as other statements about the economy, market changes, the
Bank's objectives, outlook, and priorities for fiscal 2025 and beyond, the
strategies or actions that the Bank will take to achieve them, expectations
for the Bank's financial condition and operations, the regulatory environment
in which it operates, its environmental, social, and governance targets and
commitments, the impacts and benefits of the acquisition of Canadian Western
Bank (CWB), and certain risks to which the Bank is exposed. The Bank may also
make forward-looking statements in other documents and regulatory filings, as
well as orally. These forward-looking statements are typically identified by
verbs or words such as "outlook", "believe", "foresee", "forecast",
"anticipate", "estimate", "project", "expect", "intend" and "plan", the use of
future or conditional forms, notably verbs such as "will", "may", "should",
"could" or "would", as well as similar terms and expressions.
These forward-looking statements are intended to assist the security holders
of the Bank in understanding the Bank's financial position and results of
operations as at the dates indicated and for the periods then ended, as well
as the Bank's vision, strategic objectives, and performance targets, and may
not be appropriate for other purposes. These forward-looking statements are
based on current expectations, estimates, assumptions and intentions that the
Bank deems reasonable as at the date thereof and are subject to inherent
uncertainty and risks, many of which are beyond the Bank's control. There is a
strong possibility that the Bank's express or implied predictions, forecasts,
projections, expectations, or conclusions will not prove to be accurate, that
its assumptions will not be confirmed, and that its vision, strategic
objectives, and performance targets will not be achieved. The Bank cautions
investors that these forward-looking statements are not guarantees of future
performance and that actual events or results may differ materially from these
statements due to a number of factors. Therefore, the Bank recommends that
readers not place undue reliance on these forward-looking statements, as a
number of factors could cause actual results to differ materially from the
expectations, estimates, or intentions expressed in these forward-looking
statements. Investors and others who rely on the Bank's forward-looking
statements should carefully consider the factors listed below as well as other
uncertainties and potential events 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.
Assumptions about the performance of the Canadian and U.S. economies in 2025
and how that performance will affect the Bank's business are among the factors
considered in setting the Bank's strategic priorities and objectives,
including allowances for credit losses. These assumptions in the Economic
Review and Outlook section and, for each business segment, in the Economic and
Market Review sections of the 2024 Annual Report and the Economic Review and
Outlook section of the Report to Shareholders for the first quarter of 2025,
and may be updated in the quarterly reports to shareholders filed
thereafter.
The forward-looking statements made in this document are based on a number of
assumptions and their future outcome is subject to a variety of risk factors,
many of which are beyond the Bank's control and the impacts of which are
difficult to predict. These risk factors include, among others, the general
economic environment and business and financial market conditions in Canada,
the United States, and the other countries where the Bank operates; the
measures affecting trade relations between Canada and its partners, including
the imposition of tariffs and any measures taken in response to such tariffs,
as well as the possible impacts on our clients, our operations and, more
generally, the economy; exchange rate and interest rate fluctuations;
inflation; global supply chain disruptions; higher funding costs and greater
market volatility; changes to fiscal, monetary, and other public policies;
regulatory oversight and changes to regulations that affect the Bank's
business; geopolitical and sociopolitical uncertainty; the Bank's ability to
successfully integrate CWB and the undisclosed costs or liability associated
with the acquisition; climate change, including physical risks and risks
related to the transition to a low-carbon economy; the Bank's ability to meet
stakeholder expectations on environmental and social issues, the need for
active and continued stakeholder engagement; the availability of comprehensive
and high-quality information from customers and other third parties, including
greenhouse gas emissions; the ability of the Bank to develop indicators to
effectively monitor our progress; the development and deployment of new
technologies and sustainable products; the ability of the Bank to identify
climate-related opportunities as well as to assess and manage climate-related
risks; significant changes in consumer behaviour; the housing situation, real
estate market, and household indebtedness in Canada; the Bank's ability to
achieve its key short-term priorities and long-term strategies; the timely
development and launch of new products and services; the ability of the Bank
to recruit and retain key personnel; technological innovation, including open
banking and the use of artificial intelligence; heightened competition from
established companies and from competitors offering non-traditional services;
model risk; changes in the performance and creditworthiness of the Bank's
clients and counterparties; the Bank's exposure to significant regulatory
issues or litigation; changes made to the accounting policies used by the Bank
to report its financial position, including the uncertainty related to
assumptions and significant accounting estimates; changes to tax legislation
in the countries where the Bank operates; changes to capital and liquidity
guidelines as well as to the instructions related to the presentation and
interpretation thereof; changes to the credit ratings assigned to the Bank by
financial and extra-financial rating agencies; potential disruptions to key
suppliers of goods and services to the Bank; third-party risk, including
failure by third parties to fulfil their obligations to the Bank; the
potential impacts of disruptions to the Bank's information technology systems
due to cyberattacks and theft or disclosure of data, including personal
information and identity theft; the risk of fraudulent activity; and possible
impacts of major events on the economy, market conditions, or the Bank's
outlook, including international conflicts, natural disasters, public health
crises, and the measures taken in response to these events; and the ability of
the Bank to anticipate and successfully manage risks arising from all of the
foregoing factors.
The foregoing list of risk factors is not exhaustive, and the forward-looking
statements made in this document are also subject to credit risk, market risk,
liquidity and funding risk, operational risk, regulatory compliance risk,
reputation risk, strategic risk, and social and environmental risk as well as
certain emerging risks or risks deemed significant. Additional information
about these factors is provided in the Risk Management section of the 2024
Annual Report as well as in the Risk Management section of the Report to
Shareholders for the first quarter of 2025 and may be updated in the quarterly
reports to shareholders filed thereafter.
Disclosure of the First Quarter 2025 Results
Conference Call
- A conference call for analysts and institutional investors
will be held on Wednesday, February 26, 2025 at 11:00 a.m. ET.
- Access by telephone in listen-only mode: 1-800-898-3989 or
416-340-2217. The access code is 4235703#.
- A recording of the conference call can be heard until May 23,
2025 by dialing 1-800-408-3053 or 905-694-9451. The access code is 7336996#.
Webcast
- The conference call will be webcast live at
nbc.ca/investorrelations
(https://www.nbc.ca/en/about-us/investors/investor-relations.html) .
- 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
(https://www.nbc.ca/en/about-us/investors/investor-relations.html) .
- 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 on the morning of the day of the conference call.
For more information
- Marianne Ratté, Vice-President and Head - Investor Relations,
investorrelations@nbc.ca
- Jean-François Cadieux, Assistant Vice-President, Public
Affairs, jean-francois.cadieux@nbc.ca (mailto:jean-francois.cadieux@nbc.ca)
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