REG - Nat Bank of Canada - Press Release Q1 2022
25/02/2022 14:15
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RNS Number : 8976C National Bank of Canada 25 February 2022
National Bank of Canada
February 25, 2022
Regulatory Announcement
Q1 2022 Results
National Bank of Canada (the "Bank") announces publication of its First
Quarter 2022 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/en/about-us/investors/investor-relations/quarterly-results.html
To view the full PDF of this First Quarter 2022 Release, please click on the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/8976C_1-2022-2-25.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8976C_1-2022-2-25.pdf)
Press Release
First Quarter
2022
National Bank reports its results for the First Quarter of 2022
The financial information reported in this document is based on the unaudited
interim condensed consolidated financial statements for the first quarter
ended January 31, 2022 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, February 25, 2022 - For the first quarter of 2022, National Bank is
reporting net income of $932 million compared to $761 million in the first
quarter of 2021. First-quarter diluted earnings per share stood at $2.65
compared to $2.15 in the first quarter of 2021. This growth was driven by
year-over-year increases in the first-quarter total revenues of all the
business segments, by reversals of allowances for credit losses on
non-impaired loans given improvements in the macroeconomic outlook and in
credit conditions, and by a reduction in provisions for credit losses on
impaired loans. Income before provisions for credit losses and income taxes
totalled $1,189 million in the first quarter of 2022 compared to
$1,044 million in the first quarter of 2021, a 14% increase arising from good
performance across all of the business segments.
"The Bank is entering fiscal 2022 on a positive note thanks to excellent
performance by its business segments, strong regulatory capital, and adequate
allowances for credit losses," said Laurent Ferreira, President and Chief
Executive Officer of National Bank of Canada. "Solid revenue growth helped the
Bank achieve a high return on equity in the first quarter," added Mr.
Ferreira.
Highlights
(millions of Canadian dollars) Quarter ended January 31
2022 2021 % Change
Net income 932 761 22
Diluted earnings per share (dollars) $ 2.65 $ 2.15 23
Income before provisions for credit losses and income taxes 1,189 1,044 14
Return on common shareholders' equity((1)) 21.7 % 21.2 %
Dividend payout ratio((1)) 31.3 % 45.7 %
As at January 31, As at October 31, 2021
2022
CET1 capital ratio under Basel III((2)) 12.7 % 12.4 %
Leverage ratio under Basel III((2)) 4.4 % 4.4 %
(1) For details on the composition of these measures, see the
Glossary section on pages 43 to 45 in the Report to Shareholders - First
Quarter 2022, which is available on the Bank's website at nbc.ca or the SEDAR
website at sedar.com.
(2) For additional information on capital management measures, see
the Financial Reporting Method section on pages 6 to 8 in the Report to
Shareholders - First Quarter 2022, which is available on the Bank's website at
nbc.ca or the SEDAR website at sedar.com.
Personal and Commercial
- Net income totalled $317 million in the first quarter of 2022
versus $250 million in the first quarter of 2021, strong growth that was
essentially driven by an increase in total revenues and lower provisions for
credit losses.
- Income before provisions for credit losses and income taxes
totalled $426 million in the first quarter of 2022, up 11% from $385 million
in the first quarter of 2021.
- At $958 million, first-quarter total revenues rose $77 million
or 9% year over year due to higher net interest income, which was up owing to
loan and deposit growth (tempered by a lower net interest margin) and to
higher non-interest income.
- Compared to a year ago, personal lending grew 9% and
commercial lending grew 21%.
- Net interest margin((1)) stood at 2.05% in the first quarter
of 2022, down from 2.16% in the first quarter of 2021.
- First-quarter non-interest expenses stood at $532 million, up
7% from the first quarter of 2021.
- First-quarter provisions for credit losses were down $50
million compared to the first quarter of 2021, a decrease arising from
reversals of allowances for credit losses on non-impaired loans and from a
decrease in provisions for credit losses on impaired loans.
- At 55.5%, the efficiency ratio((1)) improved from 56.3% in the
first quarter of 2021.
Wealth Management
- Net income totalled $176 million in the first quarter of 2022,
an 11% increase from $158 million in the first quarter of 2021.
- First-quarter total revenues amounted to $592 million compared
to $518 million in first-quarter 2021, a $74 million or 14% increase driven
mainly by growth in fee-based revenues.
- First-quarter non-interest expenses stood at $352 million
compared to $305 million in first-quarter 2021, a 15% increase associated with
revenue growth.
- At 59.5%, the efficiency ratio((1)) compares to 58.9% in the
first quarter of 2021.
Financial Markets
- Net income totalled $307 million in the first quarter of 2022
versus $255 million in the first quarter of 2021, a 20% increase that was
essentially due to higher total revenues and lower provisions for credit
losses.
- Income before provisions for credit losses and income taxes on
a taxable equivalent basis totalled $402 million in the first quarter of 2022,
up 10% from $367 million in the first quarter of 2021.
- First-quarter total revenues on a taxable equivalent basis
reached a record $662 million, a $64 million or 11% year-over-year increase
attributable to global markets revenue.
- First-quarter non-interest expenses stood at $260 million
compared to $231 million in first-quarter 2021, an increase that was partly
attributable to compensation and employee benefits as well as to operations
support charges.
- $16 million in recoveries of credit losses were recorded in
the first quarter of 2022, whereas $20 million in provisions for credit losses
had been recorded in the first quarter of 2021, essentially due to lower
provisions for credit losses on impaired loans.
- At 39.3%, the efficiency ratio((1)) on a taxable equivalent
basis compares to 38.6% in the first quarter of 2021.
U.S. Specialty Finance and International
- Net income totalled $148 million in the first quarter of 2022
versus $136 million in the first quarter of 2021, a 9% increase that was due
to higher total revenues combined with lower non-interest expenses.
- First-quarter total revenues amounted to $285 million, a 4%
year-over-year increase driven by revenue growth at the ABA Bank subsidiary,
tempered by a decrease in revenues at the Credigy subsidiary.
- First-quarter non-interest expenses stood at $80 million, down
4% from first-quarter 2021.
- At 28.1%, the efficiency ratio((1)) improved from 30.3% in the
first quarter of 2021.
Other
- Net loss stood at $16 million in the first quarter of 2022
versus a net loss of $38 million in the first quarter of 2021, due to a
decrease in non-interest expenses and an increase in total revenues.
Capital Management
- As at January 31, 2022, the Common Equity Tier 1 (CET1)
capital ratio under Basel III((2)) stood at 12.7%, up from 12.4% as at October
31, 2021.
- As at January 31, 2022, the Basel III((2)) leverage ratio was
4.4%, unchanged from October 31, 2021.
Dividends
- On February 24, 2022, the Board of Directors declared regular
dividends on the various series of first preferred shares and a dividend of 87
cents per common share payable on May 1, 2022 to shareholders of record on
March 28, 2022.
(1) For details on the composition of these measures, see the
Glossary section on pages 43 to 45 in the Report to Shareholders - First
Quarter 2022, which is available on the Bank's website at nbc.ca or the SEDAR
website at sedar.com.
(2) For additional information on capital management measures, see
the Financial Reporting Method section on pages 6 to 8 in the Report to
Shareholders - First Quarter 2022, which is available on the Bank's website at
nbc.ca or the SEDAR website at sedar.com.
COVID-19
Pandemic
Since March 11, 2020, the date on which the World Health Organization (WHO)
declared that the COVID-19 outbreak constituted a pandemic, many countries,
including Canada, deployed substantial protective measures to prevent
overcrowding at health services and to strengthen preventive hygiene. These
lockdown and social distancing measures, which included the closing of aerial,
maritime, and land borders, were taken to prevent new outbreaks.
During the fiscal years ended October 31, 2021 and 2020, some of the
restrictions imposed at the start of the pandemic were eased, but subsequent
waves of COVID-19 forced authorities in a number of countries, including those
in Canada, to reintroduce lockdown measures, effectively shutting down parts
of the economy again. The authorities in many countries, including those in
Canada, are actively working to ensure that widespread vaccination coverage is
achieved as quickly as possible. However, uncertainty remains regarding the
long-term effectiveness of the vaccines, the acceptance thereof by the public,
and the anticipated reduction of infection rates, especially given a rise in
cases linked to more contagious COVID-19 variants in recent months. Certain
measures by the public health authorities in Canada are expected to remain in
place to continue limiting the spread of COVID-19 and its variants.
In Canada, banking services are considered essential services and have
therefore been maintained despite the lockdown and social distancing measures.
Given the current economic and social conditions, the Bank is committed to
supporting its employees, clients, and communities.
The Bank is continuing to closely monitor the potential impacts of the
COVID-19 pandemic. It is not possible to predict the full impacts that the
pandemic will have on the global economy, on the countries in which the Bank
operates, on the Bank's clients, and on the Bank itself, including its
business activities, results of operations, financial position, regulatory
capital and liquidity ratios, reputation, and ability to satisfy regulatory
requirements. The actual impacts will depend on future events that are highly
uncertain, including the extent, severity, and duration of the COVID-19
pandemic, and on the effectiveness of actions and measures taken by
governments, monetary authorities, and regulators over the long term.
For additional information on the impact of the COVID-19 risk factor, on
relief measures offered to the Bank's clients, and on the measures introduced
by regulators, see the COVID-19 Pandemic section on pages 16 to 18 of the
2021 Annual Report.
A number of the relief measures offered to the Bank's clients at the start of
the pandemic ended in 2020, although some measures were being offered as part
of various government programs in which the Bank is participating. These
measures consist mainly of loans backed by government guarantees, particularly
for businesses operating in sectors hit hardest by the pandemic. In the normal
course of business, the Bank is continuing to address the specific needs of
its clients to support them during this unprecedented crisis.
Financial Reporting Method
The Bank's consolidated financial statements are prepared in accordance with
IFRS, 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, which represent Canadian GAAP. None of the
OSFI accounting requirements are exceptions to IFRS.
The presentation of segment disclosures is consistent with the presentation
adopted by the Bank for the fiscal year beginning November 1, 2021. This
presentation reflects the fact that the loan portfolio of borrowers in the
"Oil and gas, and pipelines" sector and related activities, which had
previously been reported in the Personal and Commercial segment, are now
reported in the Financial Markets segment. The Bank made this change to better
align the monitoring of its activities with its management structure.
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 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 Bank excludes certain specified items that are inherently
unpredictable from its results. In addition, like many other financial
institutions, the Bank uses the taxable equivalent basis to calculate net
interest income, non-interest income, and income taxes. This calculation
method consists of grossing up certain tax-exempt income (particularly
dividends) by the income tax that would have been otherwise payable. An
equivalent amount is added to income taxes. This adjustment is necessary in
order to perform a uniform comparison of the return on different assets
regardless of their tax treatment.
For additional information on non-GAAP financial measures, on non-GAAP ratios,
on supplementary financial measures, and on capital management measures, see
the Financial Reporting Method section and the Glossary section, on pages 6 to
8 and 43 to 45, respectively, in the Report to Shareholders - First
Quarter 2022, which is available on the Bank's website at nbc.ca or the SEDAR
website at sedar.com.
Reconciliation of Non-GAAP Financial Measures
Presentation of Results - Adjusted
(millions of Canadian dollars) Quarter ended January 31
2022 2021
Personal and Commercial Wealth Management Financial Markets USSF&I Other
Total Total
Net interest income 669 119 339 270 (65) 1,332 1,207
Taxable equivalent − − 59 − 1 60 54
Net interest income - Adjusted 669 119 398 270 (64) 1,392 1,261
Non-interest income 289 473 260 15 97 1,134 1,017
Taxable equivalent − − 4 − − 4 3
Non-interest income - Adjusted 289 473 264 15 97 1,138 1,020
Total revenues - Adjusted 958 592 662 285 33 2,530 2,281
Non-interest expenses 532 352 260 80 53 1,277 1,180
Income before provisions for credit losses and income taxes - Adjusted 426 240 402 205 (20) 1,253 1,101
Provisions for credit losses (5) − (16) 18 1 (2) 81
Income before income taxes - Adjusted 431 240 418 187 (21) 1,255 1,020
Income taxes 114 64 48 39 (6) 259 202
Taxable equivalent − − 63 − 1 64 57
Income taxes - Adjusted 114 64 111 39 (5) 323 259
Net income 317 176 307 148 (16) 932 761
Non-controlling interests − − − − − − −
Net income attributable to the Bank's shareholders 317 176 307 148 (16) 932 761
and holders of other equity instruments
Highlights
(millions of Canadian dollars, except per share amounts) Quarter ended January 31
2022 2021 % Change
Operating results
Total revenues 2,466 2,224 11
Income before provisions for credit losses and income taxes 1,189 1,044 14
Net income 932 761 22
Net income attributable to the Bank's shareholders and 932 761 22
holders of other equity instruments
Return on common shareholders' equity((1)) 21.7 % 21.2 %
Earnings per share
Basic $ 2.68 $ 2.16 24
Diluted 2.65 2.15 23
Operating results - Adjusted((2))
Total revenues - Adjusted((2)) 2,530 2,281 11
Income before provisions for credit losses and income taxes - Adjusted((2)) 1,253 1,101 14
Net income - Adjusted((2)) 932 761 22
Return on common shareholders' equity - Adjusted((3)) 21.7 % 21.2 %
Operating leverage - Adjusted((3)) 2.7 % 4.0 %
Efficiency ratio - Adjusted((3)) 50.5 % 51.7 %
Earnings per share - Adjusted((2))
Basic $ 2.68 $ 2.16 24
Diluted 2.65 2.15 23
Common share information
Dividends declared $ 0.87 $ 0.71
Book value((1)) 50.23 41.48
Share price
High 105.44 73.81
Low 94.37 65.54
Close 101.70 71.87
Number of common shares (thousands) 338,367 336,770
Market capitalization 34,412 24,204
(millions of Canadian dollars) As at January 31, As at October 31, % Change
2022 2021
Balance sheet and off-balance-sheet
Total assets 366,888 355,795 3
Loans and acceptances, net of allowances 188,080 182,689 3
Deposits 247,095 240,938 3
Equity attributable to common shareholders 16,996 16,203 5
Assets under administration((1)) 654,538 651,530 −
Assets under management((1)) 118,205 117,186 1
Regulatory ratios under Basel III((4))
Capital ratios
Common Equity Tier 1 (CET1) 12.7 % 12.4 %
Tier 1 15.2 % 15.0 %
Total 16.1 % 15.9 % ( )
Leverage ratio 4.4 % 4.4 % ( )
TLAC ratio((4)) 27.8 % 26.3 % ( )
TLAC leverage ratio((4)) 8.0 % 7.8 % ( )
Liquidity coverage ratio (LCR)((4)) 149 % 154 % ( )
Net stable funding ratio (NSFR)((4)) 117 % 117 %
Other information ( )
Number of employees - Worldwide 27,804 26,920 3
Number of branches in Canada 385 384 −
Number of banking machines in Canada 937 927 1
(1) For details on the composition of these measures, see the
Glossary section on pages 43 to 45 in the Report to Shareholders - First
Quarter 2022, which is available on the Bank's website at nbc.ca or the SEDAR
website at sedar.com.
(2) See the Financial Reporting Method section on pages 3 to 4 for
additional information on non-GAAP financial measures.
(3) For additional information on non-GAAP ratios, see the
Financial Reporting Method section on pages 6 to 8 and see the Glossary
section on pages 43 to 45 in the Report to Shareholders - First Quarter 2022,
which is available on the Bank's website at nbc.ca or the SEDAR website at
sedar.com.
(4) For additional information on capital management measures, see
the Financial Reporting Method section on pages 6 to 8 in the Report to
Shareholders - First Quarter 2022, which is available on the Bank's website at
nbc.ca or the SEDAR website at sedar.com.
Caution Regarding Forward-Looking Statements
From time to time, the Bank makes written forward-looking statements such as
those contained in this document, in other filings with Canadian securities
regulators, and in other communications. In addition, representatives of the
Bank may make forward-looking statements orally to analysts, investors, the
media, and others. All such statements are made in accordance with applicable
securities legislation in Canada and the United States. Forward-looking
statements in this document may include, but are not limited to, statements
with respect to the economy-particularly the Canadian and U.S.
economies-market changes, the Bank's objectives, outlook and priorities for
fiscal year 2022 and beyond, the strategies or actions that will be taken to
achieve them, expectations for the Bank's financial condition, the regulatory
environment in which it operates, the potential impacts of-and the Bank's
response to-the COVID-19 pandemic, and certain risks it faces. These
forward-looking statements are typically identified by verbs or words such as
"outlook", "believe", "foresee", "forecast", "anticipate", "estimate",
"project", "expect", "intend" and "plan", in their future or conditional
forms, notably verbs such as "will", "may", "should", "could" or "would" as
well as similar terms and expressions. Such forward-looking statements are
made for the purpose of assisting the holders of the Bank's securities in
understanding the Bank's financial position and results of operations as at
and for the periods ended on the dates presented, as well as the Bank's
vision, strategic objectives, and financial performance targets, and may not
be appropriate for other purposes.
By their very nature, these 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 2022, including in the context of the COVID-19 pandemic, and how that will
affect the Bank's business are among the main factors considered in setting
the Bank's strategic priorities and objectives including provisions for credit
losses. In determining its expectations for economic conditions, both broadly
and in the financial services sector in particular, the Bank primarily
considers historical economic data provided by the governments of Canada, the
United States, and certain other countries in which the Bank conducts
business, as well as their agencies.
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 may not be confirmed and that its vision,
strategic objectives and financial performance targets will not be achieved.
The Bank recommends that readers not place undue reliance on forward-looking
statements, as a number of factors, many of which are beyond the Bank's
control, including the impacts of the COVID-19 pandemic, could cause actual
results to differ significantly from the expectations, estimates or intentions
expressed in these forward-looking statements. These risk factors include
credit risk, market risk, liquidity and funding risk, operational risk,
regulatory compliance risk, reputation risk, strategic risk, environmental and
social risk, and certain emerging risks or risks deemed significant, all of
which are described in greater detail in the Risk Management section beginning
on page 69 of the 2021 Annual Report. These risk factors also include, among
others, the general economic environment and financial market conditions in
Canada, the United States, and other countries where the Bank operates;
exchange rate and interest rate fluctuations; higher funding costs and greater
market volatility; changes made to fiscal, monetary, and other public
policies; changes made to regulations that affect the Bank's business;
geopolitical and sociopolitical uncertainty; the transition to a low-carbon
economy and the Bank's ability to satisfy stakeholder expectations on
environmental and social issues; significant changes in consumer behaviour;
the housing situation, real estate market, and household indebtedness in
Canada; the Bank's ability to achieve its long-term strategies and key
short-term priorities; the timely development and launch of new products and
services; the Bank's ability to recruit and retain key personnel;
technological innovation and heightened competition from established companies
and from competitors offering non-traditional services; changes in the
performance and creditworthiness of the Bank's clients and counterparties; the
Bank's exposure to significant regulatory matters or litigation; changes made
to the accounting policies used by the Bank to report financial information,
including the uncertainty inherent to assumptions and critical accounting
estimates; changes to tax legislation in the countries where the Bank
operates, i.e., primarily Canada and the United States; changes made to
capital and liquidity guidelines as well as to the presentation and
interpretation thereof; changes to the credit ratings assigned to the Bank;
potential disruption to key suppliers of goods and services to the Bank;
potential disruptions to the Bank's information technology systems, including
evolving cyberattack risk as well as identity theft and theft of personal
information; and possible impacts of major events affecting the local and
global economies, including international conflicts, natural disasters, and
public health crises such as the COVID-19 pandemic. The foregoing list of risk
factors is not exhaustive. Additional information about these risk factors is
provided in the Risk Management section and in the COVID-19 Pandemic section
of the 2021 Annual Report and in the Report to Shareholders for the First
Quarter of 2022, notably in the COVID-19 Pandemic section. 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.
Disclosure of the First Quarter 2022 results
Conference Call
- A conference call for analysts and institutional investors
will be held on Friday, February 25, 2022 at 11:00 a.m. EST.
- Access by telephone in listen-only mode: 1-800-806-5484 or
416-340-2217. The access code is 8772703#.
- A recording of the conference call can be heard until March
25, 2022 by dialing 1-800-408-3053 or 905-694-9451. The access code is
2805224#.
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 Ghislain Parent Jean Dagenais Linda Boulanger Marie-Pierre Jodoin
information: Chief Financial Officer and Senior Vice-President - Senior Vice-President - Senior Manager -
Executive Vice-President - Finance Investor Relations Public Affairs and Corporate
Finance 514-394-6233 514-394-0296 Social Responsibility
514-394-6807 514-394-4209
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