Nat Bank of Canada - Q2 2025 Report to shareholders (Part 2)

Royal Bank of Canada

28/05/2025 14:32

RNS Number : 4578K

National Bank of Canada

28 May 2025

 

Regulatory Announcement (Part 2)

Q2 2025 Results

National Bank of Canada (the "Bank") announces publication of its Second Quarter 2025 Release. The Second Quarter Results have been uploaded to the National Storage Mechanism and will shortly be available at 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

To view the full PDF of this Second Quarter 2025 Release, please click on the following link:

http://www.rns-pdf.londonstockexchange.com/rns/4572K_1-2025-5-28.pdf

 

 

 

Report to Shareholders              Second Quarter 2025

 

 

Interim Condensed Consolidated

Financial Statements

(unaudited)

 

 

Consolidated Balance Sheets
56
Consolidated Statements of Income
57
Consolidated Statements of Comprehensive Income
58
Consolidated Statements of Changes in Equity
60
Consolidated Statements of Cash Flows
61
Notes to the Interim Condensed Consolidated Financial Statements
62

 







 

 

Consolidated Balance Sheets

(unaudited) (millions of Canadian dollars)

 

As at April 30, 2025
As at October 31, 2024
Assets
Cash and deposits with financial institutions
31,422
31,549
Securities (Notes 3, 4 and 5)
At fair value through profit or loss
133,092
115,935
At fair value through other comprehensive income
20,101
14,622
At amortized cost
15,450
14,608
168,643
145,165
Securities purchased under reverse repurchase agreements
and securities borrowed
20,836
16,265
Loans (Note 6)
Residential mortgage
108,507
95,009
Personal
47,533
46,883
Credit card
2,835
2,761
Business and government
128,791
99,720
287,666
244,373
Allowances for credit losses
(1,938)
(1,341)
285,728
243,032
Other
Derivative financial instruments
13,649
12,309
Premises and equipment
2,127
1,868
Goodwill
3,081
1,522
Intangible assets
1,870
1,233
Other assets (Note 7)
8,838
9,283
29,565
26,215
536,194
462,226
Liabilities and equity
Deposits (Notes 4, 8 and 10)
387,974
333,545
Other
Obligations related to securities sold short
13,871
10,873
Obligations related to securities sold under repurchase agreements
and securities loaned
40,984
38,177
Derivative financial instruments
18,096
15,760
Liabilities related to transferred receivables (Note 4)
29,403
28,377
Other liabilities (Note 9)
10,139
8,686
112,493
101,873
Subordinated debt (Note 11)
2,822
1,258
Equity
Equity attributable to the Bank's shareholders and holders of
other equity instruments (Notes 12, 14 and 19)
Preferred shares and other equity instruments
3,114
3,150
Common shares
9,805
3,463
Contributed surplus
113
85
Retained earnings
19,813
18,633
Accumulated other comprehensive income
59
219
32,904
25,550
Non-controlling interests
1
−
32,905
25,550
536,194
462,226
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.


Consolidated Statements of Income

(unaudited) (millions of Canadian dollars)

 

Quarter ended April 30
Six months ended April 30
2025
2024
2025
2024
Interest income
Loans
4,096
3,823
7,992
7,516
Securities at fair value through profit or loss
548
429
1,081
881
Securities at fair value through other comprehensive income
187
123
355
238
Securities at amortized cost
143
109
281
232
Deposits with financial institutions
288
391
602
814
5,262
4,875
10,311
9,681
Interest expense
Deposits
3,181
3,256
6,368
6,430
Liabilities related to transferred receivables
198
188
393
360
Subordinated debt
34
16
53
27
Other
644
780
1,320
1,478
4,057
4,240
8,134
8,295
Net interest income(1)
1,205
635
2,177
1,386
Non-interest income
Underwriting and advisory fees
112
115
208
203
Securities brokerage commissions
55
46
112
97
Mutual fund revenues
174
155
352
305
Investment management and trust service fees
342
282
662
550
Credit fees
83
133
165
281
Card revenues
53
51
103
101
Deposit and payment service charges
74
72
146
144
Trading revenues (losses)
1,388
1,125
2,569
2,126
Gains (losses) on non-trading securities, net
22
38
49
63
Insurance revenues, net
18
12
40
33
Foreign exchange revenues, other than trading
64
57
130
105
Share in the net income of associates and joint ventures
2
2
4
4
Other
58
27
116
62
2,445
2,115
4,656
4,074
Total revenues
3,650
2,750
6,833
5,460
Non-interest expenses
Compensation and employee benefits
1,196
909
2,233
1,813
Occupancy
87
94
184
181
Technology
342
255
627
514
Communications
18
14
34
27
Professional fees
120
66
213
132
Other
179
134
297
254
1,942
1,472
3,588
2,921
Income before provisions for credit losses and income taxes
1,708
1,278
3,245
2,539
Provisions for credit losses (Note 6)
545
138
799
258
Income before income taxes
1,163
1,140
2,446
2,281
Income taxes (Note 16)
267
234
553
453
Net income
896
906
1,893
1,828
Net income attributable to
Preferred shareholders and holders of other equity instruments
43
37
82
74
Common shareholders
853
870
1,811
1,755
Bank shareholders and holders of other equity instruments
896
907
1,893
1,829
Non-controlling interests
−
(1)
−
(1)
896
906
1,893
1,828
Earnings per share(dollars) (Note 17)
Basic
2.19
2.56
4.96
5.18
Diluted
2.17
2.54
4.91
5.13
Dividends per common share(dollars) (Note 12)
1.14
1.06
2.28
2.12
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.


(1)       Net interest income includes dividend income. For additional information, see Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2024.

 

Consolidated Statements of Comprehensive Income

(unaudited) (millions of Canadian dollars)

 

Quarter ended April 30
Six months ended April 30
2025
2024
2025
2024
Net income
896
906
1,893
1,828
Other comprehensive income, net of income taxes
Items that may be subsequently reclassified to net income
Net foreign currency translation adjustments
Net unrealized foreign currency translation gains (losses) on investments
in foreign operations
(589)
203
(136)
(40)
Impact of hedging net foreign currency translation gains (losses)
277
(86)
73
(17)
(312)
117
(63)
(57)
Net change in debt securities at fair value through other comprehensive income
Net unrealized gains (losses) on debt securities at fair value through other
comprehensive income
(14)
(12)
8
33
Net (gains) losses on debt securities at fair value through other comprehensive
income reclassified to net income
(17)
(12)
(35)
(9)
(31)
(24)
(27)
24
Net change in cash flow hedges
Net gains (losses) on derivative financial instruments designated as cash flow hedges
(14)
(25)
(29)
4
Net (gains) losses on designated derivative financial instruments reclassified
to net income
(19)
(31)
(41)
(57)
(33)
(56)
(70)
(53)
Items that will not be subsequently reclassified to net income
Remeasurements of pension plans and other post-employment benefit plans
94
(24)
98
(16)
Net gains (losses) on equity securities designated at fair value through
other comprehensive income
(27)
9
(10)
31
Net fair value change attributable to the credit risk on financial liabilities
designated at fair value through profit or loss
109
(168)
127
(333)
176
(183)
215
(318)
Total other comprehensive income, net of income taxes
(200)
(146)
55
(404)
Comprehensive income
696
760
1,948
1,424
Comprehensive income attributable to
Bank shareholders and holders of other equity instruments
696
761
1,948
1,425
Non-controlling interests
−
(1)
−
(1)
696
760
1,948
1,424
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.


Consolidated Statements of Comprehensive Income (cont.)

(unaudited) (millions of Canadian dollars)

 

Income Taxes - Other Comprehensive Income

 

The following table presents the income tax expense or recovery for each component of other comprehensive income.

 

Quarter ended April 30
Six months ended April 30
2025
2024
2025
2024
Items that may be subsequently reclassified to net income
Net foreign currency translation adjustments
Net unrealized foreign currency translation gains (losses) on investments
in foreign operations
18
(4)
3
2
Impact of hedging net foreign currency translation gains (losses)
90
(25)
26
(8)
108
(29)
29
(6)
Net change in debt securities at fair value through other comprehensive income
Net unrealized gains (losses) on debt securities at fair value through other
comprehensive income
(4)
(4)
5
13
Net (gains) losses on debt securities at fair value through other comprehensive income
reclassified to net income
(7)
(4)
(14)
(3)
(11)
(8)
(9)
10
Net change in cash flow hedges
Net gains (losses) on derivative financial instruments designated as cash flow hedges
(7)
(10)
(12)
1
Net (gains) losses on designated derivative financial instruments reclassified
to net income
(7)
(12)
(16)
(22)
(14)
(22)
(28)
(21)
Items that will not be subsequently reclassified to net income
Remeasurements of pension plans and other post-employment benefit plans
37
(10)
38
(7)
Net gains (losses) on equity securities designated at fair value through
other comprehensive income
(9)
3
(3)
13
Net fair value change attributable to the credit risk on financial liabilities
designated at fair value through profit or loss
42
(65)
49
(128)
70
(72)
84
(122)
153
(131)
76
(139)
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.


Consolidated Statements of Changes in Equity

(unaudited) (millions of Canadian dollars)

 

Six months ended April 30
2025
2024
Preferred shares and other equity instruments at beginning (Notes 12 and 19)
3,150
3,150
Issuances of preferred shares, Series 47 and 49 (Note 19)
264
−
Redemption of preferred shares, Series 32, for cancellation
(300)
−
Preferred shares and other equity instruments at end
3,114
3,150
Common shares at beginning (Note 12)
3,463
3,294
Issuances of common shares pursuant to the Stock Option Plan
34
103
Issuances of common shares related to the CWB acquisition (Notes 10 and 19)
Exchange of common shares
5,290
−
Automatic exchange of subscription receipts
1,040
−
Impact of shares purchased or sold for trading
(22)
16
Common shares at end
9,805
3,413
Contributed surplus at beginning
85
68
Stock option expense (Note 14)
11
9
Stock options exercised
(4)
(11)
Replacement options related to the CWB acquisition (Note 14)
29
−
Other
(8)
(2)
Contributed surplus at end
113
64
Retained earnings at beginning
18,633
16,650
Net income attributable to the Bank's shareholders and holders of other equity instruments
1,893
1,829
Dividends on preferred shares and distributions on other equity instruments (Note 12)
(93)
(85)
Dividends on common shares (Note 12)
(837)
(720)
Issuance expenses for shares, net of income taxes
(11)
−
Remeasurements of pension plans and other post-employment benefit plans
98
(16)
Net gains (losses) on equity securities designated at fair value through other comprehensive income
(10)
31
Net fair value change attributable to the credit risk on financial liabilities
designated at fair value through profit or loss
127
(333)
Impact of a financial liability resulting from put options written to non-controlling interests
(1)
1
Other
14
11
Retained earnings at end
19,813
17,368
Accumulated other comprehensive income at beginning
219
420
Net foreign currency translation adjustments
(63)
(57)
Net change in unrealized gains (losses) on debt securities at fair value through other comprehensive income
(27)
24
Net change in gains (losses) on instruments designated as cash flow hedges
(70)
(53)
Accumulated other comprehensive income at end
59
334
Equity attributable to the Bank's shareholders and holders of other equity instruments
32,904
24,329
−
Non-controlling interests at beginning
−
2
Net income attributable to non-controlling interests
−
(1)
Other
1
−
Non-controlling interests at end
1
1
Equity
32,905
24,330


 

 

Accumulated Other Comprehensive Income 

As at April 30,2025
As at April 30, 2024
Accumulated other comprehensive income
Net foreign currency translation adjustments
257
250
Net unrealized gains (losses) on debt securities at fair value through other comprehensive income
(53)
(11)
Net gains (losses) on instruments designated as cash flow hedges
(147)
93
Share in the other comprehensive income of associates and joint ventures
2
2
59
334
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.


Consolidated Statements of Cash Flows

(unaudited) (millions of Canadian dollars)

Six months ended April 30
2025
2024
Cash flows from operating activities
Net income
1,893
1,828
Adjustments for
Provisions for credit losses
799
258
Amortization of premises and equipment, including right-of-use assets
138
112
Amortization of intangible assets
154
143
Deferred taxes
(173)
(22)
Losses (gains) on sales of non-trading securities, net
(45)
(63)
Share in the net income of associates and joint ventures
(4)
(4)
Stock option expense
11
9
Gain on the fair value remeasurement of an equity interest (Note 18)
(4)
−
Change in operating assets and liabilities
Securities at fair value through profit or loss
(17,157)
(6,186)
Securities purchased under reverse repurchase agreements and securities borrowed
(4,571)
(9,897)
Loans and acceptances, net of securitization
(4,652)
(11,112)
Deposits
21,101
18,708
Obligations related to securities sold short
429
(2,780)
Obligations related to securities sold under repurchase agreements and securities loaned
2,791
3,147
Derivative financial instruments, net
1,083
4,212
Securitization-Credit cards
(49)
−
Interest and dividends receivable and interest payable
342
194
Current tax assets and liabilities
23
24
Other items
649
(970)
2,758
(2,399)
Cash flows from financing activities
Redemption of preferred shares for cancellation
(300)
−
Issuances of common shares (including the impact of shares purchased for trading)
8
108
Issuance of subordinated debt
1,000
500
Issuance expenses for shares
(11)
−
Repayments of lease liabilities
(46)
(63)
Dividends paid on shares and distributions on other equity instruments
(933)
(804)
(282)
(259)
Cash flows from investing activities
Net change in investments in associates and joint ventures
(2)
10
Acquisition (Note 19)
148
−
Purchases of non-trading securities
(16,734)
(7,716)
Maturities of non-trading securities
5,269
2,546
Sales of non-trading securities
9,333
2,900
Net change in premises and equipment, excluding right-of-use assets
(115)
(322)
Net change in intangible assets
(111)
(125)
(2,212)
(2,707)
Impact of currency rate movements on cash and cash equivalents
(391)
(191)
Increase (decrease) in cash and cash equivalents
(127)
(5,556)
Cash and cash equivalents at beginning
31,549
35,234
Cash and cash equivalents at end(1)
31,422
29,678
Supplementary information about cash flows from operating activities
Interest paid
7,827
8,065
Interest and dividends received
10,346
9,645
Income taxes paid
539
588
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.


(1)       This item represents the balance of Cash and deposits with financial institutions in the Consolidated Balance Sheet. It includes an amount of $14.7 billion as at April 30, 2025 ($11.7 billion as at October 31, 2024) for which there are restrictions and of which $6.6 billion ($6.5 billion as at October 31, 2024) represents the balances that the Bank must maintain with central banks, other regulatory agencies, and certain counterparties.

 

Notes to the Interim Condensed Consolidated Financial Statements

(unaudited) (millions of Canadian dollars)

 

Note 1
Basis of Presentation
62
Note 11
Subordinated Debt
85
Note 2
Future Accounting Policy Changes
63
Note 12
Share Capital and Other Equity Instruments
86
Note 3
Fair Value of Financial Instruments
64
Note 13
Capital Disclosure
87
Note 4
Financial Instruments Designated at Fair Value Through
Note 14
Share-Based Payments
88
Profit or Loss
69
Note 15
Employee Benefits - Pension Plans and Other
Note 5
Securities
70
Post-Employment Benefit Plans
89
Note 6
Loans and Allowances for Credit Losses
71
Note 16
Income Taxes
90
Note 7
Other Assets
83
Note 17
Earnings Per Share
91
Note 8
Deposits
84
Note 18
Segment Disclosures
92
Note 9
Other Liabilities
84
Note 19
Acquisition
94
Note 10
Subscription Receipts
85


 

Note 1 - Basis of Presentation

 

On May 27, 2025, the Board of Directors authorized the publication of the Bank's unaudited interim condensed consolidated financial statements (the Consolidated Financial Statements) for the quarter and six-month period ended April 30, 2025.

 

The Bank's Consolidated Financial Statements were prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (IASB), using the same accounting policies as those described in Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2024 except for the addition of the accounting policy for finance leases, described below, resulting from the acquisition of Canadian Western Bank (CWB). As the Consolidated Financial Statements do not include all of the information required for full annual financial statements, they should be read in conjunction with the audited annual consolidated financial statements for the year ended October 31, 2024. The financial results of CWB have been consolidated in the Bank's financial statements as of February 3, 2025 and have been recorded in the Personal and Commercial, Wealth Management and Financial Markets segments and in the Other heading of segment disclosures.

 

Leases

Bank as the lessor

When the Bank is the lessor, the contracts are classified as finance leases if they transfer substantially all of the risks and rewards of ownership of the underlying asset to the lessee, otherwise they are classified as operating leases. For finance leases, a receivable is recorded in Loans on the Consolidated Balance Sheet for an amount equal to the net investment in the finance leases, which represents the minimum payments receivable from the lessee plus any unguaranteed residual value expected to be recovered at the end of the finance leases, discounted at the interest rate implicit in the lease. Finance lease receivables are subsequently recorded at an amount equal to the net investment in the lease, net of allowances for expected credit losses. Interest income is recognized over the term of the lease in Interest income in the Consolidated Statement of Income. For operating leases, the leased assets remain on the Consolidated Balance Sheet and are reported in Premises and equipment, and the rental income is recognized in Non-interest income in the Consolidated Statement of Income.

 

Judgment, Estimates and Assumptions

In preparing consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB, management must exercise judgment and make estimates and assumptions that affect the reporting date carrying values of assets and liabilities, net income, and related information. Some of the Bank's accounting policies, such as measurement of expected credit losses (ECLs), require particularly complex judgments and estimates. See Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2024 for a summary of the most significant estimation processes used to prepare the Consolidated Financial Statements and for the valuation techniques used to determine the carrying values and fair values of assets and liabilities. In addition, valuation techniques used for assets and liabilities resulting from the CWB acquisition are described below.

 

The geopolitical landscape, notably the measures affecting trade relations between Canada and its partners, including the imposition of tariffs and any measures taken in response to such tariffs, the Russia-Ukraine war and clashes between Israel and Hamas, inflation, climate change, and previously high interest rates continue to create uncertainty. As a result, establishing reliable estimates and applying judgment continue to be substantially complex. The uncertainty surrounding certain key inputs used in measuring ECLs is described in Note 6 to these Consolidated Financial Statements.

 

CWB acquisition - Valuation of Assets and Liabilities

The Bank used significant judgment and assumptions to determine the fair value of the CWB assets acquired and liabilities assumed, including the loan portfolio, core-deposit and customer relationship intangible assets and deposits.

 

 

For loans, fair value was determined by discounting the estimated cash flows expected to be received on all purchased loans back to their present value. Management's best estimate of current key assumptions such as default rates, loss severity, timing of prepayments options and collateral was used to estimate expected cash flows. In determining the discount rate, various inputs were considered, including the risk-free interest rates in the current market, the risk premium associated with the loans and the cost to service the portfolios.

 

For core-deposit intangible assets, fair value was determined using a discounted cash flow approach, comparing the present value of the cost to

maintain the acquired core deposits to the cost of alternative funding. The present value of the cost to maintain the acquired core deposits includes an

estimate of future interest costs and operating expenses for these deposits acquired. Core deposits are those that are considered to be stable,

below-market sources of funding, whereas the present value of the cost of alternative funding includes an estimate of future interest costs that would be incurred if the funds were borrowed from the public market. Deposit run-off was estimated using historical attrition data, comparing this to market sources at the date of acquisition.

 

The fair value of customer relationships acquired was determined based on the excess of estimated future cash inflows based on revenue from the acquired relationships over the related estimated cash outflows over the estimated useful life of the customer base.

 

For the deposits, fair value was determined by discounting the estimated cash flows to be repaid, back to their present value. The timing and amount of cash flows involve significant management judgment regarding the likelihood of early redemption and the timing of withdrawal by the customer. Discount rates were based on the prevailing rates that were paid on similar deposits at the date of acquisition.

 

The fair value of all other assets and liabilities was calculated using market data where possible, as well as management judgment to determine the price that would be obtained in an arms-length transaction between knowledgeable, willing parties.

 

For additional information, see Note 19 to these Consolidated Financial Statements.

 

Unless otherwise indicated, all amounts are expressed in Canadian dollars, which is the Bank's functional and presentation currency.

Note 2 - Future Accounting Policy Changes

 

The Bank closely monitors both new accounting standards and amendments to existing accounting standards issued by the IASB. There have been no significant updates to the future accounting policy changes disclosed in Note 3 to the audited annual consolidated financial statements for the year ended October 31, 2024. The Bank is currently assessing the impact of applying these standards on the consolidated financial statements.

 

Note 3 - Fair Value of Financial Instruments

 

Fair Value and Carrying Value of Financial Instruments by Category

 

Financial assets and financial liabilities are recognized on the Consolidated Balance Sheet at fair value or at amortized cost in accordance with the categories set out in the accounting framework for financial instruments.

 

As at April 30, 2025
Carrying value
and fair value
Carrying value
Fair
value
Total carrying value
Total
fair
value
Financial instruments classified as at fair value through profit or loss
Financial instruments designated at fair value through profit or loss
Debt securities classified as at fair value through other comprehensive income
Equity securities
designated at
fair value
through other
comprehensive
income
Financial instruments at amortized cost, net
Financial instruments at amortized cost, net
Financial assets
Cash and deposits with financial
institutions
−
−
−
−
31,422
31,422
31,422
31,422
Securities
132,730
362
19,689
412
15,450
15,593
168,643
168,786
Securities purchased under reverse
repurchase agreements
and securities borrowed
−
−
−
−
20,836
20,836
20,836
20,836
Loans, net of allowances
15,997
−
−
−
269,731
271,429
285,728
287,426
Other
Derivative financial instruments
13,649
−
−
−
−
−
13,649
13,649
Other assets
1,198
−
−
−
3,563
3,563
4,761
4,761
Financial liabilities
Deposits(1)
−
29,249
358,725
359,698
387,974
388,947
Other
Obligations related to securities sold short
13,871
−
−
−
13,871
13,871
Obligations related to securities sold under
repurchase agreements and
securities loaned
−
−
40,984
40,984
40,984
40,984
Derivative financial instruments
18,096
−
−
−
18,096
18,096
Liabilities related to transferred receivables
−
12,105
17,298
17,663
29,403
29,768
Other liabilities
−
−
5,389
5,389
5,389
5,389
Subordinated debt
−
−
2,822
2,862
2,822
2,862


(1)       Includes embedded derivative financial instruments.

 

 

As at October 31, 2024
Carrying value and
fair value
Carrying value
Fair
value
Total carrying value
Total
fair
value
Financial instruments classified as at fair value through profit or loss
Financial instruments designated at fair value through profit or loss
Debt securities classified as at fair value through other comprehensive income
Equity securities
designated at
fair value
through other
comprehensive
income
Financial instruments at amortized cost, net
Financial instruments at amortized cost, net
Financial assets
Cash and deposits with financial
institutions
−
−
−
−
31,549
31,549
31,549
31,549
Securities
115,578
357
13,956
666
14,608
14,551
145,165
145,108
Securities purchased under reverse
repurchase agreements
and securities borrowed
−
−
−
−
16,265
16,265
16,265
16,265
Loans, net of allowances
14,972
−
−
−
228,060
229,614
243,032
244,586
Other
Derivative financial instruments
12,309
−
−
−
−
−
12,309
12,309
Other assets
2,059
−
−
−
3,674
3,674
5,733
5,733
Financial liabilities
Deposits(1)
−
26,190
307,355
307,553
333,545
333,743
Other
Obligations related to securities sold short
10,873
−
−
−
10,873
10,873
Obligations related to securities sold under
repurchase agreements and
securities loaned
−
−
38,177
38,177
38,177
38,177
Derivative financial instruments
15,760
−
−
−
15,760
15,760
Liabilities related to transferred receivables
−
11,034
17,343
17,011
28,377
28,045
Other liabilities
−
−
4,114
4,114
4,114
4,114
Subordinated debt
−
−
1,258
1,296
1,258
1,296


(1)       Includes embedded derivative financial instruments.

 

Establishing Fair Value

 

The fair value of a financial instrument is the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction in the principal market at the measurement date under current market conditions (i.e., an exit price).

 

Unadjusted quoted prices in active markets provide the best evidence of fair value. When there is no quoted price in an active market, the Bank applies other valuation techniques that maximize the use of relevant observable inputs and that minimize the use of unobservable inputs. Such valuation techniques include the following: using information available from recent market transactions, referring to the current fair value of a comparable financial instrument, applying discounted cash flow analysis, applying option pricing models, or relying on any other valuation technique that is commonly used by market participants and has proven to yield reliable estimates. Judgment is required when applying many of the valuation techniques. The Bank's valuations were based on its assessment of the conditions prevailing as at April 30, 2025 and may change in the future. Furthermore, there may be measurement uncertainty resulting from the choice of valuation model used.

 

Fair value is established in accordance with a rigorous control framework. The Bank has policies and procedures that govern the process for determining fair value. The Bank's valuation governance structure has remained largely unchanged from that described in Note 4 to the audited annual consolidated financial statements for the year ended October 31, 2024. The valuation techniques used to determine the fair value of financial assets and financial liabilities are also described in this note, and no significant changes have been made to the valuation techniques.

Note 3 - Fair Value of Financial Instruments (cont.)

 

Financial Instruments Recorded at Fair Value in the Consolidated Balance Sheet

 

Hierarchy of Fair Value Measurements

IFRS establish a fair value measurement hierarchy that classifies the inputs used in financial instrument fair value measurement techniques according to three levels. This fair value hierarchy requires observable market inputs in an active market to be used whenever such inputs exist. According to the hierarchy, the highest level of inputs are unadjusted quoted prices in active markets for identical instruments and the lowest level of inputs are unobservable inputs. In some cases, the inputs used to measure the fair value of a financial instrument might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. For additional information, see Note 4 to the audited annual consolidated financial statements for the year ended October 31, 2024.

 

Transfers of financial instruments between Levels 1 and 2 and transfers to (or from) Level 3 are deemed to have taken place at the beginning of the quarter in which the transfer occurred. Significant transfers can occur between the fair value hierarchy levels due to new information on inputs used to determine fair value and the observable nature of those inputs.

 

During the quarter ended April 30, 2025, $5 million in securities classified as at fair value through profit or loss and $2 million in obligations related to securities sold short were transferred from Level 2 to Level 1 as a result of changing market conditions ($5 million in securities classified as at fair value through profit or loss and $1 million in obligations related to securities sold short during the quarter ended April 30, 2024). Also, during the quarter ended April 30, 2025, $4 million in securities classified as at fair value through profit or loss were transferred from Level 1 to Level 2 as a result of changing market conditions (no transfer during the quarter ended April 30, 2024). During the six-month periods ended April 30, 2025 and 2024, financial instruments were transferred to (or from) Level 3 due to changes in the availability of observable market inputs as a result of changing market conditions.

 

The following tables show financial instruments recorded at fair value on the Consolidated Balance Sheet according to the fair value hierarchy.

 

As at April 30, 2025
Level 1
Level 2
Level 3
Total financial assets/liabilities at fair value
Financial assets
Securities
At fair value through profit or loss
Securities issued or guaranteed by
Canadian government
5,622
11,086
−
16,708
Canadian provincial and municipal governments
−
8,670
−
8,670
U.S. Treasury, other U.S. agencies and other foreign governments
1,907
2,460
−
4,367
Other debt securities
−
3,167
75
3,242
Equity securities
97,166
2,050
889
100,105
104,695
27,433
964
133,092
At fair value through other comprehensive income
Securities issued or guaranteed by
Canadian government
1,206
5,949
−
7,155
Canadian provincial and municipal governments
−
4,274
−
4,274
U.S. Treasury, other U.S. agencies and other foreign governments
6,918
413
−
7,331
Other debt securities
−
929
−
929
Equity securities
−
236
176
412
8,124
11,801
176
20,101
Loans
−
15,748
249
15,997
Other
Derivative financial instruments
1,130
12,428
91
13,649
Other assets-Other items
−
1,135
63
1,198
113,949
68,545
1,543
184,037
Financial liabilities
Deposits(1)
−
33,711
−
33,711
Other
Obligations related to securities sold short
6,286
7,585
−
13,871
Derivative financial instruments
1,299
16,749
48
18,096
Liabilities related to transferred receivables
−
12,105
−
12,105
7,585
70,150
48
77,783


(1)       The amounts include the fair value of embedded derivative financial instruments.

 

As at October 31, 2024
Level 1
Level 2
Level 3
Total financial
assets/liabilities
at fair value
Financial assets
Securities
At fair value through profit or loss
Securities issued or guaranteed by
Canadian government
4,150
10,330
−
14,480
Canadian provincial and municipal governments
−
8,473
−
8,473
U.S. Treasury, other U.S. agencies and other foreign governments
1,169
1,046
−
2,215
Other debt securities
−
3,030
60
3,090
Equity securities
85,414
1,655
608
87,677
90,733
24,534
668
115,935
At fair value through other comprehensive income
Securities issued or guaranteed by
Canadian government
170
5,048
−
5,218
Canadian provincial and municipal governments
−
2,900
−
2,900
U.S. Treasury, other U.S. agencies and other foreign governments
4,805
186
−
4,991
Other debt securities
−
847
−
847
Equity securities
−
359
307
666
4,975
9,340
307
14,622
Loans
−
14,767
205
14,972
Other
Derivative financial instruments
1,139
11,073
97
12,309
Other assets-Other items
−
1,976
83
2,059
96,847
61,690
1,360
159,897
Financial liabilities
Deposits(1)
−
30,434
−
30,434
Other
Obligations related to securities sold short
6,052
4,821
−
10,873
Derivative financial instruments
1,976
13,758
26
15,760
Liabilities related to transferred receivables
−
11,034
−
11,034
8,028
60,047
26
68,101


(1)       The amounts include the fair value of embedded derivative financial instruments.

 

Financial Instruments Classified in Level 3

 

The Bank classifies financial instruments in Level 3 when the valuation technique is based on at least one significant input that is not observable in the markets. The Bank maximizes the use of observable inputs to determine the fair value of financial instruments.

 

For a description of the valuation techniques and significant unobservable inputs used in determining the fair value of financial instruments classified in Level 3, see Note 4 to the audited annual consolidated financial statements for the year ended October 31, 2024. For the quarter and six-month period ended April 30, 2025, no significant change was made to the valuation techniques and significant unobservable inputs used in determining fair value.

 

Sensitivity Analysis of Financial Instruments Classified in Level 3

The Bank performs sensitivity analyses for the fair value measurements of Level 3 financial instruments, substituting unobservable inputs with one or more reasonably possible alternative assumptions. For additional information on how a change in an unobservable input might affect the fair value measurements of Level 3 financial instruments, see Note 4 to the audited annual consolidated financial statements for the year ended October 31, 2024. For the six-month period ended April 30, 2025, there were no significant changes in the sensitivity analyses of Level 3 financial instruments.

 

Note 3 - Fair Value of Financial Instruments (cont.)

 

Change in the Fair Value of Financial Instruments Classified in Level 3

The Bank may hedge the fair value of financial instruments classified in the various levels through offsetting hedge positions. Gains and losses on financial instruments classified in Level 3 presented in the following tables do not reflect the inverse gains and losses on financial instruments used for economic hedging purposes that may have been classified in Level 1 or Level 2 by the Bank. In addition, the Bank may hedge the fair value of financial instruments classified in Level 3 using other financial instruments classified in Level 3. The effect of these hedges is not included in the net amount presented in the following tables. The gains and losses presented hereafter may comprise changes in fair value based on observable and unobservable inputs.

 

Six months ended April 30, 2025
Securities
at fair value
through profit
or loss
Securities
at fair value
through other
comprehensive
income
Loans and
other assets
Derivative
financial
instruments(1)
Fair value as at October 31, 2024
668
307
288
71
Total realized and unrealized gains (losses) included in Net income(2)
21
−
5
(17)
Total realized and unrealized gains (losses) included in
Other comprehensive income
−
(18)
−
−
Purchases
399
15
−
−
Sales
(124)
(128)
(4)
−
Issuances
−
−
62
−
Settlements and other
−
−
(39)
(14)
Financial instruments transferred into Level 3
−
−
−
1
Financial instruments transferred out of Level 3
−
−
−
2
Fair value as at April 30, 2025
964
176
312
43
Change in unrealized gains and losses included in Net income with respect
to financial assets and financial liabilities held as at April 30, 2025(3)
6
−
(1)
(17)


 

Six months ended April 30, 2024
Securities
at fair value
through profit
or loss
Securities
at fair value
through other
comprehensive
income
Loans and
other assets
Derivative
financial
instruments(1)
Fair value as at October 31, 2023
551
378
290
(15)
Total realized and unrealized gains (losses) included in Net income(4)
36
−
7
(4)
Total realized and unrealized gains (losses) included in
Other comprehensive income
−
(7)
−
−
Purchases
22
−
−
−
Sales
(11)
(9)
(2)
−
Issuances
−
−
10
−
Settlements and other
−
−
(25)
200
Financial instruments transferred into Level 3
−
−
−
(1)
Financial instruments transferred out of Level 3
−
−
−
2
Fair value as at April 30, 2024
598
362
280
182
Change in unrealized gains and losses included in Net income with respect
to financial assets and financial liabilities held as at April 30, 2024(5)
81
−
7
(4)


 

(1)      The derivative financial instruments include assets and liabilities presented on a net basis.

(2)      Total gains (losses) included in Non-interest income was a gain of $9 million.

(3)      Total unrealized gains (losses) included in Non-interest income was an unrealized loss of $12 million.

(4)      Total gains (losses) included in Non-interest income was a gain of $39 million.

(5)      Total unrealized gains (losses) included in Non-interest income was an unrealized gain of $84 million.

 

Note 4 - Financial Instruments Designated at Fair Value Through Profit or Loss

 

The Bank chose to designate certain financial instruments at fair value through profit or loss according to the criteria presented in Note 1 to the audited annual consolidated financial statements for the year ended October 31, 2024. Consistent with its risk management strategy and in accordance with the fair value option, which permits the designation if it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring financial assets or financial liabilities or recognizing the gains and losses thereon on different bases, the Bank designated certain securities and certain liabilities related to transferred receivables at fair value through profit or loss. The fair value of liabilities related to transferred receivables does not include credit risk, as the holders of these liabilities are not exposed to the Bank's credit risk. The Bank also designated certain deposits that include embedded derivative financial instruments at fair value through profit or loss.

 

To determine a change in fair value arising from a change in the credit risk of deposits designated at fair value through profit or loss, the Bank calculates, at the beginning of the period, the present value of the instrument's contractual cash flows using the following rates: first, an observed discount rate for similar securities that reflects the Bank's credit spread and, then, a rate that excludes the Bank's credit spread. The difference obtained between the two values is then compared to the difference obtained using the same rates at the end of the period.

 

Information about the financial assets and financial liabilities designated at fair value through profit or loss is provided in the following tables.

 

Carrying
value as at
April 30, 2025
Unrealized
gains (losses) for
the quarter ended
April 30, 2025
Unrealized
gains (losses) for
the six months ended
April 30, 2025
Unrealized
gains (losses) since
the initial recognition
of the instrument
Financial assets designated at fair value through profit or loss
Securities
362
1
4
12
Financial liabilities designated at fair value through profit or loss
Deposits(1)(2)
29,249
146
131
1,929
Liabilities related to transferred receivables
12,105
(66)
(160)
(38)
41,354
80
(29)
1,891


Carrying
value as at
April 30, 2024
Unrealized
gains (losses) for
the quarter ended
April 30, 2024
Unrealized
gains (losses) for
the six months ended
April 30, 2024
Unrealized
gains (losses) since
the initial recognition
of the instrument
Financial assets designated at fair value through profit or loss
Securities
417
(6)
2
(5)
Financial liabilities designated at fair value through profit or loss
Deposits(1)(2)
22,953
11
(1,745)
2,165
Liabilities related to transferred receivables
10,231
75
(96)
451
33,184
86
(1,841)
2,616


(1)       For the quarter ended April 30, 2025, the change in the fair value of deposits designated at fair value through profit or loss attributable to credit risk, and recorded in Other comprehensive income, resulted in a gain of $151 million ($233 million loss for the quarter ended April 30, 2024). For the six-month period ended April 30, 2025, this change resulted in a gain of $176 million ($461 million loss for the six-month period ended April 30, 2024).

(2)       The amount at maturity that the Bank will be contractually required to pay to the holders of these deposits varies and will differ from the reporting date fair value.

Note 5 - Securities

 

Credit Quality

 

As at April 30, 2025 and as at October 31, 2024, securities at fair value through other comprehensive income and securities at amortized cost were mainly classified in Stage 1, with their credit quality falling mostly in the "Excellent" category according to the Bank's internal risk-rating categories. For additional information on the reconciliation of allowances for credit losses, see Note 6 to these Consolidated Financial Statements.

 

Unrealized Gross Gains (Losses) on Securities at Fair Value Through Other Comprehensive Income(1)

 

As at April 30, 2025
Amortized
cost
Unrealized gross gains
Unrealized gross losses
Carrying
value(2)
Securities issued or guaranteed by
Canadian government
7,016
158
(19)
7,155
Canadian provincial and municipal governments
4,237
71
(34)
4,274
U.S. Treasury, other U.S. agencies and other foreign governments
7,195
146
(10)
7,331
Other debt securities
955
6
(32)
929
Equity securities
341
74
(3)
412
19,744
455
(98)
20,101


 

As at October 31, 2024
Amortized
cost
Unrealized gross gains
Unrealized gross losses
Carrying
value(2)
Securities issued or guaranteed by
Canadian government
5,166
96
(44)
5,218
Canadian provincial and municipal governments
2,894
45
(39)
2,900
U.S. Treasury, other U.S. agencies and other foreign governments
4,986
37
(32)
4,991
Other debt securities
888
3
(44)
847
Equity securities
591
77
(2)
666
14,525
258
(161)
14,622


 

(1)        Excludes the impact of hedging.

(2)        The allowances for credit losses on securities at fair value through other comprehensive income (excluding equity securities), representing $3 million as at April 30, 2025 ($3 million as at October 31, 2024), are reported in Other comprehensive income. For additional information, see Note 6 to these Consolidated Financial Statements.

 

Equity Securities Designated at Fair Value Through Other Comprehensive Income

The Bank designated certain equity securities, the main business objective of which is to generate dividend income, at fair value through other comprehensive income without subsequent reclassification of gains and losses to net income. During the six-month period ended April 30, 2025, a dividend income amount of $18 million was recognized for these investments ($30 million for the six-month period ended April 30, 2024), including amounts of $1 million for investments that were sold during the six-month period ended April 30, 2025 ($2 million for investments that were sold during the six-month period ended April 30, 2024).

 

Six months ended April 30, 2025
Six months ended April 30, 2024
Equity securities of private companies
Equity securities of
public companies
Total
Equity securities of private companies
Equity securities of
public companies
Total
Fair value at beginning
307
359
666
378
281
659
Change in fair value
(18)
5
(13)
(7)
51
44
Designated at fair value through
other comprehensive income
15
66
81
−
102
102
Sales(1)
(128)
(194)
(322)
(9)
(123)
(132)
Fair value at end
176
236
412
362
311
673


(1)       The Bank disposed of private and public company equity securities for economic reasons.

 

Securities at Amortized Cost

 

As at April 30, 2025
As at October 31, 2024
Securities issued or guaranteed by
Canadian government
9,290
9,194
Canadian provincial and municipal governments
3,957
2,458
U.S. Treasury, other U.S. agencies and other foreign governments
260
687
Other debt securities
1,949
2,275
Gross carrying value
15,456
14,614
Allowances for credit losses
6
6
Carrying value
15,450
14,608


 

Gains (Losses) on Disposals of Securities at Amortized Cost

 

During the six-month periods ended April 30, 2025 and 2024, the Bank disposed of certain debt securities measured at amortized cost. The carrying value of these securities upon disposal was $195 million for the six-month period ended April 30, 2025 ($180 million for the six-month period ended April 30, 2024), and the Bank recognized gains of $5 million for the six-month period ended April 30, 2025 ($1 million for the six-month period ended April 30, 2024) in Non-interest income - Gains (losses) on non-trading securities, net in the Consolidated Statement of Income. 

 

 

Note 6 - Loans and Allowances for Credit Losses

 

Determining and Measuring Expected Credit Losses (ECL)

 

Determining Expected Credit Losses

Expected credit losses are determined using a three-stage impairment approach that is based on the change in the credit quality of financial assets since initial recognition.

 

Non-Impaired Loans

Stage 1

Financial assets that have experienced no significant increase in credit risk between initial recognition and the reporting date, and for which 12-month expected credit losses are recorded at the reporting date, are classified in Stage 1.

 

Stage 2

Financial assets that have experienced a significant increase in credit risk between initial recognition and the reporting date, and for which lifetime expected credit losses are recorded at the reporting date, are classified in Stage 2.

 

Impaired Loans

Stage 3

Financial assets for which there is objective evidence of impairment, for which one or more events have had a detrimental impact on the estimated future cash flows of these financial assets at the reporting date, and for which lifetime expected credit losses are recorded, are classified in Stage 3.

 

POCI

Financial assets that are credit-impaired when purchased or originated (POCI) are classified in the POCI category.

 

For additional information, see Notes 1 and 8 to the audited annual consolidated financial statements for the year ended October 31, 2024.

 

Credit Quality of Loans

 

The following tables present the gross carrying amounts of loans as at April 30, 2025 and as at October 31, 2024, according to credit quality and ECL impairment stage of each loan category at amortized cost, and according to credit quality for loans at fair value through profit or loss. For additional information on credit quality according to the Internal Ratings-Based (IRB) categories, see the Internal Default Risk Ratings table on page 81 in the Credit Risk section of the 2024 Annual Report.

 

Note 6 - Loans and Allowances for Credit Losses (cont.)

 

As at April 30, 2025
Non-impaired loans
Impaired loans
Loans at fair value
through profit or loss(1)
Total
Stage 1
Stage 2
Residential mortgage
Excellent
35,580
11
−
−
35,591
Good
17,115
169
−
−
17,284
Satisfactory
14,015
3,889
−
−
17,904
Special mention
366
784
−
−
1,150
Substandard
80
322
−
−
402
Default
−
−
147
−
147
IRB Approach
67,156
5,175
147
−
72,478
Standardized Approach
20,116
754
882
14,277
36,029
Gross carrying amount
87,272
5,929
1,029
14,277
108,507
Allowances for credit losses(2)
81
88
80
−
249
Carrying amount
87,191
5,841
949
14,277
108,258
Personal
Excellent
22,188
96
−
−
22,284
Good
7,079
1,240
−
−
8,319
Satisfactory
7,379
2,025
−
−
9,404
Special mention
1,955
860
−
−
2,815
Substandard
47
294
−
−
341
Default
−
−
243
−
243
IRB Approach
38,648
4,515
243
−
43,406
Standardized Approach
3,836
88
203
−
4,127
Gross carrying amount
42,484
4,603
446
−
47,533
Allowances for credit losses(2)
104
135
169
−
408
Carrying amount
42,380
4,468
277
−
47,125
Credit card
Excellent
342
−
−
−
342
Good
466
−
−
−
466
Satisfactory
846
21
−
−
867
Special mention
546
250
−
−
796
Substandard
45
156
−
−
201
Default
−
−
−
−
−
IRB Approach
2,245
427
−
−
2,672
Standardized Approach
157
6
−
−
163
Gross carrying amount
2,402
433
−
−
2,835
Allowances for credit losses(2)
38
127
−
−
165
Carrying amount
2,364
306
−
−
2,670
Business and government
Excellent
4,875
4
−
1,525
6,404
Good
27,422
3
−
8
27,433
Satisfactory
38,075
12,281
−
143
50,499
Special mention
308
1,468
−
−
1,776
Substandard
2
673
−
−
675
Default
−
−
799
−
799
IRB Approach
70,682
14,429
799
1,676
87,586
Standardized Approach
35,534
4,787
840
44
41,205
Gross carrying amount
106,216
19,216
1,639
1,720
128,791
Allowances for credit losses(2)
335
353
428
−
1,116
Carrying amount
105,881
18,863
1,211
1,720
127,675
Total loans
Gross carrying amount
238,374
30,181
3,114
15,997
287,666
Allowances for credit losses(2)
558
703
677
−
1,938
Carrying amount
237,816
29,478
2,437
15,997
285,728


 

(1)        Not subject to expected credit losses.

(2)        The allowances for credit losses do not include the amounts related to undrawn commitments reported in the Other liabilities item of the Consolidated Balance Sheet.

 

 

As at October 31, 2024
Non-impaired loans
Impaired loans
Loans at fair value
through profit or loss(1)
Total
Stage 1
Stage 2
Residential mortgage
Excellent
33,651
16
−
−
33,667
Good
17,063
241
−
−
17,304
Satisfactory
12,634
4,209
−
−
16,843
Special mention
358
800
−
−
1,158
Substandard
70
300
−
−
370
Default
−
−
118
−
118
IRB Approach
63,776
5,566
118
−
69,460
Standardized Approach
11,350
266
741
13,192
25,549
Gross carrying amount
75,126
5,832
859
13,192
95,009
Allowances for credit losses(2)
62
85
50
−
197
Carrying amount
75,064
5,747
809
13,192
94,812
Personal
Excellent
21,702
274
−
−
21,976
Good
6,686
1,618
−
−
8,304
Satisfactory
6,959
2,247
−
−
9,206
Special mention
2,111
845
−
−
2,956
Substandard
53
279
−
−
332
Default
−
−
226
−
226
IRB Approach
37,511
5,263
226
−
43,000
Standardized Approach
3,580
84
219
−
3,883
Gross carrying amount
41,091
5,347
445
−
46,883
Allowances for credit losses(2)
102
123
135
−
360
Carrying amount
40,989
5,224
310
−
46,523
Credit card
Excellent
551
−
−
−
551
Good
399
−
−
−
399
Satisfactory
729
28
−
−
757
Special mention
484
211
−
−
695
Substandard
69
149
−
−
218
Default
−
−
−
−
−
IRB Approach
2,232
388
−
−
2,620
Standardized Approach
141
−
−
−
141
Gross carrying amount
2,373
388
−
−
2,761
Allowances for credit losses(2)
42
114
−
−
156
Carrying amount
2,331
274
−
−
2,605
Business and government
Excellent
7,743
−
−
1,486
9,229
Good
27,950
7
−
53
28,010
Satisfactory
34,626
11,381
−
147
46,154
Special mention
255
1,770
−
−
2,025
Substandard
2
481
2
−
485
Default
−
−
565
−
565
IRB Approach
70,576
13,639
567
1,686
86,468
Standardized Approach
12,879
107
172
94
13,252
Gross carrying amount
83,455
13,746
739
1,780
99,720
Allowances for credit losses(2)
218
181
229
−
628
Carrying amount
83,237
13,565
510
1,780
99,092
Total loans
Gross carrying amount
202,045
25,313
2,043
14,972
244,373
Allowances for credit losses(2)
424
503
414
−
1,341
Carrying amount
201,621
24,810
1,629
14,972
243,032


(1)        Not subject to expected credit losses.

(2)        The allowances for credit losses do not include the amounts related to undrawn commitments reported in the Other liabilities item of the Consolidated Balance Sheet.

Note 6 - Loans and Allowances for Credit Losses (cont.)

 

The following table presents the credit risk exposures of off-balance-sheet commitments as at April 30, 2025 and as at October 31, 2024 according to credit quality and ECL impairment stage.

 

As at April 30, 2025
As at October 31, 2024
Stage 1
Stage 2
Impaired
Total
Stage 1
Stage 2
Impaired
Total
Off-balance-sheet commitments(1)
Retail
Excellent
15,916
46
−
15,962
16,159
113
−
16,272
Good
4,675
351
−
5,026
3,492
415
−
3,907
Satisfactory
1,663
239
−
1,902
1,095
249
−
1,344
Special mention
431
131
−
562
381
112
−
493
Substandard
21
48
−
69
30
35
−
65
Default
−
−
2
2
−
−
1
1
Non-retail
Excellent
13,650
−
−
13,650
13,071
−
−
13,071
Good
21,749
−
−
21,749
22,547
−
−
22,547
Satisfactory
15,714
7,658
−
23,372
15,513
6,351
−
21,864
Special mention
24
220
−
244
24
278
−
302
Substandard
21
167
−
188
2
52
−
54
Default
−
−
14
14
−
−
27
27
IRB Approach
73,864
8,860
16
82,740
72,314
7,605
28
79,947
Standardized Approach
29,683
883
61
30,627
18,968
−
−
18,968
Total exposure
103,547
9,743
77
113,367
91,282
7,605
28
98,915
Allowances for credit losses
165
86
2
253
142
72
−
214
Total exposure, net
of allowances
103,382
9,657
75
113,114
91,140
7,533
28
98,701


 

(1)       Represent letters of guarantee and documentary letters of credit, undrawn commitments, and backstop liquidity and credit enhancement facilities.

 

Loans Past Due But Not Impaired(1)

 

As at April 30, 2025
As at October 31, 2024
Residential
mortgage
Personal
Credit card
Business and
government
Residential
mortgage
Personal
Credit card
Business and
government
Past due but not impaired
31 to 60 days
262
142
31
242
179
121
30
76
61 to 90 days
150
45
18
101
82
48
14
33
Over 90 days(2)
−
−
38
−
−
−
35
−
412
187
87
343
261
169
79
109


 

(1)       Loans less than 31 days past due are not presented as they are not considered past due from an administrative standpoint.

(2)       All loans more than 90 days past due, except for credit card receivables, are considered impaired (Stage 3).

 

Impaired Loans

 

As at April 30, 2025
As at October 31, 2024
Gross
Allowances for
credit losses
Net
Gross
Allowances for
credit losses
Net
Residential mortgage
1,029
80
949
859
50
809
Personal
446
169
277
445
135
310
Credit card(1)
−
−
−
−
−
−
Business and government
1,639
428
1,211
739
229
510
3,114
677
2,437
2,043
414
1,629


(1)        Credit card receivables are considered impaired, at the latest, when payment is 180 days past due, and they are written off at that time.

Allowances for Credit Losses

 

The following tables present a reconciliation of the allowances for credit losses by Consolidated Balance Sheet item and by type of off-balance-sheet commitment.

 

Quarter ended April 30, 2025
Allowances for
credit losses as at
January 31, 2025
Provisions for
credit losses
Write-offs(1)
Disposals
Recoveries
and other
Allowances for
credit losses as at
April 30, 2025
Balance sheet
Cash and deposits with financial institutions(2)(3)
11
(2)
−
−
−
9
Securities(3)
At fair value through other comprehensive income(4)
4
(1)
−
−
−
3
At amortized cost(2)
6
−
−
−
−
6
Securities purchased under reverse repurchase
agreements and securities borrowed(2)(3)
−
−
−
−
−
−
Loans(5)
Residential mortgage
215
46
(8)
−
(4)
249
Personal
395
57
(42)
−
(2)
408
Credit card
157
34
(32)
−
6
165
Business and government
716
385
(16)
−
31
1,116
1,483
522
(98)
−
31
1,938
Other assets(2)(3)
−
−
−
−
−
−
Off-balance-sheet commitments(6)
Letters of guarantee and documentary letters of credit
22
1
−
−
−
23
Undrawn commitments
200
24
−
−
−
224
Backstop liquidity and credit enhancement facilities
5
1
−
−
−
6
227
26
−
−
−
253
1,731
545
(98)
−
31
2,209


 

Quarter ended April 30, 2024
Allowances for
credit losses as at
January 31, 2024
Provisions for
credit losses
Write-offs(1)
Disposals
Recoveries
and other
Allowances for
credit losses as at
April 30, 2024
Balance sheet
Cash and deposits with financial institutions(2)(3)
7
1
−
−
−
8
Securities(3)
At fair value through other comprehensive income(4)
3
−
−
−
−
3
At amortized cost(2)
3
−
−
−
−
3
Securities purchased under reverse repurchase
agreements and securities borrowed(2)(3)
−
−
−
−
−
−
Loans(5)
Residential mortgage
166
6
−
(2)
2
172
Personal
293
53
(30)
−
5
321
Credit card
144
23
(27)
−
3
143
Business and government
556
63
(89)
−
5
535
Customers' liability under acceptances
52
(12)
−
−
−
40
1,211
133
(146)
(2)
15
1,211
Other assets(2)(3)
−
−
−
−
−
−
Off-balance-sheet commitments(6)
Letters of guarantee and documentary letters of credit
19
(1)
−
−
−
18
Undrawn commitments
166
6
−
−
−
172
Backstop liquidity and credit enhancement facilities
7
(1)
−
−
−
6
192
4
−
−
−
196
1,416
138
(146)
(2)
15
1,421


(1)    The contractual amount outstanding on financial assets that were written off during the quarter ended April 30, 2025 and that are still subject to enforcement activity was $63 million ($41 million for the quarter ended April 30, 2024).

(2)    These financial assets are presented net of the allowances for credit losses on the Consolidated Balance Sheet.

(3)    As at April 30, 2025 and 2024, these financial assets were mainly classified in Stage 1 and their credit quality fell mostly within the Excellent category.

(4)    The allowances for credit losses are reported in the Accumulated other comprehensive income item of the Consolidated Balance Sheet.

(5)    The allowances for credit losses are reported in the Allowances for credit losses item of the Consolidated Balance Sheet.

(6)    The allowances for credit losses are reported in the Other liabilities item of the Consolidated Balance Sheet.

 

Note 6 - Loans and Allowances for Credit Losses (cont.)

 

Six months ended April 30, 2025
Allowances for
credit losses as at
October 31, 2024
Provisions for
credit losses
Write-offs(1)
Disposals
Recoveries
and other
Allowances for
credit losses as at
April 30, 2025
Balance sheet
Cash and deposits with financial institutions(2)(3)
9
−
−
−
−
9
Securities(3)
At fair value through other comprehensive income(4)
3
−
−
−
−
3
At amortized cost(2)
6
−
−
−
−
6
Securities purchased under reverse repurchase
agreements and securities borrowed(2)(3)
−
−
−
−
−
−
Loans(5)
Residential mortgage
197
60
(9)
−
1
249
Personal
360
123
(80)
−
5
408
Credit card
156
62
(63)
−
10
165
Business and government
628
515
(61)
−
34
1,116
1,341
760
(213)
−
50
1,938
Other assets(2)(3)
−
−
−
−
−
−
Off-balance-sheet commitments(6)
Letters of guarantee and documentary letters of credit
21
2
−
−
−
23
Undrawn commitments
188
36
−
−
−
224
Backstop liquidity and credit enhancement facilities
5
1
−
−
−
6
214
39
−
−
−
253
1,573
799
(213)
−
50
2,209


 

Six months ended April 30, 2024
Allowances for
credit losses as at
October 31, 2023
Provisions for
credit losses
Write-offs(1)
Disposals
Recoveries
and other
Allowances for
credit losses as at
April 30, 2024
Balance sheet
Cash and deposits with financial institutions(2)(3)
10
(2)
−
−
−
8
Securities(3)
At fair value through other comprehensive income(4)
3
−
−
−
−
3
At amortized cost(2)
4
(1)
−
−
−
3
Securities purchased under reverse repurchase
agreements and securities borrowed(2)(3)
−
−
−
−
−
−
Loans(5)
Residential mortgage
154
21
(1)
(2)
−
172
Personal
271
97
(53)
−
6
321
Credit card
139
50
(53)
−
7
143
Business and government
567
86
(133)
−
15
535
Customers' liability under acceptances
53
(13)
−
−
−
40
1,184
241
(240)
(2)
28
1,211
Other assets(2)(3)
−
−
−
−
−
−
Off-balance-sheet commitments(6)
Letters of guarantee and documentary letters of credit
16
2
−
−
−
18
Undrawn commitments
152
20
−
−
−
172
Backstop liquidity and credit enhancement facilities
8
(2)
−
−
−
6
176
20
−
−
−
196
1,377
258
(240)
(2)
28
1,421


 

(1)    The contractual amount outstanding on financial assets that were written off during the six-month period ended April 30, 2025 and that are still subject to enforcement activity was $114 million ($76 million for the six-month period ended April 30, 2024).

(2)    These financial assets are presented net of the allowances for credit losses on the Consolidated Balance Sheet.

(3)    As at April 30, 2025 and 2024, these financial assets were mainly classified in Stage 1 and their credit quality fell mostly within the Excellent category.

(4)    The allowances for credit losses are reported in the Accumulated other comprehensive income item of the Consolidated Balance Sheet.

(5)    The allowances for credit losses are reported in the Allowances for credit losses item of the Consolidated Balance Sheet.

(6)    The allowances for credit losses are reported in the Other liabilities item of the Consolidated Balance Sheet.   

The following tables present a reconciliation of allowances for credit losses for each loan category at amortized cost according to ECL impairment stage.

 

Quarter ended April 30, 2025
Quarter ended April 30, 2024
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Stage 1
Stage 2
Stage 1
Stage 2
Residential mortgage
Balance at beginning
63
86
66
215
71
91
4
166
Originations or purchases(2)
15
−
−
15
4
−
−
4
Transfers(3):
to Stage 1
11
(10)
(1)
−
16
(14)
(2)
−
to Stage 2
(2)
8
(6)
−
(2)
7
(5)
−
to Stage 3
−
(4)
4
−
−
(4)
4
−
Net remeasurement of loss allowances(4)
(4)
11
28
35
(16)
7
18
9
Derecognitions(5)
(1)
(1)
(2)
(4)
(2)
(1)
(4)
(7)
Changes to models
−
−
−
−
−
−
−
−
Provisions for credit losses
19
4
23
46
−
(5)
11
6
Write-offs
−
−
(8)
(8)
−
−
−
−
Disposals
−
−
−
−
(2)
−
−
(2)
Recoveries
−
−
2
2
−
−
−
−
Foreign exchange movements and other
(1)
(2)
(3)
(6)
1
1
−
2
Balance at end
81
88
80
249
70
87
15
172
Includes:
Amounts drawn
81
88
80
249
70
87
15
172
Undrawn commitments(6)
−
−
−
−
−
−
−
−
Personal
Balance at beginning
111
140
153
404
97
116
90
303
Originations or purchases
10
−
−
10
6
−
−
6
Transfers(3):
to Stage 1
26
(22)
(4)
−
22
(19)
(3)
−
to Stage 2
(10)
12
(2)
−
(7)
9
(2)
−
to Stage 3
−
(24)
24
−
(1)
(19)
20
−
Net remeasurement of loss allowances(4)
(20)
38
40
58
(19)
44
30
55
Derecognitions(5)
(2)
(3)
(2)
(7)
(3)
(3)
(1)
(7)
Changes to models
−
−
−
−
−
−
−
−
Provisions for credit losses
4
1
56
61
(2)
12
44
54
Write-offs
−
−
(42)
(42)
−
−
(30)
(30)
Disposals
−
−
−
−
−
−
−
−
Recoveries
−
−
5
5
−
−
4
4
Foreign exchange movements and other
(3)
(1)
(3)
(7)
2
−
(1)
1
Balance at end
112
140
169
421
97
128
107
332
Includes:
Amounts drawn
104
135
169
408
91
123
107
321
Undrawn commitments(6)
8
5
−
13
6
5
−
11


 

(1)       The total amount of undiscounted initially expected credit losses on the POCI loans acquired during the quarter ended April 30, 2025 was $379 million (no POCI loans had been acquired during the quarter ended April 30, 2024). The expected credit losses reflected in the purchase price have been discounted.

(2)       Include allowances for credit losses on impaired loans acquired from CWB. For additional information, see Note 19.

(3)       Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.

(4)       Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.

(5)       Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).

(6)       The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.

Note 6 - Loans and Allowances for Credit Losses (cont.)

 

Quarter ended April 30, 2025
Quarter ended April 30, 2024
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Stage 1
Stage 2
Stage 1
Stage 2
Credit card
Balance at beginning
78
143
−
221
59
131
−
190
Originations or purchases(2)
5
−
−
5
3
−
−
3
Transfers(3):
to Stage 1
35
(35)
−
−
26
(26)
−
−
to Stage 2
(7)
7
−
−
(5)
5
−
−
to Stage 3
−
(15)
15
−
(1)
(11)
12
−
Net remeasurement of loss allowances(4)
(39)
62
11
34
(24)
33
12
21
Derecognitions(5)
(1)
−
−
(1)
−
(1)
−
(1)
Changes to models
−
−
−
−
−
−
−
−
Provisions for credit losses
(7)
19
26
38
(1)
−
24
23
Write-offs
−
−
(32)
(32)
−
−
(27)
(27)
Disposals
−
−
−
−
−
−
−
−
Recoveries
−
−
6
6
−
−
3
3
Foreign exchange movements and other
−
−
−
−
−
−
−
−
Balance at end
71
162
−
233
58
131
−
189
Includes:
Amounts drawn
38
127
−
165
33
110
−
143
Undrawn commitments(6)
33
35
−
68
25
21
−
46
Business and government
Balance at beginning
318
238
287
843
276
213
229
718
Originations or purchases(2)
246
−
−
246
28
−
−
28
Transfers(3):
to Stage 1
13
(12)
(1)
−
9
(9)
−
−
to Stage 2
(116)
119
(3)
−
(10)
13
(3)
−
to Stage 3
(2)
(6)
8
−
−
(6)
6
−
Net remeasurement of loss allowances(4)
(2)
71
123
192
(3)
19
33
49
Derecognitions(5)
(18)
(17)
(2)
(37)
(13)
(9)
1
(21)
Changes to models
−
−
−
−
−
−
−
−
Provisions for credit losses
121
155
125
401
11
8
37
56
Write-offs
−
−
(16)
(16)
−
−
(89)
(89)
Disposals
−
−
−
−
−
−
−
−
Recoveries
−
−
41
41
−
−
4
4
Foreign exchange movements and other
(3)
−
(7)
(10)
−
−
1
1
Balance at end
436
393
430
1,259
287
221
182
690
Includes:
Amounts drawn
335
353
428
1,116
198
195
182
575
Undrawn commitments(6)
101
40
2
143
89
26
−
115
Total allowances for credit losses at end(7)
700
783
679
2,162
512
567
304
1,383
Includes:
Amounts drawn
558
703
677
1,938
392
515
304
1,211
Undrawn commitments(6)
142
80
2
224
120
52
−
172


 

(1)       The total amount of undiscounted initially expected credit losses on the POCI loans acquired during the quarter ended April 30, 2025 was $379 million (no POCI loans had been acquired during the quarter ended April 30,2024). The expected credit losses reflected in the purchase price have been discounted.

(2)       Include allowances for credit losses on impaired loans acquired from CWB. For additional information, see Note 19.

(3)       Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.

(4)       Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.

(5)       Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).

(6)       The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.

(7)       Excludes allowances for credit losses on other financial assets at amortized cost and on off-balance-sheet commitments other than undrawn commitments.

 

Six months ended April 30, 2025
Six months ended April 30, 2024
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Stage 1
Stage 2
Stage 1
Stage 2
Residential mortgage
Balance at beginning
62
85
50
197
69
93
(8)
154
Originations or purchases(2)
19
−
−
19
6
−
−
6
Transfers(3):
to Stage 1
24
(22)
(2)
−
32
(28)
(4)
−
to Stage 2
(4)
14
(10)
−
(5)
14
(9)
−
to Stage 3
−
(9)
9
−
−
(17)
17
−
Net remeasurement of loss allowances(4)
(19)
22
46
49
(24)
40
18
34
Derecognitions(5)
(2)
(2)
(4)
(8)
(4)
(3)
(6)
(13)
Changes to models
−
−
−
−
(2)
(12)
8
(6)
Provisions for credit losses
18
3
39
60
3
(6)
24
21
Write-offs
−
−
(9)
(9)
−
−
(1)
(1)
Disposals
−
−
−
−
(2)
−
−
(2)
Recoveries
−
−
3
3
−
−
−
−
Foreign exchange movements and other
1
−
(3)
(2)
−
−
−
−
Balance at end
81
88
80
249
70
87
15
172
Includes:
Amounts drawn
81
88
80
249
70
87
15
172
Undrawn commitments(6)
−
−
−
−
−
−
−
−
Personal
Balance at beginning
107
127
135
369
95
114
72
281
Originations or purchases
20
−
−
20
13
−
−
13
Transfers(3):
to Stage 1
52
(46)
(6)
−
43
(38)
(5)
−
to Stage 2
(21)
24
(3)
−
(12)
15
(3)
−
to Stage 3
−
(44)
44
−
(1)
(37)
38
−
Net remeasurement of loss allowances(4)
(41)
85
77
121
(36)
83
50
97
Derecognitions(5)
(4)
(6)
(4)
(14)
(5)
(7)
(2)
(14)
Changes to models
−
−
−
−
−
(1)
3
2
Provisions for credit losses
6
13
108
127
2
15
81
98
Write-offs
−
−
(80)
(80)
−
−
(53)
(53)
Disposals
−
−
−
−
−
−
−
−
Recoveries
−
−
9
9
−
−
8
8
Foreign exchange movements and other
(1)
−
(3)
(4)
−
(1)
(1)
(2)
Balance at end
112
140
169
421
97
128
107
332
Includes:
Amounts drawn
104
135
169
408
91
123
107
321
Undrawn commitments(6)
8
5
−
13
6
5
−
11


 

(1)       The total amount of undiscounted initially expected credit losses on the POCI loans acquired during the six-month period ended April 30, 2025 was $379 million (no POCI loans had been acquired during the six-month period ended April 30, 2024). The expected credit losses reflected in the purchase price have been discounted.

(2)       Include allowances for credit losses on impaired loans acquired from CWB. For additional information, see Note 19.

(3)       Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.

(4)       Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.

(5)       Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).

(6)       The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.

Note 6 - Loans and Allowances for Credit Losses (cont.)

 

Six months ended April 30, 2025
Six months ended April 30, 2024
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Allowances for
credit losses on
non-impaired loans
Allowances for
credit losses on
impaired loans(1)
Total
Stage 1
Stage 2
Stage 1
Stage 2
Credit card
Balance at beginning
70
141
−
211
59
127
−
186
Originations or purchases(2)
8
−
−
8
5
−
−
5
Transfers(3):
to Stage 1
62
(62)
−
−
55
(55)
−
−
to Stage 2
(13)
13
−
−
(10)
10
−
−
to Stage 3
−
(28)
28
−
(1)
(21)
22
−
Net remeasurement of loss allowances(4)
(54)
98
25
69
(49)
71
24
46
Derecognitions(5)
(2)
−
−
(2)
(1)
(1)
−
(2)
Changes to models
−
−
−
−
−
−
−
−
Provisions for credit losses
1
21
53
75
(1)
4
46
49
Write-offs
−
−
(63)
(63)
−
−
(53)
(53)
Disposals
−
−
−
−
−
−
−
−
Recoveries
−
−
10
10
−
−
7
7
Foreign exchange movements and other
−
−
−
−
−
−
−
−
Balance at end
71
162
−
233
58
131
−
189
Includes:
Amounts drawn
38
127
−
165
33
110
−
143
Undrawn commitments(6)
33
35
−
68
25
21
−
46
Business and government
Balance at beginning
308
215
229
752
251
220
244
715
Originations or purchases(2)
283
−
−
283
67
−
−
67
Transfers(3):
to Stage 1
27
(26)
(1)
−
18
(17)
(1)
−
to Stage 2
(128)
134
(6)
−
(23)
27
(4)
−
to Stage 3
(2)
(11)
13
−
−
(8)
8
−
Net remeasurement of loss allowances(4)
(24)
110
224
310
(4)
19
53
68
Derecognitions(5)
(27)
(29)
(3)
(59)
(21)
(15)
(2)
(38)
Changes to models
−
−
−
−
−
(5)
1
(4)
Provisions for credit losses
129
178
227
534
37
1
55
93
Write-offs
−
−
(61)
(61)
−
−
(133)
(133)
Disposals
−
−
−
−
−
−
−
−
Recoveries
−
−
43
43
−
−
18
18
Foreign exchange movements and other
(1)
−
(8)
(9)
(1)
−
(2)
(3)
Balance at end
436
393
430
1,259
287
221
182
690
Includes:
Amounts drawn
335
353
428
1,116
198
195
182
575
Undrawn commitments(6)
101
40
2
143
89
26
−
115
Total allowances for credit losses at end(7)
700
783
679
2,162
512
567
304
1,383
Includes:
Amounts drawn
558
703
677
1,938
392
515
304
1,211
Undrawn commitments(6)
142
80
2
224
120
52
−
172


 

(1)       The total amount of undiscounted initially expected credit losses on the POCI loans acquired during the six-month period ended April 30, 2025 was $379 million (no POCI loans had been acquired during the six-month period ended April 30,2024). The expected credit losses reflected in the purchase price have been discounted.

(2)       Include allowances for credit losses on impaired loans acquired from CWB. For additional information, see Note 19.

(3)       Represent stage transfers deemed to have taken place at the beginning of the quarter in which the transfer occurred.

(4)       Includes the net remeasurement of loss allowances (after transfers) attributable mainly to changes in volumes and in the credit quality of existing loans as well as to changes in risk parameters.

(5)       Represent reversals to loss allowances arising from full loan repayments (excluding write-offs and disposals).

(6)       The allowances for credit losses on undrawn commitments are reported in the Other liabilities item of the Consolidated Balance Sheet.

(7)       Excludes allowances for credit losses on other financial assets at amortized cost and on off-balance-sheet commitments other than undrawn commitments.

 

Main Macroeconomic Factors

 

The following tables show the main macroeconomic factors used to estimate the allowances for credit losses on loans. For each scenario, namely, the base scenario, upside scenario, and downside scenario, the average values of the macroeconomic factors over the next 12 months (used for Stage 1 credit loss calculations) and over the remaining forecast period (used for Stage 2 credit loss calculations) are presented.

 

 

As at April 30, 2025
Base scenario
Upside scenario
Downside scenario
Next
12 months
Remaining
forecast period
Next
12 months
Remaining
forecast period
Next
12 months
Remaining
forecast period
Macroeconomic factors(1)
GDP growth(2)
(0.1)
%
1.8
%
1.6
%
2.2
%
(5.4)
%
2.7
%
Unemployment rate
7.2
%
6.8
%
6.6
%
5.9
%
8.8
%
8.1
%
Housing price index growth(2)
(0.3)
%
2.6
%
9.7
%
2.4
%
(13.9)
%
0.3
%
BBB spread(3)
2.0
%
1.7
%
1.4
%
1.4
%
3.2
%
2.4
%
S&P/TSX growth(2)(4)
(9.1)
%
2.8
%
4.0
%
3.0
%
(25.6)
%
5.5
%
WTI oil price(5)(US$ per barrel)
62
68
84
79
42
52


 

As at January 31, 2025
Base scenario
Upside scenario
Downside scenario
Next
12 months
Remaining
forecast period
Next
12 months
Remaining
forecast period
Next
12 months
Remaining
forecast period
Macroeconomic factors(1)
GDP growth(2)
1.4
%
1.7
%
1.6
%
2.1
%
(5.4)
%
2.7
%
Unemployment rate
7.0
%
6.5
%
6.7
%
6.0
%
8.9
%
8.1
%
Housing price index growth(2)
6.4
%
2.7
%
9.7
%
2.4
%
(13.9)
%
0.3
%
BBB spread(3)
2.0
%
1.7
%
1.4
%
1.4
%
3.2
%
2.4
%
S&P/TSX growth(2)(4)
(8.4)
%
2.8
%
4.0
%
3.0
%
(25.6)
%
5.5
%
WTI oil price(5)(US$ per barrel)
67
69
82
78
41
51


 

As at October 31, 2024
Base scenario
Upside scenario
Downside scenario
Next
12 months
Remaining
forecast period
Next
12 months
Remaining
forecast period
Next
12 months
Remaining
forecast period
Macroeconomic factors(1)
GDP growth(2)
1.2
%
2.0
%
1.9
%
2.1
%
(5.2)
%
2.7
%
Unemployment rate
7.3
%
6.7
%
6.5
%
5.8
%
8.7
%
7.9
%
Housing price index growth(2)
4.1
%
2.6
%
7.7
%
2.4
%
(13.9)
%
0.3
%
BBB spread(3)
2.2
%
1.9
%
1.7
%
1.6
%
3.4
%
2.6
%
S&P/TSX growth(2)(4)
(3.8)
%
2.7
%
4.0
%
3.0
%
(25.6)
%
5.5
%
WTI oil price(5)(US$ per barrel)
71
75
89
84
45
55


 

(1)       All macroeconomic factors are based on the Canadian economy unless otherwise indicated.

(2)       Growth rate is annualized.

(3)       Yield on corporate BBB bonds less yield on Canadian federal government bonds with 10-year maturity.

(4)       Main stock index in Canada.

(5)       The West Texas Intermediate (WTI) index is commonly used as a benchmark for the price of oil.

 

The main macroeconomic factors used for the personal credit portfolio are unemployment rate and growth in the housing price index, based on the economy of Canada or Quebec. The main macroeconomic factors used for the business and government credit portfolio are unemployment rate, spread on corporate BBB bonds, S&P/TSX growth, and WTI oil price. An increase in unemployment rate or BBB spread will generally lead to higher allowances for credit losses, whereas an increase in the other macroeconomic factors (GDP, S&P/TSX, housing price index, and WTI oil price) will generally lead to lower allowances for credit losses.

Note 6 - Loans and Allowances for Credit Losses (cont.)

 

During the quarter ended April 30, 2025, the macroeconomic outlook deteriorated slightly, and uncertainty remained high.

 

After imposing tariffs on specific products and certain countries (notably Canada), the U.S. administration presented its reciprocal tariff plan at the beginning of April, before announcing a 90-day pause. Escalating trade tensions between China and the United States have led to prohibitive tariffs between the two great powers. As a result, the U.S. is imposing tariffs on its trading partners at an effective rate that is at levels not seen in decades. While Canada has been somewhat spared, as products covered by the Canada-United States-Mexico Agreement (CUSMA) are not subject to tariffs, the situation continues to be marked by high uncertainty. The risks of escalation and a lack of visibility are paralyzing businesses, which are placing their investment plans on hold. The labour market is deteriorating once again. Fortunately, inflation is under control, allowing the Bank of Canada to continue easing its monetary policy. In the base scenario, Canada's unemployment rate stands at 7.3% after 12 months, an increase of 0.7 percentage point. In addition to the deterioration in the labour market, housing prices are down slightly, as economic uncertainty is dampening the enthusiasm of potential buyers. Instead, housing prices fall 0.3% year over year. The S&P/TSX sits at 22,831 points after one year, and the price of oil is at US$61.

 

In the upside scenario, trade tensions fade and geopolitical conflicts are resolved, lifting confidence. Inflation continues to subside, as central bankers managed to curb it without causing significant damage to the economy. The Canadian and U.S. governments continue to expand spending, offsetting the effects of the restrictive monetary policies. With the labour market holding up, consumer spending remains relatively resilient. House prices appreciate strongly against a backdrop of respectable economic growth and an improving labour market. After one year, the unemployment rate in this scenario is more favourable than in the base scenario (0.8 percentage point lower). Housing prices rise 9.7%, the S&P/TSX sits at 26,109 points after one year, and the price of oil is at US$83.

 

In the downside scenario, widespread tariffs are imposed on Canada, but the country limits retaliation so as not to generate too much inflation. The central bank cuts interest rates sharply, but falling demand and uncertainty translate into sharply reduced investment by businesses, which consequently reduce staffing levels. Given budgetary constraints, governments are unable to support households and businesses as they did during the pandemic. The geopolitical situation continues to cause concern, with the risk of conflicts escalating. After 12 months, economic contraction pushes unemployment to 9.6%. House prices fall sharply (-13.9%). The S&P/TSX sits at 18,680 points after one year, and the price of oil is at US$36.

 

Given the uncertainty surrounding key inputs used to measure credit losses, the Bank has applied expert credit judgment to adjust the modelled expected credit loss results.

 

Sensitivity Analysis of Allowances for Credit Losses on Non-Impaired Loans

 

Scenarios

The following table shows a comparison of the Bank's allowances for credit losses on non-impaired loans (Stages 1 and 2) as at April 30, 2025 based on the probability weightings of three scenarios with allowances for credit losses resulting from simulations of each scenario weighted at 100%.

 

Allowances for credit losses on non-impaired loans
Balance as at April 30, 2025
1,483
Simulations
100% upside scenario
1,068
100% base scenario
1,215
100% downside scenario
1,861


Finance leases

 

As part of the CWB acquisition, the Bank acquired finance leases for a fair value amount of $3,625 million. As at April 30, 2025, the amount recognized as net investment in finance leases included in business and government loans was $3,609 million and the related allowance for expected credit losses recorded was $48 million.

 

The following table sets out a reconciliation of maturity analysis of undiscounted lease payments and net investment in finance leases.

 

As at April 30, 2025
1 year or less
1,325
Over 1 year to 2 years
1,050
Over 2 years to 3 years
762
Over 3 years to 4 years
471
Over 4 years to 5 years
220
Over 5 years
52
Undiscounted lease payments
3,880
Unearned finance income
(271)
Net investment in finance leases(1)
3,609


 

(1)       Interest income totalled $42 million for the six-month period ended April 30, 2025.

 

 

Note 7 - Other Assets 

 

As at April 30, 2025
As at October 31, 2024
Receivables, prepaid expenses and other items
3,226
3,579
Interest and dividends receivable
1,707
1,742
Due from clients, dealers and brokers
955
1,302
Defined benefit asset
638
487
Deferred tax assets
968
828
Current tax assets
766
669
Reinsurance contract assets
23
22
Insurance contract assets
43
41
Investments in associates and joint ventures
43
40
Commodities(1)
469
573
8,838
9,283


(1)       Commodities are recorded at fair value based on quoted prices in active markets and are classified in Level 1 of the fair value measurement hierarchy.

 

Note 8 - Deposits

 

As at April 30, 2025
As at October 31, 2024
On demand(1)
After notice(2)
Fixed term(3)
Total
Total
Personal
7,113
52,300
62,595
122,008
95,181
Business and government(4)
65,302
32,613
160,174
258,089
232,730
Deposit-taking institutions
2,068
395
5,414
7,877
5,634
74,483
85,308
228,183
387,974
333,545


 

(1)       Demand deposits are deposits for which the Bank does not have the right to require a notice of withdrawal and consist essentially of deposits in chequing accounts.

(2)       Notice deposits are deposits for which the Bank may legally require a notice of withdrawal and consist mainly of deposits in savings accounts.

(3)       Fixed-term deposits are deposits that can be withdrawn by the holder on a specified date and include term deposits, guaranteed investment certificates, savings accounts and plans, covered bonds, and other similar instruments.

(4)       As at October 31, 2024, business and government deposits included subscription receipts issued under the agreement to acquire CWB for $1.0 billion. For additional information, see Notes 10 and 19.

 

The Deposits - Business and government item includes, among other items, covered bonds for which the balance was $9.8 billion as at April 30, 2025 ($11.4 billion as at October 31, 2024). During the six-month period ended April 30, 2025, an amount of US$255 million and an amount of 1.0 billion euros in covered bonds came to maturity (750 million euros in covered bonds came to maturity during the six-month period ended April 30, 2024). For additional information on covered bonds, see Note 29 to the audited annual consolidated financial statements for the year ended October 31, 2024.

 

In addition, as at April 30, 2025, the Deposits - Business and government item also includes deposits of $23.4 billion ($23.5 billion as at October 31, 2024) that are subject to the bank bail-in conversion regulations issued by the Government of Canada. These regulations provide certain powers to the Canada Deposit Insurance Corporation (CDIC), notably the power to convert certain eligible Bank shares and liabilities into common shares should the Bank become non-viable.

 

 

Note 9 - Other Liabilities

 

As at April 30, 2025
As at October 31, 2024
Accounts payable and accrued expenses
3,174
3,433
Subsidiaries' debts to third parties
381
236
Interest and dividends payable
2,594
2,290
Lease liabilities
620
472
Due to clients, dealers and brokers
1,067
853
Defined benefit liability
105
103
Allowances for credit losses-Off-balance-sheet commitments (Note 6)
253
214
Deferred tax liabilities
260
69
Current tax liabilities
243
123
Insurance contract liabilities
26
28
Other items(1)(2)(3)
1,416
865
10,139
8,686


(1)       As at April 30, 2025, Other items included provisions for litigation of $9 million ($10 million as at October 31, 2024).

(2)       As at April 30, 2025, Other items included provisions for onerous contracts of $13 million ($18 million as at October 31, 2024).

(3)       As at April 30, 2025, Other items included the financial liability resulting from put options written to non-controlling interests of Flinks Technology Inc. (Flinks) for an amount of $6 million ($5 million as at October 31, 2024).

 

Note 10 - Subscription Receipts

 

In connection with the CWB transaction, the Bank had offered an aggregate of 9,262,500 subscription receipts at a price of $112.30 per subscription receipt pursuant to a public offering (the Public Offering) and concurrent private placement (the Concurrent Private Placement) for a total amount of $1.0 billion.

 

Pursuant to the Public Offering, on June 17, 2024, the Bank had issued and sold 4,453,000 subscription receipts at a price of $112.30 for total gross proceeds of approximately $500 million. The Public Offering had been underwritten on a bought-deal basis by a syndicate of underwriters (the Underwriters). On July 17, 2024, the Bank had issued and sold 178,250 additional subscription receipts pursuant to the partial exercise of the Underwriters' over-allotment option. Pursuant to the Concurrent Private Placement, on June 17, 2024, the Bank had issued and sold 4,453,000 subscription receipts at a price of $112.30 to an affiliate of Caisse de dépôt et placement du Québec (CDPQ) for total gross proceeds of approximately $500 million. On July 17, 2024, the Bank had issued and sold 178,250 additional subscription receipts to an affiliate of CDPQ pursuant to CDPQ's option to purchase additional subscription receipts to maintain its pro-rata ownership.

 

Each subscription receipt entitled the holder thereof to receive automatically upon closing of the CWB transaction, without any action on the part of the holder and without payment of additional consideration, (i) one common share of National Bank, and (ii) a cash payment equal to the amount per common share of any cash dividends declared by the Bank and for which the record date fell within the period from June 17, 2024 up to (but excluding) the last day the subscription receipts were outstanding (less applicable withholding taxes, if any). Had the transaction failed, the subscription receipt holders would have had the right to the reimbursement of the full amount, including interest earned.

 

On February 3, 2025, the closing date of the transaction, the common shares of the Bank issuable pursuant to the subscription receipts were automatically issued through CDS Clearing and Depository Services Inc. in accordance with the terms of the subscription receipts. In addition, pursuant to the terms of the subscription receipts, holders of subscription receipts were also entitled to receive a cash amount for each subscription receipt equivalent to the dividend per common share payable by National Bank to holders of common shares of record on June 24, 2024, September 30, 2024, and December 30, 2024, with payment occurring on August 1, 2024, November 1, 2024, and February 1, 2025, respectively. The number of common shares of National Bank issued pursuant to the automatic exchange of the subscription receipts was 9,262,500.

 

 

Note 11 - Subordinated Debt

 

On January 13, 2025, the Bank issued medium-term notes for a total amount of $1.0 billion bearing interest at 4.260% and maturing on February 15, 2035. The interest on these notes will be payable semi-annually at a rate of 4.260% per annum until February 15, 2030 and, thereafter, will be payable quarterly at a floating rate equal to Daily Compounded CORRA (Canadian Overnight Repo Rate Average) plus 1.56%. With the prior approval of the Office of the Superintendent of Financial Institutions (OSFI), the Bank may, at its option, redeem these notes as of February 15, 2030, in whole or in part, at their nominal value plus accrued and unpaid interest. Given that the medium-term notes satisfy the non-viability contingent capital (NVCC) requirements, they qualify for the purposes of calculating regulatory capital under Basel III.

 

As part of the CWB acquisition, the Bank acquired subordinated debentures of $525 million, detailed below. The acquisition-date fair value was $554 million. For additional information, see Note 19 to these Consolidated Financial Statements.

 

The Bank acquired subordinated debentures in an amount of $125 million bearing interest at 4.840% and maturing on June 29, 2030. The interest on these debentures will be payable semi-annually at a rate of 4.840% per annum until June 29, 2025 and, thereafter, will be payable quarterly at a floating rate equal to Daily Compounded CORRA plus 4.102%. With the prior approval of OSFI, the Bank may, at its option, redeem these debentures as of June 29, 2025, in whole or in part, at their nominal value plus accrued and unpaid interest. On May 7, 2025, the Bank provided notice to the holders of its intention to redeem on June 29, 2025, these debentures, at a redemption price equal to the outstanding principal amount and all accrued and unpaid interest.

 

The Bank acquired subordinated debentures in an amount of $150 million bearing interest at 5.937% and maturing on December 22, 2032. The interest on these debentures will be payable semi-annually at a rate of 5.937% per annum until December 22, 2027 and, thereafter, will be payable quarterly at a floating rate equal to Daily Compounded CORRA plus 2.91%. With the prior approval of OSFI, the Bank may, at its option, redeem these debentures as of December 22, 2027, in whole or in part, at their nominal value plus accrued and unpaid interest.

 

The Bank acquired subordinated debentures in an amount of $250 million bearing interest at 5.949% and maturing on January 29, 2034. The interest on these debentures will be payable semi-annually at a rate of 5.949% per annum until January 29, 2029 and, thereafter, will be payable quarterly at a floating rate equal to Daily Compounded CORRA plus 2.73%. With the prior approval of OSFI, the Bank may, at its option, redeem these debentures as of January 29, 2029, in whole or in part, at their nominal value plus accrued and unpaid interest.

 

Given that the subordinated debentures satisfy the NVCC requirements, they qualify for the purposes of calculating regulatory capital under Basel III.

 

Note 12 - Share Capital and Other Equity Instruments

 

Shares and Other Equity Instruments Outstanding

 

As at April 30, 2025
As at October 31, 2024
Number
of shares
or LRCN(1)
Shares
or LRCN
$
Number
of shares
or LRCN
Shares
or LRCN
$
First Preferred Shares
Series 30
14,000,000
350
14,000,000
350
Series 32
−
−
12,000,000
300
Series 38
16,000,000
400
16,000,000
400
Series 40
12,000,000
300
12,000,000
300
Series 42
12,000,000
300
12,000,000
300
Series 47(2)
5,000,000
128
−
−
Series 49(2)
5,000,000
136
−
−
64,000,000
1,614
66,000,000
1,650
Other equity instruments
LRCN - Series 1
500,000
500
500,000
500
LRCN - Series 2
500,000
500
500,000
500
LRCN - Series 3
500,000
500
500,000
500
1,500,000
1,500
1,500,000
1,500
Preferred shares and other equity instruments
65,500,000
3,114
67,500,000
3,150
Common shares at beginning of fiscal year
340,743,876
3,463
338,284,629
3,294
Issued pursuant to the Stock Option Plan
460,890
34
2,297,601
146
Issued as part of the CWB acquisition(2)
Exchange of common shares
41,010,378
5,290
−
−
Automatic exchange of subscription receipts
9,262,500
1,040
−
−
Impact of shares purchased or sold for trading(3)
(155,940)
(22)
161,646
23
Common shares at end of period
391,321,704
9,805
340,743,876
3,463


 

(1)       Limited Recourse Capital Notes (LRCN).

(2)       For additional information, see Note 19 to these Consolidated Financial Statements.

(3)       As at April 30, 2025, a total of 32,431 shares were sold short for trading, representing $4 million (188,371 shares were sold short for trading, representing an amount of $26 million as at October 31, 2024).

 

Dividends Declared and Distributions on Other Equity Instruments

 

Six months ended April 30
2025
2024
Dividends
or interest
$
Dividends
per share
Dividends
or interest
$
Dividends
per share
First Preferred Shares
Series 30
11
0.7739
7
0.5031
Series 32
3
0.2399
6
0.4799
Series 38
14
0.8784
14
0.8784
Series 40
9
0.7273
9
0.7273
Series 42
10
0.8820
10
0.8820
Series 47
2
0.3982
−
−
Series 49
2
0.4782
−
−
51
46
Other equity instruments
LRCN-Series 1(1)
10
10
LRCN - Series 2(2)
10
10
LRCN - Series 3(3)
19
19
LRCN - Series 1 and 2 of CWB(4)
3
−
42
39
Preferred shares and other equity instruments
93
85
Common shares
837
2.2800
720
2.1200
930
805


(1)       The LRCN - Series 1 bear interest at a fixed rate of 4.30% per annum.

(2)       The LRCN - Series 2 bear interest at a fixed rate of 4.05% per annum.

(3)       The LRCN - Series 3 bear interest at a fixed rate of 7.50% per annum.

(4)       For additional information, see Note 19 to these Consolidated Financial Statements.

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.

 

Repurchase of Common Shares

On December 12, 2023, the Bank had begun a normal course issuer bid to repurchase for cancellation up to 7,000,000 common shares (representing approximately 2.1% of its then outstanding common shares) over the 12-month period ended on December 11, 2024. On December 12, 2022, the Bank had begun a normal course issuer bid to repurchase for cancellation up to 7,000,000 common shares (representing approximately 2.1% of its then outstanding common shares) over the 12-month period ended December 11, 2023. Any repurchase through the Toronto Stock Exchange will be done at market prices. The common shares may also be repurchased through other means authorized by the Toronto Stock Exchange and applicable regulations, including private agreements or share repurchase programs under issuer bid exemption orders issued by the securities regulators. A private purchase made under an exemption order issued by a securities regulator will be done at a discount to the prevailing market price. The amounts that are paid above the average book value of the common shares are charged to Retained earnings. During the six-month periods ended April 30, 2025 and 2024, the Bank did not repurchase any common shares.

 

 

Note 13 - Capital Disclosure

 

The Bank and all other major Canadian banks have to maintain the following minimum capital ratios established by OSFI: a CET1 capital ratio of at least 11.5%, a Tier 1 capital ratio of at least 13.0%, and a Total capital ratio of at least 15.0%. All of these ratios include a capital conservation buffer of 2.5% established by the Basel Committee on Banking Supervision (BCBS) and OSFI, a 1.0% surcharge applicable solely to Domestic Systemically Important Banks (D-SIBs), and a 3.5% domestic stability buffer (DSB) established by OSFI. The DSB, which can vary from 0% to 4.0% of risk-weighted assets (RWA), consists exclusively of CET1 capital. A D‑SIB that fails to meet this buffer requirement will not be subject to automatic constraints to reduce capital distributions but must provide a remediation plan to OSFI. The Bank also has to meet the requirements of the capital output floor, under which its total RWA must not be lower than 72.5% of the total RWA as calculated under the Basel III Standardized Approaches. OSFI had planned a phase-in of the floor factor, starting at 65.0% in the second quarter of 2023, and rising to reach 72.5% in fiscal 2027. On February 12, 2025, OSFI deferred any additional increases until further notice. As a result, the floor factor, currently set at 67.5%, will remain at this level for an undetermined period. If the capital requirement is less than the capital output floor requirement after applying the floor factor, the difference is added to the total RWA. Lastly, OSFI requires D-SIBs to maintain a Basel III leverage ratio of at least 3.5%, which includes a Tier 1 capital buffer of 0.5% applicable only to D-SIBs.

 

OSFI also requires D-SIBs to maintain a risk-based total loss-absorbing capacity (TLAC) ratio of at least 25.0% (including the DSB) of RWA and a TLAC leverage ratio of at least 7.25%. The purpose of TLAC is to ensure that a D-SIB has sufficient loss-absorbing capacity to support its internal recapitalization in the unlikely event it becomes non-viable.

 

During the quarter and the six-month period ended April 30, 2025, the Bank was compliant with all of OSFI's regulatory capital, leverage, and TLAC requirements.

 

Regulatory Capital(1), Leverage Ratio(1) and TLAC(2)

 

As at April 30, 2025
As at October 31, 2024
Capital
CET1
24,514
19,321
Tier 1
27,603
22,470
Total capital
30,930
24,001
Risk-weighted assets
182,772
140,975
Total exposure
585,319
511,160
Capital ratios
CET1
13.4
%
13.7
%
Tier 1
15.1
%
15.9
%
Total
16.9
%
17.0
%
Leverage ratio
4.7
%
4.4
%
Available TLAC
51,508
44,040
TLAC ratio
28.2
%
31.2
%
TLAC leverage ratio
8.8
%
8.6
%


 

(1)       Capital, risk-weighted assets, total exposure, the capital ratios, and the leverage ratio are calculated in accordance with the Basel III rules, as set out in OSFI's Capital Adequacy Requirements Guideline and Leverage Requirements Guideline.

(2)       Available TLAC, the TLAC ratio, and the TLAC leverage ratio are calculated in accordance with OSFI's Total Loss Absorbing Capacity Guideline.

 

 

Note 14 - Share-Based Payments

 

Stock Option Plan

During the quarters ended April 30, 2025 and 2024, the Bank did not award any stock options. During the six-month period ended April 30, 2025, the Bank awarded 1,004,492 stock options (1,222,652 stock options during the six-month period ended April 30, 2024) with an average fair value of $23.26 per option ($13.74 in 2024).

 

Replacement Options

In connection with the CWB acquisition, during the quarter ended April 30, 2025, the Bank exchanged outstanding options held by employees of CWB for 719,886 replacement options, with a weighted average fair value of $53.32 granting holders the right to purchase common shares of the Bank on substantially similar terms and conditions as were applicable under the CWB Stock Option Plan prior to the exchange, including vesting schedule, term to expiry, termination of employment and change of control provisions. The replacement options vest at the end of a three-year period and expire seven years from the grant date attached to the CWB options prior to the exchange. The exercise price of the replacement options was adjusted to reflect the price difference between the CWB common shares and the Bank's common shares, and the number of replacement options exchanged for CWB options was adjusted, in conjunction with the exercise price, to maintain the same aggregate intrinsic value immediately following the exchange as immediately prior to the exchange. The adjustment of the exercise price and the number of replacement options issued was based on the acquisition's share exchange ratio of 0.450. See Note 19 for additional information on the CWB acquisition.

 

As at April 30, 2025, there were 11,671,264 stock options outstanding (10,443,059 stock options as at October 31, 2024).

 

The average fair value of the options awarded, excluding replacement options issued in connection with the CWB acquisition, was estimated on the award date using the Black-Scholes model as well as the following accounting assumptions.

Six months ended April 30
2025
2024
Risk-free interest rate
2.63%
3.61%
Expected life of options
7 years
7 years
Expected volatility
24.43%
22.29%
Expected dividend yield
3.54%
4.62%


 

The average fair value of replacement options issued in connection with the CWB acquisition, was estimated on the award date using the Black-Scholes model as well as the following assumptions, which are presented on a weighted average basis.

 

Six months ended April 30
2025
Risk-free interest rate
2.54%
Expected life of options
4-7 years
Expected volatility
22.00%
Expected dividend yield
3.59%


 

During the quarter ended April 30, 2025, a $6 million compensation expense was recorded for this plan ($5 million for the quarter ended April 30, 2024). During the six-month period ended April 30, 2025, a $11 million compensation expense was recorded for this plan ($9 million for the six-month period ended April 30, 2024).

 

Replacement Restricted Stock Units (RSUs)

In connection with the CWB acquisition, during the quarter ended April 30, 2025, the Bank exchanged outstanding RSUs and performance stock units (PSUs) held by employees of CWB for 501,764 replacement RSUs at a price of $128.99, granting holders the right to a cash settlement based on the value of the Bank's common shares. The replacement RSUs retained the same terms as were applicable under the CWB RSU and PSU Plans, including vesting schedule, term to expiry, termination of employment and change of control provisions, with the exception of the performance condition previously attached to the CWB PSU Plan, which was removed immediately prior to the exchange. The replacement units issued in exchange for the CWB RSUs vest on each anniversary of the grant in equal instalments over a period of three years, and the replacement units issued in exchange for the CWB PSUs vest at the end of a three-year period. Upon the exchange, the value of the cash settlement was substituted by the value of the Bank's common shares. To reflect the difference in the value of the cash-settlement between the replacement units and the CWB units, the number of replacement units was adjusted to maintain the same aggregate cash-settlement value immediately following the exchange as immediately prior to the exchange. The number of replacement units was based on the acquisition's share exchange ratio of 0.450.

 

Note 15 - Employee Benefits - Pension Plans and Other Post-Employment Benefit Plans

 

The Bank offers pension plans that have a defined benefit component and a defined contribution component. The Bank also offers other post-employment benefit plans to eligible retirees. The cost associated with these plans, including the remeasurements recognized in Other comprehensive income, is presented in the following table.

 

Cost for Pension Plans and Other Post-Employment Benefit Plans

 

Quarter ended April 30
Pension plans
Other post-employment benefit plans
2025
2024
2025
2024
Current service cost
27
21
−
−
Interest expense (income), net
(5)
(5)
1
2
Administrative costs
1
1
Expense of the defined benefit component
23
17
1
2
Expense of the defined contribution component
9
5
Expense recognized in Net income
32
22
1
2
Remeasurements(1)
Actuarial (gains) losses on the defined benefit obligation
(218)
(233)
(3)
(3)
Return on plan assets(2)
90
270
Remeasurements recognized in Other comprehensive income
(128)
37
(3)
(3)
(96)
59
(2)
(1)


 

Six months ended April 30
Pension plans
Other post-employment benefit plans
2025
2024
2025
2024
Current service cost
54
41
−
−
Interest expense (income), net
(10)
(9)
2
3
Administrative costs
2
2
Expense of the defined benefit component
46
34
2
3
Expense of the defined contribution component
16
9
Expense recognized in Net income
62
43
2
3
Remeasurements(1)
Actuarial (gains) losses on the defined benefit obligation
(106)
271
(1)
5
Return on plan assets(2)
(29)
(253)
Remeasurements recognized in Other comprehensive income
(135)
18
(1)
5
(73)
61
1
8


 

(1)        Changes related to the discount rate and to the return on plan assets are reviewed and updated on a quarterly basis. All other assumptions are updated annually.

(2)        Excludes interest income.

 

 

Note 16 - Income Taxes

 

Notice of Assessment

In April 2025, the Bank was reassessed by the Canada Revenue Agency (CRA) for additional income tax and interest of approximately $125 million (including estimated provincial tax and interest) in respect of certain Canadian dividends received by the Bank during the 2020 taxation year.  

 

In prior fiscal years, the Bank had been reassessed for additional income tax and interest of approximately $1,075 million (including provincial tax and interest) in respect of certain Canadian dividends received by the Bank during the 2012-2019 taxation years.  

 

In the reassessments, the CRA alleges that the dividends were received as part of a "dividend rental arrangement."

 

In October 2023, the Bank filed a notice of appeal with the Tax Court of Canada, and the matter is now in litigation. The CRA may issue reassessments to the Bank for taxation years subsequent to 2020 in regard to certain activities similar to those that were the subject of the above-mentioned reassessments. The Bank remains confident that its tax position was appropriate and intends to vigorously defend its position. As a result, no amount has been recognized in the Consolidated Financial Statements as at April 30, 2025. 

 

Pillar 2 Rules

On June 20, 2024, Bill C-69 - An Act to implement certain provisions of the budget tabled in Parliament on April 16, 2024 received royal assent. The bill included the Pillar 2 rules (global minimum tax) published by the Organisation for Economic Co-operation and Development (OECD) that are applicable to fiscal years beginning on or after December 31, 2023 (November 1, 2024, for the Bank). To date, the Pillar 2 rules have been included in a bill or enacted in certain jurisdictions where the Bank operates. For the quarter and the six-month period ended April 30, 2025, the Bank estimates that the application of the Pillar 2 rules represents an increase in the effective tax rate of 1.9%. For the quarter ended April 30, 2025, the Bank continues to apply the exception to the recognition and disclosure of information about deferred tax assets and liabilities arising from the Pillar 2 rules in the jurisdictions where they have been included in a bill or enacted. 

Note 17 - Earnings Per Share

 

Diluted earnings per share is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding after taking into account the dilution effect of stock options using the treasury stock method and any gain (loss) on the redemption of preferred shares.

 

Quarter ended April 30
Six months ended April 30
2025
2024
2025
2024
Basic earnings per share
Net income attributable to the Bank's shareholders and holders of other equity instruments
896
907
1,893
1,829
Dividends on preferred shares and distributions on other equity instruments
43
37
82
74
Net income attributable to common shareholders
853
870
1,811
1,755
Weighted average basic number of common shares outstanding (thousands)
390,124
339,558
365,022
339,111
Basic earnings per share(dollars)
2.19
2.56
4.96
5.18
Diluted earnings per share
Net income attributable to common shareholders
853
870
1,811
1,755
Weighted average basic number of common shares outstanding (thousands)
390,124
339,558
365,022
339,111
Adjustment to average number of common shares (thousands)
Stock options(1)
3,754
3,223
4,045
2,792
Weighted average diluted number of common shares outstanding (thousands)
393,878
342,781
369,067
341,903
Diluted earnings per share(dollars)
2.17
2.54
4.91
5.13


 

(1)       For the quarter April 30, 2025, the calculation of diluted earnings per share excluded an average number of 999,490 options outstanding with a weighted average exercise price of $132.75 given that the exercise price of these options was greater than the average price of the Bank's common shares. For the six-month period ended April 30, 2025, the calculation of diluted earnings per share excluded an average number of 791,144 options outstanding with a weighted average exercise price of $132.75 given that the exercise price of these options was greater than the average price of the Bank's common shares. For the quarter and six-month period ended April 30, 2024, as the exercise price of the options was lower than the average price of the Bank's common shares, no options were excluded from the diluted earnings per share calculation.

Note 18 - Segment Disclosures

 

The Bank carries out its activities in four business segments, which are defined below. For presentation purposes, other activities are grouped in the Other heading. Each reportable segment is distinguished by services offered, type of clientele, and marketing strategy.

 

The presentation of segment disclosures is consistent with the presentation adopted by the Bank for the fiscal year that began on November 1, 2024. It reflects the discontinuation of taxable equivalent basis reporting for income and income tax expense. Using the taxable equivalent basis 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.

 

Personal and Commercial

The Personal and Commercial segment encompasses the banking, financing, and investing services offered to individuals, advisors, and businesses as well as insurance operations.

 

Wealth Management

The Wealth Management segment comprises investment solutions, trust services, banking services, lending services, and other wealth management solutions offered through internal and third-party distribution networks.

 

Financial Markets

The Financial Markets segment encompasses corporate banking and investment banking and financial solutions for large and mid-size corporations, public sector organizations, and institutional investors.

 

U.S. Specialty Finance and International (USSF&I)

The USSF&I segment encompasses the specialty finance expertise provided by the Credigy subsidiary; the activities of the ABA Bank subsidiary, which offers financial products and services to individuals and businesses in Cambodia; and the activities of targeted investments in certain emerging markets.

 

Other

This heading encompasses treasury activities; liquidity management; Bank funding; asset/liability management activities; the activities of the Flinks subsidiary, a fintech company specialized in financial data aggregation and distribution; certain specified items; and the unallocated portion of corporate units.

 

Quarter ended April 30(1)
Personal and
Commercial
Wealth
Management
Financial
Markets
USSF&I
Other
Total
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
Net interest income
1,146
870
230
203
(505)
(671)
356
318
(22)
(85)
1,205
635
Non-interest income
270
261
561
480
1,606
1,352
34
32
(26)
(10)
2,445
2,115
Total revenues
1,416
1,131
791
683
1,101
681
390
350
(48)
(95)
3,650
2,750
Non-interest expenses(2)(3)
804
612
476
400
403
312
117
108
142
40
1,942
1,472
Income before provisions for credit
losses and income taxes
612
519
315
283
698
369
273
242
(190)
(135)
1,708
1,278
Provisions for credit losses(4)
426
89
(1)
−
64
11
59
37
(3)
1
545
138
Income before income taxes (recovery)
186
430
316
283
634
358
214
205
(187)
(136)
1,163
1,140
Income taxes (recovery)
54
119
84
78
133
36
45
42
(49)
(41)
267
234
Net income
132
311
232
205
501
322
169
163
(138)
(95)
896
906
Non-controlling interests
−
−
−
−
−
−
−
−
−
(1)
−
(1)
Net income attributable
to the Bank's shareholders and holders of other equity instruments
132
311
232
205
501
322
169
163
(138)
(94)
896
907
Average assets(5)
208,658
156,736
10,754
8,963
224,314
194,158
33,101
27,402
74,605
67,777
551,432
455,036
Total assets
210,502
159,359
10,968
9,369
213,679
183,123
31,613
28,156
69,432
61,683
536,194
441,690

Six months ended April 30(1)
Personal and
Commercial
Wealth
Management
Financial
Markets
USSF&I
Other
Total
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
Net interest income(6)
2,090
1,740
457
401
(1,014)
(1,224)
726
619
(82)
(150)
2,177
1,386
Non-interest income(7)
530
545
1,110
942
3,022
2,552
69
57
(75)
(22)
4,656
4,074
Total revenues
2,620
2,285
1,567
1,343
2,008
1,328
795
676
(157)
(172)
6,833
5,460
Non-interest expenses(2)(3)
1,445
1,227
917
790
770
625
240
208
216
71
3,588
2,921
Income before provisions for credit
losses and income taxes
1,175
1,058
650
553
1,238
703
555
468
(373)
(243)
3,245
2,539
Provisions for credit losses(4)
588
160
1
−
100
28
110
73
−
(3)
799
258
Income before income taxes (recovery)
587
898
649
553
1,138
675
445
395
(373)
(240)
2,446
2,281
Income taxes (recovery)
165
248
175
152
220
45
93
82
(100)
(74)
553
453
Net income
422
650
474
401
918
630
352
313
(273)
(166)
1,893
1,828
Non-controlling interests
−
−
−
−
−
−
−
−
−
(1)
−
(1)
Net income attributable
to the Bank's shareholders and
holders of other equity instruments
422
650
474
401
918
630
352
313
(273)
(165)
1,893
1,829
Average assets(5)
186,905
155,874
10,681
8,834
217,949
192,280
32,134
26,706
71,627
65,089
519,296
448,783
Total assets
210,502
159,359
10,968
9,369
213,679
183,123
31,613
28,156
69,432
61,683
536,194
441,690

 

(1)       Certain comparative amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes.

(2)       During the quarter ended April 30, 2025, the Bank recorded acquisition and integration charges of $118 million ($86 million net of income taxes) in the Personal and Commercial segment ($1 million), in the Wealth Management segment ($3 million) and in the Other heading ($114 million) related to the CWB acquisition. For the six-month period ended April 30, 2025, these charges were $144 million ($105 million, net of income taxes).

(3)       During the quarter and six-month period ended April 30, 2025 the Bank recorded an amount of $24 million ($18 million, net of income taxes) in the Personal and Commercial segment ($23 million) and in the Wealth Management segment ($1 million), to reflect the amortization of intangible assets related to the CWB acquisition.

(4)       During the quarter and six-month period ended April 30, 2025, the Bank recorded an amount of $230 million ($166 million net of income taxes) in the Personal and Commercial segment to reflect the initial provisions for credit losses on non-impaired loans acquired from CWB.

(5)       Represents the average of the daily balances for the period, which is also the basis on which segment assets are reported in the business segments.

(6)       During the six-month period ended April 30, 2025, the Bank recorded an amount of $28 million ($20 million net of income taxes) in the Other heading 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 these Consolidated  Financial Statements).

(7)       During the six-month period ended April 30, 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. Also, during the six-month period ended April 30, 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. All these items were recorded in the Other heading.

 

Note 19 - Acquisition

 

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 award. 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 $45.4 billion to assets, including goodwill, and $37.7 billion to liabilities at acquisition date. The estimated goodwill of $1.6 billion reflects the expected expense synergies from our Personal and Commercial and Wealth Management banking services operations, expected funding synergies, and the expected growth from the product and service platform at a national scale. Goodwill is not deductible for tax purposes.

 

The following table presents the estimated acquisition-date fair values of the assets acquired and liabilities assumed and consideration transferred. During the measurement period, which can last up to 12 months from the acquisition date, the estimated fair values of the assets acquired and liabilities assumed may be retroactively adjusted to reflect new information obtained about facts and circumstances that existed as at the acquisition date.

 

As at February 3, 2025
Assets
Cash and deposits with financial institutions
148
Securities
4,481
Loans(1)
37,818
Derivative financial instruments
127
Premises and equipment
225
Goodwill
1,560
Intangible assets(2)
680
Other assets(3)
368
45,407
Liabilities
Deposits(4)
33,328
Obligations related to securities sold under repurchase agreements and securities loaned
16
Derivative financial instruments
40
Liabilities related to transferred receivables
2,570
Other liabilities(5)
1,224
Subordinated debt
554
37,732
Total identifiable net assets acquired and goodwill
7,675
Consideration transferred
Equity issued
5,290
Settlement of pre-existing relationships
1,400
Issuance of replacement share-based payment awards
63
6,753
Previously held interest
329
Non-controlling interest
593
Purchase consideration
7,675


 

(1)       Includes $10,021 million of residential mortgage loans, $476 million of personal loans, $36 million of credit card receivables and $27,285 million of business and government loans. The fair value of loans reflects estimates of incurred and expected future credit losses as at the acquisition date and interest rate premiums or discounts relative to prevailing interest rates.

(2)       Includes $605 million of core deposit intangibles and $75 million of customer relationships, which are amortized on a straight-line basis over 7 years.

(3)       Includes interest receivable, derivative collateral receivable, receivables, deferred tax assets and other assets items.

(4)       Includes $21,198 million in personal deposits and $12,130 million in business and government deposits.

(5)       Includes accounts payable and accrued expenses, interest payable, lease liabilities and other liabilities items.

 

 

During the six-month period ended April 30, 2025, the remeasurement at fair value of the previously held interest in CWB generated a gain of $4 million which was reported in the Non‑interest income - Other item of the Consolidated Statement of Income in the Other heading of segment disclosures. For the six‑month period ended April 30, 2025, the acquisition and integration costs of $144 million are included in the Non-Interest expenses in the Consolidated Statement of Income ($118 million for the quarter ended April 30, 2025). The financial results of CWB have been consolidated in the Bank's financial statements as of February 3, 2025 and have been recorded in the Personal and Commercial, Wealth Management and Financial Markets segments and in the Other heading of segment disclosures. Since acquisition date, CWB contributed approximately $298 million to the Bank's total revenues and a net loss of approximately $147 million to the Bank's total net income. If the Bank had completed the acquisition on November 1, 2024, the Bank would have reported total revenues of approximately $7,137 million and net income of approximately $1,975 million for the six-month period ended April 30, 2025.

 

Issuance of Common Shares

On February 3, 2025, the Bank issued a total of 50,272,878 common shares, for an amount 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 Consolidated Financial Statements.

 

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 permitted 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 satisfy the non-viability contingent capital requirements, they qualify for the purposes of calculating regulatory capital under Basel III. 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.

Information for Shareholders and Investors

 

Investor Relations

Financial analysts and investors who want to obtain financial information on the Bank may contact the Investor Relations Department.

 

800 Saint-Jacques Street, 33rd Floor

Montreal, Quebec H3C 1A3

Toll-free: 1-866-517-5455

Email: investorrelations@nbc.ca

Website: nbc.ca/investorrelations

 

Media Relations

800 Saint-Jacques Street, 32th Floor

Montreal, Quebec H3C 1A3

Telephone: 514-394-6500

Email: pa@nbc.ca

 

Quarterly Report Publication Dates for Fiscal 2025

(subject to approval by the Board of Directors of the Bank)

 

First quarter
February 26
Second quarter
May 28
Third quarter
August 27
Fourth quarter
December 3

 

 

Disclosure of
Second Quarter 2025 Results
Conference Call
- A conference call for analysts and institutional investors will be held on Wednesday, May 28, 2025 at 11:00 a.m. EDT.
- Access by telephone in listen-only mode:1-800-806-5484 or
416-340-2217. The access code is 4131060#.
- A recording of the conference call can be heard until August 28, 2025 by dialing 1-800-408-3053 or 905-694-9451. The access code is 8760078#.
Webcast
- The conference call will be webcast live atnbc.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 atnbc.ca/investorrelations.
- 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.

 

Transfer Agent and Registrar

For information about stock transfers, address changes, dividends, lost certificates, tax forms, and estate transfers, shareholders of record may contact the transfer agent, Computershare Trust Company of Canada, at the address or telephone number below.

 

Computershare Trust Company of Canada

Share Ownership Management

100 University Avenue, 8th Floor

Toronto, Ontario M5J 2Y1

Telephone: 1-888-838-1407

Fax: 1-888-453-0330

Email: service@computershare.com

Website: computershare.com

 

Shareholders whose shares are held by a market intermediary are asked to contact the market intermediary concerned.

 

Direct Deposit Service for Dividends

Shareholders may elect to have their dividend payments deposited directly via electronic funds transfer to their bank account at any financial institution that is a member of the Canadian Payments Association. To do so, they must send a written request to the transfer agent, Computershare Trust Company of Canada.

 

Dividend Reinvestment and Share Purchase Plan

National Bank has a Dividend Reinvestment and Share Purchase Plan for holders of its common and preferred shares under which they can acquire common shares of the Bank without paying commissions or administration fees. Participants acquire common shares through the reinvestment of cash dividends paid on the shares they hold or through optional cash payments of at least $1 per payment, up to a maximum of $5,000 per quarter.

 

For additional information, shareholders may contact National Bank's registrar and transfer agent, Computershare Trust Company of Canada, at 1‑888‑838‑1407. To participate in the plan, National Bank's beneficial or non-registered common shareholders must contact their financial institution or broker.

 

Dividends

Dividends paid are "eligible dividends" in accordance with the Income Tax Act (Canada).

 

 

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