Nat Bank of Canada - Q2 2025 Report to shareholders (Part 1)

Sa Sa International Holdings

28/05/2025 14:32

RNS Number : 4572K

National Bank of Canada

28 May 2025

 

 

 

Regulatory Announcement (Part 1)

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

 

National Bank reports its results for the Second Quarter of 2025 and raises its quarterly dividend by 4 cents to $1.18 per share

 

The financial information reported in this document is based on the unaudited interim condensed consolidated financial statements for the quarter and the six-month period ended April 30, 2025 and is prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). All amounts are presented in Canadian dollars.

 

MONTREAL, May 28, 2025 - For the second quarter of 2025, National Bank is reporting net income of $896 million, down 1% from $906 million in the second quarter of 2024 and diluted earnings per share stood at $2.17 compared to $2.54 in the second quarter of 2024. Excluding specified items(1) recorded in the second quarter of 2025, notably the acquisition and integration costs related to the acquisition of Canadian Western Bank (CWB)(2), which was completed on February 3, 2025 as well as the initial provisions for credit losses on non-impaired loans acquired, adjusted net income(1) stood at $1,166 million compared to $906 million in the corresponding quarter of 2024. Adjusted diluted earnings per share(1) stood at $2.85, up 12% from $2.54 in the second quarter of 2024.

 

For the six-month period ended April 30, 2025, the Bank's net income totalled $1,893 million, up 4% from $1,828 million for the corresponding period of 2024. Diluted earnings per share stood at $4.91 for the six-month period ended April 30, 2025 versus $5.13 for the corresponding period in 2024, the decrease being attributable to the common shares issued as part of the acquisition of CWB(2). Excluding specified items(1), adjusted net income(1) for the

six-month period ended April 30, 2025 totalled $2,216 million, up 21% from $1,828 million for the six-month period ended April 30, 2024, and adjusted diluted earnings per share(1) stood at $5.78, up 13% from $5.13 for the six-month period ended April 30, 2024.

 

"The Bank delivered strong second quarter results, supported by solid organic growth in our business segments. We were also pleased to complete the acquisition of Canadian Western Bank during the quarter, marking a significant step forward in the acceleration of our domestic strategy and in extending the depth and reach of our banking capabilities for our clients," said Laurent Ferreira, President and Chief Executive Officer of National Bank of Canada.

 

"In the context of continued geopolitical and geoeconomic uncertainty, our strong capital position allows us to support business growth," concluded Mr. Ferreira.

 

 

 

 

 

 

Highlights

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(2)
2024(3)
% Change
2025(2)
2024(3)
% Change
Net income
896
906
(1)
1,893
1,828
4
Diluted earnings per share (dollars)
$
2.17
$
2.54
(15)
$
4.91
$
5.13
(4)
Income before provisions for credit losses and income taxes
1,708
1,278
34
3,245
2,539
28
Return on common shareholders' equity(4)
11.9
%
16.9
%
14.0
%
17.0
%
Dividend payout ratio(4)
42.2
%
43.2
%
42.2
%
43.2
%
Operating results-Adjusted(1)
Net income - Adjusted
1,166
906
29
2,216
1,828
21
Diluted earnings per share - Adjusted (dollars)
$
2.85
$
2.54
12
$
5.78
$
5.13
13
Income before provisions for credit losses and income taxes - Adjusted
1,850
1,278
45
3,460
2,539
36
As at
April 30,
2025
As at
October 31, 2024
CET1 capital ratio under Basel III(5)
13.4
%
13.7
%
Leverage ratio under Basel III(5)
4.7
%
4.4
%


 

(1)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures.

(2)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(3)       Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes. For additional information, see the Financial Reporting Method section.

(4)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(5)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

 

Report to Shareholders              Second Quarter 2025

 

Personal and Commercial(1)

 

-      Net income totalled $132 million in the second quarter of 2025 versus $311 million in the second quarter of 2024, a 58% decrease. Adjusted net income(2) totalled $316 million, up 2% from the corresponding quarter of 2024.

-      At $1,416 million, second-quarter total revenues rose $285 million or 25% year over year due to the inclusion of CWB, which represents $240 million or 21%, as well as to an increase in net interest income related to growth in loan and deposit volumes, partly offset by a lower net interest margin.

-      Compared to a year ago, personal lending grew 11% and commercial lending grew 64%, mainly due to the inclusion of CWB loans during the second quarter of 2025.

-      The net interest margin(3) stood at 2.30% in the second quarter of 2025, down from 2.36% in the second quarter of 2024.

-      Second-quarter non-interest expenses stood at $804 million, up 31% year over year, of which the inclusion of CWB drove a 25% increase.

-      Provisions for credit losses rose $337 million year over year, mainly due to the initial provisions for credit losses of $230 million on non-impaired loans acquired from CWB as well as provisions for credit losses on impaired loans and non-impaired loans in Personal Banking and Commercial Banking.

-      At 56.8%, the second-quarter efficiency ratio(3) had deteriorated compared to 54.1% in the second quarter of 2024, partly due to specified items(2) related to the acquisition of CWB.

 

 

Wealth Management(1)

 

-      Net income totalled $232 million in the second quarter of 2025, a 13% increase from $205 million in the corresponding quarter of 2024.

-      Second-quarter total revenues amounted to $791 million compared to $683 million in second-quarter 2024, a $108 million or 16% increase driven mainly by growth in fee-based revenues, net interest income and the inclusion of CWB revenues.

-      Second-quarter non-interest expenses stood at $476 million versus $400 million in second-quarter 2024, a 19% increase associated with revenue growth and with the impact of the inclusion of CWB.

-      At 60.2%, the second-quarter efficiency ratio(3) had deteriorated compared to 58.6% in the second quarter of 2024.

 

 

Financial Markets(1)

 

-      Net income totalled $501 million in the second quarter of 2025, up 56% from $322 million in the second quarter of 2024.

-      Second-quarter total revenues amounted to $1,101 million, a 62% increase that was mainly due to growth in global markets revenues.

-      Second-quarter non-interest expenses stood at $403 million in second-quarter 2025 compared to $312 million in second-quarter 2024, an increase that was due to higher variable compensation.

-      Second-quarter provisions for credit losses were $64 million compared to $11 million in the same quarter of 2024, owing to provisions for credit losses on impaired loans.

-      At 36.6%, the efficiency ratio(3) had improved from 45.8% in the second quarter of 2024 due to the marked increase in revenues.

 

 

U.S. Specialty Finance and International

 

-      Net income totalled $169 million in the second quarter of 2025, up 4% from $163 million in the second quarter of 2024.

-      Second-quarter total revenues amounted to $390 million, an 11% year-over-year increase driven mainly by revenue growth at the ABA Bank subsidiary.

-      Non-interest expenses for the second quarter of 2025 stood at $117 million, an 8% year-over-year increase attributable to business growth at the Credigy and ABA Bank subsidiaries.

-      Second-quarter provisions for credit losses were up $22 million year over year, with the increase being attributable to both Credigy and ABA Bank.

-      At 30.0%, the efficiency ratio(3) had improved from 30.9% in the second quarter of 2024.

 

 

Other(1)

 

-      The Other segment reported a net loss of $138 million in the second quarter of 2025 compared to a net loss of $95 million in the same quarter of 2024, owing to the CWB acquisition and integration charges, which are considered specified items(2), partly offset by a higher contribution from Treasury activities and the inclusion of CWB revenues in the second quarter of 2025.

 

 

 

Capital Management(1)

 

-      As at April 30, 2025, the Common Equity Tier 1 (CET1) capital ratio under Basel III(4) stood at 13.4%, down from 13.7% as at October 31, 2024. The decrease is mainly explained by the growth in the risk-weighted assets partly due to the inclusion of CWB.

-      As at April 30, 2025, the Basel III(4) leverage ratio was 4.7%, up from 4.4% as at October 31, 2024.

 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures.

(3)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(4)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

 

 



Management's Discussion

and Analysis

May 27, 2025

 

The following Management's Discussion and Analysis (MD&A) presents the financial condition and operating results of National Bank of Canada (the Bank). This analysis was prepared in accordance with the requirements set out in National Instrument 51-102, Continuous Disclosure Obligations, released by the Canadian Securities Administrators (CSA). This MD&A should be read in conjunction with the unaudited interim condensed consolidated financial statements (the Consolidated Financial Statements) and accompanying notes for the quarter and six-month period ended April 30, 2025 and with the audited annual consolidated financial statements for the year ended October 31, 2024 prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), unless otherwise indicated. IFRS represent Canadian generally accepted accounting principles (GAAP). All amounts are presented in Canadian dollars. Additional information about the Bank, including the Annual Information Form, can be obtained from the Bank's website at nbc.ca and SEDAR+'s website at sedarplus.ca. The information found in the various documents and reports published by the Bank or the information available on the Bank's website and mentioned herein is not and should not be considered incorporated by reference into the Report to Shareholders, the Management's Discussion and Analysis, or the consolidated financial statements, unless expressly stated otherwise.

Acquisition
4
Capital Management
25
Economic Review and Outlook
5
Risk Management
31
Financial Reporting Method
6
Risk Disclosures
47
Highlights
13
Accounting Policies and Financial Disclosure
48
Financial Analysis
14
Material Accounting Policies and Accounting Estimates
48
Consolidated Results
14
Future Accounting Policy Changes
49
Results by Segment
17
Financial Disclosure
49
Consolidated Balance Sheet
23
Quarterly Financial Information
50
Related Party Transactions
24
Glossary
51
Securitization and Off-Balance-Sheet Arrangements
24
Income Taxes
25


 

 

Caution Regarding Forward-Looking Statements

Certain statements in this document are forward-looking statements. These statements are made in accordance with applicable securities legislation in Canada and the United States. The forward-looking statements in this document may include, but are not limited to, statements in the messages from management, as well as other statements about the economy, market changes, the Bank's objectives, outlook, and priorities for fiscal 2025 and beyond, the strategies or actions that the Bank will take to achieve them, expectations for the Bank's financial condition and operations, the regulatory environment in which it operates, the potential impacts of increased geopolitical uncertainty on the Bank and its clients, its environmental, social, and governance targets and commitments, the impacts and benefits of the acquisition of Canadian Western Bank (CWB), and certain risks to which the Bank is exposed. The Bank may also make forward-looking statements in other documents and regulatory filings, as well as orally. These forward-looking statements are typically identified by verbs or words such as "outlook", "believe", "foresee", "forecast", "anticipate", "estimate", "project", "expect", "intend" and "plan", the use of future or conditional forms, notably verbs such as "will", "may", "should", "could" or "would", as well as similar terms and expressions.

 

These forward-looking statements are intended to assist the security holders of the Bank in understanding the Bank's financial position and results of operations as at the dates indicated and for the periods then ended, as well as the Bank's vision, strategic objectives, and performance targets, and may not be appropriate for other purposes. These forward-looking statements are based on current expectations, estimates, assumptions and intentions that the Bank deems reasonable as at the date thereof and are subject to inherent uncertainty and risks, many of which are beyond the Bank's control. There is a strong possibility that the Bank's express or implied predictions, forecasts, projections, expectations, or conclusions will not prove to be accurate, that its assumptions will not be confirmed, and that its vision, strategic objectives, and performance targets will not be achieved. The Bank cautions investors that these forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from these statements due to a number of factors. Therefore, the Bank recommends that readers not place undue reliance on these forward-looking statements, as a number of factors could cause actual results to differ materially from the expectations, estimates, or intentions expressed in these forward-looking statements. Investors and others who rely on the Bank's forward-looking statements should carefully consider the factors listed below as well as other uncertainties and potential events and the risks they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

 

Assumptions about the performance of the Canadian and U.S. economies in 2025, in particular in the context of increased geopolitical uncertainty, and how that performance will affect the Bank's business are among the factors considered in setting the Bank's strategic priorities and objectives, including allowances for credit losses. These assumptions appear in the 2024 Annual Report in the Economic Review and Outlook section and, for each business segment, in the Economic and Market Review sections of the 2024 Annual Report and the Economic Review and Outlook section of this document, and may be updated in the quarterly reports to shareholders filed thereafter.

 

The forward-looking statements made in this document are based on a number of assumptions and their future outcome is subject to a variety of risk factors, many of which are beyond the Bank's control and the impacts of which are difficult to predict. These risk factors include, among others, the general economic environment and business and financial market conditions in Canada, the United States, and the other countries where the Bank operates, including recession risk; geopolitical and sociopolitical uncertainty; the measures affecting trade relations between Canada and its partners, including the imposition of tariffs and any measures taken in response to such tariffs, as well as the possible impacts on our clients, our operations and, more generally, the economy; exchange rate and interest rate fluctuations; inflation; global supply chain disruptions; higher funding costs and greater market volatility; changes to fiscal, monetary, and other public policies; regulatory oversight and changes to regulations that affect the Bank's business; the Bank's ability to successfully integrate CWB and the undisclosed costs or liability associated with the acquisition; climate change, including physical risks and risks related to the transition to a low-carbon economy; the Bank's ability to meet stakeholder expectations on environmental and social issues, the need for active and continued stakeholder engagement; the availability of comprehensive and high-quality information from customers and other third parties, including greenhouse gas emissions; the ability of the Bank to develop indicators to effectively monitor progress; the development and deployment of new technologies and sustainable products; the ability of the Bank to identify climate-related opportunities as well as to assess and manage climate-related risks; significant changes in consumer behaviour; the housing situation, real estate market, and household indebtedness in Canada; the Bank's ability to achieve its key short-term priorities and long-term strategies; the timely development and launch of new products and services; the ability of the Bank to recruit and retain key personnel; technological innovation, including open banking and the use of artificial intelligence; heightened competition from established companies and from competitors offering non-traditional services; model risk; changes in the performance and creditworthiness of the Bank's clients and counterparties; the Bank's exposure to significant regulatory issues or litigation; changes made to the accounting policies used by the Bank to report its financial position, including the uncertainty related to assumptions and significant accounting estimates; changes to tax legislation in the countries where the Bank operates; changes to capital and liquidity guidelines as well as to the instructions related to the presentation and interpretation thereof; changes to the credit ratings assigned to the Bank by financial and extra-financial rating agencies; potential disruptions to key suppliers of goods and services to the Bank; third-party risk, including failure by third parties to fulfil their obligations to the Bank; the potential impacts of disruptions to the Bank's information technology systems due to cyberattacks and theft or disclosure of data, including personal information and identity theft; the risk of fraudulent activity; and possible impacts of major events on the economy, market conditions, or the Bank's outlook, including international conflicts, natural disasters, public health crises, and the measures taken in response to these events; and the ability of the Bank to anticipate and successfully manage risks arising from all of the foregoing factors.

 

The foregoing list of risk factors is not exhaustive, and the forward-looking statements made in this document are also subject to credit risk, market risk, liquidity and funding risk, operational risk, regulatory compliance risk, reputation risk, strategic risk, and social and environmental risk as well as certain emerging risks or risks deemed significant. Additional information about these factors is provided in the Risk Management section of the

2024 Annual Report as well as in the Risk Management section of this Report to Shareholders for the second quarter of 2025 and may be updated in the quarterly reports to shareholders filed thereafter.

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, including goodwill, assigns $45.4 billion to assets 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.

 

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

 

The following table present the impacts of the CWB acquisition on the results of Personal and Commercial Banking, the main segment impacted, and on the Bank's consolidated results.

 

(millions of Canadian dollars)
Quarter ended April 30, 2025
Six months ended April 30, 2025
Results
Personal and Commercial
Consolidated results
Results
Personal and Commercial
Consolidated results
Excluding CWB
CWB
impact(1)
Total
Excluding CWB
CWB
impact(1)
Total
Excluding CWB
CWB
impact(1)
Total
Excluding CWB
CWB
impact(1)
Total
Operating results
Net interest income
921
225
1,146
954
251
1,205
1,865
225
2,090
1,926
251
2,177
Non-interest income
255
15
270
2,398
47
2,445
515
15
530
4,609
47
4,656
Total revenues
1,176
240
1,416
3,352
298
3,650
2,380
240
2,620
6,535
298
6,833
Non-interest expenses
651
153
804
1,719
223
1,942
1,292
153
1,445
3,365
223
3,588
Income before provisions for credit
losses and income taxes
525
87
612
1,633
75
1,708
1,088
87
1,175
3,170
75
3,245
Provisions for credit losses
152
274
426
271
274
545
314
274
588
525
274
799
Income before income taxes (recovery)
373
(187)
186
1,362
(199)
1,163
774
(187)
587
2,645
(199)
2,446
Income taxes (recovery)
102
(48)
54
319
(52)
267
213
(48)
165
605
(52)
553
Net income
271
(139)
132
1,043
(147)
896
561
(139)
422
2,040
(147)
1,893
Operating results - Adjusted(2)
Net interest income - Adjusted
921
225
1,146
954
251
1,205
1,865
225
2,090
1,954
251
2,205
Non-interest income - Adjusted
255
15
270
2,398
47
2,445
515
15
530
4,628
47
4,675
Total revenues - Adjusted
1,176
240
1,416
3,352
298
3,650
2,380
240
2,620
6,582
298
6,880
Non-interest expenses - Adjusted
651
129
780
1,645
155
1,800
1,292
129
1,421
3,265
155
3,420
Income before provisions for credit
losses and income taxes - Adjusted
525
111
636
1,707
143
1,850
1,088
111
1,199
3,317
143
3,460
Provisions for credit losses - Adjusted
152
44
196
271
44
315
314
44
358
525
44
569
Income before income taxes
(recovery) - Adjusted
373
67
440
1,436
99
1,535
774
67
841
2,792
99
2,891
Income taxes (recovery) - Adjusted
102
22
124
340
29
369
213
22
235
646
29
675
Net income - Adjusted
271
45
316
1,096
70
1,166
561
45
606
2,146
70
2,216


 

(1)       Refers to the impact of the CWB transaction on the results.

(2)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures.

 

 

Economic Review and Outlook

 

Global Economy

The most significant trend last month was undoubtedly the easing of the trade war between Washington and its trading partners. Although any form of appeasement is clearly positive for the global economy, we believe that the current enthusiasm is somewhat exaggerated. After all, not since 1939 has the average tariff imposed by Washington been this high, and even after the recent reduction. While it is true that tariffs could continue to fall as new agreements are reached, we believe that a return to the status quo of recent years is highly unlikely. We would also point out that most of the agreements signed by Washington have an expiry date (90 days in most cases). This means that higher tariffs could always be reintroduced if negotiations to establish a new trade framework between the United States and its main trading partners were to end in deadlock. These risks, combined with a less favourable trade environment, should continue to hamper global growth in the coming months. Although the actions taken by central banks and governments have been limited, they should help to limit the damage.

 

In the United States, the gross domestic product (GDP) contracted slightly in the first quarter due to a sharp increase in imports, a phenomenon that is expected to reverse in the second quarter. A desire to act ahead of any tariffs being imposed not only boosted imports but also private domestic demand, which rose by 3% in the first quarter on an annualized basis. The labour market remains resilient for now. However, signs of weakness are apparent, including an increase in the number of long-term unemployed and a drop in job postings. Although recently the protectionist measures have sharply reduced, they are likely to keep inflation above the central bank's target for some time to come. Perhaps this will not be enough to prevent a rate cut this year, but enough to prompt the central bank to adopt a cautious approach. Higher-than-expected policy rates, combined with trade retaliation and boycotts by other countries (affecting, in particular, the tourism sector), could slow growth in the second half of the year. All this should result in growth of 1.5%(1) this year and 1.1%(1) in 2026.

 

Canadian Economy

Even though the average effective tariff imposed by the Americans on Canadian exports is probably only around 6%, taking into account that products compliant with the United States-Canada-Mexico Agreement (USMCA) are not affected, the risk of escalation and the resulting lack of visibility are paralyzing Canadian businesses. And, even though just a few months ago, investment intentions were pointing to a recovery in 2025, the situation has now changed dramatically, with several projects put on hold. Uncertainty is also beginning to affect the labour market, which is showing signs of weakness. The unemployment rate has risen by 0.3 of a percentage point in the last two months, while private sector employment has fallen by at least 75,000. A decline of this magnitude rivals that experienced during the pandemic lockdown and the worst of the 2008-2009 financial crisis. For now, Ontario has been the province hardest hit by the current situation, with 62,000 jobs lost since February, including 30,000 in the manufacturing sector. Against this backdrop, consumer confidence has fallen to historically low levels, and the real estate data already show that buyers are reluctant to make commitments. This points to weak consumption in the coming months as fears of job losses intensify. With the dollar still resilient, inflation generally under control and retaliatory tariff measures relatively limited, the Bank of Canada should be able to lower its key interest rate to 2.0% by the end of the year. This should be sufficient for now, as the federal government also intends to step in to limit the economic damage. Against a backdrop of very weak population growth, we forecast GDP growth of only 1.1%(1) in 2025, with a slight contraction in the economy in the second and third quarters and an average unemployment rate for this year of 7.1%(1) (6.9%(1) in April, peaking at 7.4%(1) in the fourth quarter). GDP growth of 0.9% (1) is expected for 2026.

 

Quebec Economy

Despite some headwinds, Quebec's economy is well positioned to face any new challenges as they arise. Quebecers have been less affected by the fight against inflation since 2022 and the resulting restrictive monetary policy because they are less indebted than consumers elsewhere. Quebec's unemployment rate was 6.0% in April, the third lowest among Canada's provinces and 0.9 below the national average. Survey data also indicate that Quebec consumers are holding up better than elsewhere, as the province has the highest share of households that consider their financial situation to be good. Quebec households have a higher savings rate, which could enable them to better withstand the headwinds ahead. Despite the current uncertainty, we also note greater resilience in the Quebec real estate market compared to that of Ontario and British Columbia in particular. We continue to believe that Quebec's GDP could prove relatively resilient compared to the rest of the country due to its solid fundamentals. Like other provinces, Quebec is vulnerable to U.S. protectionism. Non-energy exports to the United States account for 14.2% of GDP, slightly higher than the national average of 13.0%. However, the Quebec economy is less vulnerable to sectoral shocks. In fact, Quebec is the fourth most diversified jurisdiction in North America, after Manitoba, Pennsylvania and Texas. In terms of exports, Quebec is the most diversified province. Our growth forecast for the province is 0.9%(1) in 2025, following on 1.4% growth in 2024. With population growth lower than in the rest of the country, Quebec should continue to have one of the lowest unemployment rates in the federation on average in 2025, at 6.0%(1) (compared to 7.1%(1) for Canada).

 

 

 

(1)       Forecasts of real GDP or unemployment rate, National Bank Financial's Economics and Strategy group

Financial Reporting Method                

 

The Bank's Consolidated Financial Statements are prepared in accordance with IFRS, as issued by the IASB and represent Canadian GAAP.

 

Effective November 1, 2024, the Bank discontinued taxable equivalent basis (TEB) reporting for revenues and income taxes. Using the TEB method is less relevant since the introduction of the Pillar 2 rules (global minimum tax) during the first quarter of 2025 and Bill C-59 in relation to the taxation of certain Canadian dividends during fiscal 2024. This change has no impact on net income previously disclosed. Data for the 2024 periods were adjusted to reflect this change.

 

On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and six-month period ended April 30, 2025 in the Personal and Commercial, Wealth Management, and Financial Markets segments and in the Other heading of segment disclosures. For additional information on the impact of CWB acquisition on the Bank's results, see the Acquisition section.

 

Non-GAAP and Other Financial Measures

 

The Bank uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance with GAAP. Regulation 52-112 Respecting Non-GAAP and Other Financial Measures Disclosure (Regulation 52-112) prescribes disclosure requirements that apply to the following measures used by the Bank:

 

·     non-GAAP financial measures;

·     non-GAAP ratios;

·     supplementary financial measures;

·     capital management measures.

 

Non-GAAP Financial Measures

The Bank uses non-GAAP financial measures that do not have standardized meanings under GAAP and that therefore may not be comparable to similar measures used by other companies. Presenting non-GAAP financial measures helps readers to better understand how management analyzes results, shows the impacts of specified items on the results of the reported periods, and allows readers to better assess results without the specified items if they consider such items not to be reflective of the underlying performance of the Bank's operations.

 

The key non-GAAP financial measures used by the Bank to analyze its results are described below, and a quantitative reconciliation of these measures is presented in the tables in the Reconciliation of Non-GAAP Financial Measures section on pages 10 to 12 and in the Consolidated Results table on page 14. It should be noted that, for the quarter and the six-month period ended April 30, 2025, as part of the CWB transaction, several acquisition-related items have been excluded from results since, in the opinion of management, they do not reflect the underlying performance of the Bank's operations, in particular, acquisition and integration charges, amortization of intangible assets related to the CWB acquisition and initial provisions for credit losses on non-impaired loans acquired from CWB. In addition, for the six-month period ended April 30, 2025, the amortization of subscription receipt issuance costs, the gain resulting from the remeasurement at fair value of the CWB common shares previously held by the Bank, and the loss resulting from the impact of managing fair value changes were excluded from the results. For the quarter and the six-month period ended April 30, 2024, no specified items had been excluded from results.

 

Adjusted Net Interest Income

This item represents net interest income excluding specified items. Specified items are excluded so that net interest income can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Non-Interest Income

This item represents non-interest income excluding specified items. Specified items are excluded so that non‑interest income can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Total Revenues

This item represents total revenues excluding specified items. It consists of adjusted net interest income and adjusted non-interest income. Specified items are excluded so that total revenues can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Non-Interest Expenses

This item represents non-interest expenses excluding specified items. Specified items are excluded so that non-interest expenses can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Income Before Provisions for Credit Losses and Income Taxes

This item represents income before provisions for credit losses and income taxes excluding specified items. It also represents the difference between adjusted total revenues and adjusted non-interest expenses. Specified items are excluded so that income before provisions for credit losses and income taxes can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Provisions for Credit Losses

This item represents provisions for credit losses excluding specified items. Specified items are excluded so that provisions for credit losses can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Income Taxes (Recovery)

This item represents income taxes excluding income taxes (recovery) on specified items.

 

Adjusted Net Income

This item represents net income excluding specified items. Specified items are excluded so that net income can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Net Income Attributable to Common Shareholders

This item represents net income attributable to common shareholders excluding specified items. Specified items are excluded so that net income attributable to common shareholders can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Basic Earnings Per Share

This item represents basic earnings per share excluding specified items. Specified items are excluded so that basic earnings per share can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Diluted Earnings Per Share

This item represents diluted earnings per share excluding specified items. Specified items are excluded so that diluted earnings per share can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

The Bank also uses the below-described measures to assess its results, and a quantitative reconciliation of these non-GAAP financial measures is presented on page 7 of the document entitled Supplementary Financial Information - Second Quarter 2025 available on the Bank's website at nbc.ca.

 

Adjusted Non-Trading Net Interest Income

This item represents non-trading net interest income excluding specified items. It includes revenues related to financial assets and financial liabilities associated with non-trading activities, net of interest expenses and interest income related to the financing of these financial assets and financial liabilities, and is used to calculate adjusted non-trading net interest margin. Specified items are excluded so that adjusted non-trading net interest income can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Net Interest Income Related to Trading Activities

This item represents net interest income related to trading activities which comprises dividends related to financial assets and liabilities associated with trading activities and certain interest income related to the financing of these financial assets and liabilities, net of interest expenses.

 

 

Non-Interest Income Related to Trading Activities

This item represents non-interest income related to trading activities which consists of realized and unrealized gains and losses as well as interest income on securities measured at fair value through profit or loss, income from held-for-trading derivative financial instruments, changes in the fair value of loans at fair value through profit or loss, changes in the fair value of financial instruments designated at fair value through profit or loss, realized and unrealized gains and losses as well as interest expense on obligations related to securities sold short, certain commission income as well as other trading activity revenues, and any applicable transaction costs.

 

Trading Activity Revenues

This item represents trading activity revenues which comprise dividends related to financial assets and financial liabilities associated with trading activities; certain interest income related to the financing of these financial assets and liabilities, net of interest expenses; realized and unrealized gains and losses as well as interest income on securities measured at fair value through profit or loss; income from held-for-trading derivative financial instruments; changes in the fair value of loans at fair value through profit or loss; changes in the fair value of financial instruments designated at fair value through profit or loss; realized and unrealized gains and losses as well as interest expense on obligations related to securities sold short; certain commission income as well as other trading activity revenues, and any applicable transaction costs.

 

Non-GAAP Ratios

The Bank uses non-GAAP ratios that do not have standardized meanings under GAAP and that may therefore not be comparable to similar measures used by other companies. A non-GAAP ratio is a ratio in which at least one component is a non-GAAP financial measure. The Bank uses non-GAAP ratios to present aspects of its financial performance or financial position.

 

The key non-GAAP ratios used by the Bank are described below.

 

Adjusted Return on Common Shareholders' Equity (ROE)

This item represents ROE excluding specified items. It is adjusted net income attributable to common shareholders expressed as a percentage of average equity attributable to common shareholders. It is a general measure of the Bank's efficiency in using equity. Specified items are excluded so that ROE can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Dividend Payout Ratio

This item represents the dividend payout ratio excluding specified items. It is dividends on common shares (per share amount) expressed as a percentage of adjusted basic earnings per share. This ratio is a measure of the proportion of earnings that is paid out to shareholders in the form of dividends. Specified items are excluded so that the dividend payout ratio can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Operating Leverage

This item represents operating leverage excluding specified items. It is the difference between the growth rate of adjusted total revenues and the growth rate of adjusted non-interest expenses, and it measures the sensitivity of the Bank's results to changes in its revenues. Specified items are excluded so that the operating leverage can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Efficiency Ratio

This item represents the efficiency ratio excluding specified items. The ratio represents adjusted non-interest expenses expressed as a percentage of adjusted total revenues. It measures the efficiency of the Bank's operations. Specified items are excluded so that the efficiency ratio can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Adjusted Net Interest Margin, Non-Trading

This item represents the non-trading net interest margin excluding specified items. It is calculated by dividing adjusted non-trading net interest income by average non-trading interest-bearing assets. This ratio is a measure of the profitability of non-trading activities. Specified items are excluded so that the net interest margin, non-trading can be better evaluated by excluding items that management believes do not reflect the underlying financial performance of the Bank's operations.

 

Supplementary Financial Measures

A supplementary financial measure is a financial measure that: (a) is not reported in the Bank's Consolidated Financial Statements, and (b) is, or is intended to be, reported periodically to represent historical or expected financial performance, financial position, or cash flows. The composition of these supplementary financial measures is presented in table footnotes or in the Glossary section on pages 51 to 54 of this MD&A.

Capital Management Measures

The financial reporting framework used to prepare the financial statements requires disclosure that helps readers assess the Bank's capital management objectives, policies, and processes, as set out in IFRS in IAS 1 - Presentation of Financial Statements. The Bank has its own methods for managing capital and liquidity, and IFRS do not prescribe any particular calculation method. These measures are calculated using various guidelines and advisories issued by the Office of the Superintendent of Financial Institutions (OSFI), which are based on the standards, recommendations, and best practices of the Basel Committee on Banking Supervision (BCBS), as presented in the following table.

 

OSFI guideline or advisory
Measure
Capital Adequacy Requirements
Common Equity Tier 1 (CET1) capital ratio
Tier 1 capital ratio
Total capital ratio
CET1 capital
Tier 1 capital
Tier 2 capital
Total capital
Risk-weighted assets
Maximum credit risk exposure under the Basel asset classes
Leverage Requirements
Leverage ratio
Total exposure
Total Loss Absorbing Capacity (TLAC)
Key indicators - TLAC requirements
Available TLAC
TLAC ratio
TLAC leverage ratio
Liquidity Adequacy Requirements
Liquid asset portfolio
Encumbered assets and unencumbered assets
Liquidity coverage ratio (LCR)
High-quality liquid assets (HQLA)
Cash inflows/outflows and net cash outflows
Net stable funding ratio (NSFR)
Available stable funding items
Required stable funding items
Global Systemically Important Banks (G-SIBs) -
Public Disclosure Requirements
G-SIB indicators

 

 

 

Reconciliation of Non-GAAP Financial Measures

 

Presentation of Results - Adjusted

(millions of Canadian dollars)
Quarter ended April 30
2025(1)
2024(2)
Personal and Commercial
Wealth Management
Financial Markets
USSF&I
Other
Total
Total
Operating results
Net interest income
1,146
230
(505)
356
(22)
1,205
635
Non-interest income
270
561
1,606
34
(26)
2,445
2,115
Total revenues
1,416
791
1,101
390
(48)
3,650
2,750
Non-interest expenses
804
476
403
117
142
1,942
1,472
Income before provisions for credit losses and income taxes
612
315
698
273
(190)
1,708
1,278
Provisions for credit losses
426
(1)
64
59
(3)
545
138
Income before income taxes (recovery)
186
316
634
214
(187)
1,163
1,140
Income taxes (recovery)
54
84
133
45
(49)
267
234
Net income
132
232
501
169
(138)
896
906
Items that have an impact on results
Non-interest expenses
CWB acquisition and integration charges(3)
1
3
−
−
114
118
−
Amortization of intangible assets related to the CWB acquisition(4)
23
1
−
−
−
24
−
Impact on non-interest expenses
24
4
−
−
114
142
−
Provisions for credit losses
Initial provisions for credit losses on non-impaired loans acquired from
CWB(5)
230
−
−
−
−
230
−
Impact on provisions for credit losses
230
−
−
−
−
230
−
Income taxes
Income taxes on the CWB acquisition and integration charges(3)
−
(1)
−
−
(31)
(32)
−
Income taxes on the amortization of intangible assets related to the
CWB acquisition(4)
(6)
−
−
−
−
(6)
−
Income taxes on initial provisions for credit losses on non-impaired
loans acquired from CWB(5)
(64)
−
−
−
−
(64)
−
Impact on income taxes
(70)
(1)
−
−
(31)
(102)
−
Impact on net income
(184)
(3)
−
−
(83)
(270)
−
Operating results - Adjusted
Net interest income - Adjusted
1,146
230
(505)
356
(22)
1,205
635
Non-interest income - Adjusted
270
561
1,606
34
(26)
2,445
2,115
Total revenues - Adjusted
1,416
791
1,101
390
(48)
3,650
2,750
Non-interest expenses - Adjusted
780
472
403
117
28
1,800
1,472
Income before provisions for credit losses and income taxes - Adjusted
636
319
698
273
(76)
1,850
1,278
Provisions for credit losses - Adjusted
196
(1)
64
59
(3)
315
138
Income before income taxes (recovery) - Adjusted
440
320
634
214
(73)
1,535
1,140
Income taxes (recovery) - Adjusted
124
85
133
45
(18)
369
234
Net income - Adjusted
316
235
501
169
(55)
1,166
906


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

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

(3)       During the quarter ended April 30, 2025, the Bank recorded acquisition and integration charges of $118 million ($86 million net of income taxes) related to the CWB transaction.

(4)       During the quarter ended April 30, 2025, the Bank recorded an amount of $24 million ($18 million net of income taxes) to reflect the amortization of intangible assets related to the CWB acquisition.

(5)       During the quarter ended April 30, 2025, the Bank recorded initial provisions for credit losses on non-impaired loans acquired from CWB of $230 million ($166 million net of income taxes).

 

(millions of Canadian dollars)
Six months ended April 30
2025(1)
2024(2)
Personal and Commercial
Wealth Management
Financial Markets
USSF&I
Other
Total
Total
Operating results
Net interest income
2,090
457
(1,014)
726
(82)
2,177
1,386
Non-interest income
530
1,110
3,022
69
(75)
4,656
4,074
Total revenues
2,620
1,567
2,008
795
(157)
6,833
5,460
Non-interest expenses
1,445
917
770
240
216
3,588
2,921
Income before provisions for credit losses and income taxes
1,175
650
1,238
555
(373)
3,245
2,539
Provisions for credit losses
588
1
100
110
−
799
258
Income before income taxes (recovery)
587
649
1,138
445
(373)
2,446
2,281
Income taxes (recovery)
165
175
220
93
(100)
553
453
Net income
422
474
918
352
(273)
1,893
1,828
Items that have an impact on results
Net interest income
Amortization of the subscription receipt issuance costs(3)
−
−
−
−
(28)
(28)
−
Impact on net interest income
−
−
−
−
(28)
(28)
−
Non-interest income
Gain on the fair value remeasurement of an equity interest(4)
−
−
−
−
4
4
−
Management of the fair value changes related to the CWB acquisition(5)
−
−
−
−
(23)
(23)
−
Impact on non-interest income
−
−
−
−
(19)
(19)
−
Non-interest expenses
CWB acquisition and integration charges(6)
1
3
−
−
140
144
−
Amortization of intangible assets related to the CWB acquisition(7)
23
1
−
−
−
24
−
Impact on non-interest expenses
24
4
−
−
140
168
−
Provisions for credit losses
Initial provisions for credit losses on non-impaired loans acquired from
CWB(8)
230
−
−
−
−
230
−
Impact on provisions for credit losses
230
−
−
−
−
230
−
Income taxes
Income taxes on the amortization of the subscription receipt issuance
costs(3)
−
−
−
−
(8)
(8)
−
Income taxes on the gain on the fair value remeasurement
of an equity interest(4)
−
−
−
−
1
1
−
Income taxes on management of the fair value changes related to the
CWB acquisition(5)
−
−
−
−
(6)
(6)
−
Income taxes on the CWB acquisition and integration charges(6)
−
(1)
−
−
(38)
(39)
−
Income taxes on the amortization of intangible assets related to the
CWB acquisition(7)
(6)
−
−
−
−
(6)
−
Income taxes on initial provisions for credit losses on non-
impaired loans acquired from CWB(8)
(64)
−
−
−
−
(64)
−
Impact on income taxes
(70)
(1)
−
−
(51)
(122)
−
Impact on net income
(184)
(3)
−
−
(136)
(323)
−
Operating results-Adjusted
Net interest income - Adjusted
2,090
457
(1,014)
726
(54)
2,205
1,386
Non-interest income - Adjusted
530
1,110
3,022
69
(56)
4,675
4,074
Total revenues - Adjusted
2,620
1,567
2,008
795
(110)
6,880
5,460
Non-interest expenses - Adjusted
1,421
913
770
240
76
3,420
2,921
Income before provisions for credit losses and income taxes - Adjusted
1,199
654
1,238
555
(186)
3,460
2,539
Provisions for credit losses - Adjusted
358
1
100
110
−
569
258
Income before income taxes (recovery) - Adjusted
841
653
1,138
445
(186)
2,891
2,281
Income taxes (recovery) - Adjusted
235
176
220
93
(49)
675
453
Net income - Adjusted
606
477
918
352
(137)
2,216
1,828


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

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

(3)       During the six-month period ended April 30, 2025, the Bank recorded an amount of $28 million ($20 million net of income taxes) to reflect the amortization of the issuance costs of the subscription receipts issued as part of the agreement to acquire CWB (for additional information, see Notes 8 and 10 to the Consolidated Financial Statements).

(4)       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.

(5)       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.

(6)       During the six-month period ended April 30, 2025, the Bank recorded acquisition and integration charges of $144 million ($105 million net of income taxes) related to the CWB transaction.

(7)       During the six-month period ended April 30, 2025, the Bank recorded an amount of $24 million ($18 million net of income taxes) to reflect the amortization of intangible assets related to the CWB acquisition.

(8)       During the six-month period ended April 30, 2025, the Bank recorded initial provisions for credit losses on non-impaired loans acquired from CWB of $230 million ($166 million net of income taxes).

 

Presentation of Basic and Diluted Earnings Per Share - Adjusted

 

(Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(1)
2024
% Change
2025(1)
2024
% Change
Basic earnings per share
$
2.19
$
2.56
(14)
$
4.96
$
5.18
(4)
Amortization of the subscription receipt issuance costs(2)
−
−
0.05
−
Gain on the fair value remeasurement of an equity interest(3)
−
−
(0.01)
−
Management of the fair value changes related to the CWB acquisition(4)
−
−
0.05
−
CWB acquisition and integration charges(5)
0.22
−
0.29
−
Amortization of intangible assets related to the CWB acquisition(6)
0.04
−
0.05
−
Initial provisions for credit losses on non-impaired loans acquired from
CWB(7)
0.43
−
0.45
−
Basic earnings per share - Adjusted
$
2.88
$
2.56
13
$
5.84
$
5.18
13
Diluted earnings per share
$
2.17
$
2.54
(15)
$
4.91
$
5.13
(4)
Amortization of the subscription receipt issuance costs(2)
−
−
0.05
−
Gain on the fair value remeasurement of an equity interest(3)
−
−
(0.01)
−
Management of the fair value changes related to the CWB acquisition(4)
−
−
0.05
−
CWB acquisition and integration charges(5)
0.22
−
0.28
−
Amortization of intangible assets related to the CWB acquisition(6)
0.04
−
0.05
−
Initial provisions for credit losses on non-impaired loans acquired from
CWB(7)
0.42
−
0.45
−
Diluted earnings per share - Adjusted
$
2.85
$
2.54
12
$
5.78
$
5.13
13


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       During the six-month period ended April 30, 2025, the Bank recorded an amount of $28 million ($20 million net of income taxes) to reflect the amortization of the issuance costs of the subscription receipts issued as part of the agreement to acquire CWB (for additional information, see Notes 8 and 10 to the Consolidated Financial Statements).

(3)       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.

(4)       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.

(5)       During the quarter ended April 30, 2025, the Bank recorded acquisition and integration charges of $118 million ($86 million net of income taxes) related to the CWB transaction. For the

six-month period ended April 30, 2025, these charges were $144 million ($105 million net of income taxes).

(6)       During the quarter and the six-month period ended April 30, 2025, the Bank recorded an amount of $24 million ($18 million net of income taxes) to reflect the amortization of intangible assets related to the CWB acquisition.

(7)       During the quarter and the six-month period ended April 30, 2025, the Bank recorded initial provisions for credit losses on non-impaired loans acquired from CWB of $230 million ($166 million net of income taxes).

Highlights

 

 

(millions of Canadian dollars, except per share amounts)
Quarter ended April 30
Six months ended April 30
2025(1)
2024(2)
% Change
2025(1)
2024(2)
% Change
Operating results
Total revenues
3,650
2,750
33
6,833
5,460
25
Incomebeforeprovisionsforcreditlossesand incometaxes
1,708
1,278
34
3,245
2,539
28
Net income
896
906
(1)
1,893
1,828
4
Return on common shareholders' equity(3)
11.9
%
16.9
%
14.0
%
17.0
%
Operating leverage(3)
0.8
%
4.3
%
2.3
%
2.9
%
Efficiency ratio(3)
53.2
%
53.5
%
52.5
%
53.5
%
Earnings per share
Basic
$
2.19
$
2.56
(14)
$
4.96
$
5.18
(4)
Diluted
$
2.17
$
2.54
(15)
$
4.91
$
5.13
(4)
Operating results - Adjusted(4)
Total revenues - Adjusted(4)
3,650
2,750
33
6,880
5,460
26
Income before provisions for credit losses
and income taxes - Adjusted(4)
1,850
1,278
45
3,460
2,539
36
Net income - Adjusted(4)
1,166
906
29
2,216
1,828
21
Return on common shareholders' equity - Adjusted(5)
15.6
%
16.9
%
16.5
%
17.0
%
Operating leverage - Adjusted(5)
10.4
%
4.3
%
8.9
%
2.9
%
Efficiency ratio - Adjusted(5)
49.3
%
53.5
%
49.7
%
53.5
%
Diluted earnings per share - Adjusted(4)
$
2.85
$
2.54
12
$
5.78
$
5.13
13
Common share information
Dividends declared
$
1.14
$
1.06
8
$
2.28
$
2.12
8
Book value(3)
$
76.13
$
62.28
$
76.13
$
62.28
Share price
High
$
127.44
$
114.68
$
140.76
$
114.68
Low
$
107.01
$
101.24
$
107.01
$
86.50
Close
$
121.08
$
110.54
$
121.08
$
110.54
Number of common shares (thousands)
391,322
340,056
391,322
340,056
Market capitalization
47,381
37,590
47,381
37,590


(millions of Canadian dollars)
As at
April 30,
2025(1)
As at
October 31,
2024
% Change
Balance sheet and off-balance-sheet
Total assets
536,194
462,226
16
Loans, net of allowances
285,728
243,032
18
Deposits
387,974
333,545
16
Equity attributable to common shareholders
29,790
22,400
33
Assets under administration(3)
825,523
766,082
8
Assets under management(3)
170,469
155,900
9
Regulatory ratios under Basel III(6)
Capital ratios
Common Equity Tier 1 (CET1)
13.4
%
13.7
%
Tier 1
15.1
%
15.9
%
Total
16.9
%
17.0
%
Leverage ratio
4.7
%
4.4
%
TLAC ratio(6)
28.2
%
31.2
%
TLAC leverage ratio(6)
8.8
%
8.6
%
Liquidity coverage ratio (LCR)(6)
166
%
150
%
Net stable funding ratio (NSFR)(6)
127
%
122
%
Other information
Number of employees - Worldwide (full-time equivalent)
32,371
29,196
11
Number of branches in Canada
395
368
7
Number of banking machines in Canada
965
940
3


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

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

(3)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(4)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures.

(5)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP ratios.

(6)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

 

 

 

Financial Analysis

 

Consolidated Results

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(1)
2024(2)
% Change
2025(1)
2024(2)
% Change
Operating results
Net interest income
1,205
635
90
2,177
1,386
57
Non-interest income
2,445
2,115
16
4,656
4,074
14
Total revenues
3,650
2,750
33
6,833
5,460
25
Non-interest expenses
1,942
1,472
32
3,588
2,921
23
Income before provisions for credit losses and income taxes
1,708
1,278
34
3,245
2,539
28
Provisions for credit losses
545
138
799
258
Income before income taxes
1,163
1,140
2
2,446
2,281
7
Income taxes
267
234
14
553
453
22
Net income
896
906
(1)
1,893
1,828
4
Diluted earnings per share (dollars)
2.17
2.54
(15)
4.91
5.13
(4)
Specified items(3)
Amortization of the subscription receipt issuance costs
−
−
(28)
−
Gain on the fair value remeasurement of an equity interest
−
−
4
−
Management of the fair value changes related to the CWB acquisition
acquisition
−
−
(23)
−
CWB acquisition and integration charges
(118)
−
(144)
−
Amortization of intangible assets related to the CWB acquisition
(24)
−
(24)
−
Initial provisions for credit losses on non-impaired loans acquired
from CWB
(230)
−
(230)
−
Specified items before income taxes
(372)
−
(445)
−
Income taxes related to specified items
(102)
−
(122)
−
Specified items after income taxes
(270)
−
(323)
−
Operating results - Adjusted(3)
Net interest income - Adjusted
1,205
635
90
2,205
1,386
59
Non-interest income - Adjusted
2,445
2,115
16
4,675
4,074
15
Total revenues - Adjusted
3,650
2,750
33
6,880
5,460
26
Non-interest expenses - Adjusted
1,800
1,472
22
3,420
2,921
17
Income before provisions for credit losses and income taxes - Adjusted
1,850
1,278
45
3,460
2,539
36
Provisions for credit losses - Adjusted
315
138
569
258
Income before income taxes - Adjusted
1,535
1,140
35
2,891
2,281
27
Income taxes - Adjusted
369
234
58
675
453
49
Net income - Adjusted
1,166
906
29
2,216
1,828
21
Diluted earnings per share - Adjusted (dollars)
2.85
2.54
12
5.78
5.13
13
Average assets(4)
551,432
455,036
21
519,296
448,783
16
Average loans(4)(5)
284,845
231,691
23
264,442
229,909
15
Average deposits(4)
399,064
308,488
29
373,936
304,974
23
Operating leverage(6)
0.8
%
4.3
%
2.3
%
2.9
%
Operating leverage - Adjusted(7)
10.4
%
4.3
%
8.9
%
2.9
%
Efficiency ratio(6)
53.2
%
53.5
%
52.5
%
53.5
%
Efficiency ratio - Adjusted(7)
49.3
%
53.5
%
49.7
%
53.5
%


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

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

(3)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures.

(4)       Represents an average of the daily balances for the period.

(5)       Including customers' liability under acceptances for the quarter and the six-month period ended April 30, 2024.

(6)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(7)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP ratios.

Financial Results

For the second quarter of 2025, the Bank is reporting net income of $896 million, down 1% from $906 million in the second quarter of 2024 and diluted earnings per share stood at $2.17 compared to $2.54 in the second quarter of 2024. Excluding specified items recorded in the second quarter of 2025, notably the acquisition and integration costs related to the acquisition of CWB as well as the initial provisions for credit losses on non-impaired loans acquired, adjusted net income stood at $1,166 million compared to $906 million in the corresponding quarter of 2024. Adjusted diluted earnings per share stood at $2.85, up 12% from $2.54 in the second quarter of 2024.

 

For the six-month period ended April 30, 2025, the Bank's net income totalled $1,893 million, up 4% from $1,828 million for the corresponding period of 2024. Diluted earnings per share stood at $4.91 for the six-month period ended April 30, 2025 versus $5.13 for the corresponding period in 2024, the decrease being attributable to the common shares issued as part of the acquisition of CWB. Excluding specified items, adjusted net income for the six-month period ended April 30, 2025 totalled $2,216 million, up 21% from $1,828 million for the six-month period ended April 30, 2024, and adjusted diluted earnings per share stood at $5.78, up 13% from $5.13 for the six-month period ended April 30, 2024.

 

Return on common shareholders' equity was 14.0% for the six-month period ended April 30, 2025 compared to 17.0% in the same period of 2024.

 

Total Revenues

For the second quarter of 2025, the Bank's total revenues amounted to $3,650 million, up $900 million or 33% compared to the corresponding quarter of 2024, of which the inclusion of CWB drove a 11% increase. This increase was also due to total revenues in the Financial Markets segment in the second quarter of 2025, which rose 62% compared to the second quarter of 2024 due to a sharp increase in global markets revenues. In the Personal and Commercial segment, total revenues rose due to growth in personal and commercial loans and deposits (including the transition from bankers' acceptances to loans referencing the Canadian Overnight Repo Rate Average (CORRA)), which more than offset the impact of a lower net interest margin, as well as to the increase in internal commission revenues related to the distribution of Wealth Management products. These increases were partly offset by lower credit fees related to the transition of bankers' acceptances to CORRA loans. The growth in total revenues in the Wealth Management segment was mainly attributable to increases in fee-based revenues, notably revenues from investment management and trust service fees as well as mutual fund revenues. This growth was also due to an increase in net interest income and securities brokerage commissions, which was driven by an increase in client activity. In the USSF&I segment, total revenues were up 11% compared to the second quarter of 2024 as a result of revenue growth at the ABA Bank subsidiary, stemming from business growth. Total revenues for the Other heading were higher in the second quarter of 2025 than in the corresponding quarter of 2024, primarily due to a higher contribution from Treasury activities.

 

For the six-month period ended April 30, 2025, the Bank's total revenues amounted to $6,833 million, compared to $5,460 million in the corresponding period of 2024, for an increase of $1,373 million or 25%, of which the inclusion of CWB drove a 5% increase. Total revenues for the Financial Markets segment were up $680 million, or 51%, compared to the same period in 2024, essentially due to significant revenue growth in global markets. In the Personal and Commercial segment, total revenues rose $335 million or 15%, mainly driven by the increase in net interest income arising from growth in loans and deposits (including the transition of bankers' acceptances to loans at the CORRA rate), partly offset by a decrease in the net interest margin, as well as growth in internal commission revenues related to the distribution of Wealth Management products. These increases were partly offset by a decrease in revenues from bankers' acceptances. The increase in total revenues in the Wealth Management segment was mainly due to revenues from fee-based revenues, notably revenues from investment management and trust service fees as well as mutual fund revenues as a result of growth in assets under administration and management. The growth was also attributable to the rise in net interest income and securities brokerage commissions, which was driven by an increase in client activity. In the USSF&I segment, total revenues rose 18% compared to the six-month period ended April 30, 2024, which was driven by revenue growth at the ABA Bank subsidiary stemming from business growth and revenue growth at Credigy. For the six-month period ended April 30, 2025, total income in the Other heading was higher than in the corresponding period of 2024, mainly due to an increase attributable to the inclusion of the CWB's revenues offset by a smaller contribution from Treasury activities and by the unfavourable impact of specified items related to the acquisition of CWB. Excluding specified items recorded in the first six months of 2025, adjusted total revenues amounted to $6,880 million in the six-month period ended April 30, 2025, up 26% from $5,460 million recorded in the corresponding six-month period of 2024.

 

Non-Interest Expenses

For the second quarter of 2025, non-interest expenses stood at $1,942 million, up $470 million or 32% from the corresponding quarter in 2024, of which $223 million was attributable to the inclusion of CWB. Non-interest expenses for the second quarter of 2025 include the following specified items: charges of $118 million related to the acquisition and integration of CWB and $24 million for the amortization of intangible assets related to the acquisition of CWB. Compensation and employee benefits were higher than in the second quarter of 2024 owing to salary growth as well as higher variable compensation related to revenue growth. Occupancy expenses, including depreciation expense, were down compared to the second quarter in 2024, due to a reversal of the provision for property taxes related to the Bank's new head office building in an amount of $22 million. The increase in technology expenses, including depreciation expense, is attributable to investments made to support the Bank's technological evolution and business development plan. Professional fees rose, notably due to expenses related to the acquisition and integration of CWB recorded during the second quarter of 2025. Communication expenses were also higher compared to the corresponding quarter of 2024. The increase in other expenses was mainly due to the amortization of intangible assets related to the acquisition of CWB. Excluding specified items, adjusted non-interest expenses stood at $1,800 million in the second quarter of 2025, up 22% from $1,472 million in the corresponding quarter of 2024.

 

For the six-month period ended April 30, 2025, non-interest expenses totalled $3,588 million, up 23% compared to the corresponding period in 2024, partly due to the inclusion of CWB, which drove an 8% increase. The growth in non-interest expenses was essentially due to the same reasons provided above for the quarter, except for occupancy expenses, which were up compared to the first six months of 2024. This increase in occupancy expenses was due to higher expenses related to the Bank's new head office building and the expansion of the banking network at the ABA Bank subsidiary, partly offset by a reversal, in an amount of $22 million, of the provision for property taxes related to the Bank's new head office. The specified items recorded in non-interest expense in the six-month period ended April 30, 2025 stood at $168 million. Adjusted non-interest expenses were $3,420 million for the first six months of 2025, a 17% increase from $2,921 million for the corresponding period in 2024.

 

Provisions for Credit Losses

For the second quarter of 2025, the Bank recorded provisions for credit losses of $545 million compared to $138 million in the corresponding quarter in 2024. This significant increase was partly due to initial provisions for credit losses of $230 million recorded on non-impaired loans acquired from CWB. The increase in provisions for credit losses on non-impaired loans was also due to the unfavourable impact related to updated macroeconomic scenarios and the recalibration of certain risk parameters, as well as uncertainties surrounding the imposition of new tariffs. These increases were partly offset by the effects of the migration of credit risk, which was more favourable in the second quarter of 2025, as well as by slower loan portfolio growth than in the corresponding quarter of 2024. Provisions for credit losses on impaired loans excluding Credigy's purchased or originated credit-impaired (POCI) loans(1) also rose compared to the second quarter of 2024. This increase was attributable to Personal Banking (including credit card receivables), Commercial Banking (including CWB), the Financial Markets segment as well as the Credigy and ABA Bank subsidiaries. In addition, the Credigy subsidiary recorded provisions for credit losses on POCI loans of $11 million in the second quarter of 2025, due to remeasurements of certain portfolios.

 

For the six-month period ended April 30, 2025, the Bank's provisions for credit losses totalled $799 million compared to $258 million in the corresponding period of 2024. This increase stemmed in part from initial provisions for credit losses of $230 million recorded on non-impaired loans acquired from CWB. In addition, the increase was due to higher provisions for credit losses on non-impaired loans, due to the unfavourable impact related to updated macroeconomic outlooks, the recalibration of certain risk parameters and uncertainties surrounding the imposition of new tariffs. These items were partly offset by the effects of the migration of credit risk, which was more unfavourable in the first six months of 2024, and slower loan portfolio growth than in the corresponding six-month period in 2024. Provisions for credit losses on impaired loans excluding Credigy's POCI loans(1) increased, due to Personal Banking (including credit card receivables), and to Commercial Banking, the Financial Markets segment and the Credigy and ABA Bank subsidiaries. In addition, the Credigy subsidiary recorded provisions for credit losses on POCI loans of $11 million in the first six months of 2025 due to the remeasurement of certain portfolios.

 

Income Taxes

For the second quarter of 2025, income taxes stood at $267 million compared to $234 million in the corresponding quarter in 2024. The 2025 second-quarter effective income tax rate was 23% compared to 21% in the corresponding quarter in 2024. This was mainly due to the impact of applying the Pillar 2 rules (for additional information, see the Income Taxes section).

 

For the six-month period ended April 30, 2025, the effective income tax rate stood at 23% compared to 20% in the corresponding six-month period of 2024. The change in effective income tax rate was due to the same reason as that mentioned for the quarter and a lower level of tax-exempt income for the six-month period ended April 30, 2025.

 

 

(1)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

 

Results by Segment

 

The Bank carries out its activities in four business segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International, which mainly comprises the activities of the Credigy Ltd. (Credigy) and Advanced Bank of Asia Limited (ABA Bank) subsidiaries. Other operating activities, certain specified items, Treasury activities, and the operations of the Flinks Technology Inc. (Flinks) subsidiary are grouped in the Other heading of segment disclosures. Each business segment is distinguished by services offered, type of clientele, and marketing strategy.

 

Personal and Commercial

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(1)
2024
% Change
2025(1)
2024
% Change
Operating results
Net interest income
1,146
870
32
2,090
1,740
20
Non-interest income
270
261
3
530
545
(3)
Total revenues
1,416
1,131
25
2,620
2,285
15
Non-interest expenses
804
612
31
1,445
1,227
18
Income before provisions for credit losses and income taxes
612
519
18
1,175
1,058
11
Provisions for credit losses
426
89
588
160
Income before income taxes
186
430
(57)
587
898
(35)
Income taxes
54
119
(55)
165
248
(33)
Net income
132
311
(58)
422
650
(35)
Less: Specified items after income taxes(2)
(184)
−
(184)
−
Net income - Adjusted(2)
316
311
2
606
650
(7)
Net interest margin(3)
2.30
%
2.36
%
2.29
%
2.36
%
Average interest-bearing assets(3)
204,759
150,072
36
184,214
148,367
24
Average assets(4)
208,658
156,736
33
186,905
155,874
20
Average loans(4)(5)
203,341
155,100
31
183,394
154,185
19
Net impaired loans(3)
1,237
433
1,237
433
Net impaired loans as a % of total loans and acceptances(3)
0.6
%
0.3
%
0.6
%
0.3
%
Average deposits(4)
107,086
88,933
20
99,433
88,942
12
Efficiency ratio(3)
56.8
%
54.1
%
55.2
%
53.7
%
Efficiency ratio - Adjusted(6)
55.1
%
54.1
%
54.2
%
53.7
%


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures. During the quarter and six-month period ended April 30, 2025, the Bank recorded several items related to the acquisition of CWB, including acquisition and integration charges of $1 million net of income taxes, amortization of intangible assets of $17 million net of income taxes and initial provisions for credit losses of $166 million net of income taxes recorded on non-impaired loans acquired from CWB.

(3)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(4)       Represents an average of the daily balances for the period.

(5)       Including customers' liability under acceptances for the quarter and six-month period ended April 30, 2024.

(6)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP ratios.

 

In the Personal and Commercial segment, net income totalled $132 million in the second quarter of 2025, down 58% from $311 million in the corresponding quarter in 2024, primarily due to the increase in provisions for credit losses, in particular initial provisions for credit losses in an amount of $230 million on non-impaired loans acquired from CWB, and to a higher non-interest expense (including specified items recorded in the second quarter of 2025). In addition, income before provisions for credit losses and income taxes stood at $612 million, up 18% from the second quarter of 2024 due to growth in the segment's revenues, as well as the inclusion of CWB's results, which drove a 17% increase. Adjusted net income was $316 million, up 2% from the same quarter in 2024, while adjusted income before provisions for credit losses and income taxes was up 23%. The 32% increase in net interest income in the second quarter of 2025 was driven in part by the inclusion of CWB, which drove a 26% increase, as well as by growth in personal and commercial loans and deposits (including the transition of bankers' acceptances to loans at the CORRA rate), which more than offset the impact of a lower net interest margin. In addition, non-interest income increased by 3% compared to the corresponding quarter in 2024, notably due to the inclusion of CWB's income, partly offset by the transition of bankers' acceptances to loans at the CORRA rate.

 

Personal Banking's total revenues increased by $52 million compared to the second quarter of 2024. This increase was driven by a higher net interest income, attributable to growth in loans and deposits, partly offset by a narrower margin on deposits, as well as to increases in internal commission revenues related to the distribution of Wealth Management products. The increase in Personal Banking's total revenues was also due to the inclusion of CWB in the second quarter of 2025. Commercial Banking's total revenues grew $233 million compared to the corresponding quarter in 2024, mainly due to an increase in net interest income that was driven by loan growth (including the transition of bankers' acceptances to loans at the CORRA rate) and deposit growth, partly offset by a reduction in the net interest margin, and as a result of the inclusion of CWB's revenues. This increase was partly offset by a decline in revenues from bankers' acceptances related to the transition of bankers' acceptances to loans at the CORRA rate.

 

For the second quarter of 2025, the segment's non-interest expenses stood at $804 million, up 31% compared to the corresponding quarter in 2024, of which the inclusion of CWB's non-interest expenses drove a 25% increase, which include specified items of $24 million related to the acquisition. The increase in non-interest expense was also due to higher compensation and employee benefits, mainly from salary increases, and greater investments made as part of the segment's technological evolution. The efficiency ratio of 56.8% in the second quarter of 2025 had deteriorated by 2.7 percentage points compared to the second quarter of 2024. Adjusted non-interest expenses amounted to $780 million in the second quarter of 2025, compared to $612 million in the second quarter of 2024. The adjusted efficiency ratio stood at 55.1% in the second quarter of 2025, compared to 54.1% in the second quarter of 2024.

 

The segment recorded provisions for credit losses of $426 million in the second quarter of 2025 compared to $89 million in the second quarter of 2024, up $337 million. This increase was mainly due to initial provisions for credit losses on non-impaired loans acquired from CWB in an amount of $230 million. In addition, provisions for credit losses were higher on impaired loans and non-impaired loans in Personal Banking (including credit card receivables) and in Commercial Banking. Adjusted provisions for credit losses stood at $196 million for the second quarter of 2025, up $107 million from the corresponding quarter of 2024.

 

For the six-month period ended April 30, 2025, the Personal and Commercial segment's net income was $422 million, down 35% from $650 million in 2024, mainly due to the increase in provisions for credit losses (including initial provisions for credit losses on the non-impaired loans acquired from CWB recorded in the first six months of 2025). In addition, income before provisions for credit losses and income taxes for the six-month period ended April 30, 2025, was $1,175 million, up 11% year over year, of which the inclusion of CWB's results drove an 8% increase. Adjusted net income was down 7% compared to $650 million for the same six-month period in 2024, attributable to higher provisions for credit losses, while adjusted income before provisions for credit losses and income taxes increased by 13%. The increase in Personal Banking's total revenues was mainly due to growth in loans and deposits and an increase in the loan margin (partly offset by a narrower margin on deposits), as well as higher internal commission revenues arising from the distribution of the Wealth Management segment's products and the inclusion of CWB. In addition, the increase in Commercial Banking's total revenues was due to growth in loans and deposits, partly offset by a narrower loan margin, and the inclusion of CWB. These increases were partly offset by a decline in credit fees related to the transition from bankers' acceptances to loans at the CORRA rate.

 

For the six-month period ended April 30, 2025, non-interest expenses stood at $1,445 million, an 18% increase compared to the same period of 2024, due to the same reasons provided above for the quarter. The inclusion of CWB drove a 12% increase in the non-interest expenses. The efficiency ratio was 55.2%, representing a deterioration of 1.5 percentage points compared to April 30, 2024. The segment's adjusted non-interest expenses increased by 16% compared to $1,227 million for the six-month period ended April 30, 2024. The adjusted efficiency ratio was 54.2% for the first six months of 2025, compared to 53.7% for the same period in 2024. For the six-month period ended April 30, 2025, provisions for credit losses amounted to $588 million, an increase of $428 million compared to the same period of 2024. This increase was due to initial provisions on credit losses on non-impaired loans acquired from CWB in an amount of $230 million and higher provisions for credit losses on impaired loans (including credit card receivables) in Personal Banking as well as in Commercial Banking. In addition, provisions for credit losses on non-impaired loans also increased due to changes in certain risk parameters and uncertainties surrounding the imposition of new tariffs. Excluding specified items recorded during the six-month period ended April 30, 2025, provisions for credit losses stood at $358 million, compared to $160 million for the same six-month period of 2024.

 

 

Wealth Management

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(1)
2024
% Change
2025(1)
2024
% Change
Operating results
Net interest income
230
203
13
457
401
14
Fee-based revenues
467
394
19
917
769
19
Transaction-based and other revenues
94
86
9
193
173
12
Total revenues
791
683
16
1,567
1,343
17
Non-interest expenses
476
400
19
917
790
16
Income before provisions for credit losses and income taxes
315
283
11
650
553
18
Provisions for credit losses
(1)
−
1
−
Income before income taxes
316
283
12
649
553
17
Income taxes
84
78
8
175
152
15
Net income
232
205
13
474
401
18
Less: Specified items after income taxes(2)
(3)
−
(3)
−
Net income - Adjusted(2)
235
205
15
477
401
19
Average assets(3)
10,754
8,963
20
10,681
8,834
21
Average loans(3)(4)
9,596
7,967
20
9,518
7,839
21
Net impaired loans(5)
12
6
100
12
6
100
Average deposits(3)
60,015
41,927
43
51,602
41,568
24
Assets under administration(5)
825,523
691,554
19
825,523
691,554
19
Assets under management(5)
170,469
138,848
23
170,469
138,848
23
Efficiency ratio(5)
60.2
%
58.6
%
58.5
%
58.8
%
Efficiency ratio - Adjusted(6)
59.7
%
58.6
%
58.3
%
58.8
%


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures. During the quarter and six-month period ended April 30, 2025, the Bank recorded several items related to the acquisition of CWB, including acquisition and integration charges of $2 million net of income taxes and amortization of intangible assets of $1 million net of income taxes.

(3)       Represents an average of the daily balances for the period.

(4)       Including customers' liability under acceptances for the quarter and the six-month period ended April 30, 2024.

(5)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(6)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial ratios.

 

In the Wealth Management segment, net income totalled $232 million in the second quarter of 2025, a 13% increase from $205 million in the corresponding quarter in 2024. The segment's total revenues amounted to $791 million, up $108 million or 16% from $683 million in the second quarter of 2024. The 13% increase in net interest income compared to the corresponding quarter in 2024 was due to higher loan and deposit volumes, the favourable impact of a change in the composition of deposits and the inclusion of CWB in the second quarter of 2025. The 19% increase in fee-based revenues was due to the rise in stock markets compared to the corresponding quarter in 2024, positive net inflows for the various solutions and the inclusion of CWB. Transaction and other revenues rose 9% compared to the second quarter of 2024 due to increased client activity.

 

Non-interest expenses stood at $476 million in the second quarter of 2025, up 19% from $400 million in the second quarter of 2024, partly due to the inclusion of CWB. This increase was also due to higher compensation and employee benefits, due in particular to variable compensation in line with revenue growth, external management fees, as well as higher technology expenses related to the segment's initiatives. The deterioration of the efficiency ratio, which stood at 60.2% in the second quarter of 2025, was due to the inclusion of CWB during the second quarter of 2025. Adjusted non-interest expenses stood at $472 million in the second quarter of 2025 compared to $400 million in the same quarter of 2024. The adjusted efficiency ratio was 59.7% in the second quarter of 2025 compared to 58.6% in the corresponding quarter in 2024. Recoveries of credit losses in an amount of $1 million were recorded in the second quarter of 2025, while negligible provisions for credit losses were recorded in the second quarter of 2024.

 

In the Wealth Management segment, net income totalled $474 million in the six-month period ended April 30, 2025 compared to $401 million in the same period of 2024, for an increase of 18%. The segment's total revenue stood at $1,567 million for the six-month period ended April 30, 2025, an increase of 17% compared to $1,343 million for the same period of 2024. Net interest income increased by 14%, due to growth in loan and deposit volumes, the favourable impact of the change in the composition of deposits and the inclusion of CWB. Fee-based revenues increased by 19%, due to growth in assets under administration and under management as a result of stronger equity markets, positive net inflows into various solutions and the inclusion of CWB. In addition, transaction and other income increased by 12% compared to the same period in 2024 due to increased client activity. Non-interest expenses stood at $917 million for the six-month period ended April 30, 2025, compared to $790 million for the same period in 2024, an increase of 16% due to the same reasons provided above for the quarter. The efficiency ratio for the six-month period ended April 30, 2025 was 58.5%, an improvement from 58.8% for the corresponding six-month period in 2024. Provisions for credit losses stood at $1 million for the six-month period ended April 30, 2025, whereas they were negligible in the six-month period ended April 30, 2024.

 

Financial Markets

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(1)
2024(2)
% Change
2025(1)
2024(2)
% Change
Operating results
Global markets
Equities
542
170
219
909
300
203
Interest rate and credit
180
143
26
350
285
23
Commodities and foreign exchange
62
56
11
120
127
(6)
784
369
112
1,379
712
94
Corporate and investment banking
317
312
2
629
616
2
Total revenues
1,101
681
62
2,008
1,328
51
Non-interest expenses
403
312
29
770
625
23
Income before provisions for credit losses and income taxes
698
369
89
1,238
703
76
Provisions for credit losses
64
11
100
28
Income before income taxes
634
358
77
1,138
675
69
Income taxes
133
36
220
45
Net income
501
322
56
918
630
46
Average assets(3)
224,314
194,158
16
217,949
192,280
13
Average loans(3)(4) (Corporate Banking only)
31,118
31,911
(2)
31,298
31,784
(2)
Net impaired loans(5)
74
57
30
74
57
30
Net impaired loans as a % of total loans and acceptances(5)
0.2
%
0.2
%
0.2
%
0.2
%
Average deposits(3)
77,467
64,578
20
75,872
63,950
19
Efficiency ratio(5)
36.6
%
45.8
%
38.3
%
47.1
%


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

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

(3)       Represents an average of the daily balances for the period.

(4)       Including customers' liability under acceptances for the quarter and the six-month period ended April 30, 2024.

(5)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

 

In the Financial Markets segment, net income totalled $501 million in the second quarter of 2025, up 56% from $322 million in the corresponding quarter in 2024. The impact of including CWB in this segment's results for the quarter was not material. Total revenues amounted to $1,101 million, compared to $681 million in the second quarter of 2024, a significant increase of $420 million or 62%. The growth in global markets revenues came from all types of revenues but was mainly due to equities revenues. Corporate and investment banking revenues for the second quarter of 2025 increased 2% compared to the corresponding quarter in 2024 due to growth in banking service revenues, partly offset by a decrease in revenues related to capital markets activities and revenues from merger and acquisition activities.

 

Non-interest expenses stood at $403 million in the second quarter of 2025, a 29% increase compared to the second quarter of 2024, attributable to higher compensation and employee benefits, notably caused by variable compensation resulting from revenue growth, as well as the increase in technology investment expenses and other expenses related to the segment's business growth. The efficiency ratio was 36.6% in the second quarter of 2025, an improvement of 9.2 percentage points from 45.8% in the second quarter of 2024, owing to a sharp increase in the segment's revenues. In the quarter ended April 30, 2025, provisions for credit losses were up $53 million compared to the second quarter of 2024. This increase was essentially due to provisions for credit losses on impaired loans of $55 million recorded in the second quarter of 2025, attributable to a file in the manufacturing sector.

 

For the six-month period ended April 30, 2025, the segment's net income totalled $918 million, up 46% compared to the same period of 2024. The impact of including CWB in this segment's results for the first six-month period of 2025 was not material. Total revenues amounted to $2,008 million for the six-month period ended April 30, 2025, for strong growth of $680 million or 51% compared to the same period of 2024. Global markets revenues were up 94%, driven by increases in equities revenues and interest rate and credit products revenues, partly offset by the decrease in commodities and foreign exchange revenues. In addition, corporate and investment banking revenues were up 2% compared to the six-month period ended April 30, 2024, due to the same reasons provided above for the quarter.

 

For the six-month period ended April 30, 2025, non-interest expenses rose 23% compared to the same period of 2024, mainly due to higher variable compensation, technology investment expenses and other expenses related to the segment's business growth. The efficiency ratio for the six-month period ended April 30, 2025 was 38.3%, an improvement of 8.8 percentage points from 47.1% recorded for the corresponding period of 2024. This improvement was driven by a significant increase in revenues. Financial Markets recorded provisions for credit losses of $100 million in the first six months of 2025, compared to $28 million for the same period of 2024. This increase was mainly due to $73 million in provisions for credit losses on impaired loans recorded for the first six months of 2025, compared to the $2 million of recoveries of credit losses on impaired loans recorded for the corresponding period of 2024.

 

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

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025
2024
% Change
2025
2024
% Change
Total revenues
Credigy
141
136
4
286
261
10
ABA Bank
250
209
20
498
403
24
International
(1)
5
11
12
390
350
11
795
676
18
Non-interest expenses
Credigy
39
34
15
79
69
14
ABA Bank
77
73
5
160
138
16
International
1
1
1
1
117
108
8
240
208
15
Income before provisions for credit losses and income taxes
273
242
13
555
468
19
Provisions for credit losses
Credigy
30
26
15
60
51
18
ABA Bank
29
11
164
50
22
127
International
−
−
−
−
59
37
59
110
73
51
Income before income taxes
214
205
4
445
395
13
Income taxes
Credigy
15
15
−
31
29
7
ABA Bank
31
26
19
61
51
20
International
(1)
1
1
2
45
42
7
93
82
13
Net income
Credigy
57
61
(7)
116
112
4
ABA Bank
113
99
14
227
192
18
International
(1)
3
9
9
169
163
4
352
313
12
Average assets(1)
33,101
27,402
21
32,134
26,706
20
Average loans and receivables(1)
24,126
21,686
11
23,771
21,231
12
Purchased or originated credit-impaired (POCI) loans
309
429
(28)
309
429
(28)
Net impaired loans excluding Credigy's POCI loans(2)
719
368
95
719
368
95
Average deposits(1)
16,500
12,750
29
15,811
12,459
27
Efficiency ratio(2)
30.0
%
30.9
%
30.2
%
30.8
%


 

(1)       Represents an average of the daily balances for the period.

(2)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

 

In the USSF&I segment, net income totalled $169 million in the second quarter of 2025, up 4% from $163 million in the corresponding quarter of 2024, attributable to the ABA Bank subsidiary. The 11% growth in the segment's total revenues was partly offset by the increase in non-interest expenses and provisions for credit losses. For the six-month period ended April 30, 2025, the segment recorded net income of $352 million, an increase of 12% compared to $313 million recorded in the same period of 2024.

 

Credigy

For the second quarter of 2025, the Credigy subsidiary reported net income of $57 million, down $4 million or 7% compared to the corresponding quarter in 2024. Total revenues amounted to $141 million in the second quarter of 2025 compared to $136 million in the second quarter of 2024, an increase that was driven by growth in loan volumes, the remeasurement of the fair value of certain portfolios in the second quarter of 2025, and the impact of exchange rate fluctuations, items that were partly offset by a gain realized on the disposal of a loan portfolio and revenues related to the under-utilization of credit facilities recorded in the second quarter of 2024. Non-interest expenses stood at $39 million in the second quarter of 2025, a $5 million increase from the corresponding quarter in 2024 due to servicing fees and the impact of exchange rate fluctuations. Provisions for credit losses rose $4 million compared to the second quarter of 2024 due to higher provisions for credit losses on impaired loans (excluding Credigy's POCI loans), attributable to the normal maturation of loan portfolios, and provisions for credit losses on POCI loans, partly offset by the decrease in provisions for credit losses on non-impaired loans.

 

For the six-month period ended April 30, 2025, the Credigy subsidiary reported net income of $116 million, up 4% from the corresponding period of 2024. Total revenues amounted to $286 million for the first six months of 2025, up from $261 million in the same period of 2024. This increase was due to the same reasons provided above for the quarter. Non-interest expenses for the six-month period ended April 30, 2025 were up $10 million from the corresponding period of 2024, owing to compensation and employee benefits, servicing fees, and the impact of exchange rate fluctuations. The subsidiary reported a $9 million increase in provisions for credit losses compared to the corresponding six-month period in 2024, due to the increase in provisions for credit losses on impaired loans and POCI loans, partly offset by the decrease in credit losses on non-impaired loans.

 

ABA Bank

For the second quarter of 2025, the ABA Bank subsidiary recorded net income totalling $113 million, up $14 million or 14% from the corresponding quarter in 2024. Total revenues rose 20%, mainly attributable to sustained growth in assets, as well as the impact of exchange rate fluctuations. Non-interest expenses for the second quarter of 2025 stood at $77 million, a $4 million or 5% increase compared to the second quarter of 2024 due to higher occupancy expenses driven by the subsidiary's business growth and the opening of new branches, as well as the impact of exchange rate fluctuations. The subsidiary reported provisions for credit losses totalling $29 million in the second quarter of 2025, up $18 million compared to the corresponding quarter of 2024. This increase was due to higher provisions for credit losses on impaired loans and non-impaired loans related to the uncertainties around the imposition of new tariffs.

 

For the six-month period ended April 30, 2025, the ABA Bank subsidiary recorded net income totalling $227 million, up $35 million or 18% from the corresponding period of 2024. The 24% increase in total revenues compared to the corresponding six-month period of 2024 stemmed from business expansion at the subsidiary, driven mainly by sustained asset growth and the impact of exchange rate fluctuations. ABA Bank reported non-interest expenses totalling $160 million, up 16% year over year, due to the same reasons provided above for the quarter as well as higher compensation and employee benefits. The subsidiary reported provisions for credit losses totalling $50 million in the six-month period ended April 30, 2025, up $28 million from the same period of 2024, owing to higher provisions for credit losses on impaired and non-impaired loans.

 

Other

 

(millions of Canadian dollars)
Quarter ended April 30
Six months ended April 30
2025(1)
2024(2)
2025(1)
2024(2)
Operating results
Net interest income
(22)
(85)
(82)
(150)
Non-interest income
(26)
(10)
(75)
(22)
Total revenues
(48)
(95)
(157)
(172)
Non-interest expenses
142
40
216
71
Income before provisions for credit losses and income taxes
(190)
(135)
(373)
(243)
Provisions for credit losses
(3)
1
−
(3)
Income before income taxes (recovery)
(187)
(136)
(373)
(240)
Income taxes (recovery)
(49)
(41)
(100)
(74)
Net loss
(138)
(95)
(273)
(166)
Non-controlling interests
−
(1)
−
(1)
Net loss attributable to the Bank's shareholders and holders of
other equity instruments
(138)
(94)
(273)
(165)
Less: Specified items after income taxes(3)
(83)
−
(136)
−
Net loss - Adjusted(3)
(55)
(95)
(137)
(166)
Average assets(4)
74,605
67,777
71,627
65,089


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

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

(3)       See the Financial Reporting Method section on pages 6 to 12 for additional information on non-GAAP financial measures. During the quarter and six-month period ended April 30, 2025, the Bank recorded several items related to the acquisition of CWB, including acquisition and integration charges of $83 million net of income taxes ($102  million net of income taxes for the

six-month period ended April 30, 2025). In addition, during the six-month period ended April 30, 2025, the Bank recorded the amortization of the subscription receipt issuance costs of $20 million net of income taxes, a gain of $3 million net of income taxes resulting from the remeasurement at fair value of the CWB common shares already held by the Bank, and the impact of managing fair value changes, representing a loss of $17 million net of income taxes.

(4)       Represents an average of the daily balances for the period.

 

For the Other heading of segment results, a net loss of $138 million was posted in the second quarter of 2025 compared to a net loss of $95 million in the corresponding quarter in 2024. The change in net loss was due to the increase in non-interest expenses, stemming mainly from CWB acquisition and integration charges, for an amount of $114 million recorded in the second quarter of 2025, partly offset by a higher contribution from Treasury activities and the inclusion of CWB income. The specified items recorded in the second quarter of 2025, related to the acquisition of CWB, had an unfavourable impact of $83 million on net loss. The adjusted net loss stood at $55 million for the quarter ended April 30, 2025, compared to $95 million for the corresponding quarter in 2024.

 

For the six-month period ended April 30, 2025, the segment's loss stood at $273 million compared to a net loss of $166 million in the corresponding period of 2024. The change in net loss was due to the increase in non-interest expenses compared to the first six months of 2024, mainly attributable to higher compensation and employee benefits as well as CWB acquisition and integration charges recorded in the first six months of 2025 for an amount of $140 million. In addition, the lower contribution from Treasury activities, in particular due to a $17 million loss, net of taxes, due to the management of fair value changes related to the acquisition of CWB, as well as the amortization of subscription receipt issuance costs in an amount of $20 million, net of taxes, contributed to the change in net loss. The specified items recorded during the six-month period ended April 30, 2025, related to the CWB acquisition, had a $136 million unfavourable impact on the net loss. The adjusted net loss stood at $137 million for the six-month period ended April 30, 2025 compared to $166 million for the corresponding period of 2024.

 

Consolidated Balance Sheet

 

Consolidated Balance Sheet Summary

 

(millions of Canadian dollars)
As at April 30, 2025(1)
As at October 31, 2024
% Change
Assets
Cash and deposits with financial institutions
31,422
31,549
−
Securities
168,643
145,165
16
Securities purchased under reverse repurchase agreements and securities borrowed
20,836
16,265
28
Loans, net of allowances
285,728
243,032
18
Other
29,565
26,215
13
536,194
462,226
16
Liabilities and equity
Deposits
387,974
333,545
16
Other
112,493
101,873
10
Subordinated debt
2,822
1,258
124
Equity attributable to the Bank's shareholders and holders of other equity instruments
32,904
25,550
29
Non-controlling interests
1
−
536,194
462,226
16


 

(1)         On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the balances as at April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section and Note 19 to the Consolidated Financial Statements.

 

Assets

As at April 30, 2025, the Bank had total assets of $536.2 billion, up $74.0 billion or 16% from $462.2 billion as at October 31, 2024. Cash and deposits with financial institutions as at April 30, 2025, stood at $31.4 billion, down $0.1 billion, owing primarily to a decrease in deposits with the Bank of Canada, partly offset by an increase in deposits with regulated financial institutions.

 

Securities have risen $23.4 billion since October 31, 2024, owing to a $17.2 billion or 15% increase in securities at fair value through profit or loss driven mainly by equity securities. In addition, securities other than those measured at fair value through profit or loss rose $6.4 billion. Securities purchased under reverse repurchase agreements and securities borrowed increased by $4.5 billion since October 31, 2024, driven primarily by the Financial Markets segment and Treasury activities.

 

As at April 30, 2025, loans, net of allowances for credit losses, totalled $285.7 billion, up $42.7 billion or 18% since October 31, 2024. The following table provides a breakdown of the main loan portfolios.

 

(millions of Canadian dollars)
As at April 30, 2025(1)
As at October 31, 2024
As at April 30, 2024
Loans
Residential mortgage and home equity lines of credit
138,497
124,431
119,548
Personal
17,543
17,461
17,253
Credit card
2,835
2,761
2,644
Business and government(2)
128,791
99,720
96,536
287,666
244,373
235,981
Allowances for credit losses
(1,938)
(1,341)
(1,211)
285,728
243,032
234,770


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the balances as at April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section and Note 19 to the Consolidated Financial Statements.

(2)       Including customers' liability under acceptances as at April 30, 2024.

 

Since October 31, 2024, residential mortgages (including home equity lines of credit) rose $14.1 billion or 11%, above all due to the inclusion of CWB and growth in the business activities of the Personal and Commercial segment and the Financial Markets segment. Also since October 31, 2024, personal loans were up $0.1 billion, and credit card receivables were relatively stable. Business and government loans rose $29.1 billion or 29% since October 31, 2024, mainly due to the inclusion of CWB and business growth in Commercial Banking. These increases were partly offset by a decline in the activities of the Financial Markets segment and the Credigy subsidiary.

 

Since April 30, 2024, loans, net of allowances for credit losses, grew $50.9 billion or 22%. Residential mortgages (including home equity lines of credit) rose $19.0 billion or 15% due to the inclusion of CWB, sustained demand for mortgage credit in the Personal and Commercial segment and business growth in the Financial Markets segment. Also since April 30, 2024, personal loans rose $0.2 billion due to the inclusion of CWB and business growth in Personal Banking. Credit card receivables were up $0.2 billion. Business and government loans grew $32.3 billion or 33% since April 30, 2024, owing essentially to business growth in Commercial Banking, in the Financial Markets and Wealth Management segments, and at the ABA Bank subsidiary.

 

Impaired loans include all loans classified in Stage 3 of the expected credit loss model and POCI loans. As at April 30, 2025, gross impaired loans stood at $3,114 million compared to $2,043 million as at October 31, 2024. As for net impaired loans, they totalled $2,437 million as at April 30, 2025, compared to $1,629 million as at October 31, 2024. This increase was mainly due to an increase in net impaired loans in the loan portfolios of the Personal and Commercial Banking segment following the inclusion of loans acquired from CWB in the second quarter of 2025, and at the ABA Bank subsidiary, partly offset by the decrease in net impaired loans at the Credigy subsidiary (including POCI loans) due to the maturities of certain portfolios and to loan repayments.

 

As at April 30, 2025, other assets totalled $29.6 billion, a $3.4 billion increase since October 31, 2024 that resulted mainly from increases in derivative financial instruments as well as in goodwill resulting from the CWB acquisition.

 

Liabilities

As at April 30, 2025, the Bank had total liabilities of $503.3 billion compared to $436.7 billion as at October 31, 2024.

 

The Bank's total deposits stood at $388.0 billion as at April 30, 2025, rising $54.5 billion or 16% from $333.5 billion as at October 31, 2024. As at April 30, 2025, personal deposits stood at $122.0 billion, up $26.8 billion since October 31, 2024. This increase was driven by the inclusion of CWB and business growth in Personal Banking, in the Financial Markets and Wealth Management segments, and at the ABA Bank subsidiary.

 

Business and government deposits stood at $258.1 billion as at April 30, 2025, rising $25.4 billion since October 31, 2024. The increase is explained by the inclusion of CWB, the activities of the Financial Markets and Wealth Management segments and Treasury funding activities, despite a $0.1 billion decrease in deposits subject to bank capitalization (bail-in) conversion regulations. As at April 30, 2025, deposits from deposit-taking institutions stood at $7.9 billion, an increase of $2.3 billion since October 31, 2024 arising from Treasury funding activities.

 

As at April 30, 2025, other liabilities stood at $112.5 billion, up $10.6 billion since October 31, 2024, essentially due a $2.3 billion increase in derivative financial instruments, a $3.0 billion increase in obligations related to securities sold short, a $2.8 billion increase in obligations related to securities sold under repurchase agreements and securities loaned and a $1.0 billion increase in liabilities related to transferred receivables.

 

Subordinated debt increased since October 31, 2024, as a result of the issuance of $1.0 billion of medium-term notes on January 13, 2025 and $0.5 billion in subordinated debt related to the acquisition of CWB.

 

Equity

As at April 30, 2025, equity attributable to the Bank's shareholders and holders of other equity instruments was $32.9 billion, rising $7.3 billion since October 31, 2024. This increase was primarily due to the issuances of common shares related to the CWB acquisition for a total amount of $6.3 billion, as well as to net income net of dividends, remeasurements of pension plans and other post-employment benefit plans, and the net fair value change attributable to the credit risk on financial liabilities designated at fair value through profit or loss. Moreover, the issuance of Series 47 and 49 preferred shares were more than offset by the redemption for cancellation of Series 32 preferred shares.

 

Related Party Transactions

 

The Bank's policies and procedures regarding related party transactions have not significantly changed since October 31, 2024. For additional information, see Note 30 to the audited annual consolidated financial statements for the year ended October 31, 2024.

 

Securitization and Off-Balance-Sheet Arrangements

 

In the normal course of business, the Bank is party to various financial arrangements that, under IFRS, are not required to be recorded on the Consolidated Balance Sheet or are recorded under amounts other than their notional or contractual values. These arrangements include, among others, transactions with structured entities, derivative financial instruments, the issuance of guarantees, credit instruments, and financial assets received as collateral. A complete analysis of these types of arrangements, including their nature, business purpose, and importance, is provided on pages 53 and 54 of the 2024 Annual Report.

 

For additional information on financial assets transferred but not derecognized, guarantees, commitments, and structured entities, see Notes 9, 28, and 29 to the audited annual consolidated financial statements for the year ended October 31, 2024.

 

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. 

Capital Management

 

Capital management has a dual role of ensuring a competitive return to the Bank's shareholders while maintaining a solid capital foundation that covers the risks inherent to the Bank's business activities, supports its business segments, and protects its clients. The Bank's capital management policy defines the guiding principles as well as the roles and responsibilities of its internal capital adequacy assessment process. This process aims to determine the capital that the Bank needs to maintain to pursue its business activities and accommodate unexpected losses arising from extremely adverse economic and operational conditions. For additional information on the capital management framework, see the Capital Management section on pages 55 to 64 of the Bank's 2024 Annual Report.

 

Basel Accord

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%. For additional information on the ratio calculations, see pages 56 to 58 of the 2024 Annual Report. All of these ratios include a capital conservation buffer of 2.5% established by the 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 will have to provide a remediation plan to OSFI. The Bank must also meet the requirements of the capital output floor that will ensure that its total calculated RWA is not below 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. For additional information on the leverage ratio calculation, see page 58 of the 2024 Annual Report.

 

In addition, OSFI requires that regulatory capital instruments other than common equity must have a non-viability contingent capital (NVCC) clause to ensure that investors bear losses before taxpayers should the government determine that rescuing a non-viable financial institution is in the public interest. The Bank's regulatory capital instruments, other than common shares, all have an NVCC clause.

OSFI's Total Loss Absorbing Capacity (TLAC) Guideline, which applies to all D-SIBs under the federal government's bail-in regulations, is intended to ensure that a D-SIB has sufficient loss-absorbing capacity to support its internal recapitalization in the unlikely event it becomes non-viable. Available TLAC includes total capital as well as certain senior unsecured debts that satisfy all of the eligibility criteria of OSFI's TLAC guideline. OSFI requires D-SIBs to maintain a risk-based TLAC ratio of at least 25.0% (including the DSB) of RWA and a TLAC leverage ratio of at least 7.25%. The TLAC ratio is calculated by dividing available TLAC by RWA, and the TLAC leverage ratio is calculated by dividing available TLAC by total exposure. As at April 30, 2025, outstanding liabilities of $23.4 billion ($23.5 billion as at October 31, 2024) were subject to conversion under the bail-in regulations.

 

Requirements - Regulatory Capital(1), Leverage(1), and TLAC(2) Ratios

 

Requirements as at April 30, 2025
Ratios as at April 30, 2025
Minimum
Capital
conservation
buffer
Minimum
set by
BCBS
D-SIB surcharge
Minimum
set by
OSFI
Domestic
stability
buffer(3)
Minimum set by OSFI, including the domestic stability buffer
Capital ratios
CET1
4.5
%
2.5
%
7.0
%
1.0
%
8.0
%
3.5
%
11.5
%
13.4
%
Tier 1
6.0
%
2.5
%
8.5
%
1.0
%
9.5
%
3.5
%
13.0
%
15.1
%
Total
8.0
%
2.5
%
10.5
%
1.0
%
11.5
%
3.5
%
15.0
%
16.9
%
Leverage ratio
3.0
%
n.a.
3.0
%
0.5
%
3.5
%
n.a.
3.5
%
4.7
%
TLAC ratio
21.5
%
n.a.
21.5
%
n.a.
21.5
%
3.5
%
25.0
%
28.2
%
TLAC leverage ratio
6.75
%
n.a.
6.75
%
0.5
%
7.25
%
n.a.
7.25
%
8.8
%


 

n.a.     Not applicable

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

(3)       On December 17, 2024, OSFI confirmed that the domestic stability buffer was being maintained at 3.5%.

 

The Bank ensures that its capital levels are always above the minimum capital requirements set by OSFI, including the DSB. By maintaining a strong capital structure, the Bank can cover the risks inherent to its business activities, support its business segments, and protect its clients.

 

Other disclosure requirements pursuant to Pillar 3 of the Basel Accord and a set of recommendations defined by the Enhanced Disclosure Task Force (EDTF) are presented in the Supplementary Regulatory Capital and Pillar 3 Disclosure report published quarterly and available on the Bank's website at nbc.ca. Furthermore, a complete list of capital instruments and their main features is also available on the Bank's website.

 

Regulatory Developments

The Bank closely monitors regulatory developments and participates actively in various consultative processes. For additional information about the regulatory context as at October 31, 2024, refer to page 59 of the Capital Management section in the 2024 Annual Report. Since November 1, 2024, there have been no new regulatory developments to be considered.

 

Management Activities

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. Given that the medium-term notes satisfy the NVCC requirements, they qualify for the purposes of calculating regulatory capital under the Basel III rules.

 

On February 3, 2025, at closing of the CWB acquisition, the Bank issued a total of 50,272,878 common shares, for total proceeds of $6.3 billion.

 

On February 3, 2025, as part of the acquisition of CWB, the Bank acquired the obligations related to the CWB subordinated debts for a total amount of $525 million, which included a debenture of $125 million bearing interest at 4.840% and maturing on June 29, 2030 (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), a debenture of $150 million bearing interest at 5.937% and maturing on December 22, 2032 and a debenture of $250 million bearing interest at 5.949% and maturing on January 29, 2034. Given that the debentures satisfy the NVCC requirements, they qualify for the purposes of calculating regulatory capital under the Basel III rules.

 

On February 17, 2025, i.e. the first business day after the February 15, 2025 redemption date, the Bank redeemed all 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 First Preferred Shares for a total amount of $300 million.

 

On February 20, 2025, there was an exchange of all the issued and outstanding First Preferred Shares, Series 5 and Series 9 of CWB for substantially equivalent First Preferred Shares, Series 47 and Series 49 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 $264 million. Given that the Series 47 and Series 49 preferred shares meet the NVCC requirements, they qualify for the purposes of calculating regulatory capital under the Basel III rules.

 

Dividends

On May 27, 2025, the Board of Directors declared regular dividends on the various series of first preferred shares and a dividend of $1.18 per common share, up 4 cents or 3.4%, payable on August 1, 2025 to shareholders of record on June 30, 2025.

 

Shares, Other Equity Instruments, and Stock Options

 

As at April 30, 2025
Number of shares or
LRCN(1)
$ million
First preferred shares
Series 30
14,000,000
350
Series 38
16,000,000
400
Series 40
12,000,000
300
Series 42
12,000,000
300
Series 47
5,000,000
128
Series 49
5,000,000
136
64,000,000
1,614
Other equity instruments
LRCN-Series 1
500,000
500
LRCN-Series 2
500,000
500
LRCN - Series 3
500,000
500
1,500,000
1,500
65,500,000
3,114
Common shares
391,321,704
9,805
Stock options
11,671,264


 

(1)       Limited Recourse Capital Notes (LRCN).

 

As at May 23, 2025 there were 391,340,763 common shares and 11,619,774 stock options outstanding. The number of common shares and options outstanding reflects the closing of the CWB transaction. NVCC provisions require the conversion of capital instruments into a variable number of common shares should OSFI deem a bank to be non-viable or should the government publicly announce that a bank has accepted or agreed to accept a capital injection. If an NVCC trigger event were to occur, all of the Bank's preferred shares, LRCNs, and medium-term notes and subordinated debentures which are NVCC capital instruments, would be converted into common shares of the Bank according to an automatic conversion formula at a conversion price corresponding to the greater of the following amounts: (i) a $5.00 contractual floor price; or (ii) the market price of the Bank's common shares on the date of the trigger event (10-day weighted average price). Based on a $5.00 floor price and including an estimate for accrued dividends and interest, these NVCC capital instruments would be converted into a maximum of 1,472 million Bank common shares, which would have a 79.0% dilutive effect based on the number of Bank common shares outstanding as at April 30, 2025.

 

Movement in Regulatory Capital(1)

(millions of Canadian dollars)
Six months ended
April 30, 2025
Common Equity Tier 1 (CET1) capital
Balance at beginning
19,321
Issuance of common shares (including Stock Option Plan)
30
Issuance of common shares related to the CWB acquisition
6,329
Impact of shares purchased or sold for trading
(21)
Repurchase of common shares
−
Replacement options related to the CWB acquisition
29
Other contributed surplus
3
Dividends on preferred and common shares and distributions on other equity instruments
(930)
Net income attributable to the Bank's shareholders and holders of other equity instruments
1,893
Removal of own credit spread (net of income taxes)
(124)
Other
217
Movements in accumulated other comprehensive income
Translation adjustments
(63)
Debt securities at fair value through other comprehensive income
(27)
Other
−
Change in goodwill and intangible assets (net of related tax liability)
(2,049)
Other, including regulatory adjustments
Change in defined benefit pension plan asset (net of related tax liability)
(108)
Change in amount exceeding 15% threshold
Deferred tax assets
−
Significant investment in common shares of financial institutions
−
Deferred tax assets, unless they result from temporary differences (net of related tax liability)
(5)
Other deductions or regulatory adjustments to CET1 implemented by OSFI
(2)
Change in other regulatory adjustments
21
Balance at end
24,514
Additional Tier 1 capital
Balance at beginning
3,149
New Tier 1 eligible capital issuances
250
Redeemed capital
(300)
Other, including regulatory adjustments
(10)
Balance at end
3,089
Total Tier 1 capital
27,603
Tier 2 capital
Balance at beginning
1,531
New Tier 2 eligible capital issuances
1,525
Redeemed capital
−
Tier 2 instruments issued by subsidiaries and held by third parties
−
Change in certain allowances for credit losses
365
Other, including regulatory adjustments
(94)
Balance at end
3,327
Total regulatory capital
30,930


 

(1)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

 

Risk-Weighted Assets by Key Risk Drivers

Risk-weighted assets (RWA) amounted to $182.8 billion as at April 30, 2025 compared to $141.0 billion as at October 31, 2024, a $41.8 billion increase resulting mainly from the inclusion of CWB, organic growth in RWA and a deterioration in the credit quality of the loan portfolio. The changes in the Bank's RWA by risk type are presented in the following table.

 

Movement of Risk-Weighted Assets by Key Drivers(1)

 

(millions of Canadian dollars)
Quarter ended
April 30,
2025
January 31,
2025
October 31,
2024
Non-counterparty
credit risk
Counterparty
credit risk
Total
Total
Total
Credit risk - Risk-weighted assets at beginning
117,453
6,990
124,443
118,450
116,684
Book size
2,412
(186)
2,226
3,447
1,067
Book quality
393
16
409
785
(70)
Model updates
108
−
108
−
439
Methodology and policy
−
−
−
−
−
Acquisitions and disposals
30,699
9
30,708
−
−
Foreign exchange movements
(2,049)
(187)
(2,236)
1,761
330
Credit risk - Risk-weighted assets at end
149,016
6,642
155,658
124,443
118,450
Market risk - Risk-weighted assets at beginning
9,146
8,002
8,066
Movement in risk levels(2)
1,004
1,144
(64)
Model updates
−
−
−
Methodology and policy
−
−
−
Acquisitions and disposals
−
−
−
Market risk - Risk-weighted assets at end
10,150
9,146
8,002
Operational risk - Risk-weighted assets at beginning
14,875
14,523
14,168
Movement in risk levels
459
352
355
Methodology and policy
−
−
−
Acquisitions and disposals(3)
1,630
−
−
Operational risk - Risk-weighted assets at end
16,964
14,875
14,523
Risk-weighted assets at end
182,772
148,464
140,975


 

(1)         See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

(2)         Also includes foreign exchange rate movements that are not considered material.

(3)         During the second quarter of 2025, the operational risk change is related to the inclusion of CWB which was calculated using the Standardized approach in accordance with the approach used by the Bank.

 

The table above provides risk-weighted asset movements by the key drivers underlying the different risk categories.

 

The Book size item reflects organic changes in book size and composition (including new loans and maturing loans). RWA movements attributable to book size include increases or decreases in exposures, measured by exposure at default, assuming a stable risk profile.

 

The Book quality item is the Bank's best estimate of changes in book quality related to experience, such as underlying customer behaviour or demographics, including changes resulting from model recalibrations or realignments and also including risk mitigation factors.

 

The Model updates item is used to reflect implementations of new models, changes in model scope, or any other change applied to address model malfunctions.

 

The Methodology and policy item presents the impact of changes in calculation methods resulting from changes in regulatory policies or from new regulations.

 

Regulatory Capital Ratios, Leverage Ratio, and TLAC Ratios

As at April 30, 2025, the Bank's CET1, Tier 1, and Total capital ratios were, respectively, 13.4%, 15.1%, and 16.9% compared to ratios of, respectively, 13.7%, 15.9%, and 17.0% as at October 31, 2024. All of the capital ratios decreased since October 31, 2024. The growth in RWA, mainly due to the inclusion of CWB, had an unfavourable impact on the ratios, partly offset by the common shares issued as part of the acquisition of CWB and by net income, net of dividends. In addition, the redemption of preferred shares on February 17, 2025, partly offset by the exchange of CWB's preferred shares for the Bank's preferred shares on February 20, 2025 negatively affected the Tier 1 and Total capital ratios, while the $1.0 billion issuance of medium-term notes on January 13, 2025 and the obligation related to CWB's subordinated debts for an amount of $525 million positively impacted the Total capital ratio.

 

As at April 30, 2025, the leverage ratio was 4.7% compared to 4.4% as at October 31, 2024. The increase in the leverage ratio was essentially due to growth in Tier 1 capital related to the common shares issued as part of the acquisition of CWB, partly offset by an increase in total exposure.

 

As at April 30, 2025, the Bank's TLAC ratio and TLAC leverage ratio were 28.2% and 8.8%, respectively, compared to 31.2% and 8.6%, respectively, as at October 31, 2024. The TLAC leverage ratio increase is explained by the net issuances of instruments that met all of the TLAC eligibility criteria during the period. However, the growth in RWA, mainly attributable to the inclusion of CWB, more than offset these issuances, resulting in a decrease in the TLAC ratio.

 

During the quarter and 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)

 

(millions of Canadian dollars)
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.

Risk Management

 

Risk-taking is intrinsic to a financial institution's business. The Bank views risk as an integral part of its development and the diversification of its activities. It advocates a risk management approach that is consistent with its business strategy. The Bank voluntarily exposes itself to certain risk categories, particularly credit and market risk, in order to generate revenue. It also assumes certain risks that are inherent to its activities-to which it does not choose to expose itself-and that do not generate revenue, i.e., mainly operational risks.

 

Emerging risks - Increasing and uncertain trade tariffs and barriers
As a result of recent comprehensive changes to U.S. trade policy, tariffs and retaliatory tariffs are being imposed by the U.S. administration and various affected countries, including Canada, Mexico and China, which may affect the Bank and its clients.The level of uncertainty related to such tariffs remains elevated and persistent, as the U.S. administration recently imposed a 90‑day pause on most of the previously announced country-specific reciprocal tariffs, reducing tariffs for most countries including China but excluding Canada and Mexico. The potential enactment of recently proposed U.S. tax legislation contributes to this climate of uncertainty. The heightened economic uncertainty and unpredictability of the U.S. government's trade policies continue to create volatility in the financial markets and weigh on the economic and investment outlook, impacting current economic conditions, including such issues as the inflation rate, foreign exchange rates, recessionary risks, and the global supply chain. In addition, the U.S. administration has stated its interest in renegotiating the U.S.-Mexico-Canada Agreement (USMCA), which could result in higher tariffs. Aside from its impact on the global economy, the tariff conflict should continue to have repercussions on the Bank and its clients. The Bank is closely monitoring the developments, as well as the impacts and potential consequences on its financial position and that of its clients, in a macroeconomic environment marked by elevated debt servicing costs, weakened consumer demand and higher operating costs due in part to the reconfiguration of supply chains. Given these circumstances, this conflict may impact many of the top and emerging risks to which the Bank is exposed, including credit risk, market risk, liquidity and funding risk, operational risk, strategic risk, and third-party risk. The extent of the adverse effect on the operational and financial situation of entities such as the Bank and its clients depends largely on the nature and duration of uncertain and unpredictable events, such as the duration or escalation of the tariffs, the evolution of retaliatory measures, possible fiscal or monetary policy responses, and reactions to ongoing changes by global financial markets.

 

Despite the exercise of stringent risk management and existing mitigation measures, risk cannot be eliminated entirely, and residual risks may occasionally cause losses. Certain risks are discussed hereafter. For additional information, see the Risk Management section on pages 65 to 112 of the 2024 Annual Report. Risk management information is also provided in Note 6 to the Consolidated Financial Statements, which covers loans.

 

Credit Risk

 

Credit risk is the risk of incurring a financial loss if an obligor does not fully honour its contractual commitments to the Bank. Obligors may be borrowers, issuers, guarantors or counterparties. General economic and market conditions in Canada, the U.S. and other countries in which the Bank operates are currently difficult to predict due in part to measures affecting trade relations between Canada and its partners. The imposition of tariffs and the measures taken in response, as well as the possible impacts on our customers, could have an impact on a debtor's ability to repay. Credit risk is the most significant risk facing the Bank in the normal course of its business.

 

Between March 2, 2022 and July 12, 2023, the Bank of Canada raised its policy rate ten times; the rate has thus risen from 0.25% to 5%. This rapid increase in rates, undertaken primarily to counter inflation in Canada, continues to put pressure on the ability of borrowers, particularly those whose mortgages came up for renewal in the last few months. Over the course of its last eight announcements, from June 5, 2024 to April 16, 2025, the Bank of Canada lowered its policy rate from 5% to 2.75%.

 

Regulatory Developments

The Bank closely monitors regulatory developments and is actively involved in the various consultation processes. For additional information about the regulatory context as at October 31, 2024, see page 81 of the Risk Management section of the 2024 Annual Report. In addition, since November 1, 2024, there have been no new regulatory developments to consider.

 

The amounts in the following tables represent the Bank's maximum exposure to credit risk as at the financial reporting date without considering any collateral held or any other credit enhancements. These amounts do not include allowances for credit losses nor amounts pledged as collateral. The tables also exclude equity securities.

 

Maximum Credit Risk Exposure Under the Basel Asset Categories(1)

 

(millions of Canadian dollars)
As at April 30, 2025
Drawn(2)
Undrawn
commitments
Repo-style
transactions(3)
Derivative
financial
instruments
Other
off-balance-
sheet items(4)
Total
Standardized Approach(5)
IRB
Approach
Retail
Residential mortgages
88,697
9,318
−
−
−
98,015
18
%
82
%
Qualifying revolving retail
4,292
12,906
−
−
−
17,198
−
%
100
%
Other retail
22,552
2,858
−
−
40
25,450
30
%
70
%
115,541
25,082
−
−
40
140,663
Non-retail
Corporate
123,157
33,429
60,247
190
9,892
226,915
31
%
69
%
Sovereign
72,214
8,062
94,149
−
272
174,697
3
%
97
%
Financial institutions
10,756
1,109
151,458
4,492
1,877
169,692
24
%
76
%
206,127
42,600
305,854
4,682
12,041
571,304
Trading portfolio
−
−
−
16,051
−
16,051
3
%
97
%
Securitization
3,054
−
−
−
6,511
9,565
100
%
−
%
Total - Gross credit risk
324,722
67,682
305,854
20,733
18,592
737,583
20
%
80
%
Standardized Approach(5)
77,393
2,854
57,833
4,574
7,545
150,199
IRB Approach
247,329
64,828
248,021
16,159
11,047
587,384
Total - Gross credit risk
324,722
67,682
305,854
20,733
18,592
737,583
20
%
80
%


(millions of Canadian dollars)
As at October 31, 2024
Drawn(2)
Undrawn
commitments
Repo-style
transactions(3)
Derivative
financial
instruments
Other
off-balance-
sheet items(4)
Total
Standardized Approach(5)
IRB
Approach
Retail
Residential mortgages
80,861
8,905
−
−
−
89,766
13
%
87
%
Qualifying revolving retail
3,335
11,867
−
−
−
15,202
−
%
100
%
Other retail
17,237
2,526
−
−
37
19,800
13
%
87
%
101,433
23,298
−
−
37
124,768
Non-retail
Corporate
96,023
31,921
42,395
234
8,813
179,386
21
%
79
%
Sovereign
65,758
5,982
79,859
−
283
151,882
3
%
97
%
Financial institutions
8,797
1,095
133,787
2,640
1,700
148,019
22
%
78
%
170,578
38,998
256,041
2,874
10,796
479,287
Trading portfolio
−
−
−
17,507
−
17,507
3
%
97
%
Securitization
4,885
−
−
−
6,480
11,365
93
%
7
%
Total - Gross credit risk
276,896
62,296
256,041
20,381
17,313
632,927
16
%
84
%
Standardized Approach(5)
39,868
1,209
47,241
2,870
7,015
98,203
IRB Approach
237,028
61,087
208,800
17,511
10,298
534,724
Total - Gross credit risk
276,896
62,296
256,041
20,381
17,313
632,927
16
%
84
%


 

(1)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

(2)       Excludes equity securities and certain other assets such as investments in deconsolidated subsidiaries and joint ventures, right-of-use properties and assets, goodwill, deferred tax assets, and intangible assets.

(3)       Securities purchased under reverse repurchase agreements and sold under repurchase agreements as well as securities loaned and borrowed.

(4)       Letters of guarantee, documentary letters of credit, and securitized assets that represent the Bank's commitment to make payments in the event that an obligor cannot meet its financial obligations to third parties.

(5)       Includes exposures to qualifying central counterparties (QCCP).

 

To meet OSFI's mortgage loan disclosure requirements, additional information has been provided in the documents Supplementary Financial Information - Second Quarter 2025 and Supplementary Regulatory Capital and Pillar 3 Disclosure - Second Quarter 2025, which are available on the Bank's website at nbc.ca.

 

Market Risk

 

Market risk is the risk of financial losses arising from movements in market prices. The Bank is exposed to market risk through its participation in trading, investment, and asset/liability management activities.

 

The following tables provide a breakdown of the Bank's Consolidated Balance Sheet into financial assets and liabilities by those that carry market risk and those that do not carry market risk, distinguishing between trading positions whose main risk measures are Value-at-Risk (VaR) and non-trading positions that use other risk measures.

 

Reconciliation of Market Risk With Consolidated Balance Sheet Items

 

(millions of Canadian dollars)
As at April 30, 2025
Market risk measures
Balance
sheet
Trading(1)
Non-trading(2)
Not subject to market risk
Non-traded risk
primary risk sensitivity
Assets
Cash and deposits with financial institutions
31,422
877
22,875
7,670
Interest rate(3)
Securities
At fair value through profit or loss
133,092
130,307
2,785
−
Interest rate(3)and equity
At fair value through other comprehensive income
20,101
−
20,101
−
Interest rate(3)and equity(4)
At amortized cost
15,450
−
15,450
−
Interest rate(3)
Securities purchased under reverse repurchase
agreements and securities borrowed
20,836
−
20,836
−
Interest rate(3)(5)
Loans, net of allowances
285,728
15,612
270,116
−
Interest rate(3)
Derivative financial instruments
13,649
12,530
1,119
−
Interest rate and exchange rate
Defined benefit asset
638
−
638
−
Other
Other
15,278
469
−
14,809
536,194
159,795
353,920
22,479
Liabilities
Deposits
387,974
33,697
354,277
−
Interest rate(3)
Obligations related to securities sold short
13,871
13,871
−
−
Obligations related to securities sold under repurchase
agreements and securities loaned
40,984
−
40,984
−
Interest rate(3)(5)
Derivative financial instruments
18,096
17,264
832
−
Interest rate and exchange rate
Liabilities related to transferred receivables
29,403
11,627
17,776
−
Interest rate(3)
Defined benefit liability
105
−
105
−
Other
Other
10,034
−
−
10,034
Interest rate(3)
Subordinated debt
2,822
−
2,822
−
Interest rate(3)
503,289
76,459
416,796
10,034


 

(1)       Trading positions whose risk measure is total VaR. For additional information, see the table in the pages ahead and in the Market Risk section of the 2024 Annual Report that shows the VaR distribution of the trading portfolios by risk category and their diversification effect.

(2)       Non-trading positions that use other risk measures.

(3)       For additional information, see the table in the pages ahead and in the Market Risk section of the 2024 Annual Report that shows the VaR distribution of the trading portfolios by risk category and their diversification effect, as well as the interest rate sensitivity table.

(4)       The fair value of equity securities designated at fair value through other comprehensive income is presented in Notes 3 and 5 to the Consolidated Financial Statements.

(5)       These instruments are recorded at amortized cost and are subject to credit risk for capital management purposes. For trading-related transactions with maturities of more than one day, interest rate risk is included in the VaR measure. 

 

(millions of Canadian dollars)
As at October 31, 2024
Market risk measures
Balance
sheet
Trading(1)
Non-trading(2)
Not subject to market risk
Non-traded risk primary
risk sensitivity
Assets
Cash and deposits with financial institutions
31,549
257
20,440
10,852
Interest rate(3)
Securities
At fair value through profit or loss
115,935
113,445
2,490
−
Interest rate(3) and equity(4)
At fair value through other comprehensive income
14,622
−
14,622
−
Interest rate(3) and equity(5)
At amortized cost
14,608
−
14,608
−
Interest rate(3)
Securities purchased under reverse repurchase
agreements and securities borrowed
16,265
−
16,265
−
Interest rate(3)(6)
Loans, net of allowances
243,032
14,572
228,460
−
Interest rate(3)
Derivative financial instruments
12,309
11,686
623
−
Interest rate(7) and exchange rate(7)
Defined benefit asset
487
−
487
−
Other(8)
Other
13,419
573
−
12,846
462,226
140,533
297,995
23,698
Liabilities
Deposits
333,545
30,429
303,116
−
Interest rate(3)
Obligations related to securities sold short
10,873
10,873
−
−
Obligations related to securities sold under repurchase
agreements and securities loaned
38,177
−
38,177
−
Interest rate(3)(6)
Derivative financial instruments
15,760
15,240
520
−
Interest rate(7) and exchange rate(7)
Liabilities related to transferred receivables
28,377
10,564
17,813
−
Interest rate(3)
Defined benefit liability
103
−
103
−
Other(8)
Other
8,583
−
49
8,534
Interest rate(3)
Subordinated debt
1,258
−
1,258
−
Interest rate(3)
436,676
67,106
361,036
8,534


 

(1)       Trading positions whose risk measure is total VaR. For additional information, see the table on the following page and in the Market Risk section of the 2024 Annual Report that shows the VaR distribution of the trading portfolios by risk category and their diversification effect.

(2)       Non-trading positions that use other risk measures.

(3)       For additional information, see the table in the pages ahead and in the Market Risk section of the 2024 Annual Report that shows the VaR distribution of the trading portfolios by risk category and their diversification effect and the interest rate sensitivity table.

(4)       For additional information, see Note 7 to the audited annual consolidated financial statements for the year ended October 31, 2024.

(5)       The fair value of equity securities designated at fair value through other comprehensive income is presented in Notes 3 and 5 to the Consolidated Financial Statements.

(6)       These instruments are recorded at amortized cost and are subject to credit risk for capital management purposes. For trading-related transactions with maturities of more than one day, interest rate risk is included in the VaR measure.

(7)       For additional information, see Notes 18 and 19 to the audited annual consolidated financial statements for the year ended October 31, 2024.

(8)       For additional information, see Note 25 to the audited annual consolidated financial statements for the year ended October 31, 2024. 

 

Trading Activities

The table below shows the VaR distribution of trading portfolios by risk category and their diversification effect.

 

VaR of Trading Portfolios(1)(2)

 

(millions of Canadian dollars)
Quarter ended
Six months ended
April 30, 2025
January 31, 2025
April 30, 2024
April 30, 2025
April 30, 2024
Low
High
Average
Period end
Average
Period end
Average
Period end
Average
Average
Interest rate
(5.7)
(18.1)
(12.4)
(12.7)
(12.8)
(13.0)
(10.2)
(10.1)
(12.6)
(9.1)
Exchange rate
(0.8)
(3.6)
(1.5)
(1.7)
(2.0)
(0.9)
(1.9)
(1.5)
(1.8)
(2.2)
Equity
(5.0)
(8.9)
(6.2)
(5.6)
(4.8)
(6.5)
(5.0)
(4.5)
(5.5)
(5.6)
Commodity
(1.0)
(1.9)
(1.3)
(1.1)
(1.6)
(1.2)
(1.4)
(1.5)
(1.4)
(1.6)
Diversification effect(3)
n.m.
n.m.
8.7
9.2
9.1
8.0
7.4
7.4
8.9
7.9
Total trading VaR
(7.5)
(16.6)
(12.7)
(11.9)
(12.1)
(13.6)
(11.1)
(10.2)
(12.4)
(10.6)


 

n.m.   Computation of a diversification effect for the high and low is not meaningful, as highs and lows may occur on different days and be attributable to different types of risk.

(1)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

(2)       Amounts are presented on a pre-tax basis and represent one-day VaR using a 99% confidence level.

(3)       The total trading VaR is less than the sum of the individual risk factor VaR results due to the diversification effect. 

 

The average total VaR of the trading portfolios remained stable from the first quarter of 2025 to the second quarter of 2025.

 

Daily Trading and Underwriting Revenues

The following chart shows daily trading and underwriting revenues and VaR. During the quarter ended April 30, 2025, daily trading and underwriting revenues were positive on 98% of the days. In addition, one day was marked by net daily trading and underwriting losses in excess of $1 million. None of these losses exceeded VaR.

 

Quarter Ended April 30, 2025

(millions of Canadian dollars)

 

Interest Rate Sensitivity - Non-Trading Activities (Before Tax)

The following table presents the potential before-tax impact of an immediate and sustained 100-basis-point increase or of an immediate and sustained 100‑basis-point decrease in interest rates on the economic value of equity and on the net interest income of the Bank's non-trading portfolios for the next 12 months, assuming no further hedging is undertaken.

 

(millions of Canadian dollars)
As at April 30, 2025
As at October 31, 2024
Canadian dollar
Other currencies
Total
Canadian dollar
Other currencies
Total
Impact on equity
100-basis-point increase in the interest rate
(487)
(76)
(563)
(378)
(57)
(435)
100-basis-point decrease in the interest rate
482
75
557
352
48
400
Impact on net interest income
100-basis-point increase in the interest rate
127
(16)
111
121
(22)
99
100-basis-point decrease in the interest rate
(143)
18
(125)
(161)
25
(136)


 

Liquidity and Funding Risk

 

Liquidity and funding risk is the risk that the Bank will be unable to honour daily cash and financial obligations without resorting to costly and untimely measures. Liquidity and funding risk arises when sources of funds become insufficient to meet scheduled payments under the Bank's commitments.

 

Liquidity risk refers to the possibility that an institution may not be able to meet its financial obligations as they fall due, due to a mismatch between cash inflows and outflows, without incurring unacceptable losses.

 

Funding risk is defined as the risk to the Bank's ongoing ability to raise sufficient funds to finance actual or proposed business activities on an unsecured or secured basis at an acceptable price. The funding management priority is to achieve an optimal balance between deposits, securitization, secured funding, and unsecured funding. This brings optimal stability to the funding and reduces vulnerability to unpredictable events.

 

Regulatory Developments

The Bank continues to closely monitor regulatory developments and participates actively in various consultative processes. For additional information about the regulatory context as at October 31, 2024, refer to pages 95 and 96 of the Risk Management section in the 2024 Annual Report. Furthermore, since November 1, 2024, the new regulatory development below is to be considered.

 

On November 21, 2024, OSFI published an amended version of the Liability Adequacy Requirement (LAR) Guideline. The LAR Guideline incorporates two sets of revisions related to intraday liquidity and the treatment of bankers' acceptances. The revisions relating to intraday liquidity affect Chapters 1 and 7 of the LAR Guideline, while those relating to the processing of bankers' acceptances affect Chapters 3 and 4. No changes were made to Chapters 2, 5 and 6. Implementation of the new intraday liquidity rules is scheduled for November 2025, and is limited to the direct clearers of Lynx, Canada's high-value payment system.

 

Liquidity Management

Liquid Assets

To protect depositors and creditors from unexpected crisis situations, the Bank holds a portfolio of unencumbered liquid assets that can be readily liquidated to meet financial obligations. The majority of the unencumbered liquid assets are held in Canadian or U.S. dollars. Moreover, all assets that can be quickly monetized are considered liquid assets. The Bank's liquidity reserves do not factor in the availability of the emergency liquidity facilities of central banks. The following tables provide information on the Bank's encumbered and unencumbered assets.

 

Liquid Asset Portfolio(1)

 

(millions of Canadian dollars)
As at April 30,
2025
As at October 31,
2024
Bank-owned liquid assets(2)
Liquid assets
received(3)
Total
liquid assets
Encumbered
liquid assets(4)
Unencumbered liquid assets
Unencumbered liquid assets
Cash and deposits with financial institutions
31,422
−
31,422
14,712
16,710
19,819
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments
45,111
67,533
112,644
65,045
47,599
41,541
Issued or guaranteed by Canadian provincial and
municipal governments
16,901
12,359
29,260
18,023
11,237
10,669
Other debt securities
6,114
6,183
12,297
4,445
7,852
7,305
Equity securities
100,517
53,402
153,919
98,650
55,269
40,972
Loans
Securities backed by insured residential mortgages
18,785
−
18,785
9,519
9,266
8,471
As at April 30, 2025
218,850
139,477
358,327
210,394
147,933
As at October 31, 2024
192,169
117,906
310,075
181,298
128,777


 

(millions of Canadian dollars)
As at April 30, 2025
As at October 31, 2024
Unencumbered liquid assets by entity
National Bank (parent)
103,283
80,768
Domestic subsidiaries
10,615
12,023
Foreign subsidiaries and branches
34,035
35,986
147,933
128,777


 

(millions of Canadian dollars)
As at April 30, 2025
As at October 31, 2024
Unencumbered liquid assets by currency
Canadian dollar
76,698
66,970
U.S. dollar
64,254
53,960
Other currencies
6,981
7,847
147,933
128,777


 

Liquid Asset Portfolio(1) - Average(5)

 

(millions of Canadian dollars)
Quarter ended
April 30, 2025
October 31, 2024
Bank-owned
liquid assets(2)
Liquid assets
received(3)
Total
liquid assets
Encumbered
liquid assets(4)
Unencumbered liquid assets
Unencumbered liquid assets
Cash and deposits with financial institutions
31,414
−
31,414
14,390
17,024
20,762
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments
44,110
64,366
108,476
61,463
47,013
40,832
Issued or guaranteed by Canadian provincial and
municipal governments
17,377
12,060
29,437
19,180
10,257
9,063
Other debt securities
7,429
5,868
13,297
4,363
8,934
8,244
Equity securities
110,819
56,344
167,163
102,864
64,299
45,621
Loans
Securities backed by insured residential mortgages
18,398
−
18,398
9,218
9,180
8,486
229,547
138,638
368,185
211,478
156,707
133,008


 

(1)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

(2)       Bank-owned liquid assets include assets for which there are no legal or geographic restrictions.

(3)       Securities received as collateral with respect to securities financing and derivative transactions and securities purchased under reverse repurchase agreements and securities borrowed.

(4)       In the normal course of its funding activities, the Bank pledges assets as collateral in accordance with standard terms. Encumbered liquid assets include assets used to cover short sales, obligations related to securities sold under repurchase agreements and securities loaned, guarantees related to security-backed loans and borrowings, collateral related to derivative financial instrument transactions, asset-backed securities, and liquid assets legally restricted from transfers.

(5)       The average is based on the sum of the end-of-period balances of the three months of the quarter divided by three.

Summary of Encumbered and Unencumbered Assets(1)

 

(millions of Canadian dollars)
As at April 30, 2025
Encumbered
assets(2)
Unencumbered
assets
Total
Encumbered
assets as a %
of total assets
Pledged as
collateral
Other(3)
Available as
collateral
Other(4)
Cash and deposits with financial institutions
992
13,720
16,710
−
31,422
2.7
Securities
53,651
−
114,992
−
168,643
10.0
Securities purchased under reverse repurchase
agreements and securities borrowed
−
13,871
6,965
−
20,836
2.6
Loans, net of allowances
39,944
−
9,266
236,518
285,728
7.5
Derivative financial instruments
−
−
−
13,649
13,649
−
Premises and equipment
−
−
−
2,127
2,127
−
Goodwill
−
−
−
3,081
3,081
−
Intangible assets
−
−
−
1,870
1,870
−
Other assets
−
−
−
8,838
8,838
−
94,587
27,591
147,933
266,083
536,194
22.8
(millions of Canadian dollars)
As at October 31, 2024
Encumbered
assets(2)
Unencumbered
assets
Total
Encumbered
assets as a %
of total assets
Pledged as
collateral
Other(3)
Available as
collateral
Other(4)
Cash and deposits with financial institutions
697
11,033
19,819
−
31,549
2.5
Securities
50,071
−
95,094
−
145,165
10.8
Securities purchased under reverse repurchase
agreements and securities borrowed
−
10,872
5,393
−
16,265
2.4
Loans, net of allowances
40,296
−
8,471
194,265
243,032
8.7
Derivative financial instruments
−
−
−
12,309
12,309
−
Premises and equipment
−
−
−
1,868
1,868
−
Goodwill
−
−
−
1,522
1,522
−
Intangible assets
−
−
−
1,233
1,233
−
Other assets
−
−
−
9,283
9,283
−
91,064
21,905
128,777
220,480
462,226
24.4


 

(1)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

(2)       In the normal course of its funding activities, the Bank pledges assets as collateral in accordance with standard terms. Encumbered assets include assets used to cover short sales, obligations related to securities sold under repurchase agreements and securities loaned, guarantees related to security-backed loans and borrowings, collateral related to derivative financial instrument transactions, asset-backed securities, residential mortgage loans securitized and transferred under the Canada Mortgage Bond program, assets held in consolidated trusts supporting the Bank's funding activities, and mortgage loans transferred under the covered bond program.

(3)       Other encumbered assets include assets for which there are restrictions and that cannot therefore be used for collateral or funding purposes as well as assets used to cover short sales.

(4)       Other unencumbered assets are assets that cannot be used for collateral or funding purposes in their current form. This category includes assets that are potentially eligible as funding program collateral (e.g., mortgages insured by the Canada Mortgage and Housing Corporation that can be securitized into mortgage-backed securities under the National Housing Act (Canada)).

 

Liquidity Coverage Ratio

The liquidity coverage ratio (LCR) was introduced primarily to ensure that banks could withstand periods of severe short-term stress. LCR is calculated by dividing the total amount of high-quality liquid assets (HQLA) by the total amount of net cash outflows. OSFI has been requiring Canadian banks to maintain a minimum LCR of 100%. An LCR above 100% ensures that banks are holding sufficient high-quality liquid assets to cover net cash outflows given a severe, 30‑day liquidity crisis. The assumptions underlying the LCR scenario are established by the BCBS and OSFI's Liquidity Adequacy Requirements Guideline.

 

The table on the following page provides average LCR data calculated using the daily figures in the quarter. For the quarter ended April 30, 2025, the Bank's average LCR was 166%, well above the 100% regulatory requirement and demonstrating the Bank's solid short-term liquidity position.

LCR Disclosure Requirements(1)(2)

 

(millions of Canadian dollars)
Quarter ended
April 30, 2025
January 31, 2025
Total unweighted
value(3)(average)
Total weighted
value(4)(average)
Total weighted
value(4) (average)
High-quality liquid assets (HQLA)
Total HQLA
n.a.
98,206
89,902
Cash outflows
Retail deposits and deposits from small business customers, of which:
81,896
7,642
6,204
Stable deposits
30,447
914
856
Less stable deposits
51,449
6,728
5,348
Unsecured wholesale funding, of which:
128,420
70,748
66,110
Operational deposits (all counterparties) and deposits in networks of cooperative banks
37,508
9,156
9,057
Non-operational deposits (all counterparties)
84,921
55,565
51,063
Unsecured debt
5,991
6,027
5,990
Secured wholesale funding
n.a.
31,411
28,831
Additional requirements, of which:
82,269
21,718
21,391
Outflows related to derivative exposures and other collateral requirements
26,938
11,966
12,029
Outflows related to loss of funding on secured debt securities
2,303
2,269
1,977
Backstop liquidity and credit enhancement facilities and commitments to extend credit
53,028
7,483
7,385
Other contractual commitments to extend credit
4,265
2,708
655
Other contingent commitments to extend credit
190,401
2,673
2,158
Total cash outflows
n.a.
136,900
125,349
Cash inflows
Secured lending (e.g., reverse repos)
157,586
30,566
28,898
Inflows from fully performing exposures
17,121
12,145
9,630
Other cash inflows
32,647
32,259
27,537
Total cash inflows
207,354
74,970
66,065
Total adjusted
value(5)
Total adjusted
value(5)
Total HQLA
98,206
89,902
Total net cash outflows
61,930
59,284
Liquidity coverage ratio (%)(6)
166
%
154
%

 

n.a.     Not applicable

(1)      See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

(2)      OSFI prescribed a table format in order to standardize disclosure throughout the banking industry.

(3)       Unweighted values are calculated as outstanding balances maturing or callable within 30 days (for cash inflows and outflows).

(4)       Weighted values are calculated after the application of respective haircuts (for HQLA) or inflow and outflow rates.

(5)       Total adjusted values are calculated after the application of both haircuts and inflow and outflow rates and any applicable caps.

(6)       The data in this table is calculated using averages of the daily figures in the quarter.

 

As at April 30, 2025, Level 1 liquid assets represented 84% of the Bank's HQLA, which includes cash, central bank deposits, and bonds issued or guaranteed by the Canadian government and Canadian provincial governments.

 

Cash outflows arise from the application of OSFI-prescribed assumptions on deposits, debt, secured funding, commitments and additional collateral requirements. The cash outflows are partly offset by cash inflows, which come mainly from secured loans and performing loans. The Bank expects some quarter-over-quarter variation between reported LCRs without such variation being necessarily indicative of a trend. The variation between the quarter ended April 30, 2025 and the preceding quarter was a result of normal business operations. The Bank's liquid asset buffer is well in excess of its total net cash outflows.

 

The LCR assumptions differ from the assumptions used for the liquidity disclosures presented in the tables on the previous pages or those used for internal liquidity management rules. While the liquidity disclosure framework is prescribed by the EDTF, the Bank's internal liquidity metrics use assumptions that are calibrated according to its business model and experience.

 

Net Stable Funding Ratio

The BCBS has developed the net stable funding ratio (NSFR) to promote a more resilient banking sector. The NSFR requires institutions to maintain a stable funding profile in relation to the composition of their assets and off-balance-sheet activities. A viable funding structure is intended to reduce the likelihood that disruptions to an institution's regular sources of funding would erode its liquidity position in a way that would increase the risk of its failure and potentially lead to broader systemic stress. The NSFR is calculated by dividing available stable funding by required stable funding. OSFI has been requiring Canadian banks to maintain a minimum NSFR of 100%.

The following table provides the available stable funding and required stable funding in accordance with OSFI's Liquidity Adequacy Requirements Guideline. As at April 30, 2025, the Bank's NSFR was 127%, well above the 100% regulatory requirement and demonstrating the Bank's solid long-term liquidity position.

 

NSFR Disclosure Requirements(1)(2)

 

(millions of Canadian dollars)
As at April 30,
2025
As at January 31,
2025
Unweighted value by residual maturity
Weighted
value(3)
No
maturity
6 months
or less
Over
6 months
to 1 year
Over
1 year
Weighted
value(3)
Available Stable Funding (ASF) Items
Capital:
33,160
−
−
2,777
35,937
28,389
Regulatory capital
33,160
−
−
2,777
35,937
28,389
Other capital instruments
−
−
−
−
−
−
Retail deposits and deposits from small business customers:
75,420
19,095
9,696
34,571
128,836
105,964
Stable deposits
28,935
6,575
4,005
9,527
47,066
42,381
Less stable deposits
46,485
12,520
5,691
25,044
81,770
63,583
Wholesale funding:
83,968
96,807
36,131
69,202
143,835
131,403
Operational deposits
37,141
−
−
−
18,570
18,294
Other wholesale funding
46,827
96,807
36,131
69,202
125,265
113,109
Liabilities with matching interdependent assets(4)
−
2,479
2,716
24,209
−
−
Other liabilities(5):
17,972
10,440
1,239
789
NSFR derivative liabilities(5)
n.a.
86
n.a.
n.a.
All other liabilities and equity not included in the above categories
17,972
4,781
581
4,992
1,239
789
Total ASF
n.a.
n.a.
n.a.
n.a.
309,847
266,545
Required Stable Funding (RSF) Items
Total NSFR high-quality liquid assets (HQLA)
n.a.
n.a.
n.a.
n.a.
7,787
8,064
Deposits held at other financial institutions for operational purposes
−
−
−
−
−
−
Performing loans and securities:
66,784
118,223
38,489
121,390
200,025
174,271
Performing loans to financial institutions secured by Level 1 HQLA
255
6,590
−
−
342
136
Performing loans to financial institutions secured by non-Level-1
HQLA and unsecured performing loans to financial institutions
6,739
63,936
2,219
7,202
17,104
16,526
Performing loans to non-financial corporate clients, loans to retail
and small business customers, and loans to sovereigns, central
banks and PSEs, of which:
33,044
34,736
23,085
51,057
103,474
84,068
With a risk weight of less than or equal to 35% under the Basel II
Standardized Approach for credit risk
741
3,079
466
454
2,474
2,182
Performing residential mortgages, of which:
9,056
11,961
12,461
61,562
61,858
56,697
With a risk weight of less than or equal to 35% under the Basel II
Standardized Approach for credit risk
9,056
11,961
12,461
61,562
61,858
56,697
Securities that are not in default and do not qualify as HQLA, including
exchange-traded equities
17,690
1,000
724
1,569
17,247
16,844
Assets with matching interdependent liabilities(4)
−
2,479
2,716
24,209
−
−
Other assets(5):
11,759
32,374
31,661
28,723
Physical traded commodities, including gold
992
n.a.
n.a.
n.a.
992
712
Assets posted as initial margin for derivative contracts and
contributions to default funds of CCPs(5)
n.a.
12,761
10,847
10,503
NSFR derivative assets(5)
n.a.
3,351
3,266
3,851
NSFR derivative liabilities before deduction of the variation
margin posted(5)
n.a.
10,019
501
550
All other assets not included in the above categories
10,767
3,195
343
2,705
16,055
13,107
Off-balance-sheet items(5)
n.a.
140,626
5,374
4,954
Total RSF
n.a.
n.a.
n.a.
n.a.
244,847
216,012
Net Stable Funding Ratio (%)
n.a.
n.a.
n.a.
n.a.
127
%
123
%


 

n.a.     Not applicable

(1)       See the Financial Reporting Method section on pages 6 to 12 for additional information on capital management measures.

(2)       OSFI prescribed a table format in order to standardize disclosure throughout the banking industry.

(3)       Weighted values are calculated after application of the weightings set out in OSFI's Liquidity Adequacy Requirements Guideline.

(4)       As per OSFI's specifications, liabilities arising from transactions involving the Canada Mortgage Bond program and their corresponding encumbered mortgages are given ASF and RSF weights of 0%, respectively.

(5)       As per OSFI's specifications, there is no need to differentiate by maturities.

The NSFR represents the amount of ASF relative to the amount of RSF. ASF is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered by the NSFR, which extends to one year. The amount of RSF of a specific institution is a function of the liquidity characteristics and residual maturities of the various assets held by that institution as well as those of its off-balance-sheet exposures. The ASF and RSF amounts are calibrated to reflect the degree of stability of liabilities and liquidity of assets. The Bank expects some quarter-over-quarter variation between reported NSFRs without such variation being necessarily indicative of a long-term trend.

 

The NSFR assumptions differ from the assumptions used for the liquidity disclosures provided in the tables on the preceding pages or those used for internal liquidity management rules. While the liquidity disclosure framework is prescribed by the EDTF, the Bank's internal liquidity metrics use assumptions that are calibrated according to its business model and experience.

 

Funding

The Bank continuously monitors and analyzes market trends as well as possibilities for accessing less expensive and more flexible funding, considering both the risks and opportunities observed. The deposit strategy remains a priority for the Bank, which continues to prefer deposits to institutional funding.

 

The table below presents the residual contractual maturities of the Bank's wholesale funding. The information has been presented in accordance with the categories recommended by the EDTF working group for comparison purposes with other banks.

 

Residual Contractual Maturities of Wholesale Funding

 

(millions of Canadian dollars)
As at April 30, 2025
1 month or less
Over 1
month to
3 months
Over 3
months to
6 months
Over 6
months to
12 months
Subtotal
1 year
or less
Over 1
year to
2 years
Over 2
years
Total
Deposits from banks(1)
1,753
138
385
−
2,276
−
−
2,276
Certificates of deposit and commercial paper(2)
4,586
3,280
6,739
20,870
35,475
−
−
35,475
Senior unsecured medium-term notes(3)
275
2,745
2,637
10,395
16,052
6,118
13,502
35,672
Senior unsecured structured notes
−
−
−
248
248
1,357
3,366
4,971
Covered bonds and asset-backed securities
Mortgage securitization
−
2,107
176
1,493
3,776
4,145
21,482
29,403
Covered bonds
−
−
−
−
−
5,775
3,978
9,753
Subordinated liabilities(4)
−
−
−
−
−
−
2,822
2,822
6,614
8,270
9,937
33,006
57,827
17,395
45,150
120,372
Secured funding
−
2,107
176
1,493
3,776
9,920
25,460
39,156
Unsecured funding
6,614
6,163
9,761
31,513
54,051
7,475
19,690
81,216
6,614
8,270
9,937
33,006
57,827
17,395
45,150
120,372
As at October 31, 2024
3,200
11,456
15,080
16,669
46,405
12,239
44,588
103,232


 

(1)       Deposits from banks include all non-negotiable term deposits from banks.

(2)       Includes bearer deposit notes.

(3)       Includes debts subject to bank recapitalization (bail-in) conversion regulations.

(4)       Subordinated debt is presented in this table, but the Bank does not consider it as part of its wholesale funding.

 

As part of a comprehensive liquidity management framework, the Bank regularly reviews its contracts that stipulate that additional collateral could be required in the event of a downgrade of the Bank's credit rating. The Bank's liquidity position management approach already incorporates additional collateral requirements in the event of a one-notch to three-notch downgrade in credit rating. The table below presents the additional collateral requirements in the event of a one-, two-, or three-notch credit rating downgrade.

 

(millions of Canadian dollars)
As at April 30, 2025
One-notch
downgrade
Two-notch
downgrade
Three-notch
downgrade
Derivatives(1)
37
75
140


 

(1)       Contractual requirements related to agreements known as initial margins and variation margins.

 

Residual Contractual Maturities of Balance Sheet Items and Off-Balance-Sheet Commitments

The following tables present balance sheet items and off-balance-sheet commitments by residual contractual maturity as at April 30, 2025 with comparative figures as at October 31, 2024. The information gathered from this maturity analysis is a component of liquidity and funding management. However, this maturity profile does not represent how the Bank manages its interest rate risk or its liquidity risk and funding needs. The Bank considers factors other than contractual maturity when assessing liquid assets or determining expected future cash flows.

 

In the normal course of business, the Bank enters into various off-balance-sheet commitments. The credit instruments used to meet the financing needs of its clients represent the maximum amount of additional credit the Bank could be obligated to extend if the commitments were fully drawn.

 

The Bank also has future minimum commitments under leases for premises as well as under other contracts, mainly commitments to purchase loans and contracts for outsourced information technology services. Most of the lease commitments are related to operating leases.

 

(millions of Canadian dollars)
As at April 30, 2025(1)
1 month or less
Over 1
month to
3 months
Over 3
months to
6 months
Over 6
months to
9 months
Over 9
months to
12 months
Over 1
year to
2 years
Over 2
years to
5 years
Over 5 years
No
specified
maturity
Total
Assets
Cash and deposits
with financial institutions
17,498
1,129
1,125
875
678
−
−
−
10,117
31,422
Securities
At fair value through
profit or loss
135
1,286
847
386
1,037
5,503
10,902
12,891
100,105
133,092
At fair value through
other comprehensive income
115
92
131
451
157
2,131
7,261
9,351
412
20,101
At amortized cost
15
676
418
955
146
2,753
7,174
3,313
−
15,450
265
2,054
1,396
1,792
1,340
10,387
25,337
25,555
100,517
168,643
Securities purchased under
reverse repurchase
agreements and
securities borrowed
11,932
1,772
2,675
−
−
345
−
−
4,112
20,836
Loans(2)
Residential mortgage
2,785
3,753
6,051
5,917
6,246
26,399
46,065
10,708
583
108,507
Personal
1,096
1,177
1,872
1,804
2,296
7,210
12,094
6,325
13,659
47,533
Credit card
2,835
2,835
Business and government
13,844
7,610
7,448
7,445
5,881
15,036
26,608
13,863
31,056
128,791
Allowances for credit losses
(1,938)
(1,938)
17,725
12,540
15,371
15,166
14,423
48,645
84,767
30,896
46,195
285,728
Other
Derivative financial instruments
2,106
2,040
1,236
1,268
844
1,649
2,026
2,480
−
13,649
Premises and equipment
2,127
2,127
Goodwill
3,081
3,081
Intangible assets
1,870
1,870
Other assets(2)
1,554
1,416
226
71
272
1,012
194
289
3,804
8,838
3,660
3,456
1,462
1,339
1,116
2,661
2,220
2,769
10,882
29,565
51,080
20,951
22,029
19,172
17,557
62,038
112,324
59,220
171,823
536,194


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the balances as at April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       Amounts collectible on demand are considered to have no specified maturity.

 

(millions of Canadian dollars)
As at April 30, 2025(1)
1 month or less
Over 1
month to
3 months
Over 3
months to
6 months
Over 6
months to
9 months
Over 9
months to
12 months
Over 1
year to
2 years
Over 2
years to
5 years
Over 5 years
No
specified
maturity
Total
Liabilities and equity
Deposits(2)(3)
Personal
3,199
5,095
6,725
5,702
4,065
10,663
17,062
10,084
59,413
122,008
Business and government
43,199
11,067
13,373
21,708
13,200
14,725
36,693
6,209
97,915
258,089
Deposit-taking institutions
2,768
1,390
580
503
161
−
9
3
2,463
7,877
49,166
17,552
20,678
27,913
17,426
25,388
53,764
16,296
159,791
387,974
Other
Obligations related
to securities sold short(4)
41
838
1,212
242
317
588
2,857
6,055
1,721
13,871
Obligations related to
securities sold under
repurchase agreements and
securities loaned
22,942
2,942
1,037
−
3,446
1,127
−
−
9,490
40,984
Derivative financial
instruments
2,834
2,376
1,261
1,513
2,068
1,927
2,071
4,046
−
18,096
Liabilities related to transferred
receivables(5)
−
2,107
176
1,285
208
4,145
9,470
12,012
−
29,403
Lease liabilities(6)
1
7
18
21
22
83
198
270
−
620
Other liabilities - Other items(2)(6)
2,115
457
274
152
386
112
109
176
5,738
9,519
27,933
8,727
3,978
3,213
6,447
7,982
14,705
22,559
16,949
112,493
Subordinated debt
−
−
−
−
−
−
−
2,822
−
2,822
Equity
32,905
32,905
77,099
26,279
24,656
31,126
23,873
33,370
68,469
41,677
209,645
536,194
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit
91
976
1,525
4,376
1,803
1,637
239
20
−
10,667
Credit card receivables(7)
10,986
10,986
Backstop liquidity and credit
enhancement facilities(8)
15
−
−
15
−
5,552
−
−
5,515
11,097
Commitments to extend credit(9)
2,983
14,567
9,639
7,431
6,505
6,611
8,276
648
56,064
112,724
Obligations related to:
Lease commitments(10)
1
1
2
2
2
6
7
17
−
38
Other contracts
4
8
12
12
12
49
241
6
156
500


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the balances as at April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       Amounts payable upon demand or notice are considered to have no specified maturity.

(3)       The Deposits item is presented in greater detail than it is on the Consolidated Balance Sheet.

(4)       Amounts are disclosed according to the remaining contractual maturity of the underlying security.

(5)       These amounts mainly include liabilities related to the securitization of mortgage loans.

(6)       The Other liabilities item is presented in greater detail than it is on the Consolidated Balance Sheet.

(7)       These amounts are unconditionally revocable at the Bank's discretion at any time.

(8)       In the event of payment on one of the backstop liquidity facilities, the Bank will receive as collateral government bonds in an amount up to $5.6 billion.

(9)       These amounts include $58.5 billion that is unconditionally revocable at the Bank's discretion at any time.

(10)    These amounts include leases for which the underlying asset is of low value and leases other than for real estate of less than one year.

 

(millions of Canadian dollars)
As at October 31, 2024
1 month or less
Over 1
month to
3 months3 months
Over 3
months to
6 months
Over 6
months to
9 months
Over 9
months to
12 months
Over 1
year to
2 years
Over 2
years to
5 years
Over 5 years
No specified maturity
Total
Assets
Cash and deposits
with financial institutions
20,300
868
458
395
146
−
−
−
9,382
31,549
Securities
At fair value through
profit or loss
155
179
692
1,173
1,691
4,018
10,420
9,930
87,677
115,935
At fair value through
other comprehensive income
14
97
263
33
34
2,863
5,688
4,964
666
14,622
At amortized cost
232
756
545
931
629
2,748
7,170
1,597
−
14,608
401
1,032
1,500
2,137
2,354
9,629
23,278
16,491
88,343
145,165
Securities purchased under
reverse repurchase
agreements and
securities borrowed
5,525
2,900
2,222
881
−
696
−
−
4,041
16,265
Loans(1)
Residential mortgage
1,901
2,012
3,466
4,431
4,762
23,671
44,223
9,993
550
95,009
Personal
861
865
1,648
1,843
1,890
7,957
12,050
6,086
13,683
46,883
Credit card
2,761
2,761
Business and government
12,533
5,621
4,733
4,747
5,588
10,704
18,364
6,545
30,885
99,720
Allowances for credit losses
(1,341)
(1,341)
15,295
8,498
9,847
11,021
12,240
42,332
74,637
22,624
46,538
243,032
Other
Derivative financial instruments
2,619
1,950
1,187
643
375
1,707
1,576
2,252
−
12,309
Premises and equipment
1,868
1,868
Goodwill
1,522
1,522
Intangible assets
1,233
1,233
Other assets(1)
3,080
213
757
1,298
221
855
426
102
2,331
9,283
5,699
2,163
1,944
1,941
596
2,562
2,002
2,354
6,954
26,215
47,220
15,461
15,971
16,375
15,336
55,219
99,917
41,469
155,258
462,226


 

(1)       Amounts collectible on demand are considered to have no specified maturity.

 

(millions of Canadian dollars)
As at October 31, 2024
1 month or less
Over 1
month to
3 months
Over 3
months to
6 months
Over 6
months to
9 months
Over 9
months to
12 months
Over 1
year to
2 years
Over 2
years to
5 years
Over 5 years
No specified maturity
Total
Liabilities and equity
Deposits(1)(2)
Personal
4,022
3,808
4,840
5,342
4,810
6,856
13,857
7,170
44,476
95,181
Business and government
34,782
14,521
18,716
10,445
6,927
9,649
37,905
6,273
93,512
232,730
Deposit-taking institutions
803
101
364
1,188
401
11
2
26
2,738
5,634
39,607
18,430
23,920
16,975
12,138
16,516
51,764
13,469
140,726
333,545
Other
Obligations related
to securities sold short(3)
124
260
396
113
64
1,141
2,323
4,354
2,098
10,873
Obligations related to
securities sold under
repurchase agreements and
securities loaned
19,554
2,510
3,915
3,481
−
1,073
−
−
7,644
38,177
Derivative financial
instruments
1,875
3,134
2,183
509
372
1,844
1,886
3,957
−
15,760
Liabilities related to transferred
receivables(4)
−
1,897
1,216
1,543
197
4,169
8,872
10,483
−
28,377
Securitization - Credit card(5)
49
−
−
−
−
−
−
−
−
49
Lease liabilities(5)
6
13
19
19
18
72
176
149
−
472
Other liabilities - Other items(1)(5)
1,674
199
238
10
51
65
79
170
5,679
8,165
23,282
8,013
7,967
5,675
702
8,364
13,336
19,113
15,421
101,873
Subordinated debt
−
−
−
−
−
−
−
1,258
−
1,258
Equity
25,550
25,550
62,889
26,443
31,887
22,650
12,840
24,880
65,100
33,840
181,697
462,226
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit
80
1,861
1,914
1,420
1,456
2,506
203
20
−
9,460
Credit card receivables(6)
10,515
10,515
Backstop liquidity and credit
enhancement facilities(7)
−
15
5,552
15
−
−
−
−
5,483
11,065
Commitments to extend credit(8)
3,243
12,896
9,811
8,121
4,600
5,248
3,635
114
52,612
100,280
Obligations related to:
Lease commitments(9)
1
1
2
1
1
5
4
2
−
17
Other contracts(10)
5
10
14
12
12
48
244
9
161
515


 

(1)       Amounts payable upon demand or notice are considered to have no specified maturity.

(2)       The Deposits item is presented in greater detail than it is on the Consolidated Balance Sheet.

(3)       Amounts are disclosed according to the remaining contractual maturity of the underlying security.

(4)       These amounts mainly include liabilities related to the securitization of mortgage loans.

(5)       The Other liabilities item is presented in greater detail than it is on the Consolidated Balance Sheet.

(6)       These amounts are unconditionally revocable at the Bank's discretion at any time.

(7)       In the event of payment on one of the backstop liquidity facilities, the Bank will receive as collateral government bonds in an amount up to $5.6 billion.

(8)       These amounts include $48.6 billion that is unconditionally revocable at the Bank's discretion at any time.

(9)       These amounts include leases for which the underlying asset is of low value and leases other than for real estate of less than one year.

(10)    These amounts include $5 million in contractual commitments related to the head office building.

 

Environmental and Social Risk

 

Environmental and social risk is the possibility that environmental and social matters would result in a financial loss for the Bank or affect its business activities. For additional information on the ways the Bank addresses and mitigates this risk, see the Environmental and Social Risk section on pages 110 to 112 of the Bank's 2024 Annual Report.

 

Regulatory Developments

The Bank continues to closely monitor regulatory developments and participates actively in various consultative processes. Since November 1, 2024, the new regulatory development below is to be considered.

 

On December 18, 2024, the Canadian Sustainability Standards Board (CSSB) published its first Canadian Sustainability Disclosure Standards (CSDS).

CSDS 1 - General Requirements for Disclosure of Sustainability-related Financial Information, and CSDS 2 - Climate-related Disclosures, which are aligned with IFRS S1 - General Requirements for Disclosure of Sustainability-related financial Information and IFRS S2 - Climate-related Disclosures, retain the proposals included in the exposure drafts published on March 13, 2024, and include additional transition relief measures for certain disclosure requirements. CSDS will be applicable to D-SIBs at the end of fiscal 2026, and transitional relief measures will postpone certain disclosure requirements until the end of fiscal 2029. Disclosure under CSDS will be voluntary until mandated by the CSA. On April 23, 2025, the CSA announced that it was pausing its work on projects related to mandatory climate-related disclosure and amendments to existing diversity disclosure requirements. The CSA will monitor regulatory developments and revisit these two projects in the coming years.

 

On March 7, 2025, OSFI released an update to Guideline B-15, Climate Risk Management. Key changes include the deferral of the Scope 3 greenhouse gas (GHG) emissions disclosure requirement and clarification of expectations regarding asset management activities.

Risk Disclosures

 

One of the purposes of the 2024 Annual Report, the Report to Shareholders - Second Quarter 2025, and the related supplementary information documents is to provide transparent, high-quality risk disclosures in accordance with the recommendations made by the Financial Stability Board's EDTF group. The following table lists the references where users can find information that responds to the EDTF's 32 recommendations.

 

Pages
2024
Annual Report
Report to
Shareholders(1)
Supplementary
Regulatory Capital
and Pillar 3 Disclosure(1)
General
1
Location of risk disclosures
12
47
Management's Discussion and Analysis
55 to 112, 125 and 127 to 129
25 to 46
Consolidated Financial Statements
Notes 1, 8, 18, 25 and 31
Notes 6 and 13
Supplementary Financial Information
23 to 33(2)
Supplementary Regulatory Capital and Pillar 3 Disclosure
5 to 62
2
Risk terminology and risk measures
65 to 112
3
Top and emerging risks
24 and 70 to 77
5 and 31 to 46
4
New key regulatory ratios
56 to 59, 95, 96 and 99 to 102
25, 26, 36 and 38 to 41
Risk governance and risk management
5
Risk management organization, processes and key functions
65 to 89, 95 to 97 and 102
6
Risk management culture
65 and 66
7
Key risks by business segment, risk management
and risk appetite
64 to 66 and 70
8
Stress testing
55, 66, 83, 93, 94 and 97
Capital adequacy and risk-weighted assets (RWA)
9
Minimum Pillar 1 capital requirements
56 to 59
25 and 26
10
Reconciliation of the accounting balance sheet to
the regulatory balance sheet
11 to 17, 20 and 21
11
Movements in regulatory capital
62
28
12
Capital planning
55 to 64
13
RWA by business segment and by risk type
64
7
14
Capital requirements by risk and the RWA calculation method
78 to 82
7
15
Banking book credit risk
7
16
Movements in RWA by risk type
63
29
7
17
Assessment of credit risk model performance
69, 79 to 82 and 88
41
Liquidity
18
Liquidity management and components of the liquidity buffer
95 to 102
36 to 41
Funding
19
Summary of encumbered and unencumbered assets
98 and 99
38
20
Residual contractual maturities of balance sheet items and
off-balance-sheet commitments
230 to 234
42 to 45
21
Funding strategy and funding sources
102 to 104
41
Market risk
22
Linkage of market risk measures to balance sheet
90 and 91
33 and 34
23
Market risk factors
88 to 94, 218 and 219
33 to 36
24
VaR: Assumptions, limitations and validation procedures
92
25
Stress tests and backtesting
88 to 94
Credit risk
26
Credit risk exposures
87 and 179 to 191
32 and 71 to 83
22 to 50 and 23 to 31(2)
27
Policies for identifying impaired loans
84, 85, 152 and 153
28
Movements in impaired loans and allowances for credit losses
125, 128, 129 and 179 to 191
71 to 83
28 to 31(2)
29
Counterparty credit risk relating to derivative transactions
83 to 86 and 198 to 201
42 to 50, 32(2) and 33(2)
30
Credit risk mitigation
81 to 86, 176 and 184
24, 28, 29 and 48 to 58
Other risks
31
Other risks: Governance, measurement and management
76, 77 and 104 to 112
32
Publicly known risk events
24, 104 and 105
5, 31 and 46


 

(1)       Second quarter 2025.

(2)       These pages are included in the document entitled Supplementary Financial Information - Second Quarter 2025.

Accounting Policies and Financial Disclosure

 

Material Accounting Policies and Accounting Estimates

 

The unaudited interim condensed consolidated financial statements for the quarter and six-month period ended April 30, 2025 were prepared in accordance with IAS 34 - Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and use 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 finance lease accounting described below as a result of the acquisition of the Canadian Western Bank (CWB). The financial results of CWB have been consolidated in the Bank's financial statements as of February 3, 2025 and results have been recorded in Personal and Commercial, Wealth Management, and Financial Markets segments and in the Other heading segment of results.

 

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 lease, which represents the minimum payments receivable from the lessee plus any unguaranteed residual value expected to be recovered at the end of the lease, 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 IFRS, 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 accounting policies are considered critical given their importance to the presentation of the Bank's financial position and operating results and require subjective and complex judgments and estimates on matters that are inherently uncertain. Any change in these judgments and estimates could have a significant impact on the Bank's consolidated financial statements. The material accounting policies and accounting estimates are the same as those described on pages 113 to 118 of the 2024 Annual Report, except for the addition mentioned above.

 

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. 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 uncertainty surrounding certain key inputs used in measuring ECLs is described in Note 6 to the 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 the Consolidated Financial Statements.

 

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.

 

Financial Disclosure

 

During the second quarter of 2025, no changes were made to the policies, procedures, and other processes that comprise the Bank's internal control over financial reporting that had or could reasonably have a significant impact on the internal control over financial reporting.

 

Following the acquisition of CWB on February 3, 2025, the Bank implemented and amended certain processes related to internal control over financial reporting. These amendments did not have a material impact on internal control over financial reporting.

 

Quarterly Financial Information

 

(millions of Canadian dollars,
except per share amounts)
2025
2024
2023
2024
2023
Q2(1)
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Total
Total
Total revenues
3,650
3,183
2,944
2,996
2,750
2,710
2,560
2,490
11,400
10,058
Net income
896
997
955
1,033
906
922
751
830
3,816
3,289
Earnings per share($)
Basic
2.19
2.81
2.69
2.92
2.56
2.61
2.11
2.35
10.78
9.33
Diluted
2.17
2.78
2.66
2.89
2.54
2.59
2.09
2.33
10.68
9.24
Dividends per common share($)
1.14
1.14
1.10
1.10
1.06
1.06
1.02
1.02
4.32
3.98
Return on common
shareholders' equity(%)(2)
11.9
16.7
16.4
18.4
16.9
17.1
14.1
16.1
17.2
16.3
Total assets
536,194
483,833
462,226
453,933
441,690
433,927
423,477
425,936
Net impaired loans(2)
2,437
1,836
1,629
1,482
1,426
1,276
1,276
1,156
Per common share($)
Book value(2)
76.13
68.15
65.74
64.64
62.28
61.18
60.40
58.53
Share price
High
127.44
140.76
134.23
118.17
114.68
103.38
103.58
103.28
Low
107.01
128.79
111.98
106.21
101.24
86.50
84.97
94.62


 

(1)       On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results were consolidated from the closing date, which impacted the results, balances and ratios for the quarter and the six-month period ended April 30, 2025. For additional information on the impact of the CWB acquisition, see the Acquisition section.

(2)       See the Glossary section on pages 51 to 54 for details on the composition of these measures.

Glossary

 

Acceptances

Acceptances and the customers' liability under acceptances constitute a guarantee of payment by a bank and can be traded in the money market. The Bank earns a "stamping fee" for providing this guarantee.

 

Allowances for credit losses

Allowances for credit losses represent management's unbiased estimate of expected credit losses as at the balance sheet date. These allowances are primarily related to loans and off-balance-sheet items such as loan commitments and financial guarantees.

 

Assets under administration

Assets in respect of which a financial institution provides administrative services on behalf of the clients who own the assets. Such services include custodial services, collection of investment income, settlement of purchase and sale transactions, and record-keeping. Assets under administration are not reported on the balance sheet of the institution offering such services.

 

Assets under management

Assets managed by a financial institution and that are beneficially owned by clients. Management services are more comprehensive than administrative services and include selecting investments or offering investment advice. Assets under management, which may also be administered by the financial institution, are not reported on the balance sheet of the institution offering such services.

 

Available TLAC

Available TLAC includes total capital as well as certain senior unsecured debt subject to the federal government's bail-in regulations that satisfy all of the eligibility criteria in OSFI's Total Loss Absorbing Capacity (TLAC) Guideline.

 

Average interest-bearing assets

Average interest-bearing assets include interest-bearing deposits with financial institutions and certain cash items, securities, securities purchased under reverse repurchase agreements and securities borrowed, and loans, while excluding customers' liability under acceptances and other assets. The average is calculated based on the daily balances for the period.

 

Average interest-bearing assets, non-trading

Average interest-bearing assets, non-trading, include interest-bearing deposits with financial institutions and certain cash items, securities purchased under reverse repurchase agreements and securities borrowed, and loans, while excluding other assets and assets related to trading activities. The average is calculated based on the daily balances for the period.

Average volumes

Average volumes represent the average of the daily balances for the period of the consolidated balance sheet items.

 

Basic earnings per share

Basic earnings per share is calculated by dividing net income attributable to common shareholders by the weighted average basic number of common shares outstanding.

 

Basis point (bps)

Unit of measure equal to one one-hundredth of a percentage point (0.01%).

 

Book value of a common share

The book value of a common share is calculated by dividing common shareholders' equity by the number of common shares on a given date.

 

Common Equity Tier 1 (CET1) capital ratio

CET1 capital consists of common shareholders' equity less goodwill, intangible assets, and other capital deductions. The CET1 capital ratio is calculated by dividing total CET1 capital by the corresponding risk-weighted assets.

 

Compound annual growth rate (CAGR)

CAGR is a rate of growth that shows, for a period exceeding one year, the annual change as though the growth had been constant throughout the period.

 

Derivative financial instruments

Derivative financial instruments are financial contracts whose value is derived from an underlying interest rate, exchange rate, equity price, commodity price, credit instrument or index. Examples of derivatives include swaps, options, forward rate agreements, and futures. The notional amount of the derivative is the contract amount used as a reference point to calculate the payments to be exchanged between the two parties, and the notional amount itself is generally not exchanged by the parties.

 

Diluted 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.

 

Dividend payout ratio

The dividend payout ratio represents the dividends of common shares (per share amount) expressed as a percentage of basic earnings per share.

Economic capital

Economic capital is the internal measure used by the Bank to determine the capital required for its solvency and to pursue its business operations. Economic capital takes into consideration the credit, market, operational, business and other risks to which the Bank is exposed as well as the risk diversification effect among them and among the business segments. Economic capital thus helps the Bank to determine the capital required to protect itself against such risks and ensure its long-term viability.

 

Efficiency ratio

The efficiency ratio represents non-interest expenses expressed as a percentage of total revenues. It measures the efficiency of the Bank's operations.

 

Fair value

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

 

Gross impaired loans as a percentage of total loans and acceptances

This measure represents gross impaired loans expressed as a percentage of the balance of loans and acceptances.

 

Gross impaired loans excluding Credigy's POCI loans

Gross impaired loans excluding Credigy subsidiary's POCI loans are all loans classified in Stage 3 and POCI loans of the expected credit loss model excluding Credigy subsidiary's POCI loans.

 

Gross impaired loans excluding Credigy's POCI loans as a percentage of total loans and acceptances

This measure represents gross impaired loans excluding Credigy subsidiary's POCI loans expressed as a percentage of the balance of loans and acceptances.

 

Hedging

The purpose of a hedging transaction is to modify the Bank's exposure to one or more risks by creating an offset between changes in the fair value of, or the cash flows attributable to, the hedged item and the hedging instrument.

 

Impaired loans

The Bank considers a financial asset, other than a credit card receivable, to be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred or when contractual payments are 90 days past due. Credit card receivables are considered credit-impaired and are fully written off at the earlier of the following dates: when a notice of bankruptcy is received, a settlement proposal is made, or contractual payments are 180 days past due.

 

Leverage ratio

The leverage ratio is calculated by dividing Tier 1 capital by total exposure. Total exposure is defined as the sum of on-balance-sheet assets (including derivative financial instrument exposures and securities financing transaction exposures) and off-balance-sheet items.

 

Liquidity coverage ratio (LCR)

The LCR is a measure designed to ensure that the Bank has sufficient high-quality liquid assets to cover net cash outflows given a severe, 30‑day liquidity crisis.

Loans and acceptances

Loans and acceptances represent the sum of loans and of the customers' liability under acceptances.

 

Loan-to-value ratio

The loan-to-value ratio is calculated according to the total facility amount for residential mortgages and home equity lines of credit divided by the value of the related residential property.

 

Master netting agreement

Legal agreement between two parties that have multiple derivative contracts with each other that provides for the net settlement of all contracts through a single payment, in the event of default, insolvency or bankruptcy.

 

Net impaired loans

Net impaired loans are gross impaired loans presented net of allowances for credit losses on Stage 3 loan amounts drawn.

 

Net impaired loans as a percentage of total loans and acceptances

This measure represents net impaired loans as a percentage of the balance of loans and acceptances.

 

Net impaired loans excluding Credigy's POCI loans

Net impaired loans excluding Credigy subsidiary's POCI loans are gross impaired loans excluding the Credigy subsidiary's POCI loans presented net of allowances for credit losses on amounts drawn on Stage 3 loans granted by the Bank and the POCI loans excluding the Credigy subsidiary's POCI loans.

 

Net interest income from trading activities

Net interest income from trading activities comprises dividends related to financial assets and liabilities associated with trading activities, net of interest expenses and interest income related to the financing of these financial assets and liabilities.

 

Net interest income, non-trading

Net interest income, non-trading, comprises revenues related to financial assets and liabilities associated with non-trading activities, net of interest expenses and interest income related to the financing of these financial assets and liabilities.

 

Net interest margin

Net interest margin is calculated by dividing net interest income by average interest-bearing assets.

 

Net stable funding ratio (NSFR)

The NSFR ratio is a measure that helps guarantee that the Bank is maintaining a stable funding profile to reduce the risk of funding stress.

 

Net write-offs as a percentage of average loans and acceptances

This measure represents the net write-offs (net of recoveries) expressed as a percentage of average loans and acceptances.

Non-interest income related to trading activities

Non-interest income related to trading activities consists of realized and unrealized gains and losses as well as interest income on securities measured at fair value through profit or loss, income from held-for-trading derivative financial instruments, changes in the fair value of loans at fair value through profit or loss, changes in the fair value of financial instruments designated at fair value through profit or loss, certain commission income, other trading activity revenues, and any applicable transaction costs.

 

Office of the Superintendent of Financial Institutions (Canada) (OSFI)

The mandate of OSFI is to regulate and supervise financial institutions and private pension plans subject to federal oversight, to help minimize undue losses to depositors and policyholders and, thereby, to contribute to public confidence in the Canadian financial system.

 

Operating leverage

Operating leverage is the difference between the growth rate for total revenues and the growth rate for non-interest expenses.

 

Provisioning rate

This measure represents the allowances for credit losses on impaired loans expressed as a percentage of gross impaired loans.

 

Provisioning rate excluding Credigy's POCI loans

This measure represents the allowances for credit losses on impaired loans excluding Credigy subsidiary's POCI loans expressed as a percentage of gross impaired loans excluding Credigy subsidiary's POCI loans.

 

Provisions for credit losses

Amount charged to income necessary to bring the allowances for credit losses to a level deemed appropriate by management and is comprised of provisions for credit losses on impaired and non-impaired financial assets.

 

Provisions for credit losses as a percentage of average loans and acceptances

This measure represents the provisions for credit losses expressed as a percentage of average loans and acceptances.

 

Provisions for credit losses on impaired loans as a percentage of average loans and acceptances

This measure represents the provisions for credit losses on impaired loans expressed as a percentage of average loans and acceptances.

 

Provisions for credit losses on impaired loans excluding Credigy's POCI loans

Amount charged to income necessary to bring the allowances for credit losses to a level deemed appropriate by management and is comprised of provisions for credit losses on impaired financial assets excluding Credigy subsidiary's POCI loans.

 

Provisions for credit losses on impaired loans excluding Credigy's POCI loans as a percentage of average loans and acceptances or provisions for credit losses on impaired loans excluding Credigy's POCI loans ratio

This measure represents the provisions for credit losses on impaired loans excluding Credigy subsidiary's POCI loans expressed as a percentage of average loans and acceptances.

 

Return on average assets

Return on average assets represents net income expressed as a percentage of average assets.

 

Return on common shareholders' equity (ROE)

ROE represents net income attributable to common shareholders expressed as a percentage of average equity attributable to common shareholders. It is a general measure of the Bank's efficiency in using equity.

 

Risk-weighted assets

Assets are risk weighted according to the guidelines established by OSFI. In the Standardized calculation approach, risk factors are applied directly to the face value of certain assets in order to reflect comparable risk levels. In the Advanced Internal Ratings-Based (AIRB) Approach, risk-weighted assets are derived from the Bank's internal models, which represent the Bank's own assessment of the risks it incurs. In the Foundation Internal Ratings-Based (FIRB) Approach, the Bank can use its own estimate of probability of default but must rely on OSFI estimates for the loss given default and exposure at default risk parameters. Off-balance-sheet instruments are converted to balance sheet (or credit) equivalents by adjusting the notional values before applying the appropriate risk-weighting factors.

 

Securities purchased under reverse repurchase agreements

Securities purchased by the Bank from a client pursuant to an agreement under which the securities will be resold to the same client on a specified date and at a specified price. Such an agreement is a form of short-term collateralized lending.

 

Securities sold under repurchase agreements

Financial obligations related to securities sold pursuant to an agreement under which the securities will be repurchased on a specified date and at a specified price. Such an agreement is a form of short-term funding.

 

Structured entity

A structured entity is an entity created to accomplish a narrow and well-defined objective and is designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate solely to administrative tasks and the relevant activities are directed by means of contractual arrangements.

 

Taxable equivalent basis

Taxable equivalent basis is a calculation method that consists of grossing up certain revenues taxed at lower rates (notably dividends) by the income tax to a level that would make it comparable to revenues from taxable sources in Canada, and an equivalent amount is recognized in the income taxes.

 

Tier 1 capital ratio

Tier 1 capital ratio consists of Common Equity Tier 1 capital and Additional Tier 1 instruments, namely, qualifying non-cumulative preferred shares and the eligible amount of innovative instruments. The Tier 1 capital ratio is calculated by dividing Tier 1 capital, less regulatory adjustments, by the corresponding risk-weighted assets.

 

TLAC leverage ratio

The TLAC leverage ratio is an independent risk measure that is calculated by dividing available TLAC by total exposure, as set out in OSFI's Total Loss Absorbing Capacity (TLAC) Guideline.

 

TLAC ratio

The TLAC ratio is a measure used to assess whether a non-viable Domestic Systemically Important Bank (D-SIB) has sufficient loss-absorbing capacity to support its recapitalization. It is calculated by dividing available TLAC by risk weighted assets, as set out in OSFI's Total Loss Absorbing Capacity (TLAC) Guideline.

 

Total capital ratio

Total capital is the sum of Tier 1 and Tier 2 capital. Tier 2 capital consists of the eligible portion of subordinated debt and certain allowances for credit losses. The Total capital ratio is calculated by dividing Total capital, less regulatory adjustments, by the corresponding risk-weighted assets.

 

Total shareholder return (TSR)

TSR represents the average total return on an investment in the Bank's common shares. The return includes changes in share price and assumes that the dividends received were reinvested in additional common shares of the Bank.

Trading activity revenues

Trading activity revenues consist of the net interest income and the non-interest income related to trading activities. Net interest income comprises dividends related to financial assets and liabilities associated with trading activities, and some interest income related to the financing of these financial assets and liabilities net of interest expenses and interest income related to the financing of these financial assets and liabilities. Non-interest income consists of realized and unrealized gains and losses as well as interest income on securities measured at fair value through profit or loss, income from held-for-trading derivative financial instruments, changes in the fair value of loans at fair value through profit or loss, changes in the fair value of financial instruments designated at fair value through profit or loss, realized and unrealized gains and losses as well as interest expense on obligations related to securities sold short, certain commission income, other trading activity revenues, and any applicable transaction costs.

 

Value-at-Risk (VaR)

VaR is a statistical measure of risk that is used to quantify market risks across products, per types of risks, and aggregate risk on a portfolio basis. VaR is defined as the maximum loss at a specific confidence level over a certain horizon under normal market conditions. The VaR method has the advantage of providing a uniform measurement of financial instrument-related market risks based on a single statistical confidence level and time horizon.

 

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