RNS Number : 5736Y
National Bank of Canada
26 February 2025
Regulatory Announcement (Part 1)
Q1 2025 Results
National Bank of Canada (the "Bank") announces publication of its First Quarter 2025 Report to Shareholders. The First Quarter Results have been uploaded to the National Storage Mechanism and will shortly be available at https://data.fca.org.uk/#/nsm/nationalstoragemechanism 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 First Quarter 2025 Report to Shareholders, please click on the following link:
http://www.rns-pdf.londonstockexchange.com/rns/5736Y_1-2025-2-26.pdf
Report to Shareholders First Quarter 2025
National Bank reports its results for the First Quarter of 2025
The financial information reported in this document is based on the unaudited interim condensed Consolidated Financial Statements for the quarter ended January 31, 2025 and is prepared in accordance with International Financial Reporting Standards (IFRS® Accounting Standards) as issued by the International Accounting Standards Board (IASB), unless otherwise indicated. IFRS Accounting Standards represent Canadian generally accepted accounting principles (GAAP). All amounts are presented in Canadian dollars.
MONTREAL, February 26, 2025 - For the first quarter of 2025, National Bank is reporting net income of $997 million, up 8% from $922 million in the first quarter of 2024. First-quarter diluted earnings per share stood at $2.78 compared to $2.59 in the first quarter of 2024. These increases were driven by total revenue growth in all of the business segments, partly offset by increases in non-interest expenses and provisions for credit losses. The Bank's income before provisions for credit losses and income taxes totalled $1,537 million in the first quarter of 2025 compared to $1,261 million in the first quarter of 2024, a 22% increase owing to good performance in all of the business segments, in particular, in Financial Markets and Wealth Management. Adjusted net income(1), which excludes specified items(1) related to the acquisition of Canadian Western Bank (CWB), totalled $1,050 million in the first quarter of 2025 from net income of $922 million in the same quarter of 2024. Adjusted diluted earnings per share(1) stood at $2.93, up 13% compared to $2.59 in the first quarter of 2024.
"The Bank generated strong first quarter financial results, reflecting solid execution across business segments and our diversified earnings power. We were also pleased to recently complete the acquisition of Canadian Western Bank, marking a significant step forward in the acceleration of our domestic growth and toward extending the depth of our banking capabilities to the benefit of all our clients," said Laurent Ferreira, CEO. "In a context of heightened macroeconomic and geopolitical uncertainty and an evolving credit cycle, we remain committed to maintaining our usual discipline regarding credit, capital and costs," concluded Mr. Ferreira.
Highlights
(millions of Canadian dollars)
Quarter ended January 31
2025
2024(2)
% Change
Net income
997
922
8
Diluted earnings per share (dollars)
$
2.78
$
2.59
7
Income before provisions for credit losses and income taxes
1,537
1,261
22
Return on common shareholders' equity(3)
16.7
%
17.1
%
Dividend payout ratio(3)
40.1
%
43.1
%
Operating results-Adjusted(1)
Net income - Adjusted
1,050
922
14
Diluted earnings per share - Adjusted (dollars)
$
2.93
$
2.59
13
Income before provisions for credit losses and income taxes - Adjusted
1,610
1,261
28
As at January 31, 2025
As at October 31, 2024
CET1 capital ratio under Basel III(4)
13.6
%
13.7
%
Leverage ratio under Basel III(4)(5)
4.3
%
4.4
%
(1) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP financial measures.
(2) Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes. For additional information, see the Financial Reporting Method section.
(3) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
(4) See the Financial Reporting Method section on pages 4 to 9 for additional information on capital management measures.
(5) Ratio as at January 31, 2025 includes the redemption of Series 32 preferred shares completed on February 17, 2025.
Report to Shareholders First Quarter 2025
Personal and Commercial
- Net income totalled $290 million in the first quarter of 2025 versus $339 million in the first quarter of 2024, a 14% decrease due to a significant increase in provisions for credit losses.
- At $1,204 million, first-quarter total revenues rose $50 million or 4% year over year, mainly due to an increase in net interest income (driven by growth in loan and deposit volumes), partly offset by a lower net interest margin.
- Compared to a year ago, personal lending grew 4% and commercial lending grew 13%.
- The net interest margin(1) stood at 2.28% in the first quarter of 2025, down from 2.36% in the first quarter of 2024.
- First-quarter non-interest expenses stood at $641 million, up 4% year over year.
- Provisions for credit losses rose $91 million year over year, mainly due to an increase in provisions for credit losses on impaired loans.
- At 53.2%, the first-quarter efficiency ratio(1) was relatively stable compared to 53.3% in the first quarter of 2024.
Wealth Management
- Net income totalled $242 million in the first quarter of 2025, a 23% increase from $196 million in the first quarter of 2024.
- First-quarter total revenues amounted to $776 million compared to $660 million in first-quarter 2024, a $116 million or 18% increase driven mainly by growth in fee-based revenues and net interest income.
- First-quarter non-interest expenses stood at $441 million versus $390 million in first-quarter 2024, a 13% increase associated with revenue growth.
- At 56.8%, the first-quarter efficiency ratio(1) improved from 59.1% in the first quarter of 2024.
Financial Markets
- Net income totalled $417 million in the first quarter of 2025, up 35% from $308 million in the first quarter of 2024.
- First-quarter total revenues amounted to $907 million, a 40% increase that was mainly due to growth in global markets revenues.
- First-quarter non-interest expenses stood at $367 million compared to $313 million in first-quarter 2024, an increase that was mainly due to the increase in variable compensation.
- First-quarter provisions for credit losses stood at $36 million compared to $17 million in the first quarter of 2024, due to the provisions for credit losses on impaired loans.
- At 40.5%, the efficiency ratio(1) improved from 48.4% in the first quarter of 2024.
U.S. Specialty Finance and International
- Net income totalled $183 million in the first quarter of 2025, up 22% from $150 million in the first quarter of 2024.
- First-quarter total revenues amounted to $405 million, a 24% year-over-year increase driven mainly by revenue growth at both the Credigy and ABA Bank subsidiaries.
- First-quarter non-interest expenses stood at $123 million, a 23% year-over-year increase mainly attributable to business growth at ABA Bank.
- First-quarter provisions for credit losses were up $15 million year over year, with the increase being attributable to both Credigy and ABA Bank.
- At 30.4%, the efficiency ratio(1) improved from 30.7% in the first quarter of 2024.
Other
- There was a net loss of $135 million in the first quarter of 2025 compared to a net loss of $71 million in the same quarter of 2024, a change that essentially came from a smaller contribution from Treasury activities, a year-over-year increase in non-interest expenses (notably due to higher compensation and employee benefits), as well as the unfavourable impact of specified items(2) on net loss in the first quarter of 2025.
CWB Acquisition
- On February 3, 2025, the Bank completed its acquisition of CWB, a diversified financial services institution based in Edmonton, Alberta, in which the Bank already held a 5.9% stake. This transaction will enable the Bank to accelerate its growth across Canada. This business combination brings together two complementary Canadian banks with growing businesses, thereby enhancing customer service by offering a full range of products and services nationwide, with a regionally focused service model.
Capital Management
- As at January 31, 2025, the Common Equity Tier 1 (CET1) capital ratio under Basel III(3) stood at 13.6%, a decrease from 13.7% as at October 31, 2024.
- As at January 31, 2025, the Basel III(3)(4) leverage ratio was 4.3%, a decrease from 4.4% as at October 31, 2024.
(1) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
(2) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP financial measures.
(3) See the Financial Reporting Method section on pages 4 to 9 for additional information on capital management measures.
(4) Ratio as at January 31, 2025 includes the redemption of Series 32 preferred shares completed on February 17, 2025.
Management's Discussion
and Analysis
February 25, 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). It is based on the unaudited interim condensed consolidated financial statements (the consolidated financial statements) for the quarter ended January 31, 2025 and prepared in accordance with International Financial Reporting Standards (IFRS® Accounting Standards) as issued by the International Accounting Standards Board (IASB), unless otherwise indicated. IFRS Accounting Standards represent Canadian generally accepted accounting principles (GAAP). This MD&A should be read in conjunction with the consolidated financial statements and accompanying notes for the quarter ended January 31, 2025 and with the 2024 Annual Report. 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.
Financial Reporting Method
4
Capital Management
21
Economic Review and Outlook
10
Risk Management
28
Highlights
11
Risk Disclosures
44
Financial Analysis
12
Accounting Policies and Financial Disclosure
45
Consolidated Results
12
Material Accounting Policies and Accounting Estimates
45
Results by Segment
14
Future Accounting Policy Changes
45
Consolidated Balance Sheet
18
Financial Disclosure
45
Events After the Consolidated Balance Sheet Date
20
Quarterly Financial Information
46
Related Party Transactions
21
Glossary
47
Securitization and Off-Balance-Sheet Arrangements
21
Income Taxes
21
Caution Regarding Forward-Looking Statements
Certain statements in this document are forward-looking statements. These statements are made in accordance with applicable securities legislation in Canada and the United States. The forward-looking statements in this document may include, but are not limited to, statements in the messages from management, as well as other statements about the economy, market changes, the Bank's objectives, outlook, and priorities for fiscal 2025 and beyond, the strategies or actions that the Bank will take to achieve them, expectations for the Bank's financial condition and operations, the regulatory environment in which it operates, its environmental, social, and governance targets and commitments, the impacts and benefits of the acquisition of Canadian Western Bank (CWB), and certain risks to which the Bank is exposed. The Bank may also make forward-looking statements in other documents and regulatory filings, as well as orally. These forward-looking statements are typically identified by verbs or words such as "outlook", "believe", "foresee", "forecast", "anticipate", "estimate", "project", "expect", "intend" and "plan", the use of future or conditional forms, notably verbs such as "will", "may", "should", "could" or "would", as well as similar terms and expressions.
These forward-looking statements are intended to assist the security holders of the Bank in understanding the Bank's financial position and results of operations as at the dates indicated and for the periods then ended, as well as the Bank's vision, strategic objectives, and performance targets, and may not be appropriate for other purposes. These forward-looking statements are based on current expectations, estimates, assumptions and intentions that the Bank deems reasonable as at the date thereof and are subject to inherent uncertainty and risks, many of which are beyond the Bank's control. There is a strong possibility that the Bank's express or implied predictions, forecasts, projections, expectations, or conclusions will not prove to be accurate, that its assumptions will not be confirmed, and that its vision, strategic objectives, and performance targets will not be achieved. The Bank cautions investors that these forward-looking statements are not guarantees of future performance and that actual events or results may differ materially from these statements due to a number of factors. Therefore, the Bank recommends that readers not place undue reliance on these forward-looking statements, as a number of factors could cause actual results to differ materially from the expectations, estimates, or intentions expressed in these forward-looking statements. Investors and others who rely on the Bank's forward-looking statements should carefully consider the factors listed below as well as other uncertainties and potential events and the risk they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.
Assumptions about the performance of the Canadian and U.S. economies in 2025 and how that performance will affect the Bank's business are among the factors considered in setting the Bank's strategic priorities and objectives, including allowances for credit losses. These assumptions 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; the measures affecting trade relations between Canada and its partners, including the imposition of tariffs and any measures taken in response to such tariffs, as well as the possible impacts on our clients, our operations and, more generally, the economy; exchange rate and interest rate fluctuations; inflation; global supply chain disruptions; higher funding costs and greater market volatility; changes to fiscal, monetary, and other public policies; regulatory oversight and changes to regulations that affect the Bank's business; geopolitical and sociopolitical uncertainty; the Bank's ability to successfully integrate CWB and the undisclosed costs or liability associated with the acquisition; climate change, including physical risks and risks related to the transition to a low-carbon economy; the Bank's ability to meet stakeholder expectations on environmental and social issues, the need for active and continued stakeholder engagement; the availability of comprehensive and high-quality information from customers and other third parties, including greenhouse gas emissions; the ability of the Bank to develop indicators to effectively monitor our progress; the development and deployment of new technologies and sustainable products; the ability of the Bank to identify climate-related opportunities as well as to assess and manage climate-related risks; significant changes in consumer behaviour; the housing situation, real estate market, and household indebtedness in Canada; the Bank's ability to achieve its key short-term priorities and long-term strategies; the timely development and launch of new products and services; the ability of the Bank to recruit and retain key personnel; technological innovation, including open banking and the use of artificial intelligence; heightened competition from established companies and from competitors offering non-traditional services; model risk; changes in the performance and creditworthiness of the Bank's clients and counterparties; the Bank's exposure to significant regulatory issues or litigation; changes made to the accounting policies used by the Bank to report its financial position, including the uncertainty related to assumptions and significant accounting estimates; changes to tax legislation in the countries where the Bank operates; changes to capital and liquidity guidelines as well as to the instructions related to the presentation and interpretation thereof; changes to the credit ratings assigned to the Bank by financial and extra-financial rating agencies; potential disruptions to key suppliers of goods and services to the Bank; third-party risk, including failure by third parties to fulfil their obligations to the Bank; the potential impacts of disruptions to the Bank's information technology systems due to cyberattacks and theft or disclosure of data, including personal information and identity theft; the risk of fraudulent activity; and possible impacts of major events on the economy, market conditions, or the Bank's outlook, including international conflicts, natural disasters, public health crises, and the measures taken in response to these events; and the ability of the Bank to anticipate and successfully manage risks arising from all of the foregoing factors.
The foregoing list of risk factors is not exhaustive, and the forward-looking statements made in this document are also subject to credit risk, market risk, liquidity and funding risk, operational risk, regulatory compliance risk, reputation risk, strategic risk, and social and environmental risk as well as certain emerging risks or risks deemed significant. Additional information about these factors is provided in the Risk Management section of the 2024 Annual Report as well as in the Risk Management section of this Report to Shareholders for the first quarter of 2025 and may be updated in the quarterly reports to shareholders filed thereafter.
Financial Reporting Method
The Bank's Consolidated Financial Statements are prepared in accordance with IFRS Accounting Standards, as issued by the IASB. The financial statements also comply with section 308(4) of the Bank Act (Canada), which states that, except as otherwise specified by the Office of the Superintendent of Financial Institutions (Canada) (OSFI), the Consolidated Financial Statements are to be prepared in accordance with IFRS Accounting Standards, which represent Canadian GAAP. None of the OSFI accounting requirements are exceptions to IFRS Accounting Standards.
Effective November 1, 2024, the Bank discontinued taxable equivalent basis (TEB) reporting for revenues and income taxes. Using the TEB method is less relevant since the introduction of the Pillar 2 rules (global minimum tax) during the first quarter of 2025 and Bill C-59 in relation to the taxation of certain Canadian dividends during fiscal 2024. This change has no impact on net income previously disclosed. Data for the 2024 periods were adjusted to reflect this change.
Non-GAAP and Other Financial Measures
The Bank uses a number of financial measures when assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance with GAAP. Regulation 52-112 Respecting Non-GAAP and Other Financial Measures Disclosure (Regulation 52-112) prescribes disclosure requirements that apply to the following measures used by the Bank:
· non-GAAP financial measures;
· non-GAAP ratios;
· supplementary financial measures;
· capital management measures.
Non-GAAP Financial Measures
The Bank uses non-GAAP financial measures that do not have standardized meanings under GAAP and that therefore may not be comparable to similar measures used by other companies. Presenting non-GAAP financial measures helps readers to better understand how management analyzes results, shows the impacts of specified items on the results of the reported periods, and allows readers to better assess results without the specified items if they consider such items not to be reflective of the underlying performance of the Bank's operations.
The key non-GAAP financial measures used by the Bank to analyze its results are described below, and a quantitative reconciliation of these measures is presented in the tables in the Reconciliation of Non-GAAP Financial Measures section on pages 8 and 9 and in the Consolidated Results table on page 12. It should be noted that, for the quarter ended January 31, 2025, after the acquisition of Canadian Western Bank (CWB) was completed, several acquisition-related items have been excluded from results since, in the opinion of management, they are not reflective of the underlying performance of the Bank's operations, in particular, the amortization of the subscription receipt issuance costs of $28 million ($20 million net of income taxes); a gain of $4 million ($3 million net of income taxes) resulting from the remeasurement at fair value of the CWB common shares already held by the Bank; the impact of managing fair value changes, which is a loss of $23 million ($17 million net of income taxes), and acquisition and integration charges of $26 million ($19 million net of income taxes). For the quarter ended January 31, 2024, no specified items had been excluded from results.
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 Income Taxes
This item represents income taxes excluding income taxes 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 - First 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 47 to 50 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 Accounting Standards in IAS 1 - Presentation of Financial Statements. The Bank has its own methods for managing capital and liquidity, and IFRS Accounting Standards do not prescribe any particular calculation method. These measures are calculated using various guidelines and advisories issued by 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 January 31
2025
2024(1)
Personal and Commercial
Wealth Management
Financial Markets
USSF&I
Other
Total
Total
Operating results
Net interest income
944
227
(509)
370
(60)
972
751
Non-interest income
260
549
1,416
35
(49)
2,211
1,959
Total revenues
1,204
776
907
405
(109)
3,183
2,710
Non-interest expenses
641
441
367
123
74
1,646
1,449
Income before provisions for credit losses and income taxes
563
335
540
282
(183)
1,537
1,261
Provisions for credit losses
162
2
36
51
3
254
120
Income before income taxes (recovery)
401
333
504
231
(186)
1,283
1,141
Income taxes (recovery)
111
91
87
48
(51)
286
219
Net income
290
242
417
183
(135)
997
922
Items that have an impact on results
Net interest income
Amortization of the subscription receipt issuance costs(2)
−
−
−
−
(28)
(28)
−
Impact on net interest income
−
−
−
−
(28)
(28)
−
Non-interest income
Gain on the fair value remeasurement of an equity interest(3)
−
−
−
−
4
4
−
Management of the fair value changes related to the CWB acquisition(4)
−
−
−
−
(23)
(23)
−
Impact on non-interest income
−
−
−
−
(19)
(19)
−
Non-interest expenses
CWB acquisition and integration charges(5)
−
−
−
−
26
26
−
Impact on non-interest expenses
−
−
−
−
26
26
−
Income taxes
Income taxes on the amortization of the subscription receipt issuance costs(2)
−
−
−
−
(8)
(8)
−
Income taxes on the gain on the fair value remeasurement of an equity interest(3)
−
−
−
−
1
1
−
Income taxes on management of the fair value changes related to the CWB acquisition(4)
−
−
−
−
(6)
(6)
−
Income taxes on the CWB acquisition and integration charges(5)
−
−
−
−
(7)
(7)
−
Impact on income taxes
−
−
−
−
(20)
(20)
−
Impact on net income
−
−
−
−
(53)
(53)
−
Operating results - Adjusted
Net interest income - Adjusted
944
227
(509)
370
(32)
1,000
751
Non-interest income - Adjusted
260
549
1,416
35
(30)
2,230
1,959
Total revenues - Adjusted
1,204
776
907
405
(62)
3,230
2,710
Non-interest expenses - Adjusted
641
441
367
123
48
1,620
1,449
Income before provisions for credit losses and income taxes - Adjusted
563
335
540
282
(110)
1,610
1,261
Provisions for credit losses
162
2
36
51
3
254
120
Income before income taxes (recovery) - Adjusted
401
333
504
231
(113)
1,356
1,141
Income taxes (recovery) - Adjusted
111
91
87
48
(31)
306
219
Net income - Adjusted
290
242
417
183
(82)
1,050
922
(1) Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes.
(2) During the quarter ended January 31, 2025, the Bank recorded an amount of $28 million ($20 million net of income taxes) to reflect the amortization of the issuance costs of the subscription receipts issued as part of the agreement to acquire CWB (for additional information, see Notes 8 and 10 to the Consolidated Financial Statements).
(3) During the quarter ended January 31, 2025, the Bank recorded a gain of $4 million ($3 million net of income taxes) upon the remeasurement at fair value of the interest already held in CWB as at January 31, 2025.
(4) During the quarter ended January 31, 2025, the Bank recorded a mark-to-market loss of $23 million ($17 million net of income taxes) on interest rate swaps used to manage the fair value changes of CWB's assets and liabilities that resulted in volatility of goodwill and capital on closing of the transaction. For additional information, see the Events After the Consolidated Balance Sheet Date section.
(5) During the quarter ended January 31, 2025, the Bank recorded acquisition and integration charges of $26 million ($19 million net of income taxes) related to the CWB transaction.
Presentation of Basic and Diluted Earnings Per Share - Adjusted
(Canadian dollars)
Quarter ended January 31
2025
2024
Basic earnings per share
$
2.81
$
2.61
Amortization of the subscription receipt issuance costs(1)
0.06
−
Gain on the fair value remeasurement of an equity interest(2)
(0.01)
−
Management of the fair value changes related to the CWB acquisition(3)
0.05
−
CWB acquisition and integration charges(4)
0.05
−
Basic earnings per share - Adjusted
$
2.96
$
2.61
Diluted earnings per share
$
2.78
$
2.59
Amortization of the subscription receipt issuance costs(1)
0.06
−
Gain on the fair value remeasurement of an equity interest(2)
(0.01)
−
Management of the fair value changes related to the CWB acquisition(3)
0.05
−
CWB acquisition and integration charges(4)
0.05
−
Diluted earnings per share - Adjusted
$
2.93
$
2.59
(1) During the quarter ended January 31, 2025, the Bank recorded an amount of $28 million ($20 million net of income taxes) to reflect the amortization of the issuance costs of the subscription receipts issued as part of the agreement to acquire CWB (for additional information, see Notes 8 and 10 to the Consolidated Financial Statements).
(2) During the quarter ended January 31, 2025, the Bank recorded a gain of $4 million ($3 million net of income taxes) upon the remeasurement at fair value of the interest already held in CWB as at January 31, 2025.
(3) During the quarter ended January 31, 2025, the Bank recorded a mark-to-market loss of $23 million ($17 million net of income taxes) on interest rate swaps used to manage the fair value changes of CWB's assets and liabilities that resulted in volatility of goodwill and capital on closing of the transaction. For additional information, see the Events After the Consolidated Balance Sheet Date section.
(4) During the quarter ended January 31, 2025, the Bank recorded acquisition and integration charges of $26 million ($19 million net of income taxes) related to the CWB transaction.
Economic Review and Outlook
Global Economy
The global economic outlook is certainly not poor across the board at this juncture. The political impasses in France and Germany could lift, and the conflicts in Eastern Europe and the Middle East could subside. This would certainly be good for growth, as would a continued healthy expansion in the U.S. More monetary easing, as indicated by many central banks for 2025, would also be welcome. But all this could fade in importance should uncertainties gain in importance. If the election of Donald Trump as President of the United States proves to be a real turning point in modern economic history, and if the globalization process of the last 70 years should stagnate, or worse, be reversed, then many economies would be very poorly placed to deal with the many challenges that would inevitably follow. Manufacturing powers such as China and Germany are already struggling to find their footing, and the public finances of other countries are in poor shape. Fortunately, this is not yet our base scenario. We continue to believe that Washington's protectionist instincts will be relatively contained, and that the worst of the trade war can be avoided. This does not mean, however, that global growth will be robust. It is just that the threat of tariffs is likely to hang over our heads for the next four years, and this is unlikely to stimulate business investment. And when businesses are less confident, the labour market tends to be less buoyant, and consumption less vigorous. Even so, global gross domestic product (GDP) is set to grow 3.0%(1) in 2025, according to our base scenario.
The year 2024 ended on a positive note in the United States, with real GDP growing at an annualized rate of 2.3% in the fourth quarter of 2024. These results topped off a very good 2024, during which GDP grew by no less than 2.8%, far more than economists had initially forecast. This is because population growth, government deficits and rising household wealth were all underestimated. Barely a month ago, the outlook for 2025 looked rather positive. While there are aspects of the new administration's program that are likely to slow economic expansion, such as tariffs and mass expulsions of migrants, most economists nevertheless believed that these measures would be kept to a minimum and would be largely offset by pro-growth policies, such as tax cuts and deregulation. Unfortunately, recent events have chipped away at our conviction that Washington's protectionist instincts will be contained. The new administration has already announced additional 10% tariffs on China, and it is threatening to do the same to Europe. For the time being, we anticipate growth of 2.2%(1) in 2025, due to good momentum at the start of the year. The second half of the year could be less dynamic, due to a still restrictive monetary policy intended to curb excessively high inflation. The strength of the U.S. dollar could also dampen exports.
Canadian Economy
In Canada, weak economic growth and rising unemployment over the past two years helped contain inflation. In response, the Bank of Canada has been rapidly easing monetary policy since June to give the economy some breathing room. This strategy seems to have paid off, as evidenced by accelerating growth in the last quarter of the year, to 1.8% on an annualized basis (compared to 1.1% in the third quarter of 2024). As a result, GDP per capita rose for the first time in seven quarters. At the same time, the unemployment rate has fallen by 0.3 percentage points over the past two months, to 6.6% in January. Hiring in the private sector has improved recently, but this does not necessarily mark the start of a trend. In fact, the latest Bank of Canada survey reveals that few companies are reporting labour shortages, and job vacancy rates in the private sector remain low. On the strength of interest rate cuts, economic conditions looked set to improve over the course of the year. According to our calculations, the savings realized by variable-rate borrowers could, on a macroeconomic level, offset the financial shock suffered by those whose mortgages are up for renewal this year. Government measures such as the goods and services tax (GST) exemption and the mailing of $200 cheques to Ontarians could also stimulate consumption. However, tariffs remain a threat to the Canadian economy. Even if these measures are never implemented, the mere spectre of them is slowing investment, with many projects now on hold. We expect GDP to grow 1.2%(1) in 2025 and 1.5%(1) in 2026, while we estimate potential economic growth at approximately 1.2%(1), held back by a gloomy demographic outlook. Of course, this outlook will need to be revised downward in the event that tariffs are imposed by the new American president.
Quebec Economy
Quebec's real GDP per capita has been stable over the last three quarters and in line with its pre-pandemic level, while real GDP for the country as a whole has remained below its pre-pandemic level. This greater relative resilience is also reflected in the labour market, which remains stronger with an unemployment rate of just 5.4% in January, the lowest provincial rate, shared with Saskatchewan. This outperformance is the result of solid economic fundamentals. The level of indebtedness of Quebec households is lower than the Canadian average, and this served Quebecers well during the post-pandemic monetary tightening. This is why the province has the highest proportion of households describing their financial situation as good. What is more, in recent months the Quebec real estate market has rallied more strongly than that of the country as a whole. The much higher savings rate than the national average provides a cushion that can ease the shock to consumption should the economic backdrop further deteriorate. Like Canada as a whole, Quebec is vulnerable to new tariffs, as exports to the U.S. account for 15% of GDP (compared to 19% for Canada). However, the province's economy is less vulnerable to sectoral shocks. In fact, Quebec is the third most diversified jurisdiction in North America, after Manitoba and Pennsylvania. In terms of exports, Quebec is the most diversified province. We expect slow growth of 1.0%(1) in 2025. Considering that the province's population growth is lower than the Canadian average, this would be sufficient to allow Quebec to maintain an unemployment rate that is comfortably below the national average, namely 5.7%(1) in 2025 (compared to 6.9%(1) for Canada).
(1) Forecasts of real GDP or unemployment rate, National Bank Financial's Economics and Strategy group
Highlights
(millions of Canadian dollars, except per share amounts)
Income before provisions for credit losses and income taxes - Adjusted(3)
1,610
1,261
28
Net income - Adjusted(3)
1,050
922
14
Return on common shareholders' equity - Adjusted(4)
17.6
%
17.1
%
Operating leverage - Adjusted(4)
7.4
%
1.6
%
Efficiency ratio - Adjusted(4)
50.2
%
53.5
%
Diluted earnings per share - Adjusted(3)
$
2.93
$
2.59
13
Common share information
Dividends declared
$
1.14
$
1.06
8
Book value(2)
$
68.15
$
61.18
Share price
High
$
140.76
$
103.38
Low
$
128.79
$
86.50
Close
$
128.99
$
102.83
Number of common shares (thousands)
341,085
339,166
Market capitalization
43,997
34,876
(millions of Canadian dollars)
As at January 31, 2025
As at October 31, 2024
% Change
Balance sheet and off-balance-sheet
Total assets
483,833
462,226
5
Loans, net of allowances
246,620
243,032
1
Deposits
351,095
333,545
5
Equity attributable to common shareholders
23,245
22,400
4
Assets under administration(2)
820,125
766,082
7
Assets under management(2)
165,502
155,900
6
Regulatory ratios under Basel III(5)
Capital ratios
Common Equity Tier 1 (CET1)
13.6
%
13.7
%
Tier 1(6)
15.5
%
15.9
%
Total(6)
17.1
%
17.0
%
Leverage ratio(6)
4.3
%
4.4
%
TLAC ratio(5)
31.2
%
31.2
%
TLAC leverage ratio(5)
8.7
%
8.6
%
Liquidity coverage ratio (LCR)(5)
154
%
150
%
Net stable funding ratio (NSFR)(5)
123
%
122
%
Other information
Number of employees - Worldwide (full-time equivalent)
29,508
29,196
1
Number of branches in Canada
362
368
(2)
Number of banking machines in Canada
937
940
−
(1) Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes.
(2) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
(3) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP financial measures.
(4) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP ratios.
(5) See the Financial Reporting Method section on pages 4 to 9 for additional information on capital management measures.
(6) Ratios as at January 31, 2025 include the redemption of the Series 32 preferred shares completed on February 17, 2025.
Financial Analysis
Consolidated Results
(millions of Canadian dollars)
Quarter ended January 31
2025
2024(1)
% Change
Operating results
Net interest income
972
751
29
Non-interest income
2,211
1,959
13
Total revenues
3,183
2,710
17
Non-interest expenses
1,646
1,449
14
Income before provisions for credit losses and income taxes
1,537
1,261
22
Provisions for credit losses
254
120
Income before income taxes
1,283
1,141
12
Income taxes
286
219
31
Net income
997
922
8
Diluted earnings per share (dollars)
2.78
2.59
7
Specified items(2)
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
(26)
−
Specified items before income taxes
(73)
−
Income taxes related to specified items
(20)
−
Specified items after income taxes
(53)
−
Operating results - Adjusted(2)
Net interest income - Adjusted
1,000
751
33
Non-interest income - Adjusted
2,230
1,959
14
Total revenues - Adjusted
3,230
2,710
19
Non-interest expenses - Adjusted
1,620
1,449
12
Income before provisions for credit losses and income taxes - Adjusted
1,610
1,261
28
Provisions for credit losses
254
120
Income before income taxes - Adjusted
1,356
1,141
19
Income taxes - Adjusted
306
219
40
Net income - Adjusted
1,050
922
14
Diluted earnings per share - Adjusted (dollars)
2.93
2.59
13
Average assets(3)
488,208
442,666
10
Average loans(3)(4)
244,706
228,161
7
Average deposits(3)
349,630
301,533
16
Operating leverage(5)
3.9
%
1.6
%
Operating leverage - Adjusted(6)
7.4
%
1.6
%
Efficiency ratio(5)
51.7
%
53.5
%
Efficiency ratio - Adjusted(6)
50.2
%
53.5
%
(1) Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes.
(2) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP financial measures.
(3) Represents an average of the daily balances for the period.
(4) Including customers' liability under acceptances for the quarter ended January 31, 2024.
(5) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
(6) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP ratios.
Financial Results
For the first quarter of 2025, the Bank reported net income of $997 million, up 8% from $922 million in the first quarter of 2024. First-quarter diluted earnings per share stood at $2.78 compared to $2.59 in the first quarter of 2024. These increases were driven by total revenue growth in all of the business segments, partly offset by increases in non-interest expenses and provisions for credit losses. The Bank's income before provisions for credit losses and income taxes totalled $1,537 million in first-quarter 2025 compared to $1,261 million in first-quarter 2024, a 22% increase owing to good performance in all of the business segments, in particular in Financial Markets and Wealth Management. Adjusted net income, which excludes specified items related to the acquisition of CWB, totalled $1,050 million in the first quarter of 2025, up 14% from $922 million in the same quarter of 2024. Adjusted diluted earnings per share stood at $2.93, up 13% compared to $2.59 in the first quarter of 2024.
Return on common shareholders' equity was 16.7% for the quarter ended January 31, 2025 compared to 17.1% in the same quarter of 2024.
Total Revenues
For the first quarter of 2025, the Bank's total revenues amounted to $3,183 million, up $473 million or 17% compared to the corresponding quarter of 2024. In the Personal and Commercial segment, total revenues rose 4% 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 the narrower net interest margin, as well as to the increase in internal commission revenues related to the distribution of Wealth Management products. These increases were offset by lower credit fees related to the transition of bankers' acceptances to CORRA loans. In the Wealth Management segment, total revenues grew 18%, 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 Financial Markets segment, total revenues were up 40% in the first quarter of 2025 compared to the first quarter of 2024 due to a significant increase in global markets revenues. In the USSF&I segment, total revenues were up 24% compared to the first quarter of 2024 as a result of revenue growth at ABA Bank, stemming from business growth, as well as an increase in Credigy's revenues. Total revenues for the Other heading were lower than in the corresponding quarter of 2024, primarily due to a lower contribution from Treasury activities and the unfavourable impact of specified items related to the acquisition of CWB. Excluding specified items recorded in the first quarter of 2025, adjusted total revenues amounted to $3,230 million for the quarter ended January 31, 2025, up 19% from $2,710 million in the corresponding quarter in 2024.
Non-Interest Expenses
For the first quarter of 2025, non-interest expenses stood at $1,646 million, up $197 million or 14% from the corresponding quarter in 2024. This increase was due to higher compensation and employee benefits owing to salary growth as well as higher variable compensation related to revenue growth. Occupancy expenses, including depreciation expense, were up compared to the first quarter in 2024, due in part to expenses related to the Bank's new head office building and the expansion of the banking network at the ABA Bank subsidiary. The increase in technology expenses, including depreciation expense, is attributable to significant investments made to support the Bank's technological evolution and business development plan, as well as expenses recorded during the quarter ended January 31, 2025 related to the integration of CWB. Professional fees also rose, notably due to expenses related to the acquisition and integration of CWB recorded during the first quarter of 2025. Lastly, communication expenses were higher compared to the corresponding quarter of 2024, while other expenses were down. Adjusted non-interest expenses stood at $1,620 million in the first quarter of 2025, up 12% from $1,449 million in the first quarter of 2024.
Provisions for Credit Losses
For the first quarter of 2025, the Bank recorded provisions for credit losses of $254 million compared to $120 million in the corresponding quarter in 2024. Provisions for credit losses on impaired loans excluding purchased or originated credit-impaired (POCI) loans(1) rose $97 million compared to the first quarter of 2024. This increase came from Personal Banking (including credit card receivables), Commercial Banking, the Financial Markets segment as well as the Credigy and ABA Bank subsidiaries. Provisions for credit losses on non-impaired loans increased by $27 million compared to the corresponding quarter in 2024, mainly due to the less favourable impact of updated macroeconomic scenarios, a more significant deterioration in credit risk than in the first quarter of 2024, as well as uncertainties related to new tariffs on imports. Furthermore, provisions for credit losses on POCI loans rose $10 million, mainly due to credit loss recoveries recorded in the first quarter of 2024 following repayments of POCI loans in Commercial Banking.
Income Taxes
For the first quarter of 2025, income taxes stood at $286 million compared to $219 million in the corresponding quarter in 2024. The 2025 first-quarter effective income tax rate was 22% compared to 19% in the corresponding quarter in 2024. This was mainly due to a lower level of tax-exempt income in the first quarter of 2025 and the impact of applying Pillar 2 rules (for additional information, see the Income Taxes section).
(1) See the Glossary section on pages 47 to 50 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 January 31
2025
2024
% Change
Operating results
Net interest income
944
870
9
Non-interest income
260
284
(8)
Total revenues
1,204
1,154
4
Non-interest expenses
641
615
4
Income before provisions for credit losses and income taxes
563
539
4
Provisions for credit losses
162
71
Income before income taxes
401
468
(14)
Income taxes
111
129
(14)
Net income
290
339
(14)
Net interest margin(1)
2.28
%
2.36
%
Average interest-bearing assets(1)
164,340
146,700
12
Average assets(2)
165,861
155,031
7
Average loans(2)(3)
164,097
153,291
7
Net impaired loans(1)
557
323
72
Net impaired loans as a % of total loans and acceptances(1)
0.3
%
0.2
%
Average deposits(2)
92,032
88,949
3
Efficiency ratio(1)
53.2
%
53.3
%
(1) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
(2) Represents an average of the daily balances for the period.
(3) Including customers' liability under acceptances for the quarter ended January 31, 2024.
In the Personal and Commercial segment, net income totalled $290 million in the first quarter of 2025, down 14% from $339 million in the corresponding quarter in 2024 due to a significant increase in provisions for credit losses, that more than offset the growth in the segment's total revenues. Income before provisions for credit losses and income taxes stood at $563 million, up 4% from the first quarter of 2024. The 9% increase in net interest income in the first quarter of 2025 was driven 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 the decrease in the net interest margin to 2.28% compared to 2.36% in the first quarter of 2024. In addition, non-interest income decreased by 8% compared to the corresponding quarter in 2024, notably due to the transition of bankers' acceptances to loans at the CORRA rate.
Personal Banking's total revenues increased by $22 million compared to the first quarter of 2024. This increase was driven by higher net interest income, attributable to growth in loans and deposits, as well as increases in internal commission revenues related to the distribution of Wealth Management products. Commercial Banking's total revenues grew $28 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 lower net interest margin on loans.
For the first quarter of 2025, the segment's non-interest expenses stood at $641 million, up 4% compared to the corresponding quarter in 2024. This increase was mainly due to higher compensation and employee benefits, mainly resulting from salary increases, and greater investments made as part of the segment's technological evolution. The efficiency ratio of 53.2% in the first quarter of 2025 improved by 0.1 percentage point compared to the first quarter of 2024.
The segment recorded provisions for credit losses of $162 million compared to $71 million in the first quarter of 2024, up $91 million. This increase was mainly due to higher provisions for credit losses on impaired loans in Personal Banking (including credit card receivables) and in Commercial Banking. In addition, provisions for credit losses on non-impaired loans increased compared to the corresponding quarter of 2024, and credit loss recoveries were recorded in the first quarter of 2024 following repayments of Commercial Banking POCI loans.
Wealth Management
(millions of Canadian dollars)
Quarter ended January 31
2025
2024
% Change
Operating results
Net interest income
227
198
15
Fee-based revenues
450
375
20
Transaction-based and other revenues
99
87
14
Total revenues
776
660
18
Non-interest expenses
441
390
13
Income before provisions for credit losses and income taxes
335
270
24
Provisions for credit losses
2
−
Income before income taxes
333
270
23
Income taxes
91
74
23
Net income
242
196
23
Average assets(1)
10,611
8,708
22
Average loans(1)(2)
9,443
7,713
22
Net impaired loans(3)
17
5
Average deposits(1)
43,463
41,216
5
Assets under administration(3)
820,125
712,488
15
Assets under management(3)
165,502
132,822
25
Efficiency ratio(3)
56.8
%
59.1
%
(1) Represents an average of the daily balances for the period.
(2) Including customers' liability under acceptances for the quarter ended January 31, 2024.
(3) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
In the Wealth Management segment, net income totalled $242 million in the first quarter of 2025, a 23% increase from $196 million in the corresponding quarter in 2024. The segment's total revenues amounted to $776 million, up $116 million or 18% from $660 million in the first quarter of 2024. The 15% increase in net interest income compared to the corresponding quarter in 2024 was due to higher loan and deposit volumes and a more favourable impact of a change in the composition of deposits. The 20% increase in fee-based revenues was due to the rise in stock markets compared to the corresponding quarter in 2024 and positive net inflows for the various solutions. Transaction and other revenues rose 14% compared to the corresponding quarter in 2024 due to increased client activity.
Non-interest expenses stood at $441 million in the first quarter of 2025, up 13% from $390 million in the first quarter of 2024. This increase was due to higher compensation and employee benefits, due in particular to variable compensation in line with revenue growth, as well as higher technology expenses related to the segment's initiatives. At 56.8% in the first quarter of 2025, the efficiency ratio had improved from 59.1% in the corresponding quarter in 2024. Wealth Management recorded provisions for credit losses of $2 million in the first quarter of 2025, while they were negligible in the first quarter of 2024.
Financial Markets
(millions of Canadian dollars)
Quarter ended January 31
2025
2024(1)
% Change
Operating results
Global markets
Equities
367
130
182
Interest rate and credit
170
142
20
Commodities and foreign exchange
58
71
(18)
595
343
73
Corporate and investment banking
312
304
3
Total revenues
907
647
40
Non-interest expenses
367
313
17
Income before provisions for credit losses and income taxes
540
334
62
Provisions for credit losses
36
17
Income before income taxes
504
317
59
Income taxes
87
9
Net income
417
308
35
Average assets(2)
211,793
190,443
11
Average loans(2)(3) (Corporate Banking only)
31,472
31,659
(1)
Net impaired loans(4)
129
20
Net impaired loans as a % of total loans and acceptances(4)
0.4
%
0.1
%
Average deposits(2)
74,330
63,335
17
Efficiency ratio(4)
40.5
%
48.4
%
(1) Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes.
(2) Represents an average of the daily balances for the period.
(3) Including customers' liability under acceptances for the quarter ended January 31, 2024.
(4) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
In the Financial Markets segment, net income totalled $417 million in the first quarter of 2025, up 35% from $308 million in the corresponding quarter in 2024. Total revenues amounted to $907 million, compared to $647 million in the first quarter of 2024, a significant increase of $260 million or 40%. Global markets revenues were up 73% due to equities revenues and interest rate and credit revenues, partly offset by a decline in commodities and foreign exchange revenues. Corporate and investment banking revenues for the first quarter of 2025 increased 3% compared to the corresponding quarter in 2024 due to growth in banking service revenues and capital markets activity, partly offset by lower merger and acquisition revenues.
Non-interest expenses stood at $367 million in the first quarter of 2025, a 17% increase compared to the first 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 40.5% in the first quarter of 2025, an improvement of 7.9 percentage points from 48.4% in the first quarter of 2024, with the improvement owing to a sharp increase in the segment's revenues. For the quarter ended January 31, 2025, provisions for credit losses were up $19 million compared to the first quarter of 2024. This increase was essentially due to provisions for credit losses on impaired loans of $18 million recorded in the first quarter of 2025, while recoveries of credit losses on impaired loans of $2 million were recorded in the corresponding quarter of 2024.
U.S. Specialty Finance and International (USSF&I)
(millions of Canadian dollars)
Quarter ended January 31
2025
2024
% Change
Total revenues
Credigy
145
125
16
ABA Bank
248
194
28
International
12
7
405
326
24
Non-interest expenses
Credigy
40
35
14
ABA Bank
83
65
28
International
−
−
123
100
23
Income before provisions for credit losses and income taxes
282
226
25
Provisions for credit losses
Credigy
30
25
20
ABA Bank
21
11
91
International
−
−
51
36
42
Income before income taxes
231
190
22
Income taxes
Credigy
16
14
14
ABA Bank
30
25
20
International
2
1
48
40
20
Net income
Credigy
59
51
16
ABA Bank
114
93
23
International
10
6
183
150
22
Average assets(1)
31,197
26,025
20
Average loans and receivables(1)
23,428
20,787
13
Purchased or originated credit-impaired (POCI) loans
353
457
(23)
Net impaired loans excluding POCI loans(2)
663
329
102
Average deposits(1)
15,145
12,174
24
Efficiency ratio(2)
30.4
%
30.7
%
(1) Represents an average of the daily balances for the period.
(2) See the Glossary section on pages 47 to 50 for details on the composition of these measures.
In the USSF&I segment, net income totalled $183 million in the first quarter of 2025, up 22% from $150 million in the corresponding quarter in 2024. The 24% growth in the segment's total revenues came from the Credigy and ABA Bank subsidiaries and was partly offset by the increase in non-interest expenses and provisions for credit losses.
Credigy
For the first quarter of 2025, Credigy reported net income of $59 million, up $8 million or 16% compared to the corresponding quarter in 2024. Total revenues amounted to $145 million in the first quarter of 2025 compared to $125 million in the first quarter of 2024, an increase that was driven by growth in loan volumes and the impact of exchange rate fluctuations. Non-interest expenses stood at $40 million in the first quarter of 2025, a $5 million increase from the corresponding quarter in 2024 due to compensation and employee benefits, professional fees as well as the impact of exchange rate fluctuations. Provisions for credit losses rose $5 million compared to the first quarter of 2024, due to higher provisions for credit losses on impaired loans, attributable to the normal maturation of loan portfolios, and provisions for credit losses on non-impaired loans, partly offset by the decrease in provisions for credit losses on POCI loans.
ABA Bank
For the first quarter of 2025, ABA Bank recorded net income totalling $114 million, up $21 million or 23% from the corresponding quarter in 2024. Total revenues rose 28%, mainly attributable to sustained growth in assets, lower interest expenses on deposits, as well as the impact of exchange rate fluctuations. Non-interest expenses for the first quarter of 2025 stood at $83 million, an $18 million or 28% increase compared to the first quarter of 2024 due to higher compensation and employee benefits, higher occupancy expenses driven by the subsidiary's business growth and the opening of new branches, and the impact of exchange rate fluctuations. The subsidiary reported provisions for credit losses totalling $21 million in the first quarter of 2025, up $10 million compared to the first quarter of 2024. This increase was due to higher provisions for credit losses on impaired loans and the change in provisions for credit losses on non-impaired loans.
Other
(millions of Canadian dollars)
Quarter ended January 31
2025
2024(1)
Operating results
Net interest income
(60)
(65)
Non-interest income
(49)
(12)
Total revenues
(109)
(77)
Non-interest expenses
74
31
Income before provisions for credit losses and income taxes
(183)
(108)
Provisions for credit losses
3
(4)
Income before income taxes
(186)
(104)
Income taxes (recovery)
(51)
(33)
Net loss
(135)
(71)
Non-controlling interests
−
−
Net loss attributable to the Bank's shareholders and holders of other equity instruments
(135)
(71)
Less: Specified items after income taxes(2)
(53)
−
Net loss - Adjusted(2)
(82)
(71)
Average assets(3)
68,746
62,459
(1) Certain amounts have been adjusted to reflect the discontinuation of taxable equivalent basis reporting for revenues and income taxes.
(2) See the Financial Reporting Method section on pages 4 to 9 for additional information on non-GAAP financial measures.
(3) Represents an average of the daily balances for the period.
For the Other heading of segment results, a net loss of $135 million was posted in the first quarter of 2025 compared to a net loss of $71 million in the corresponding quarter in 2024. The change in net loss was due to the amortization of subscription receipt issue costs of $20 million, net of income taxes, as well as a lower contribution from Treasury operations, in particular because of a loss of $17 million, net of income taxes, in connection with the management of fair value changes related to the acquisition of CWB. In addition, non-interest expenses were higher compared to the first quarter of 2024, mainly due in part to higher compensation and employee benefits and the CWB acquisition and integration charges. The specified items recorded in the first quarter of 2025, related to the acquisition of CWB, had an unfavourable impact of $53 million on net loss. The adjusted net loss stood at $82 million for the quarter ended January 31, 2025, compared to $71 million in the corresponding quarter in 2024.
Consolidated Balance Sheet
Consolidated Balance Sheet Summary
(millions of Canadian dollars)
As at January 31, 2025
As at October 31, 2024
% Change
Assets
Cash and deposits with financial institutions
34,608
31,549
10
Securities
159,086
145,165
10
Securities purchased under reverse repurchase agreements and securities borrowed
15,229
16,265
(6)
Loans, net of allowances
246,620
243,032
1
Other
28,290
26,215
8
483,833
462,226
5
Liabilities and equity
Deposits
351,095
333,545
5
Other
104,077
101,873
2
Subordinated debt
2,265
1,258
80
Equity attributable to the Bank's shareholders and holders of other equity instruments
26,395
25,550
3
Non-controlling interests
1
−
483,833
462,226
5
Assets
As at January 31, 2025, the Bank had total assets of $483.8 billion, up $21.6 billion or 5% from $462.2 billion as at October 31, 2024. Cash and deposits with financial institutions as at January 31, 2025, stood at $34.6 billion, up $3.1 billion, owing primarily to an increase in deposits with regulated financial institutions, including the U.S. Federal Reserve, partly offset by a decrease in deposits with the Bank of Canada.
Securities have risen $13.9 billion since October 31, 2024, owing to a $10.6 billion or 9% increase in securities at fair value through profit or loss driven mainly by equity securities. Securities other than those measured at fair value through profit or loss were up $3.3 billion. Securities purchased under reverse repurchase agreements and securities borrowed decreased by $1.1 billion since October 31, 2024, driven primarily by the Financial Markets segment activities.
As at January 31, 2025, loans, net of allowances for credit losses, totalled $246.6 billion, up $3.6 billion or 1% since October 31, 2024. The following table provides a breakdown of the main loan portfolios.
(millions of Canadian dollars)
As at January 31, 2025
As at October 31, 2024
As at January 31, 2024
Loans
Residential mortgage and home equity lines of credit
126,916
124,431
117,883
Personal
17,495
17,461
16,948
Credit card
2,710
2,761
2,541
Business and government(1)
100,982
99,720
93,996
248,103
244,373
231,368
Allowances for credit losses
(1,483)
(1,341)
(1,211)
246,620
243,032
230,157
(1) Including customers' liability under acceptances as at January 31, 2024.
Since October 31, 2024, residential mortgages (including home equity lines of credit) rose $2.5 billion or 2% given the business activities of the Personal and Commercial segment, the Financial Markets segment, and the Credigy and ABA Bank subsidiaries. Also since October 31, 2024, personal loans were relatively stable, credit card receivables were down slightly. Business and government loans rose $1.3 billion or 1%, mainly due to business growth in Commercial Banking, in the Wealth Management segment, and at the Credigy and ABA Bank subsidiaries. These increases were partly offset by a decline in the Financial Markets segment activities.
Since January 31, 2024, loans, net of allowances for credit losses, grew $16.4 billion or 7%. Residential mortgages (including home equity lines of credit) rose $9.0 billion or 8% due to sustained demand for mortgage credit in the Personal and Commercial segment and to business growth in the Financial Markets segment and at the ABA Bank and Credigy subsidiaries. Also since January 31, 2024, personal loans rose $0.6 billion, credit card receivables were up $0.2 billion. Business and government loans grew $7.0 billion or 7%, owing essentially to greater business activity in Commercial Banking, in the Financial Markets and Wealth Management segments, and at the ABA Bank and Credigy subsidiaries, partly offset by a decrease in Treasury activities.
Impaired loans include all loans classified in Stage 3 of the expected credit loss model and POCI loans. As at January 31, 2025, gross impaired loans stood at $2,341 million compared to $2,043 million as at October 31, 2024. As for net impaired loans, they totalled $1,836 million as at January 31, 2025, compared to $1,629 million as at October 31, 2024. Net impaired loans excluding POCI loans amounted to $1,366 million as at January 31, 2025, rising $222 million from $1,144 million as at October 31, 2024. This increase was mainly due to an increase in net impaired loans in the loan portfolios of Commercial Banking, the Financial Markets segment, and the ABA Bank subsidiary. Net POCI loans stood at $470 million as at January 31, 2025 compared to $485 million as at October 31, 2024, a decrease due to the maturities of certain portfolios and to loan repayments.
As at January 31, 2025, other assets totalled $28.3 billion, a $2.1 billion increase since October 31, 2024 that resulted mainly from an increase in derivative financial instruments.
Liabilities
As at January 31, 2025, the Bank had total liabilities of $457.4 billion compared to $436.7 billion as at October 31, 2024.
The Bank's total deposits stood at $351.1 billion as at January 31, 2025, rising $17.6 billion or 5% from $333.5 billion as at October 31, 2024. As at January 31, 2025, personal deposits stood at $98.9 billion, rising $3.7 billion since October 31, 2024. This increase was driven by business growth in Personal Banking, in both the Financial Markets and Wealth Management segments, and at the ABA Bank subsidiary.
Business and government deposits stood at $246.5 billion as at January 31, 2025, rising $13.8 billion since October 31, 2024. The increase came from Treasury funding activities (including $0.3 billion in deposits subject to bank recapitalization (bail-in) conversion regulations), and from the activities of the Financial Markets and Wealth Management segments. As at January 31, 2025, deposits from deposit-taking institutions stood at $5.8 billion, an increase of $0.2 billion since October 31, 2024 arising from Treasury funding activities.
As at January 31, 2025, other liabilities stood at $104.1 billion, up $2.2 billion since October 31, 2024, essentially due a $2.9 billion increase in derivative financial instruments and a $0.7 billion increase in obligations related to securities sold short. These increases were partly offset by a $0.8 billion decrease in obligations related to securities sold under repurchase agreements and securities loaned and a $0.3 billion decrease in liabilities related to transferred receivables.
Subordinated debt increased since October 31, 2024, as a result of the $1.0 billion issuance of medium-term notes on January 13, 2025.
Equity
As at January 31, 2025, equity attributable to the Bank's shareholders and holders of other equity instruments was $26.4 billion, rising $0.8 billion since October 31, 2024. This increase was due to net income net of dividends, issuances of common shares under the Stock Option Plan, and foreign currency translation adjustments. These increases were partly offset by the net change in gains (losses) on cash flow hedges.
Events After the Consolidated Balance Sheet Date
Canadian Western Bank (CWB) Acquisition
On February 3, 2025, the Bank completed the acquisition of CWB, a diversified financial services institution based in Edmonton, Alberta, in which the Bank had already been holding a 5.9% equity interest. This transaction will enable the Bank to accelerate its growth across Canada. The business combination brings together two complementary Canadian banks with growing businesses, thereby enhancing customer service by offering a full range of products and services nationwide, with a regionally focused service model.
The total consideration transferred of $6.8 billion included $5.3 billion for 100% of the common shares of CWB acquired by way of a share exchange at an exchange ratio of 0.450 of a common share of the National Bank for each CWB common share, other than those held by the National Bank, $1.4 billion for the settlement of pre-existing relationships and $0.1 billion for the issuance of replacement share-based payment awards. The fair value of the Bank's common shares issued was determined on the basis of the share price on the Toronto Stock Exchange (TSX) at closing on January 31, 2025 being a price of $128.99 per share. At acquisition date, the Bank obtained a 100% interest in the CWB voting shares and the 5.9% previously held interest was remeasured to its fair value of $0.3 billion. The non-controlling interest in CWB recognized at acquisition date was measured at a fair value of $0.6 billion and represents CWB's preferred shares and Limited Recourse Capital Notes (LRCN) outstanding on that date. Total purchase consideration amounted to $7.7 billion.
Based on the estimated fair values, the preliminary purchase price allocation assigns $45.5 billion to assets and $37.8 billion to liabilities at acquisition date. Estimated goodwill of $1.6 billion reflects the expected expense synergies from our Personal and Commercial and Wealth Management banking services operations and the expected growth of the technology platforms. Goodwill is not deductible for tax purposes. The results of CWB will be consolidated in the Bank's financial statements as of February 3, 2025.
Prior to the closing of the CWB acquisition, the Bank had entered into interest rate swaps to hedge its exposure to changes in goodwill and capital due to changes in interest rates. On the closing date, swaps that were not designated in hedging relationships were neutralized while others were de-designated from hedging relationships. These operations economically offset the changes in fair value of the assets and liabilities of CWB and resulted in the subsequent amortization of the hedges.
Issuance of Common Shares
On February 3, 2025, the Bank issued a total of 50,272,878 common shares, for a total proceed of $6.3 billion, which increased Common share capital by $6.3 billion. This issuance includes 41,010,378 common shares at a price of $128.99 per share from the share exchange and 9,262,500 common shares at a price of $112.30 per share from the automatic exchange of subscription receipts. For additional information on subscription receipts, see Note 10 to the Consolidated Financial Statements.
Exchange of Preferred Shares and Redemption of Other Equity Instruments
As of February 4, 2025, certain amendments previously approved by the holders of the outstanding first preferred shares and LRCN of CWB, which permit the exchange of the first preferred shares of CWB for substantially equivalent first preferred shares of National Bank and the early redemption of the LRCN, were implemented.
On February 20, 2025, all the issued and outstanding Series 5 and Series 9 First Preferred Shares of CWB were exchanged for substantially equivalent Series 47 and Series 49 First Preferred Shares of National Bank, which are non-cumulative 5-year rate-reset bearing interest at 6.371% and 7.651%. The Bank exchanged 10,000,000 preferred shares for a total amount of $268 million, which reduced the Non-controlling interest by $268 million, increased Preferred Share capital by $264 million and increased Retained earnings by $4 million. Consent fees related to the exchange amounting to $2 million, net of income taxes, were recorded in Retained earnings. Given the Series 47 and Series 49 preferred shares meet the non-viability contingent capital requirements (NVCC), these shares are eligible for regulatory capital purposes under the Basel III rules. Also, the Bank redeemed 175,000 LRCN - Series 1 and 150,000 LRCN - Series 2 of CWB for a total amount of $335 million, including consent fees, which reduced the Non-controlling interest by $325 million and decreased Retained earnings by $7 million, net of income taxes.
Redemption of Preferred Shares
On February 17, 2025, the first business day after the February 15, 2025 set redemption date, the Bank redeemed all of the issued and outstanding Non-Cumulative 5-Year Rate Reset Series 32 First Preferred Shares. Pursuant to the share conditions, the redemption price was $25.00 per share plus the periodic dividends declared and unpaid. The Bank redeemed 12,000,000 Series 32 preferred shares for a total amount of $300 million which reduced Preferred share capital.
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 Accounting Standards, 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
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 ended January 31, 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 January 31, 2025, the Bank continues to apply the exception to the recognition and disclosure of information of 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 January 31, 2025, outstanding liabilities of $23.8 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 January 31, 2025
Ratios as at January 31, 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
%
13.6
%
Tier 1(4)
6.0
%
2.5
%
8.5
%
1.0
%
9.5
%
3.5
%
13.0
%
15.5
%
Total(4)
8.0
%
2.5
%
10.5
%
1.0
%
11.5
%
3.5
%
15.0
%
17.1
%
Leverage ratio(4)
3.0
%
n.a.
3.0
%
0.5
%
3.5
%
n.a.
3.5
%
4.3
%
TLAC ratio
21.5
%
n.a.
21.5
%
n.a.
21.5
%
3.5
%
25.0
%
31.2
%
TLAC leverage ratio
6.75
%
n.a.
6.75
%
0.5
%
7.25
%
n.a.
7.25
%
8.7
%
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%.
(4) Figures as at January 31, 2025 include the redemption of the Series 32 preferred shares completed on February 17, 2025.
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 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. These instruments were excluded from the capital ratio calculations as at January 31, 2025.
Dividends
On February 25, 2025, the Board of Directors declared regular dividends on the various series of first preferred shares and a dividend of $1.14 per common share, payable on May 1, 2025 to shareholders of record on March 31, 2025.
Shares, Other Equity Instruments, and Stock Options
As at January 31, 2025
Number of shares or LRCN(1)
$ million
First preferred shares
Series 30
14,000,000
350
Series 32
12,000,000
300
Series 38
16,000,000
400
Series 40
12,000,000
300
Series 42
12,000,000
300
66,000,000
1,650
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
67,500,000
3,150
Common shares
341,085,205
3,485
Stock options
11,061,775
(1) Limited Recourse Capital Notes (LRCN).
As at February 21, 2025, there were 391,216,059 common shares and 11,778,661 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 maturing on August 16, 2032, February 15, 2034, and February 15, 2035, 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 1,264 million Bank common shares, which would have a 78.7% dilutive effect based on the number of Bank common shares outstanding as at January 31, 2025. The Series 32 preferred shares redeemed on February 17, 2025 for a total amount of $300 million were excluded from the calculation.
Movement in Regulatory Capital(1)
(millions of Canadian dollars)
Quarter ended January 31, 2025
Common Equity Tier 1 (CET1) capital
Balance at beginning
19,321
Issuance of common shares (including Stock Option Plan)
25
Impact of shares purchased or sold for trading
(6)
Repurchase of common shares
−
Other contributed surplus
2
Dividends on preferred and common shares and distributions on other equity instruments
(434)
Net income attributable to the Bank's shareholders and holders of other equity instruments
997
Removal of own credit spread (net of income taxes)
(20)
Other
45
Movements in accumulated other comprehensive income
Translation adjustments
249
Debt securities at fair value through other comprehensive income
4
Other
−
Change in goodwill and intangible assets (net of related tax liability)
(1)
Other, including regulatory adjustments
Change in defined benefit pension plan asset (net of related tax liability)
(25)
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)
(6)
Other deductions or regulatory adjustments to CET1 implemented by OSFI
(16)
Change in other regulatory adjustments
6
Balance at end
20,141
Additional Tier 1 capital
Balance at beginning
3,149
New Tier 1 eligible capital issuances
−
Redeemed capital(2)
(300)
Other, including regulatory adjustments
(4)
Balance at end
2,845
Total Tier 1 capital
22,986
Tier 2 capital
Balance at beginning
1,531
New Tier 2 eligible capital issuances
1,000
Redeemed capital
−
Tier 2 instruments issued by subsidiaries and held by third parties
−
Change in certain allowances for credit losses
57
Other, including regulatory adjustments
(141)
Balance at end
2,447
Total regulatory capital
25,433
(1) See the Financial Reporting Method section on pages 4 to 9 for additional information on capital management measures.
(2) Figures as at January 31, 2025 include the redemption of the Series 32 preferred shares completed on February 17, 2025.
Risk-Weighted Assets by Key Risk Drivers
Risk-weighted assets (RWA) amounted to $148.5 billion as at January 31, 2025 compared to $141.0 billion as at October 31, 2024, a $7.5 billion increase resulting mainly from organic growth in RWA, foreign exchange movements 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
January 31, 2025
October 31, 2024
Non-counterparty credit risk
Counterparty credit risk
Total
Total
Credit risk - Risk-weighted assets at beginning
112,005
6,445
118,450
116,684
Book size
3,073
374
3,447
1,067
Book quality
768
17
785
(70)
Model updates
−
−
−
439
Methodology and policy
−
−
−
−
Acquisitions and disposals
−
−
−
−
Foreign exchange movements
1,607
154
1,761
330
Credit risk - Risk-weighted assets at end
117,453
6,990
124,443
118,450
Market risk - Risk-weighted assets at beginning
8,002
8,066
Movement in risk levels(2)
1,144
(64)
Model updates
−
−
Methodology and policy
−
−
Acquisitions and disposals
−
−
Market risk - Risk-weighted assets at end
9,146
8,002
Operational risk - Risk-weighted assets at beginning
14,523
14,168
Movement in risk levels
352
355
Methodology and policy
−
−
Acquisitions and disposals
−
−
Operational risk - Risk-weighted assets at end
14,875
14,523
Risk-weighted assets at end
148,464
140,975
(1) See the Financial Reporting Method section on pages 4 to 9 for additional information on capital management measures.
(2) Also includes foreign exchange rate movements that are not considered material.
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 January 31, 2025, the Bank's CET1, Tier 1, and Total capital ratios were, respectively, 13.6%, 15.5%, and 17.1% compared to ratios of, respectively, 13.7%, 15.9%, and 17.0% as at October 31, 2024. The CET1 ratio and the Tier 1 capital ratio decreased since October 31, 2024, whereas the Total capital ratio increased slightly. The growth in RWA had an unfavourable impact on the ratios, partly offset by net income, net of dividends. The $300 million redemption of preferred shares on February 17, 2025, which is already excluded from the capital ratio calculations as at January 31, 2025, had negatively affected the Tier 1 capital ratio, while the $1.0 billion issuance of medium-term notes, on January 13, 2025, had a favourable impact on the Total capital ratio.
As at January 31, 2025, the leverage ratio was 4.3% compared to 4.4% as at October 31, 2024. The decrease in the leverage ratio was essentially due to growth in total exposure, partly offset by growth in Tier 1 capital.
As at January 31, 2025, the Bank's TLAC ratio and TLAC leverage ratio were, respectively, 31.2% and 8.7% compared to 31.2% and 8.6%, respectively, as at October 31, 2024. The TLAC ratio remained stable and the increase in TLAC leverage ratio is primarily explained by the net issuances of instruments that met all of the TLAC eligibility criteria during the first quarter of 2025.
During the quarter ended January 31, 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 January 31, 2025
As at October 31, 2024
Capital
CET1
20,141
19,321
Tier 1(3)
22,986
22,470
Total(3)
25,433
24,001
Risk-weighted assets
148,464
140,975
Total exposure
534,461
511,160
Capital ratios
CET1
13.6
%
13.7
%
Tier 1(3)
15.5
%
15.9
%
Total(3)
17.1
%
17.0
%
Leverage ratio(3)
4.3
%
4.4
%
Available TLAC
46,331
44,040
TLAC ratio
31.2
%
31.2
%
TLAC leverage ratio
8.7
%
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.
(3) Figures as at January 31, 2025 include the redemption of the Series 32 preferred shares completed on February 17, 2025.
Public Disclosure Requirements for Global Systemically Important Banks
The BCBS developed an assessment methodology and additional loss absorbency requirements as well as indicators to be used by the BCBS and the Financial Stability Board to evaluate Global Systemically Important Banks (G-SIBs). The annual public disclosure requirements apply to large, globally active banks.
The most recent version of OSFI's advisory entitled Global Systemically Important Banks - Public Disclosure Requirements regarding implementation of public disclosure requirements for G-SIBs in Canada took effect in 2022. Canadian banks, including the Bank, that have not been designated as G‑SIBs and that have total exposure (as calculated using the Basel III leverage ratio) greater than 200 billion euros at fiscal year-end must publish the indicators annually. The indicators are calculated and presented in accordance with specific BCBS guidelines, which are updated annually. Consequently, the values obtained may not be comparable to the other measures presented in this report. The following table presents the indicators used in the BCBS's assessment methodology for evaluating G-SIBs.
Indicators - Global Systemically Important Banks (G-SIBs)(1)
(millions of Canadian dollars)
As at October 31
Category
Indicators
2024
2023
Cross-jurisdictional activity(2)
Cross-jurisdictional claims
139,164
117,016
Cross-jurisdictional liabilities
138,198
90,476
Size(3)
Total exposures as defined for use in the Basel III leverage ratio(4)
Underwritten transactions in debt and equity markets
46,856
31,821
Trading volume(8)
Fixed-income securities(8)
924,734
845,554
Equities and other securities(8)
1,513,131
1,124,984
Complexity(9)
Notional amount of over-the-counter derivative financial instruments(4)
2,261,187
1,847,636
Trading and investment securities
67,274
54,740
Level 3 financial assets(4)
1,360
1,226
(1) The G-SIB indicators are prepared using the methodology prescribed in the BCBS guidelines published in July 2018 and are calculated using the specific instructions updated by the BCBS each year.
(2) Represents the Bank's level of interaction outside Canada.
(3) Represents the Bank's total on-and-off balance sheet exposures, as determined by OSFI's Basel III leverage ratio rules before regulatory adjustments.
(4) Includes insurance activities.
(5) Represents transactions with other financial institutions.
(6) Represents the extent to which the Bank's services could be substituted by other institutions.
(7) For the fiscal years ended October 31, 2024 and 2023.
(8) This indicator consists of two sub-indicators: fixed-income securities as well as equities and other securities.
(9) Includes the level of complexity and volume of the Bank's trading activities represented through derivative financial instruments, trading securities, investment securities, and Level 3 financial assets.
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 - Tariffs on imports
In recent weeks, the new U.S administration issued executive orders directing the United States to impose new tariffs on imports from certain countries, including Canada. Such announcements and a potential tariff response strategy may create uncertainty, which has permeated the economic and investment outlook, impacting current economic conditions, including such issues as the inflation rate and the global supply chain. Aside from its impact on the global economy, the new tariff conflict may continue to have repercussions on the Bank and its clients. In light of these recent developments, the Bank is closely monitoring the impacts and potential consequences on its financial position and that of its clients. Given these circumstances, this conflict may put into perspective 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 to which entities will be affected 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 to make payments, notably borrowers with variable-rate mortgages or for whom the mortgage term is up for renewal. Over the course of its last six announcements, from June 5, 2024 to January 29, 2025, the Bank of Canada lowered its policy rate from 5% to 3%.
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 January 31, 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
81,492
8,956
−
−
−
90,448
13
%
87
%
Qualifying revolving retail
4,123
12,179
−
−
−
16,302
−
%
100
%
Other retail
17,309
2,619
−
−
37
19,965
14
%
86
%
102,924
23,754
−
−
37
126,715
Non-retail
Corporate
98,286
32,540
52,635
195
9,610
193,266
21
%
79
%
Sovereign
70,699
8,765
92,338
−
300
172,102
3
%
97
%
Financial institutions
10,288
1,089
148,520
3,221
1,853
164,971
23
%
77
%
179,273
42,394
293,493
3,416
11,763
530,339
Trading portfolio
−
−
−
18,137
−
18,137
3
%
97
%
Securitization
3,766
−
−
−
6,856
10,622
100
%
−
%
Total - Gross credit risk
285,963
66,148
293,493
21,553
18,656
685,813
16
%
84
%
Standardized Approach(5)
42,889
1,268
54,635
3,485
7,583
109,860
IRB Approach
243,074
64,880
238,858
18,068
11,073
575,953
Total - Gross credit risk
285,963
66,148
293,493
21,553
18,656
685,813
16
%
84
%
(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 4 to 9 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 - First Quarter 2025 and Supplementary Regulatory Capital and Pillar 3 Disclosure - First 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. In recent years, the Bank has been operating in a volatile environment. 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 high interest rates continue to create uncertainty.
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 January 31, 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
34,608
375
26,986
7,247
Interest rate(3)
Securities
At fair value through profit or loss
126,536
123,617
2,919
−
Interest rate(3)and equity
At fair value through other comprehensive income
16,428
−
16,428
−
Interest rate(3)and equity(4)
At amortized cost
16,122
−
16,122
−
Interest rate(3)
Securities purchased under reverse repurchase
agreements and securities borrowed
15,229
−
15,229
−
Interest rate(3)(5)
Loans, net of allowances
246,620
15,227
231,393
−
Interest rate(3)
Derivative financial instruments
14,164
13,614
550
−
Interest rate and exchange rate
Defined benefit asset
518
−
518
−
Other
Other
13,608
521
−
13,087
483,833
153,354
310,145
20,334
Liabilities
Deposits
351,095
32,952
318,143
−
Interest rate(3)
Obligations related to securities sold short
11,575
11,575
−
−
Obligations related to securities sold under repurchase
agreements and securities loaned
37,359
−
37,359
−
Interest rate(3)(5)
Derivative financial instruments
18,724
17,819
905
−
Interest rate and exchange rate
Liabilities related to transferred receivables
28,112
10,118
17,994
−
Interest rate(3)
Defined benefit liability
105
−
105
−
Other
Other
8,202
−
−
8,202
Interest rate(3)
Subordinated debt
2,265
−
2,265
−
Interest rate(3)
457,437
72,464
376,771
8,202
(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 these 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 measures.
(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)
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 these 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
January 31, 2025
October 31, 2024
January 31, 2024
Low
High
Average
Period end
Average
Period end
Average
Period end
Interest rate
(9.3)
(15.5)
(12.8)
(13.0)
(7.9)
(8.8)
(8.0)
(8.5)
Exchange rate
(0.8)
(4.3)
(2.0)
(0.9)
(1.4)
(1.1)
(2.5)
(1.0)
Equity
(3.0)
(7.3)
(4.8)
(6.5)
(3.4)
(5.3)
(6.2)
(6.1)
Commodity
(1.1)
(2.1)
(1.6)
(1.2)
(1.0)
(1.2)
(1.8)
(1.7)
Diversification effect(3)
n.m.
n.m.
9.1
8.0
5.8
6.3
8.3
7.2
Total trading VaR
(8.9)
(16.0)
(12.1)
(13.6)
(7.9)
(10.1)
(10.2)
(10.1)
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 47 to 50 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 increased from $7.9 million to $12.1 million from the fourth quarter of 2024 to the first quarter of 2025, mainly due to an increase in interest rate risk.
Daily Trading and Underwriting Revenues
The following chart shows daily trading and underwriting revenues and VaR. Daily trading and underwriting revenues were positive for 89% of the quarter ended January 31, 2025. In addition, six days were marked by net daily trading and underwriting losses in excess of $1 million. None of these losses exceeded VaR.
Quarter Ended January 31, 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 January 31, 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
(406)
(52)
(458)
(378)
(57)
(435)
100-basis-point decrease in the interest rate
386
49
435
352
48
400
Impact on net interest income
100-basis-point increase in the interest rate
138
(39)
99
121
(22)
99
100-basis-point decrease in the interest rate
(159)
31
(128)
(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. 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 January 31, 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
34,608
−
34,608
14,276
20,332
19,819
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments
39,229
55,339
94,568
56,766
37,802
41,541
Issued or guaranteed by Canadian provincial and
municipal governments
14,746
10,159
24,905
14,520
10,385
10,669
Other debt securities
6,531
4,951
11,482
3,372
8,110
7,305
Equity securities
98,580
56,987
155,567
98,098
57,469
40,972
Loans
Securities backed by insured residential mortgages
17,722
−
17,722
7,879
9,843
8,471
As at January 31, 2025
211,416
127,436
338,852
194,911
143,941
As at October 31, 2024
192,169
117,906
310,075
181,298
128,777
(millions of Canadian dollars)
As at January 31, 2025
As at October 31, 2024
Unencumbered liquid assets by entity
National Bank (parent)
93,950
80,768
Domestic subsidiaries
9,166
12,023
Foreign subsidiaries and branches
40,825
35,986
143,941
128,777
(millions of Canadian dollars)
As at January 31, 2025
As at October 31, 2024
Unencumbered liquid assets by currency
Canadian dollar
67,988
66,970
U.S. dollar
69,109
53,960
Other currencies
6,844
7,847
143,941
128,777
Liquid Asset Portfolio(1) - Average(5)
(millions of Canadian dollars)
Quarter ended
January 31, 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
33,867
−
33,867
13,169
20,698
20,762
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments
38,467
60,331
98,798
56,815
41,983
40,832
Issued or guaranteed by Canadian provincial and
municipal governments
13,782
10,576
24,358
14,949
9,409
9,063
Other debt securities
7,599
4,717
12,316
3,595
8,721
8,244
Equity securities
103,289
56,738
160,027
104,326
55,701
45,621
Loans
Securities backed by insured residential mortgages
17,152
−
17,152
7,603
9,549
8,486
214,156
132,362
346,518
200,457
146,061
133,008
(1) See the Financial Reporting Method section on pages 4 to 9 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 January 31, 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
713
13,563
20,332
−
34,608
3.0
Securities
48,974
−
110,112
−
159,086
10.1
Securities purchased under reverse repurchase
agreements and securities borrowed
−
11,575
3,654
−
15,229
2.4
Loans, net of allowances
40,166
−
9,843
196,611
246,620
8.3
Derivative financial instruments
−
−
−
14,164
14,164
−
Premises and equipment
−
−
−
1,917
1,917
−
Goodwill
−
−
−
1,530
1,530
−
Intangible assets
−
−
−
1,222
1,222
−
Other assets
−
−
−
9,457
9,457
−
89,853
25,138
143,941
224,901
483,833
23.8
(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 4 to 9 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 January 31, 2025, the Bank's average LCR was 154%, 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
January 31, 2025
October 31, 2024
Total unweighted value(3)(average)
Total weighted value(4)(average)
Total weighted value(4) (average)
High-quality liquid assets (HQLA)
Total HQLA
n.a.
89,902
86,929
Cash outflows
Retail deposits and deposits from small business customers, of which:
68,137
6,204
5,858
Stable deposits
28,502
856
834
Less stable deposits
39,635
5,348
5,024
Unsecured wholesale funding, of which:
118,390
66,110
65,742
Operational deposits (all counterparties) and deposits in networks of cooperative banks
37,067
9,057
8,660
Non-operational deposits (all counterparties)
75,448
51,063
51,612
Unsecured debt
5,875
5,990
5,470
Secured wholesale funding
n.a.
28,831
25,691
Additional requirements, of which:
82,128
21,391
19,479
Outflows related to derivative exposures and other collateral requirements
28,400
12,029
11,228
Outflows related to loss of funding on secured debt securities
1,999
1,977
1,394
Backstop liquidity and credit enhancement facilities and commitments to extend credit
51,729
7,385
6,857
Other contractual commitments to extend credit
2,331
655
791
Other contingent commitments to extend credit
167,582
2,158
2,117
Total cash outflows
n.a.
125,349
119,678
Cash inflows
Secured lending (e.g., reverse repos)
154,311
28,898
29,105
Inflows from fully performing exposures
13,752
9,630
8,794
Other cash inflows
27,728
27,537
23,262
Total cash inflows
195,791
66,065
61,161
Total adjusted value(5)
Total adjusted value(5)
Total HQLA
89,902
86,929
Total net cash outflows
59,284
58,517
Liquidity coverage ratio (%)(6)
154
%
150
%
n.a. Not applicable
(1) See the Financial Reporting Method section on pages 4 to 9 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 January 31, 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 January 31, 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 January 31, 2025, the Bank's NSFR was 123%, 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 January 31, 2025
As at October 31, 2024
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:
26,124
−
−
2,265
28,389
26,798
Regulatory capital
26,124
−
−
2,265
28,389
26,798
Other capital instruments
−
−
−
−
−
−
Retail deposits and deposits from small business customers:
63,912
14,835
8,771
26,708
105,964
103,782
Stable deposits
27,154
5,024
4,030
7,983
42,381
42,111
Less stable deposits
36,758
9,811
4,741
18,725
63,583
61,671
Wholesale funding:
80,811
97,656
25,102
65,373
131,403
126,339
Operational deposits
36,588
−
−
−
18,294
18,370
Other wholesale funding
44,223
97,656
25,102
65,373
113,109
107,969
Liabilities with matching interdependent assets(4)
−
3,218
2,401
22,493
−
−
Other liabilities(5):
15,401
9,607
789
760
NSFR derivative liabilities(5)
n.a.
6
n.a.
n.a.
All other liabilities and equity not included in the above categories
15,401
3,681
151
5,769
789
760
Total ASF
n.a.
n.a.
n.a.
n.a.
266,545
257,679
Required Stable Funding (RSF) Items
Total NSFR high-quality liquid assets (HQLA)
n.a.
n.a.
n.a.
n.a.
8,064
9,827
Deposits held at other financial institutions for operational purposes
−
−
−
−
−
−
Performing loans and securities:
64,897
101,407
31,174
102,686
174,271
167,755
Performing loans to financial institutions secured by Level 1 HQLA
139
2,586
−
−
136
228
Performing loans to financial institutions secured by non-Level-1 HQLA and unsecured performing loans to financial institutions
7,271
60,336
1,687
6,940
16,526
11,137
Performing loans to non-financial corporate clients, loans to retail and small business customers, and loans to sovereigns, central banks and PSEs, of which:
31,957
28,576
18,563
35,556
84,068
83,705
With a risk weight of less than or equal to 35% under the Basel II Standardized Approach for credit risk
656
2,854
582
57
2,182
1,959
Performing residential mortgages, of which:
8,979
8,436
9,828
58,536
56,697
56,547
With a risk weight of less than or equal to 35% under the Basel II Standardized Approach for credit risk
8,979
8,436
9,828
58,536
56,697
56,547
Securities that are not in default and do not qualify as HQLA, including exchange-traded equities
16,551
1,473
1,096
1,654
16,844
16,138
Assets with matching interdependent liabilities(4)
−
3,218
2,401
22,493
−
−
Other assets(5):
9,412
32,975
28,723
28,191
Physical traded commodities, including gold
712
n.a.
n.a.
n.a.
712
696
Assets posted as initial margin for derivative contracts and contributions to default funds of CCPs(5)
n.a.
12,356
10,503
10,960
NSFR derivative assets(5)
n.a.
3,857
3,851
3,136
NSFR derivative liabilities before deduction of the variation margin posted(5)
n.a.
11,008
550
488
All other assets not included in the above categories
8,700
3,267
616
1,871
13,107
12,911
Off-balance-sheet items(5)
n.a.
129,890
4,954
4,845
Total RSF
n.a.
n.a.
n.a.
n.a.
216,012
210,618
Net Stable Funding Ratio (%)
n.a.
n.a.
n.a.
n.a.
123
%
122
%
n.a. Not applicable
(1) See the Financial Reporting Method section on pages 4 to 9 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 January 31, 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)
788
73
150
412
1,423
−
−
1,423
Certificates of deposit and commercial paper(2)
5,473
7,963
7,102
12,796
33,334
145
−
33,479
Senior unsecured medium-term notes(3)
1,655
452
2,683
8,646
13,436
4,981
12,951
31,368
Senior unsecured structured notes
−
6
−
122
128
1,541
3,592
5,261
Covered bonds and asset-backed securities
Mortgage securitization
−
1,275
1,822
2,395
5,492
3,183
19,437
28,112
Covered bonds
−
1,508
−
−
1,508
3,938
5,613
11,059
Subordinated liabilities(4)
−
−
−
−
−
−
2,265
2,265
7,916
11,277
11,757
24,371
55,321
13,788
43,858
112,967
Secured funding
−
2,783
1,822
2,395
7,000
7,121
25,050
39,171
Unsecured funding
7,916
8,494
9,935
21,976
48,321
6,667
18,808
73,796
7,916
11,277
11,757
24,371
55,321
13,788
43,858
112,967
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 January 31, 2025
One-notch downgrade
Two-notch downgrade
Three-notch downgrade
Derivatives(1)
22
44
89
(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 January 31, 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 January 31, 2025
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
20,493
837
871
152
858
−
−
−
11,397
34,608
Securities
At fair value through
profit or loss
106
614
739
624
709
5,045
10,645
10,037
98,017
126,536
At fair value through
other comprehensive income
36
101
60
255
467
1,087
6,862
6,997
563
16,428
At amortized cost
139
385
907
561
973
2,307
7,809
3,041
−
16,122
281
1,100
1,706
1,440
2,149
8,439
25,316
20,075
98,580
159,086
Securities purchased under
reverse repurchase
agreements and
securities borrowed
7,335
2,130
1,826
−
−
363
−
−
3,575
15,229
Loans(1)
Residential mortgage
1,613
2,303
4,490
4,704
5,045
23,604
44,623
10,686
571
97,639
Personal
836
1,118
1,852
1,881
1,852
7,627
12,090
5,924
13,592
46,772
Credit card
2,710
2,710
Business and government
12,515
6,433
5,073
7,049
4,560
11,463
17,597
6,813
29,479
100,982
Allowances for credit losses
(1,483)
(1,483)
14,964
9,854
11,415
13,634
11,457
42,694
74,310
23,423
44,869
246,620
Other
Derivative financial instruments
2,595
2,049
1,675
701
931
1,743
1,894
2,576
−
14,164
Premises and equipment
1,917
1,917
Goodwill
1,530
1,530
Intangible assets
1,222
1,222
Other assets(1)
1,719
212
1,368
514
102
929
414
58
4,141
9,457
4,314
2,261
3,043
1,215
1,033
2,672
2,308
2,634
8,810
28,290
47,387
16,182
18,861
16,441
15,497
54,168
101,934
46,132
167,231
483,833
(1) Amounts collectible on demand are considered to have no specified maturity.
(millions of Canadian dollars)
As at January 31, 2025
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
3,350
3,387
5,513
5,316
3,855
7,244
14,249
7,768
48,179
98,861
Business and government
40,740
15,928
15,031
11,196
13,461
11,724
37,789
6,132
94,449
246,450
Deposit-taking institutions
1,246
984
1,252
418
84
−
13
29
1,758
5,784
45,336
20,299
21,796
16,930
17,400
18,968
52,051
13,929
144,386
351,095
Other
Obligations related
to securities sold short(3)
226
390
620
436
236
916
2,837
3,597
2,317
11,575
Obligations related to
securities sold under
repurchase agreements and
securities loaned
22,245
2,893
1,090
3
−
4,056
−
−
7,072
37,359
Derivative financial
instruments
2,512
2,595
1,569
717
1,307
3,121
2,030
4,873
−
18,724
Liabilities related to transferred
receivables(4)
−
1,275
1,822
196
2,199
3,183
8,993
10,444
−
28,112
Lease liabilities(5)
6
13
19
19
19
74
177
170
−
497
Other liabilities - Other items(1)(5)
1,765
530
106
71
42
61
116
116
5,003
7,810
26,754
7,696
5,226
1,442
3,803
11,411
14,153
19,200
14,392
104,077
Subordinated debt
−
−
−
−
−
−
−
2,265
−
2,265
Equity
26,396
26,396
72,090
27,995
27,022
18,372
21,203
30,379
66,204
35,394
185,174
483,833
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit
100
1,050
891
1,455
4,855
1,572
208
21
−
10,152
Credit card receivables(6)
10,758
10,758
Backstop liquidity and credit
enhancement facilities(7)
−
−
15
−
15
5,552
−
−
5,822
11,404
Commitments to extend credit(8)
3,256
12,742
11,747
5,787
6,307
5,242
3,076
90
54,407
102,654
Obligations related to:
Lease commitments(9)
1
1
1
1
1
5
3
2
−
15
Other contracts
4
8
12
12
12
49
256
8
160
521
(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 $49.3 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.
(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
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.
Risk Disclosures
One of the purposes of the 2024 Annual Report, the Report to Shareholders - First 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
44
Management's Discussion and Analysis
55 to 112, 125 and 127 to 129
21 to 43
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
10, 28 to 43
4
New key regulatory ratios
56 to 59, 95, 96 and 99 to 102
21, 22, 33 and 35 to 38
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
21 and 22
10
Reconciliation of the accounting balance sheet to
the regulatory balance sheet
11 to 17, 20 and 21
11
Movements in regulatory capital
62
24
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
25
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
33 to 38
Funding
19
Summary of encumbered and unencumbered assets
98 and 99
35
20
Residual contractual maturities of balance sheet items and
off-balance-sheet commitments
230 to 234
39 to 42
21
Funding strategy and funding sources
102 to 104
38
Market risk
22
Linkage of market risk measures to balance sheet
90 and 91
30 and 31
23
Market risk factors
88 to 94, 218 and 219
30 to 33
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
29 and 66 to 74
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
66 to 74
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
10, 28 and 43
(1) First quarter 2025.
(2) These pages are included in the document entitled Supplementary Financial Information - First Quarter 2025.
Accounting Policies and Financial Disclosure
Material Accounting Policies and Accounting Estimates
The Bank's Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (IFRS Accounting Standards), as issued by the International Accounting Standards Board (IASB). The financial statements also comply with section 308(4) of the Bank Act (Canada), which states that, except as otherwise specified by OSFI, the consolidated financial statements are to be prepared in accordance with IFRS Accounting Standards. IFRS Accounting Standards represent Canadian generally accepted accounting principles (GAAP). None of the OSFI accounting requirements are exceptions to IFRS Accounting Standards. The unaudited interim condensed consolidated financial statements for the quarter ended January 31, 2025 were prepared in accordance with IAS 34 - Interim Financial Reporting using the same accounting policies as those described in Note 1 to the audited annual Consolidated Financial Statements for the year ended October 31, 2024.
In preparing consolidated financial statements in accordance with IFRS Accounting Standards, management must exercise judgment and make estimates and assumptions that affect the reporting date carrying amounts 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.
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 high interest rates continue to create uncertainty. Some of the Bank's accounting policies, such as measurement of expected credit losses (ECLs), require particularly complex judgments and estimates. See Note 1 to the audited annual Consolidated Financial Statements for the year ended October 31, 2024 for a summary of the most significant estimation processes used to prepare the consolidated financial statements in accordance with IFRS Accounting Standards and for the valuation techniques used to determine the carrying values and fair values of assets and liabilities. The uncertainty regarding certain key inputs used in measuring ECLs is described in Note 6 to these unaudited interim condensed 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 first 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.
Quarterly Financial Information
(millions of Canadian dollars,
except per share amounts)
2025
2024
2023
2024
2023
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Total
Total
Total revenues
3,183
2,944
2,996
2,750
2,710
2,560
2,490
2,446
11,400
10,058
Net income
997
955
1,033
906
922
751
830
832
3,816
3,289
Earnings per share($)
Basic
2.81
2.69
2.92
2.56
2.61
2.11
2.35
2.37
10.78
9.33
Diluted
2.78
2.66
2.89
2.54
2.59
2.09
2.33
2.34
10.68
9.24
Dividends per common share($)
1.14
1.10
1.10
1.06
1.06
1.02
1.02
0.97
4.32
3.98
Return on common
shareholders' equity(%)(1)
16.7
16.4
18.4
16.9
17.1
14.1
16.1
17.2
17.2
16.3
Total assets
483,833
462,226
453,933
441,690
433,927
423,477
425,936
417,614
Net impaired loans excluding POCI loans(1)
1,366
1,144
959
864
677
606
537
477
Per common share($)
Book value(1)
68.15
65.74
64.64
62.28
61.18
60.40
58.53
57.45
Share price
High
140.76
134.23
118.17
114.68
103.38
103.58
103.28
103.45
Low
128.79
111.98
106.21
101.24
86.50
84.97
94.62
92.67
(1) See the Glossary section on pages 47 to 50 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 POCI loans
Gross impaired loans excluding POCI loans are all loans classified in Stage 3 of the expected credit loss model excluding POCI loans.
Gross impaired loans excluding POCI loans as a percentage of total loans and acceptances
This measure represents gross impaired loans excluding 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 POCI loans
Net impaired loans excluding POCI loans are gross impaired loans excluding POCI loans presented net of allowances for credit losses on amounts drawn on Stage 3 loans granted by the Bank.
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 POCI loans
This measure represents the allowances for credit losses on impaired loans excluding POCI loans expressed as a percentage of gross impaired loans excluding 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 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 POCI loans.
Provisions for credit losses on impaired loans excluding POCI loans as a percentage of average loans and acceptances or provisions for credit losses on impaired loans excluding POCI loans ratio
This measure represents the provisions for credit losses on impaired loans excluding 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, 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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