REG - Nat Bank of Canada - Q2 2025 Report to shareholders (Part 1)
28/05/2025 15:45
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RNS Number : 4572K National Bank of Canada 28 May 2025
Regulatory Announcement (Part 1)
Q2 2025 Results
National Bank of Canada (the "Bank") announces publication of its Second
Quarter 2025 Release. The Second Quarter Results have been uploaded to the
National Storage Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and is available on
the Bank's website at
https://www.nbc.ca/about-us/investors/quarterly-results.html
(https://www.nbc.ca/about-us/investors/quarterly-results.html)
To view the full PDF of this Second Quarter 2025 Release, please click on the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/4572K_1-2025-5-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/4572K_1-2025-5-28.pdf)
Report to Shareholders Second Quarter 2025
National Bank reports its results for the Second Quarter of 2025 and raises
its quarterly dividend by 4 cents to $1.18 per share
The financial information reported in this document is based on the unaudited
interim condensed consolidated financial statements for the quarter and the
six-month period ended April 30, 2025 and is prepared in accordance with
IAS 34 - Interim Financial Reporting as issued by the International
Accounting Standards Board (IASB). All amounts are presented in Canadian
dollars.
MONTREAL, May 28, 2025 - For the second quarter of 2025, National Bank is
reporting net income of $896 million, down 1% from $906 million in the second
quarter of 2024 and diluted earnings per share stood at $2.17 compared to
$2.54 in the second quarter of 2024. Excluding specified items((1)) recorded
in the second quarter of 2025, notably the acquisition and integration costs
related to the acquisition of Canadian Western Bank (CWB)((2)), which was
completed on February 3, 2025 as well as the initial provisions for credit
losses on non-impaired loans acquired, adjusted net income((1)) stood at
$1,166 million compared to $906 million in the corresponding quarter of 2024.
Adjusted diluted earnings per share((1)) stood at $2.85, up 12% from $2.54 in
the second quarter of 2024.
For the six-month period ended April 30, 2025, the Bank's net income totalled
$1,893 million, up 4% from $1,828 million for the corresponding period of
2024. Diluted earnings per share stood at $4.91 for the six-month period ended
April 30, 2025 versus $5.13 for the corresponding period in 2024, the decrease
being attributable to the common shares issued as part of the acquisition of
CWB((2)). Excluding specified items((1)), adjusted net income((1)) for the
six-month period ended April 30, 2025 totalled $2,216 million, up 21% from
$1,828 million for the six-month period ended April 30, 2024, and adjusted
diluted earnings per share((1)) stood at $5.78, up 13% from $5.13 for the
six-month period ended April 30, 2024.
"The Bank delivered strong second quarter results, supported by solid organic
growth in our business segments. We were also pleased to complete the
acquisition of Canadian Western Bank during the quarter, marking a significant
step forward in the acceleration of our domestic strategy and in extending the
depth and reach of our banking capabilities for our clients," said Laurent
Ferreira, President and Chief Executive Officer of National Bank of Canada.
"In the context of continued geopolitical and geoeconomic uncertainty, our
strong capital position allows us to support business growth," concluded
Mr. Ferreira.
Highlights
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((2)) 2024((3)) % Change 2025((2)) 2024((3)) % Change
Net income 896 906 (1) 1,893 1,828 4
Diluted earnings per share (dollars) $ 2.17 $ 2.54 (15) $ 4.91 $ 5.13 (4)
Income before provisions for credit losses and income taxes 1,708 1,278 34 3,245 2,539 28
Return on common shareholders' equity((4)) 11.9 % 16.9 % 14.0 % 17.0 %
Dividend payout ratio((4)) 42.2 % 43.2 % 42.2 % 43.2 %
Operating results - Adjusted((1))
Net income - Adjusted 1,166 906 29 2,216 1,828 21
Diluted earnings per share - Adjusted (dollars) $ 2.85 $ 2.54 12 $ 5.78 $ 5.13 13
Income before provisions for credit losses and income taxes - Adjusted 1,850 1,278 45 3,460 2,539 36
As at As at
April 30, October 31, 2024
2025
CET1 capital ratio under Basel III((5)) 13.4 % 13.7 %
Leverage ratio under Basel III((5)) 4.7 % 4.4 %
(1) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures.
(2) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and six-month period ended April
30, 2025. For additional information on the impact of the CWB acquisition, see
the Acquisition section.
(3) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes. For additional information, see the Financial Reporting Method section.
(4) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(5) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
Report to Shareholders Second Quarter 2025
Personal and Commercial((1))
- Net income totalled $132 million in the second quarter of 2025
versus $311 million in the second quarter of 2024, a 58% decrease. Adjusted
net income((2)) totalled $316 million, up 2% from the corresponding quarter
of 2024.
- At $1,416 million, second-quarter total revenues rose $285 million
or 25% year over year due to the inclusion of CWB, which represents $240
million or 21%, as well as to an increase in net interest income related to
growth in loan and deposit volumes, partly offset by a lower net interest
margin.
- Compared to a year ago, personal lending grew 11% and commercial
lending grew 64%, mainly due to the inclusion of CWB loans during the second
quarter of 2025.
- The net interest margin((3)) stood at 2.30% in the second quarter
of 2025, down from 2.36% in the second quarter of 2024.
- Second-quarter non-interest expenses stood at $804 million, up 31%
year over year, of which the inclusion of CWB drove a 25% increase.
- Provisions for credit losses rose $337 million year over year,
mainly due to the initial provisions for credit losses of $230 million on
non-impaired loans acquired from CWB as well as provisions for credit losses
on impaired loans and non-impaired loans in Personal Banking and Commercial
Banking.
- At 56.8%, the second-quarter efficiency ratio((3)) had
deteriorated compared to 54.1% in the second quarter of 2024, partly due to
specified items((2)) related to the acquisition of CWB.
Wealth Management((1))
- Net income totalled $232 million in the second quarter of 2025, a
13% increase from $205 million in the corresponding quarter of 2024.
- Second-quarter total revenues amounted to $791 million compared to
$683 million in second-quarter 2024, a $108 million or 16% increase driven
mainly by growth in fee-based revenues, net interest income and the inclusion
of CWB revenues.
- Second-quarter non-interest expenses stood at $476 million versus
$400 million in second-quarter 2024, a 19% increase associated with revenue
growth and with the impact of the inclusion of CWB.
- At 60.2%, the second-quarter efficiency ratio((3)) had
deteriorated compared to 58.6% in the second quarter of 2024.
Financial Markets((1))
- Net income totalled $501 million in the second quarter of 2025, up
56% from $322 million in the second quarter of 2024.
- Second-quarter total revenues amounted to $1,101 million, a 62%
increase that was mainly due to growth in global markets revenues.
- Second-quarter non-interest expenses stood at $403 million in
second-quarter 2025 compared to $312 million in second-quarter 2024, an
increase that was due to higher variable compensation.
- Second-quarter provisions for credit losses were $64 million
compared to $11 million in the same quarter of 2024, owing to provisions for
credit losses on impaired loans.
- At 36.6%, the efficiency ratio((3)) had improved from 45.8% in the
second quarter of 2024 due to the marked increase in revenues.
U.S. Specialty Finance and International
- Net income totalled $169 million in the second quarter of 2025, up
4% from $163 million in the second quarter of 2024.
- Second-quarter total revenues amounted to $390 million, an 11%
year-over-year increase driven mainly by revenue growth at the ABA Bank
subsidiary.
- Non-interest expenses for the second quarter of 2025 stood at $117
million, an 8% year-over-year increase attributable to business growth at the
Credigy and ABA Bank subsidiaries.
- Second-quarter provisions for credit losses were up $22 million
year over year, with the increase being attributable to both Credigy and ABA
Bank.
- At 30.0%, the efficiency ratio((3)) had improved from 30.9% in the
second quarter of 2024.
Other((1))
- The Other segment reported a net loss of $138 million in the
second quarter of 2025 compared to a net loss of $95 million in the same
quarter of 2024, owing to the CWB acquisition and integration charges, which
are considered specified items((2)), partly offset by a higher contribution
from Treasury activities and the inclusion of CWB revenues in the second
quarter of 2025.
Capital Management((1))
- As at April 30, 2025, the Common Equity Tier 1 (CET1) capital
ratio under Basel III((4)) stood at 13.4%, down from 13.7% as at October 31,
2024. The decrease is mainly explained by the growth in the risk-weighted
assets partly due to the inclusion of CWB.
- As at April 30, 2025, the Basel III((4)) leverage ratio was 4.7%,
up from 4.4% as at October 31, 2024.
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and six-month period ended April
30, 2025. For additional information on the impact of the CWB acquisition, see
the Acquisition section.
(2) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures.
(3) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(4) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
Management's Discussion
and Analysis
May 27, 2025
The following Management's Discussion and Analysis (MD&A) presents the
financial condition and operating results of National Bank of Canada (the
Bank). This analysis was prepared in accordance with the requirements set out
in National Instrument 51-102, Continuous Disclosure Obligations, released by
the Canadian Securities Administrators (CSA). This MD&A should be read in
conjunction with the unaudited interim condensed consolidated financial
statements (the Consolidated Financial Statements) and accompanying notes for
the quarter and six-month period ended April 30, 2025 and with the audited
annual consolidated financial statements for the year ended October 31, 2024
prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB), unless
otherwise indicated. IFRS represent Canadian generally accepted accounting
principles (GAAP). All amounts are presented in Canadian dollars. Additional
information about the Bank, including the Annual Information Form, can be
obtained from the Bank's website at nbc.ca and SEDAR+'s website at
sedarplus.ca. The information found in the various documents and reports
published by the Bank or the information available on the Bank's website and
mentioned herein is not and should not be considered incorporated by reference
into the Report to Shareholders, the Management's Discussion and Analysis, or
the consolidated financial statements, unless expressly stated otherwise.
Acquisition 4 Capital Management 25
Economic Review and Outlook 5 Risk Management 31
Financial Reporting Method 6 Risk Disclosures 47
Highlights 13 Accounting Policies and Financial Disclosure 48
Financial Analysis 14 Material Accounting Policies and Accounting Estimates 48
Consolidated Results 14 Future Accounting Policy Changes 49
Results by Segment 17 Financial Disclosure 49
Consolidated Balance Sheet 23 Quarterly Financial Information 50
Related Party Transactions 24 Glossary 51
Securitization and Off-Balance-Sheet Arrangements 24
Income Taxes 25
Caution Regarding Forward-Looking Statements
Certain statements in this document are forward-looking statements. These
statements are made in accordance with applicable securities legislation in
Canada and the United States. The forward-looking statements in this document
may include, but are not limited to, statements in the messages from
management, as well as other statements about the economy, market changes, the
Bank's objectives, outlook, and priorities for fiscal 2025 and beyond, the
strategies or actions that the Bank will take to achieve them, expectations
for the Bank's financial condition and operations, the regulatory environment
in which it operates, the potential impacts of increased geopolitical
uncertainty on the Bank and its clients, its environmental, social, and
governance targets and commitments, the impacts and benefits of the
acquisition of Canadian Western Bank (CWB), and certain risks to which the
Bank is exposed. The Bank may also make forward-looking statements in other
documents and regulatory filings, as well as orally. These forward-looking
statements are typically identified by verbs or words such as "outlook",
"believe", "foresee", "forecast", "anticipate", "estimate", "project",
"expect", "intend" and "plan", the use of future or conditional forms, notably
verbs such as "will", "may", "should", "could" or "would", as well as similar
terms and expressions.
These forward-looking statements are intended to assist the security holders
of the Bank in understanding the Bank's financial position and results of
operations as at the dates indicated and for the periods then ended, as well
as the Bank's vision, strategic objectives, and performance targets, and may
not be appropriate for other purposes. These forward-looking statements are
based on current expectations, estimates, assumptions and intentions that the
Bank deems reasonable as at the date thereof and are subject to inherent
uncertainty and risks, many of which are beyond the Bank's control. There is a
strong possibility that the Bank's express or implied predictions, forecasts,
projections, expectations, or conclusions will not prove to be accurate, that
its assumptions will not be confirmed, and that its vision, strategic
objectives, and performance targets will not be achieved. The Bank cautions
investors that these forward-looking statements are not guarantees of future
performance and that actual events or results may differ materially from these
statements due to a number of factors. Therefore, the Bank recommends that
readers not place undue reliance on these forward-looking statements, as a
number of factors could cause actual results to differ materially from the
expectations, estimates, or intentions expressed in these forward-looking
statements. Investors and others who rely on the Bank's forward-looking
statements should carefully consider the factors listed below as well as other
uncertainties and potential events and the risks they entail. Except as
required by law, the Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to time, by it
or on its behalf.
Assumptions about the performance of the Canadian and U.S. economies in 2025,
in particular in the context of increased geopolitical uncertainty, and how
that performance will affect the Bank's business are among the factors
considered in setting the Bank's strategic priorities and objectives,
including allowances for credit losses. These assumptions appear in the 2024
Annual Report in the Economic Review and Outlook section and, for each
business segment, in the Economic and Market Review sections of the 2024
Annual Report and the Economic Review and Outlook section of this document,
and may be updated in the quarterly reports to shareholders filed thereafter.
The forward-looking statements made in this document are based on a number of
assumptions and their future outcome is subject to a variety of risk factors,
many of which are beyond the Bank's control and the impacts of which are
difficult to predict. These risk factors include, among others, the general
economic environment and business and financial market conditions in Canada,
the United States, and the other countries where the Bank operates, including
recession risk; geopolitical and sociopolitical uncertainty; the measures
affecting trade relations between Canada and its partners, including the
imposition of tariffs and any measures taken in response to such tariffs, as
well as the possible impacts on our clients, our operations and, more
generally, the economy; exchange rate and interest rate fluctuations;
inflation; global supply chain disruptions; higher funding costs and greater
market volatility; changes to fiscal, monetary, and other public policies;
regulatory oversight and changes to regulations that affect the Bank's
business; the Bank's ability to successfully integrate CWB and the undisclosed
costs or liability associated with the acquisition; climate change, including
physical risks and risks related to the transition to a low-carbon economy;
the Bank's ability to meet stakeholder expectations on environmental and
social issues, the need for active and continued stakeholder engagement; the
availability of comprehensive and high-quality information from customers and
other third parties, including greenhouse gas emissions; the ability of the
Bank to develop indicators to effectively monitor progress; the development
and deployment of new technologies and sustainable products; the ability of
the Bank to identify climate-related opportunities as well as to assess and
manage climate-related risks; significant changes in consumer behaviour; the
housing situation, real estate market, and household indebtedness in Canada;
the Bank's ability to achieve its key short-term priorities and long-term
strategies; the timely development and launch of new products and services;
the ability of the Bank to recruit and retain key personnel; technological
innovation, including open banking and the use of artificial intelligence;
heightened competition from established companies and from competitors
offering non-traditional services; model risk; changes in the performance and
creditworthiness of the Bank's clients and counterparties; the Bank's exposure
to significant regulatory issues or litigation; changes made to the accounting
policies used by the Bank to report its financial position, including the
uncertainty related to assumptions and significant accounting estimates;
changes to tax legislation in the countries where the Bank operates; changes
to capital and liquidity guidelines as well as to the instructions related to
the presentation and interpretation thereof; changes to the credit ratings
assigned to the Bank by financial and extra-financial rating agencies;
potential disruptions to key suppliers of goods and services to the Bank;
third-party risk, including failure by third parties to fulfil their
obligations to the Bank; the potential impacts of disruptions to the Bank's
information technology systems due to cyberattacks and theft or disclosure of
data, including personal information and identity theft; the risk of
fraudulent activity; and possible impacts of major events on the economy,
market conditions, or the Bank's outlook, including international conflicts,
natural disasters, public health crises, and the measures taken in response to
these events; and the ability of the Bank to anticipate and successfully
manage risks arising from all of the foregoing factors.
The foregoing list of risk factors is not exhaustive, and the forward-looking
statements made in this document are also subject to credit risk, market risk,
liquidity and funding risk, operational risk, regulatory compliance risk,
reputation risk, strategic risk, and social and environmental risk as well as
certain emerging risks or risks deemed significant. Additional information
about these factors is provided in the Risk Management section of the
2024 Annual Report as well as in the Risk Management section of this Report to
Shareholders for the second quarter of 2025 and may be updated in the
quarterly reports to shareholders filed thereafter.
Acquisition
Canadian Western Bank (CWB) Acquisition
On February 3, 2025, the Bank completed the acquisition of CWB, a diversified
financial services institution based in Edmonton, Alberta, in which the Bank
had already been holding a 5.9% equity interest. This transaction will enable
the Bank to accelerate its growth across Canada. The business combination
brings together two complementary Canadian banks with growing businesses,
thereby enhancing customer service by offering a full range of products and
services nationwide, with a regionally focused service model.
The total consideration transferred of $6.8 billion included $5.3 billion for
100% of the common shares of CWB acquired by way of a share exchange at an
exchange ratio of 0.450 of a common share of the National Bank for each CWB
common share, other than those held by the National Bank, $1.4 billion for
the settlement of pre-existing relationships and $0.1 billion for the issuance
of replacement share-based payment award. The fair value of the Bank's common
shares issued was determined on the basis of the share price on the Toronto
Stock Exchange (TSX) at closing on January 31, 2025 being a price of $128.99
per share. At acquisition date, the Bank obtained a 100% interest in the CWB
voting shares and the 5.9% previously held interest was remeasured to its fair
value of $0.3 billion. The non-controlling interest in CWB recognized at
acquisition date was measured at a fair value of $0.6 billion and represents
CWB's preferred shares and Limited Recourse Capital Notes (LRCN) outstanding
on that date. Total purchase consideration amounted to $7.7 billion.
Based on the estimated fair values, the preliminary purchase price allocation,
including goodwill, assigns $45.4 billion to assets and $37.7 billion to
liabilities at acquisition date. The estimated goodwill of $1.6 billion
reflects the expected expense synergies from our Personal and Commercial and
Wealth Management banking services operations, expected funding synergies, and
the expected growth from the product and service platform at a national scale.
Goodwill is not deductible for tax purposes.
For additional information, see Note 19 to the Consolidated Financial
Statements.
The following table present the impacts of the CWB acquisition on the results
of Personal and Commercial Banking, the main segment impacted, and on the
Bank's consolidated results.
(millions of Canadian dollars) Quarter ended April 30, 2025 Six months ended April 30, 2025
Results Consolidated results Results Consolidated results
Personal and Commercial Personal and Commercial
Excluding CWB CWB Total Excluding CWB CWB Total Excluding CWB CWB Total Excluding CWB CWB Total
impact((1)) impact((1)) impact((1)) impact((1))
Operating results
Net interest income 921 225 1,146 954 251 1,205 1,865 225 2,090 1,926 251 2,177
Non-interest income 255 15 270 2,398 47 2,445 515 15 530 4,609 47 4,656
Total revenues 1,176 240 1,416 3,352 298 3,650 2,380 240 2,620 6,535 298 6,833
Non-interest expenses 651 153 804 1,719 223 1,942 1,292 153 1,445 3,365 223 3,588
Income before provisions for credit 525 87 612 1,633 75 1,708 1,088 87 1,175 3,170 75 3,245
losses and income taxes
Provisions for credit losses 152 274 426 271 274 545 314 274 588 525 274 799
Income before income taxes (recovery) 373 (187) 186 1,362 (199) 1,163 774 (187) 587 2,645 (199) 2,446
Income taxes (recovery) 102 (48) 54 319 (52) 267 213 (48) 165 605 (52) 553
Net income 271 (139) 132 1,043 (147) 896 561 (139) 422 2,040 (147) 1,893
Operating results - Adjusted((2))
Net interest income - Adjusted 921 225 1,146 954 251 1,205 1,865 225 2,090 1,954 251 2,205
Non-interest income - Adjusted 255 15 270 2,398 47 2,445 515 15 530 4,628 47 4,675
Total revenues - Adjusted 1,176 240 1,416 3,352 298 3,650 2,380 240 2,620 6,582 298 6,880
Non-interest expenses - Adjusted 651 129 780 1,645 155 1,800 1,292 129 1,421 3,265 155 3,420
Income before provisions for credit 525 111 636 1,707 143 1,850 1,088 111 1,199 3,317 143 3,460
losses and income taxes - Adjusted
Provisions for credit losses - Adjusted 152 44 196 271 44 315 314 44 358 525 44 569
Income before income taxes 373 67 440 1,436 99 1,535 774 67 841 2,792 99 2,891
(recovery) - Adjusted
Income taxes (recovery) - Adjusted 102 22 124 340 29 369 213 22 235 646 29 675
Net income - Adjusted 271 45 316 1,096 70 1,166 561 45 606 2,146 70 2,216
(1) Refers to the impact of the CWB transaction on the results.
(2) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures.
Economic Review and Outlook
Global Economy
The most significant trend last month was undoubtedly the easing of the trade
war between Washington and its trading partners. Although any form of
appeasement is clearly positive for the global economy, we believe that the
current enthusiasm is somewhat exaggerated. After all, not since 1939 has the
average tariff imposed by Washington been this high, and even after the recent
reduction. While it is true that tariffs could continue to fall as new
agreements are reached, we believe that a return to the status quo of recent
years is highly unlikely. We would also point out that most of the agreements
signed by Washington have an expiry date (90 days in most cases). This means
that higher tariffs could always be reintroduced if negotiations to establish
a new trade framework between the United States and its main trading partners
were to end in deadlock. These risks, combined with a less favourable trade
environment, should continue to hamper global growth in the coming months.
Although the actions taken by central banks and governments have been limited,
they should help to limit the damage.
In the United States, the gross domestic product (GDP) contracted slightly in
the first quarter due to a sharp increase in imports, a phenomenon that is
expected to reverse in the second quarter. A desire to act ahead of any
tariffs being imposed not only boosted imports but also private domestic
demand, which rose by 3% in the first quarter on an annualized basis. The
labour market remains resilient for now. However, signs of weakness are
apparent, including an increase in the number of long-term unemployed and a
drop in job postings. Although recently the protectionist measures have
sharply reduced, they are likely to keep inflation above the central bank's
target for some time to come. Perhaps this will not be enough to prevent a
rate cut this year, but enough to prompt the central bank to adopt a cautious
approach. Higher-than-expected policy rates, combined with trade retaliation
and boycotts by other countries (affecting, in particular, the tourism
sector), could slow growth in the second half of the year. All this should
result in growth of 1.5%((1)) this year and 1.1%((1)) in 2026.
Canadian Economy
Even though the average effective tariff imposed by the Americans on Canadian
exports is probably only around 6%, taking into account that products
compliant with the United States-Canada-Mexico Agreement (USMCA) are not
affected, the risk of escalation and the resulting lack of visibility are
paralyzing Canadian businesses. And, even though just a few months ago,
investment intentions were pointing to a recovery in 2025, the situation has
now changed dramatically, with several projects put on hold. Uncertainty is
also beginning to affect the labour market, which is showing signs of
weakness. The unemployment rate has risen by 0.3 of a percentage point in the
last two months, while private sector employment has fallen by at least
75,000. A decline of this magnitude rivals that experienced during the
pandemic lockdown and the worst of the 2008-2009 financial crisis. For now,
Ontario has been the province hardest hit by the current situation, with
62,000 jobs lost since February, including 30,000 in the manufacturing sector.
Against this backdrop, consumer confidence has fallen to historically low
levels, and the real estate data already show that buyers are reluctant to
make commitments. This points to weak consumption in the coming months as
fears of job losses intensify. With the dollar still resilient, inflation
generally under control and retaliatory tariff measures relatively limited,
the Bank of Canada should be able to lower its key interest rate to 2.0% by
the end of the year. This should be sufficient for now, as the federal
government also intends to step in to limit the economic damage. Against a
backdrop of very weak population growth, we forecast GDP growth of only
1.1%((1)) in 2025, with a slight contraction in the economy in the second and
third quarters and an average unemployment rate for this year of 7.1%((1))
(6.9%((1)) in April, peaking at 7.4%((1)) in the fourth quarter). GDP growth
of 0.9% ((1)) is expected for 2026.
Quebec Economy
Despite some headwinds, Quebec's economy is well positioned to face any new
challenges as they arise. Quebecers have been less affected by the fight
against inflation since 2022 and the resulting restrictive monetary policy
because they are less indebted than consumers elsewhere. Quebec's unemployment
rate was 6.0% in April, the third lowest among Canada's provinces and 0.9
below the national average. Survey data also indicate that Quebec consumers
are holding up better than elsewhere, as the province has the highest share of
households that consider their financial situation to be good. Quebec
households have a higher savings rate, which could enable them to better
withstand the headwinds ahead. Despite the current uncertainty, we also note
greater resilience in the Quebec real estate market compared to that of
Ontario and British Columbia in particular. We continue to believe that
Quebec's GDP could prove relatively resilient compared to the rest of the
country due to its solid fundamentals. Like other provinces, Quebec is
vulnerable to U.S. protectionism. Non-energy exports to the United States
account for 14.2% of GDP, slightly higher than the national average of 13.0%.
However, the Quebec economy is less vulnerable to sectoral shocks. In fact,
Quebec is the fourth most diversified jurisdiction in North America, after
Manitoba, Pennsylvania and Texas. In terms of exports, Quebec is the most
diversified province. Our growth forecast for the province is 0.9%((1)) in
2025, following on 1.4% growth in 2024. With population growth lower than in
the rest of the country, Quebec should continue to have one of the lowest
unemployment rates in the federation on average in 2025, at 6.0%((1))
(compared to 7.1%((1)) for Canada).
(1) Forecasts of real GDP or unemployment rate, National Bank
Financial's Economics and Strategy group
Financial Reporting Method
The Bank's Consolidated Financial Statements are prepared in accordance with
IFRS, as issued by the IASB and represent Canadian GAAP.
Effective November 1, 2024, the Bank discontinued taxable equivalent basis
(TEB) reporting for revenues and income taxes. Using the TEB method is less
relevant since the introduction of the Pillar 2 rules (global minimum tax)
during the first quarter of 2025 and Bill C-59 in relation to the taxation of
certain Canadian dividends during fiscal 2024. This change has no impact on
net income previously disclosed. Data for the 2024 periods were adjusted to
reflect this change.
On February 3, 2025, the Bank completed the acquisition of CWB. CWB's results
were consolidated from the closing date, which impacted the results, balances
and ratios for the quarter and six-month period ended April 30, 2025 in the
Personal and Commercial, Wealth Management, and Financial Markets segments and
in the Other heading of segment disclosures. For additional information on the
impact of CWB acquisition on the Bank's results, see the Acquisition section.
Non-GAAP and Other Financial Measures
The Bank uses a number of financial measures when assessing its results and
measuring overall performance. Some of these financial measures are not
calculated in accordance with GAAP. Regulation 52-112 Respecting Non-GAAP and
Other Financial Measures Disclosure (Regulation 52-112) prescribes disclosure
requirements that apply to the following measures used by the Bank:
· non-GAAP financial measures;
· non-GAAP ratios;
· supplementary financial measures;
· capital management measures.
Non-GAAP Financial Measures
The Bank uses non-GAAP financial measures that do not have standardized
meanings under GAAP and that therefore may not be comparable to similar
measures used by other companies. Presenting non-GAAP financial measures helps
readers to better understand how management analyzes results, shows the
impacts of specified items on the results of the reported periods, and allows
readers to better assess results without the specified items if they consider
such items not to be reflective of the underlying performance of the Bank's
operations.
The key non-GAAP financial measures used by the Bank to analyze its results
are described below, and a quantitative reconciliation of these measures is
presented in the tables in the Reconciliation of Non-GAAP Financial Measures
section on pages 10 to 12 and in the Consolidated Results table on page 14. It
should be noted that, for the quarter and the six-month period ended April 30,
2025, as part of the CWB transaction, several acquisition-related items have
been excluded from results since, in the opinion of management, they do not
reflect the underlying performance of the Bank's operations, in particular,
acquisition and integration charges, amortization of intangible assets related
to the CWB acquisition and initial provisions for credit losses on
non-impaired loans acquired from CWB. In addition, for the six-month period
ended April 30, 2025, the amortization of subscription receipt issuance
costs, the gain resulting from the remeasurement at fair value of the CWB
common shares previously held by the Bank, and the loss resulting from the
impact of managing fair value changes were excluded from the results. For the
quarter and the six-month period ended April 30, 2024, no specified items had
been excluded from results.
Adjusted Net Interest Income
This item represents net interest income excluding specified items. Specified
items are excluded so that net interest income can be better evaluated by
excluding items that management believes do not reflect the underlying
financial performance of the Bank's operations.
Adjusted Non-Interest Income
This item represents non-interest income excluding specified items. Specified
items are excluded so that non‑interest income can be better evaluated by
excluding items that management believes do not reflect the underlying
financial performance of the Bank's operations.
Adjusted Total Revenues
This item represents total revenues excluding specified items. It consists of
adjusted net interest income and adjusted non-interest income. Specified items
are excluded so that total revenues can be better evaluated by excluding items
that management believes do not reflect the underlying financial performance
of the Bank's operations.
Adjusted Non-Interest Expenses
This item represents non-interest expenses excluding specified items.
Specified items are excluded so that non-interest expenses can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Income Before Provisions for Credit Losses and Income Taxes
This item represents income before provisions for credit losses and income
taxes excluding specified items. It also represents the difference between
adjusted total revenues and adjusted non-interest expenses. Specified items
are excluded so that income before provisions for credit losses and income
taxes can be better evaluated by excluding items that management believes do
not reflect the underlying financial performance of the Bank's operations.
Adjusted Provisions for Credit Losses
This item represents provisions for credit losses excluding specified items.
Specified items are excluded so that provisions for credit losses can be
better evaluated by excluding items that management believes do not reflect
the underlying financial performance of the Bank's operations.
Adjusted Income Taxes (Recovery)
This item represents income taxes excluding income taxes (recovery) on
specified items.
Adjusted Net Income
This item represents net income excluding specified items. Specified items are
excluded so that net income can be better evaluated by excluding items that
management believes do not reflect the underlying financial performance of the
Bank's operations.
Adjusted Net Income Attributable to Common Shareholders
This item represents net income attributable to common shareholders excluding
specified items. Specified items are excluded so that net income attributable
to common shareholders can be better evaluated by excluding items that
management believes do not reflect the underlying financial performance of the
Bank's operations.
Adjusted Basic Earnings Per Share
This item represents basic earnings per share excluding specified items.
Specified items are excluded so that basic earnings per share can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Diluted Earnings Per Share
This item represents diluted earnings per share excluding specified items.
Specified items are excluded so that diluted earnings per share can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
The Bank also uses the below-described measures to assess its results, and a
quantitative reconciliation of these non-GAAP financial measures is presented
on page 7 of the document entitled Supplementary Financial Information -
Second Quarter 2025 available on the Bank's website at nbc.ca.
Adjusted Non-Trading Net Interest Income
This item represents non-trading net interest income excluding specified
items. It includes revenues related to financial assets and financial
liabilities associated with non-trading activities, net of interest expenses
and interest income related to the financing of these financial assets and
financial liabilities, and is used to calculate adjusted non-trading net
interest margin. Specified items are excluded so that adjusted non-trading net
interest income can be better evaluated by excluding items that management
believes do not reflect the underlying financial performance of the Bank's
operations.
Net Interest Income Related to Trading Activities
This item represents net interest income related to trading activities which
comprises dividends related to financial assets and liabilities associated
with trading activities and certain interest income related to the financing
of these financial assets and liabilities, net of interest expenses.
Non-Interest Income Related to Trading Activities
This item represents non-interest income related to trading activities which
consists of realized and unrealized gains and losses as well as interest
income on securities measured at fair value through profit or loss, income
from held-for-trading derivative financial instruments, changes in the fair
value of loans at fair value through profit or loss, changes in the fair value
of financial instruments designated at fair value through profit or loss,
realized and unrealized gains and losses as well as interest expense on
obligations related to securities sold short, certain commission income as
well as other trading activity revenues, and any applicable transaction costs.
Trading Activity Revenues
This item represents trading activity revenues which comprise dividends
related to financial assets and financial liabilities associated with trading
activities; certain interest income related to the financing of these
financial assets and liabilities, net of interest expenses; realized and
unrealized gains and losses as well as interest income on securities measured
at fair value through profit or loss; income from held-for-trading derivative
financial instruments; changes in the fair value of loans at fair value
through profit or loss; changes in the fair value of financial instruments
designated at fair value through profit or loss; realized and unrealized gains
and losses as well as interest expense on obligations related to securities
sold short; certain commission income as well as other trading activity
revenues, and any applicable transaction costs.
Non-GAAP Ratios
The Bank uses non-GAAP ratios that do not have standardized meanings under
GAAP and that may therefore not be comparable to similar measures used by
other companies. A non-GAAP ratio is a ratio in which at least one component
is a non-GAAP financial measure. The Bank uses non-GAAP ratios to present
aspects of its financial performance or financial position.
The key non-GAAP ratios used by the Bank are described below.
Adjusted Return on Common Shareholders' Equity (ROE)
This item represents ROE excluding specified items. It is adjusted net income
attributable to common shareholders expressed as a percentage of average
equity attributable to common shareholders. It is a general measure of the
Bank's efficiency in using equity. Specified items are excluded so that ROE
can be better evaluated by excluding items that management believes do not
reflect the underlying financial performance of the Bank's operations.
Adjusted Dividend Payout Ratio
This item represents the dividend payout ratio excluding specified items. It
is dividends on common shares (per share amount) expressed as a percentage of
adjusted basic earnings per share. This ratio is a measure of the proportion
of earnings that is paid out to shareholders in the form of dividends.
Specified items are excluded so that the dividend payout ratio can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Operating Leverage
This item represents operating leverage excluding specified items. It is the
difference between the growth rate of adjusted total revenues and the growth
rate of adjusted non-interest expenses, and it measures the sensitivity of the
Bank's results to changes in its revenues. Specified items are excluded so
that the operating leverage can be better evaluated by excluding items that
management believes do not reflect the underlying financial performance of the
Bank's operations.
Adjusted Efficiency Ratio
This item represents the efficiency ratio excluding specified items. The ratio
represents adjusted non-interest expenses expressed as a percentage of
adjusted total revenues. It measures the efficiency of the Bank's operations.
Specified items are excluded so that the efficiency ratio can be better
evaluated by excluding items that management believes do not reflect the
underlying financial performance of the Bank's operations.
Adjusted Net Interest Margin, Non-Trading
This item represents the non-trading net interest margin excluding specified
items. It is calculated by dividing adjusted non-trading net interest income
by average non-trading interest-bearing assets. This ratio is a measure of the
profitability of non-trading activities. Specified items are excluded so that
the net interest margin, non-trading can be better evaluated by excluding
items that management believes do not reflect the underlying financial
performance of the Bank's operations.
Supplementary Financial Measures
A supplementary financial measure is a financial measure that: (a) is not
reported in the Bank's Consolidated Financial Statements, and (b) is, or is
intended to be, reported periodically to represent historical or expected
financial performance, financial position, or cash flows. The composition of
these supplementary financial measures is presented in table footnotes or in
the Glossary section on pages 51 to 54 of this MD&A.
Capital Management Measures
The financial reporting framework used to prepare the financial statements
requires disclosure that helps readers assess the Bank's capital management
objectives, policies, and processes, as set out in IFRS in IAS 1 -
Presentation of Financial Statements. The Bank has its own methods for
managing capital and liquidity, and IFRS do not prescribe any particular
calculation method. These measures are calculated using various guidelines and
advisories issued by the Office of the Superintendent of Financial
Institutions (OSFI), which are based on the standards, recommendations, and
best practices of the Basel Committee on Banking Supervision (BCBS), as
presented in the following table.
OSFI guideline or advisory Measure
Capital Adequacy Requirements Common Equity Tier 1 (CET1) capital ratio
Tier 1 capital ratio
Total capital ratio
CET1 capital
Tier 1 capital
Tier 2 capital
Total capital
Risk-weighted assets
Maximum credit risk exposure under the Basel asset classes
Leverage Requirements Leverage ratio
Total exposure
Total Loss Absorbing Capacity (TLAC) Key indicators - TLAC requirements
Available TLAC
TLAC ratio
TLAC leverage ratio
Liquidity Adequacy Requirements Liquid asset portfolio
Encumbered assets and unencumbered assets
Liquidity coverage ratio (LCR)
High-quality liquid assets (HQLA)
Cash inflows/outflows and net cash outflows
Net stable funding ratio (NSFR)
Available stable funding items
Required stable funding items
Global Systemically Important Banks (G-SIBs) - G-SIB indicators
Public Disclosure Requirements
Reconciliation of Non-GAAP Financial Measures
Presentation of Results - Adjusted
(millions of Canadian dollars) Quarter ended April 30
2025((1)) 2024((2))
Personal and Commercial Wealth Management Financial Markets USSF&I Other
Total Total
Operating results
Net interest income 1,146 230 (505) 356 (22) 1,205 635
Non-interest income 270 561 1,606 34 (26) 2,445 2,115
Total revenues 1,416 791 1,101 390 (48) 3,650 2,750
Non-interest expenses 804 476 403 117 142 1,942 1,472
Income before provisions for credit losses and income taxes 612 315 698 273 (190) 1,708 1,278
Provisions for credit losses 426 (1) 64 59 (3) 545 138
Income before income taxes (recovery) 186 316 634 214 (187) 1,163 1,140
Income taxes (recovery) 54 84 133 45 (49) 267 234
Net income 132 232 501 169 (138) 896 906
Items that have an impact on results
Non-interest expenses
CWB acquisition and integration charges((3)) 1 3 − − 114 118 −
Amortization of intangible assets related to the CWB acquisition((4)) 23 1 − − − 24 −
Impact on non-interest expenses 24 4 − − 114 142 −
Provisions for credit losses
Initial provisions for credit losses on non-impaired loans acquired from 230 − − − − 230 −
CWB((5))
Impact on provisions for credit losses 230 − − − − 230 −
Income taxes
Income taxes on the CWB acquisition and integration charges((3)) − (1) − − (31) (32) −
Income taxes on the amortization of intangible assets related to the (6) − − − − (6) −
CWB acquisition((4))
Income taxes on initial provisions for credit losses on non-impaired (64) − − − − (64) −
loans acquired from CWB((5))
Impact on income taxes (70) (1) − − (31) (102) −
Impact on net income (184) (3) − − (83) (270) −
Operating results - Adjusted
Net interest income - Adjusted 1,146 230 (505) 356 (22) 1,205 635
Non-interest income - Adjusted 270 561 1,606 34 (26) 2,445 2,115
Total revenues - Adjusted 1,416 791 1,101 390 (48) 3,650 2,750
Non-interest expenses - Adjusted 780 472 403 117 28 1,800 1,472
Income before provisions for credit losses and income taxes - Adjusted 636 319 698 273 (76) 1,850 1,278
Provisions for credit losses - Adjusted 196 (1) 64 59 (3) 315 138
Income before income taxes (recovery) - Adjusted 440 320 634 214 (73) 1,535 1,140
Income taxes (recovery) - Adjusted 124 85 133 45 (18) 369 234
Net income - Adjusted 316 235 501 169 (55) 1,166 906
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter ended April 30, 2025. For
additional information on the impact of the CWB acquisition, see the
Acquisition section.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(3) During the quarter ended April 30, 2025, the Bank recorded
acquisition and integration charges of $118 million ($86 million net of income
taxes) related to the CWB transaction.
(4) During the quarter ended April 30, 2025, the Bank recorded an
amount of $24 million ($18 million net of income taxes) to reflect the
amortization of intangible assets related to the CWB acquisition.
(5) During the quarter ended April 30, 2025, the Bank recorded
initial provisions for credit losses on non-impaired loans acquired from CWB
of $230 million ($166 million net of income taxes).
(millions of Canadian dollars) Six months ended April 30
2025((1)) 2024((2))
Personal and Commercial Wealth Management Financial Markets USSF&I Other
Total Total
Operating results
Net interest income 2,090 457 (1,014) 726 (82) 2,177 1,386
Non-interest income 530 1,110 3,022 69 (75) 4,656 4,074
Total revenues 2,620 1,567 2,008 795 (157) 6,833 5,460
Non-interest expenses 1,445 917 770 240 216 3,588 2,921
Income before provisions for credit losses and income taxes 1,175 650 1,238 555 (373) 3,245 2,539
Provisions for credit losses 588 1 100 110 − 799 258
Income before income taxes (recovery) 587 649 1,138 445 (373) 2,446 2,281
Income taxes (recovery) 165 175 220 93 (100) 553 453
Net income 422 474 918 352 (273) 1,893 1,828
Items that have an impact on results
Net interest income
Amortization of the subscription receipt issuance costs((3)) − − − − (28) (28) −
Impact on net interest income − − − − (28) (28) −
Non-interest income
Gain on the fair value remeasurement of an equity interest((4)) − − − − 4 4 −
Management of the fair value changes related to the CWB acquisition((5)) − − − − (23) (23) −
Impact on non-interest income − − − − (19) (19) −
Non-interest expenses
CWB acquisition and integration charges((6)) 1 3 − − 140 144 −
Amortization of intangible assets related to the CWB acquisition((7)) 23 1 − − − 24 −
Impact on non-interest expenses 24 4 − − 140 168 −
Provisions for credit losses
Initial provisions for credit losses on non-impaired loans acquired from 230 − − − − 230 −
CWB((8))
Impact on provisions for credit losses 230 − − − − 230 −
Income taxes
Income taxes on the amortization of the subscription receipt issuance − − − − (8) (8) −
costs((3))
Income taxes on the gain on the fair value remeasurement − − − − 1 1 −
of an equity interest((4))
Income taxes on management of the fair value changes related to the − − − − (6) (6) −
CWB acquisition((5))
Income taxes on the CWB acquisition and integration charges((6)) − (1) − − (38) (39) −
Income taxes on the amortization of intangible assets related to the (6) − − − − (6) −
CWB acquisition((7))
Income taxes on initial provisions for credit losses on non- (64) − − − − (64) −
impaired loans acquired from CWB((8))
Impact on income taxes (70) (1) − − (51) (122) −
Impact on net income (184) (3) − − (136) (323) −
Operating results - Adjusted
Net interest income - Adjusted 2,090 457 (1,014) 726 (54) 2,205 1,386
Non-interest income - Adjusted 530 1,110 3,022 69 (56) 4,675 4,074
Total revenues - Adjusted 2,620 1,567 2,008 795 (110) 6,880 5,460
Non-interest expenses - Adjusted 1,421 913 770 240 76 3,420 2,921
Income before provisions for credit losses and income taxes - Adjusted 1,199 654 1,238 555 (186) 3,460 2,539
Provisions for credit losses - Adjusted 358 1 100 110 − 569 258
Income before income taxes (recovery) - Adjusted 841 653 1,138 445 (186) 2,891 2,281
Income taxes (recovery) - Adjusted 235 176 220 93 (49) 675 453
Net income - Adjusted 606 477 918 352 (137) 2,216 1,828
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the six-month period ended April 30, 2025.
For additional information on the impact of the CWB acquisition, see the
Acquisition section.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(3) During the six-month period ended April 30, 2025, the Bank
recorded an amount of $28 million ($20 million net of income taxes) to reflect
the amortization of the issuance costs of the subscription receipts issued as
part of the agreement to acquire CWB (for additional information, see Notes 8
and 10 to the Consolidated Financial Statements).
(4) During the six-month period ended April 30, 2025, the Bank
recorded a gain of $4 million ($3 million net of income taxes) upon the
remeasurement at fair value of the interest already held in CWB as at January
31, 2025.
(5) During the six-month period ended April 30, 2025, the Bank
recorded a mark-to-market loss of $23 million ($17 million net of income
taxes) on interest rate swaps used to manage the fair value changes of CWB's
assets and liabilities that resulted in volatility of goodwill and capital on
closing of the transaction.
(6) During the six-month period ended April 30, 2025, the Bank
recorded acquisition and integration charges of $144 million ($105 million net
of income taxes) related to the CWB transaction.
(7) During the six-month period ended April 30, 2025, the Bank
recorded an amount of $24 million ($18 million net of income taxes) to reflect
the amortization of intangible assets related to the CWB acquisition.
(8) During the six-month period ended April 30, 2025, the Bank
recorded initial provisions for credit losses on non-impaired loans acquired
from CWB of $230 million ($166 million net of income taxes).
Presentation of Basic and Diluted Earnings Per Share - Adjusted
(Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((1)) 2024 % Change 2025((1)) 2024 % Change
Basic earnings per share $ 2.19 $ 2.56 (14) $ 4.96 $ 5.18 (4)
Amortization of the subscription receipt issuance costs((2)) − − 0.05 −
Gain on the fair value remeasurement of an equity interest((3)) − − (0.01) −
Management of the fair value changes related to the CWB acquisition((4)) − − 0.05 −
CWB acquisition and integration charges((5)) 0.22 − 0.29 −
Amortization of intangible assets related to the CWB acquisition((6)) 0.04 − 0.05 −
Initial provisions for credit losses on non-impaired loans acquired from 0.43 − 0.45 −
CWB((7))
Basic earnings per share - Adjusted $ 2.88 $ 2.56 13 $ 5.84 $ 5.18 13
Diluted earnings per share $ 2.17 $ 2.54 (15) $ 4.91 $ 5.13 (4)
Amortization of the subscription receipt issuance costs((2)) − − 0.05 −
Gain on the fair value remeasurement of an equity interest((3)) − − (0.01) −
Management of the fair value changes related to the CWB acquisition((4)) − − 0.05 −
CWB acquisition and integration charges((5)) 0.22 − 0.28 −
Amortization of intangible assets related to the CWB acquisition((6)) 0.04 − 0.05 −
Initial provisions for credit losses on non-impaired loans acquired from 0.42 − 0.45 −
CWB((7))
Diluted earnings per share - Adjusted $ 2.85 $ 2.54 12 $ 5.78 $ 5.13 13
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) During the six-month period ended April 30, 2025, the Bank
recorded an amount of $28 million ($20 million net of income taxes) to reflect
the amortization of the issuance costs of the subscription receipts issued as
part of the agreement to acquire CWB (for additional information, see Notes 8
and 10 to the Consolidated Financial Statements).
(3) During the six-month period ended April 30, 2025, the Bank
recorded a gain of $4 million ($3 million net of income taxes) upon the
remeasurement at fair value of the interest already held in CWB as at January
31, 2025.
(4) During the six-month period ended April 30, 2025, the Bank
recorded a mark-to-market loss of $23 million ($17 million net of income
taxes) on interest rate swaps used to manage the fair value changes of CWB's
assets and liabilities that resulted in volatility of goodwill and capital on
closing of the transaction.
(5) During the quarter ended April 30, 2025, the Bank recorded
acquisition and integration charges of $118 million ($86 million net of income
taxes) related to the CWB transaction. For the
six-month period ended April 30, 2025, these charges were $144 million ($105
million net of income taxes).
(6) During the quarter and the six-month period ended April 30,
2025, the Bank recorded an amount of $24 million ($18 million net of income
taxes) to reflect the amortization of intangible assets related to the CWB
acquisition.
(7) During the quarter and the six-month period ended April 30,
2025, the Bank recorded initial provisions for credit losses on non-impaired
loans acquired from CWB of $230 million ($166 million net of income taxes).
Highlights
(millions of Canadian dollars, except per share amounts) Quarter ended April 30 Six months ended April 30
2025((1)) 2024((2)) % Change 2025((1)) 2024((2)) % Change
Operating results
Total revenues 3,650 2,750 33 6,833 5,460 25
Income before provisions for credit losses and income taxes 1,708 1,278 34 3,245 2,539 28
Net income 896 906 (1) 1,893 1,828 4
Return on common shareholders' equity((3)) 11.9 % 16.9 % 14.0 % 17.0 %
Operating leverage((3)) 0.8 % 4.3 % 2.3 % 2.9 %
Efficiency ratio((3)) 53.2 % 53.5 % 52.5 % 53.5 %
Earnings per share
Basic $ 2.19 $ 2.56 (14) $ 4.96 $ 5.18 (4)
Diluted $ 2.17 $ 2.54 (15) $ 4.91 $ 5.13 (4)
Operating results - Adjusted((4))
Total revenues - Adjusted((4)) 3,650 2,750 33 6,880 5,460 26
Income before provisions for credit losses 1,850 1,278 45 3,460 2,539 36
and income taxes - Adjusted((4))
Net income - Adjusted((4)) 1,166 906 29 2,216 1,828 21
Return on common shareholders' equity - Adjusted((5)) 15.6 % 16.9 % 16.5 % 17.0 %
Operating leverage - Adjusted((5)) 10.4 % 4.3 % 8.9 % 2.9 %
Efficiency ratio - Adjusted((5)) 49.3 % 53.5 % 49.7 % 53.5 %
Diluted earnings per share - Adjusted((4)) $ 2.85 $ 2.54 12 $ 5.78 $ 5.13 13
Common share information
Dividends declared $ 1.14 $ 1.06 8 $ 2.28 $ 2.12 8
Book value((3)) $ 76.13 $ 62.28 $ 76.13 $ 62.28
Share price
High $ 127.44 $ 114.68 $ 140.76 $ 114.68
Low $ 107.01 $ 101.24 $ 107.01 $ 86.50
Close $ 121.08 $ 110.54 $ 121.08 $ 110.54
Number of common shares (thousands) 391,322 340,056 391,322 340,056
Market capitalization 47,381 37,590 47,381 37,590
(millions of Canadian dollars) As at As at % Change
April 30, October 31,
2025((1)) 2024
Balance sheet and off-balance-sheet
Total assets 536,194 462,226 16
Loans, net of allowances 285,728 243,032 18
Deposits 387,974 333,545 16
Equity attributable to common shareholders 29,790 22,400 33
Assets under administration((3)) 825,523 766,082 8
Assets under management((3)) 170,469 155,900 9
Regulatory ratios under Basel III((6))
Capital ratios
Common Equity Tier 1 (CET1) 13.4 % 13.7 %
Tier 1 15.1 % 15.9 %
Total 16.9 % 17.0 % ( )
Leverage ratio 4.7 % 4.4 % ( )
TLAC ratio((6)) 28.2 % 31.2 % ( )
TLAC leverage ratio((6)) 8.8 % 8.6 % ( )
Liquidity coverage ratio (LCR)((6)) 166 % 150 % ( )
Net stable funding ratio (NSFR)((6)) 127 % 122 %
Other information ( )
Number of employees - Worldwide (full-time equivalent) 32,371 29,196 11
Number of branches in Canada 395 368 7
Number of banking machines in Canada 965 940 3
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(3) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(4) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures.
(5) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP ratios.
(6) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
Financial Analysis
Consolidated Results
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((1)) 2024((2)) ( ) % Change 2025((1)) 2024((2)) % Change
Operating results
Net interest income 1,205 635 90 2,177 1,386 57
Non-interest income 2,445 2,115 16 4,656 4,074 14
Total revenues 3,650 2,750 33 6,833 5,460 25
Non-interest expenses 1,942 1,472 32 3,588 2,921 23
Income before provisions for credit losses and income taxes 1,708 1,278 34 3,245 2,539 28
Provisions for credit losses 545 138 799 258
Income before income taxes 1,163 1,140 2 2,446 2,281 7
Income taxes 267 234 14 553 453 22
Net income 896 906 (1) 1,893 1,828 4
Diluted earnings per share (dollars) 2.17 2.54 (15) 4.91 5.13 (4)
Specified items((3))
Amortization of the subscription receipt issuance costs − − (28) −
Gain on the fair value remeasurement of an equity interest − − 4 −
Management of the fair value changes related to the CWB acquisition − − (23) −
acquisition
CWB acquisition and integration charges (118) − (144) −
Amortization of intangible assets related to the CWB acquisition (24) − (24) −
Initial provisions for credit losses on non-impaired loans acquired (230) − (230) −
from CWB
Specified items before income taxes (372) − (445) −
Income taxes related to specified items (102) − (122) −
Specified items after income taxes (270) − (323) −
Operating results - Adjusted((3))
Net interest income - Adjusted 1,205 635 90 2,205 1,386 59
Non-interest income - Adjusted 2,445 2,115 16 4,675 4,074 15
Total revenues - Adjusted 3,650 2,750 33 6,880 5,460 26
Non-interest expenses - Adjusted 1,800 1,472 22 3,420 2,921 17
Income before provisions for credit losses and income taxes - Adjusted 1,850 1,278 45 3,460 2,539 36
Provisions for credit losses - Adjusted 315 138 569 258
Income before income taxes - Adjusted 1,535 1,140 35 2,891 2,281 27
Income taxes - Adjusted 369 234 58 675 453 49
Net income - Adjusted 1,166 906 29 2,216 1,828 21
Diluted earnings per share - Adjusted (dollars) 2.85 2.54 12 5.78 5.13 13
Average assets((4)) 551,432 455,036 21 519,296 448,783 16
Average loans((4)(5)) 284,845 231,691 23 264,442 229,909 15
Average deposits((4)) 399,064 308,488 29 373,936 304,974 23
Operating leverage((6)) 0.8 % 4.3 % 2.3 % 2.9 %
Operating leverage - Adjusted((7)) 10.4 % 4.3 % 8.9 % 2.9 %
Efficiency ratio((6)) 53.2 % 53.5 % 52.5 % 53.5 %
Efficiency ratio - Adjusted((7)) 49.3 % 53.5 % 49.7 % 53.5 %
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(3) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures.
(4) Represents an average of the daily balances for the period.
(5) Including customers' liability under acceptances for the
quarter and the six-month period ended April 30, 2024.
(6) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(7) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP ratios.
Financial Results
For the second quarter of 2025, the Bank is reporting net income of $896
million, down 1% from $906 million in the second quarter of 2024 and diluted
earnings per share stood at $2.17 compared to $2.54 in the second quarter of
2024. Excluding specified items recorded in the second quarter of 2025,
notably the acquisition and integration costs related to the acquisition of
CWB as well as the initial provisions for credit losses on non-impaired loans
acquired, adjusted net income stood at $1,166 million compared to $906 million
in the corresponding quarter of 2024. Adjusted diluted earnings per share
stood at $2.85, up 12% from $2.54 in the second quarter of 2024.
For the six-month period ended April 30, 2025, the Bank's net income totalled
$1,893 million, up 4% from $1,828 million for the corresponding period of
2024. Diluted earnings per share stood at $4.91 for the six-month period ended
April 30, 2025 versus $5.13 for the corresponding period in 2024, the decrease
being attributable to the common shares issued as part of the acquisition of
CWB. Excluding specified items, adjusted net income for the six-month period
ended April 30, 2025 totalled $2,216 million, up 21% from $1,828 million for
the six-month period ended April 30, 2024, and adjusted diluted earnings per
share stood at $5.78, up 13% from $5.13 for the six-month period ended
April 30, 2024.
Return on common shareholders' equity was 14.0% for the six-month period ended
April 30, 2025 compared to 17.0% in the same period of 2024.
Total Revenues
For the second quarter of 2025, the Bank's total revenues amounted to $3,650
million, up $900 million or 33% compared to the corresponding quarter of 2024,
of which the inclusion of CWB drove a 11% increase. This increase was also due
to total revenues in the Financial Markets segment in the second quarter of
2025, which rose 62% compared to the second quarter of 2024 due to a sharp
increase in global markets revenues. In the Personal and Commercial segment,
total revenues rose due to growth in personal and commercial loans and
deposits (including the transition from bankers' acceptances to loans
referencing the Canadian Overnight Repo Rate Average (CORRA)), which more than
offset the impact of a lower net interest margin, as well as to the increase
in internal commission revenues related to the distribution of Wealth
Management products. These increases were partly offset by lower credit fees
related to the transition of bankers' acceptances to CORRA loans. The growth
in total revenues in the Wealth Management segment was mainly attributable to
increases in fee-based revenues, notably revenues from investment management
and trust service fees as well as mutual fund revenues. This growth was also
due to an increase in net interest income and securities brokerage
commissions, which was driven by an increase in client activity. In the
USSF&I segment, total revenues were up 11% compared to the second quarter
of 2024 as a result of revenue growth at the ABA Bank subsidiary, stemming
from business growth. Total revenues for the Other heading were higher in the
second quarter of 2025 than in the corresponding quarter of 2024, primarily
due to a higher contribution from Treasury activities.
For the six-month period ended April 30, 2025, the Bank's total revenues
amounted to $6,833 million, compared to $5,460 million in the corresponding
period of 2024, for an increase of $1,373 million or 25%, of which the
inclusion of CWB drove a 5% increase. Total revenues for the Financial Markets
segment were up $680 million, or 51%, compared to the same period in 2024,
essentially due to significant revenue growth in global markets. In the
Personal and Commercial segment, total revenues rose $335 million or 15%,
mainly driven by the increase in net interest income arising from growth in
loans and deposits (including the transition of bankers' acceptances to loans
at the CORRA rate), partly offset by a decrease in the net interest margin, as
well as growth in internal commission revenues related to the distribution of
Wealth Management products. These increases were partly offset by a decrease
in revenues from bankers' acceptances. The increase in total revenues in the
Wealth Management segment was mainly due to revenues from fee-based revenues,
notably revenues from investment management and trust service fees as well as
mutual fund revenues as a result of growth in assets under administration and
management. The growth was also attributable to the rise in net interest
income and securities brokerage commissions, which was driven by an increase
in client activity. In the USSF&I segment, total revenues rose 18%
compared to the six-month period ended April 30, 2024, which was driven by
revenue growth at the ABA Bank subsidiary stemming from business growth and
revenue growth at Credigy. For the six-month period ended April 30, 2025,
total income in the Other heading was higher than in the corresponding period
of 2024, mainly due to an increase attributable to the inclusion of the CWB's
revenues offset by a smaller contribution from Treasury activities and by the
unfavourable impact of specified items related to the acquisition of CWB.
Excluding specified items recorded in the first six months of 2025, adjusted
total revenues amounted to $6,880 million in the six-month period ended April
30, 2025, up 26% from $5,460 million recorded in the corresponding six-month
period of 2024.
Non-Interest Expenses
For the second quarter of 2025, non-interest expenses stood at $1,942 million,
up $470 million or 32% from the corresponding quarter in 2024, of which
$223 million was attributable to the inclusion of CWB. Non-interest expenses
for the second quarter of 2025 include the following specified items: charges
of $118 million related to the acquisition and integration of CWB and $24
million for the amortization of intangible assets related to the acquisition
of CWB. Compensation and employee benefits were higher than in the second
quarter of 2024 owing to salary growth as well as higher variable compensation
related to revenue growth. Occupancy expenses, including depreciation expense,
were down compared to the second quarter in 2024, due to a reversal of the
provision for property taxes related to the Bank's new head office building in
an amount of $22 million. The increase in technology expenses, including
depreciation expense, is attributable to investments made to support the
Bank's technological evolution and business development plan. Professional
fees rose, notably due to expenses related to the acquisition and integration
of CWB recorded during the second quarter of 2025. Communication expenses were
also higher compared to the corresponding quarter of 2024. The increase in
other expenses was mainly due to the amortization of intangible assets related
to the acquisition of CWB. Excluding specified items, adjusted non-interest
expenses stood at $1,800 million in the second quarter of 2025, up 22% from
$1,472 million in the corresponding quarter of 2024.
For the six-month period ended April 30, 2025, non-interest expenses totalled
$3,588 million, up 23% compared to the corresponding period in 2024, partly
due to the inclusion of CWB, which drove an 8% increase. The growth in
non-interest expenses was essentially due to the same reasons provided above
for the quarter, except for occupancy expenses, which were up compared to the
first six months of 2024. This increase in occupancy expenses was due to
higher expenses related to the Bank's new head office building and the
expansion of the banking network at the ABA Bank subsidiary, partly offset by
a reversal, in an amount of $22 million, of the provision for property taxes
related to the Bank's new head office. The specified items recorded in
non-interest expense in the six-month period ended April 30, 2025 stood at
$168 million. Adjusted non-interest expenses were $3,420 million for the first
six months of 2025, a 17% increase from $2,921 million for the corresponding
period in 2024.
Provisions for Credit Losses
For the second quarter of 2025, the Bank recorded provisions for credit losses
of $545 million compared to $138 million in the corresponding quarter in 2024.
This significant increase was partly due to initial provisions for credit
losses of $230 million recorded on non-impaired loans acquired from CWB. The
increase in provisions for credit losses on non-impaired loans was also due to
the unfavourable impact related to updated macroeconomic scenarios and the
recalibration of certain risk parameters, as well as uncertainties surrounding
the imposition of new tariffs. These increases were partly offset by the
effects of the migration of credit risk, which was more favourable in the
second quarter of 2025, as well as by slower loan portfolio growth than in the
corresponding quarter of 2024. Provisions for credit losses on impaired loans
excluding Credigy's purchased or originated credit-impaired (POCI) loans((1))
also rose compared to the second quarter of 2024. This increase was
attributable to Personal Banking (including credit card receivables),
Commercial Banking (including CWB), the Financial Markets segment as well as
the Credigy and ABA Bank subsidiaries. In addition, the Credigy subsidiary
recorded provisions for credit losses on POCI loans of $11 million in the
second quarter of 2025, due to remeasurements of certain portfolios.
For the six-month period ended April 30, 2025, the Bank's provisions for
credit losses totalled $799 million compared to $258 million in the
corresponding period of 2024. This increase stemmed in part from initial
provisions for credit losses of $230 million recorded on non-impaired loans
acquired from CWB. In addition, the increase was due to higher provisions for
credit losses on non-impaired loans, due to the unfavourable impact related to
updated macroeconomic outlooks, the recalibration of certain risk parameters
and uncertainties surrounding the imposition of new tariffs. These items were
partly offset by the effects of the migration of credit risk, which was more
unfavourable in the first six months of 2024, and slower loan portfolio growth
than in the corresponding six-month period in 2024. Provisions for credit
losses on impaired loans excluding Credigy's POCI loans((1)) increased, due to
Personal Banking (including credit card receivables), and to Commercial
Banking, the Financial Markets segment and the Credigy and ABA Bank
subsidiaries. In addition, the Credigy subsidiary recorded provisions for
credit losses on POCI loans of $11 million in the first six months of 2025 due
to the remeasurement of certain portfolios.
Income Taxes
For the second quarter of 2025, income taxes stood at $267 million compared to
$234 million in the corresponding quarter in 2024. The 2025 second-quarter
effective income tax rate was 23% compared to 21% in the corresponding quarter
in 2024. This was mainly due to the impact of applying the Pillar 2 rules (for
additional information, see the Income Taxes section).
For the six-month period ended April 30, 2025, the effective income tax rate
stood at 23% compared to 20% in the corresponding six-month period of 2024.
The change in effective income tax rate was due to the same reason as that
mentioned for the quarter and a lower level of tax-exempt income for the
six-month period ended April 30, 2025.
(1) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
Results by Segment
The Bank carries out its activities in four business segments: Personal and
Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance
and International, which mainly comprises the activities of the Credigy Ltd.
(Credigy) and Advanced Bank of Asia Limited (ABA Bank) subsidiaries. Other
operating activities, certain specified items, Treasury activities, and the
operations of the Flinks Technology Inc. (Flinks) subsidiary are grouped in
the Other heading of segment disclosures. Each business segment is
distinguished by services offered, type of clientele, and marketing strategy.
Personal and Commercial
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((1)) 2024 % Change 2025((1)) 2024 % Change
Operating results
Net interest income 1,146 870 32 2,090 1,740 20
Non-interest income 270 261 3 530 545 (3)
Total revenues 1,416 1,131 25 2,620 2,285 15
Non-interest expenses 804 612 31 1,445 1,227 18
Income before provisions for credit losses and income taxes 612 519 18 1,175 1,058 11
Provisions for credit losses 426 89 588 160
Income before income taxes 186 430 (57) 587 898 (35)
Income taxes 54 119 (55) 165 248 (33)
Net income 132 311 (58) 422 650 (35)
Less: Specified items after income taxes((2)) (184) − (184) −
Net income - Adjusted((2)) 316 311 2 606 650 (7)
Net interest margin((3)) 2.30 % 2.36 % 2.29 % 2.36 %
Average interest-bearing assets((3)) 204,759 150,072 36 184,214 148,367 24
Average assets((4)) 208,658 156,736 33 186,905 155,874 20
Average loans((4)(5)) 203,341 155,100 31 183,394 154,185 19
Net impaired loans((3)) 1,237 433 1,237 433
Net impaired loans as a % of total loans and acceptances((3)) 0.6 % 0.3 % 0.6 % 0.3 %
Average deposits((4)) 107,086 88,933 20 99,433 88,942 12
Efficiency ratio((3)) 56.8 % 54.1 % 55.2 % 53.7 %
Efficiency ratio - Adjusted((6)) 55.1 % 54.1 % 54.2 % 53.7 %
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures. During the quarter
and six-month period ended April 30, 2025, the Bank recorded several items
related to the acquisition of CWB, including acquisition and integration
charges of $1 million net of income taxes, amortization of intangible assets
of $17 million net of income taxes and initial provisions for credit losses
of $166 million net of income taxes recorded on non-impaired loans acquired
from CWB.
(3) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(4) Represents an average of the daily balances for the period.
(5) Including customers' liability under acceptances for the
quarter and six-month period ended April 30, 2024.
(6) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP ratios.
In the Personal and Commercial segment, net income totalled $132 million in
the second quarter of 2025, down 58% from $311 million in the corresponding
quarter in 2024, primarily due to the increase in provisions for credit
losses, in particular initial provisions for credit losses in an amount of
$230 million on non-impaired loans acquired from CWB, and to a higher
non-interest expense (including specified items recorded in the second quarter
of 2025). In addition, income before provisions for credit losses and income
taxes stood at $612 million, up 18% from the second quarter of 2024 due to
growth in the segment's revenues, as well as the inclusion of CWB's results,
which drove a 17% increase. Adjusted net income was $316 million, up 2% from
the same quarter in 2024, while adjusted income before provisions for credit
losses and income taxes was up 23%. The 32% increase in net interest income in
the second quarter of 2025 was driven in part by the inclusion of CWB, which
drove a 26% increase, as well as by growth in personal and commercial loans
and deposits (including the transition of bankers' acceptances to loans at the
CORRA rate), which more than offset the impact of a lower net interest margin.
In addition, non-interest income increased by 3% compared to the corresponding
quarter in 2024, notably due to the inclusion of CWB's income, partly offset
by the transition of bankers' acceptances to loans at the CORRA rate.
Personal Banking's total revenues increased by $52 million compared to the
second quarter of 2024. This increase was driven by a higher net interest
income, attributable to growth in loans and deposits, partly offset by a
narrower margin on deposits, as well as to increases in internal commission
revenues related to the distribution of Wealth Management products. The
increase in Personal Banking's total revenues was also due to the inclusion of
CWB in the second quarter of 2025. Commercial Banking's total revenues grew
$233 million compared to the corresponding quarter in 2024, mainly due to an
increase in net interest income that was driven by loan growth (including the
transition of bankers' acceptances to loans at the CORRA rate) and deposit
growth, partly offset by a reduction in the net interest margin, and as a
result of the inclusion of CWB's revenues. This increase was partly offset by
a decline in revenues from bankers' acceptances related to the transition of
bankers' acceptances to loans at the CORRA rate.
For the second quarter of 2025, the segment's non-interest expenses stood at
$804 million, up 31% compared to the corresponding quarter in 2024, of which
the inclusion of CWB's non-interest expenses drove a 25% increase, which
include specified items of $24 million related to the acquisition. The
increase in non-interest expense was also due to higher compensation and
employee benefits, mainly from salary increases, and greater investments made
as part of the segment's technological evolution. The efficiency ratio of
56.8% in the second quarter of 2025 had deteriorated by 2.7 percentage points
compared to the second quarter of 2024. Adjusted non-interest expenses
amounted to $780 million in the second quarter of 2025, compared to $612
million in the second quarter of 2024. The adjusted efficiency ratio stood at
55.1% in the second quarter of 2025, compared to 54.1% in the second quarter
of 2024.
The segment recorded provisions for credit losses of $426 million in the
second quarter of 2025 compared to $89 million in the second quarter of 2024,
up $337 million. This increase was mainly due to initial provisions for credit
losses on non-impaired loans acquired from CWB in an amount of $230 million.
In addition, provisions for credit losses were higher on impaired loans and
non-impaired loans in Personal Banking (including credit card receivables) and
in Commercial Banking. Adjusted provisions for credit losses stood at $196
million for the second quarter of 2025, up $107 million from the corresponding
quarter of 2024.
For the six-month period ended April 30, 2025, the Personal and Commercial
segment's net income was $422 million, down 35% from $650 million in 2024,
mainly due to the increase in provisions for credit losses (including initial
provisions for credit losses on the non-impaired loans acquired from CWB
recorded in the first six months of 2025). In addition, income before
provisions for credit losses and income taxes for the six-month period ended
April 30, 2025, was $1,175 million, up 11% year over year, of which the
inclusion of CWB's results drove an 8% increase. Adjusted net income was down
7% compared to $650 million for the same six-month period in 2024,
attributable to higher provisions for credit losses, while adjusted income
before provisions for credit losses and income taxes increased by 13%. The
increase in Personal Banking's total revenues was mainly due to growth in
loans and deposits and an increase in the loan margin (partly offset by a
narrower margin on deposits), as well as higher internal commission revenues
arising from the distribution of the Wealth Management segment's products and
the inclusion of CWB. In addition, the increase in Commercial Banking's total
revenues was due to growth in loans and deposits, partly offset by a narrower
loan margin, and the inclusion of CWB. These increases were partly offset by a
decline in credit fees related to the transition from bankers' acceptances to
loans at the CORRA rate.
For the six-month period ended April 30, 2025, non-interest expenses stood at
$1,445 million, an 18% increase compared to the same period of 2024, due to
the same reasons provided above for the quarter. The inclusion of CWB drove a
12% increase in the non-interest expenses. The efficiency ratio was 55.2%,
representing a deterioration of 1.5 percentage points compared to April 30,
2024. The segment's adjusted non-interest expenses increased by 16% compared
to $1,227 million for the six-month period ended April 30, 2024. The
adjusted efficiency ratio was 54.2% for the first six months of 2025, compared
to 53.7% for the same period in 2024. For the six-month period ended
April 30, 2025, provisions for credit losses amounted to $588 million, an
increase of $428 million compared to the same period of 2024. This increase
was due to initial provisions on credit losses on non-impaired loans acquired
from CWB in an amount of $230 million and higher provisions for credit losses
on impaired loans (including credit card receivables) in Personal Banking as
well as in Commercial Banking. In addition, provisions for credit losses on
non-impaired loans also increased due to changes in certain risk parameters
and uncertainties surrounding the imposition of new tariffs. Excluding
specified items recorded during the six-month period ended April 30, 2025,
provisions for credit losses stood at $358 million, compared to $160 million
for the same six-month period of 2024.
Wealth Management
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((1)) 2024 % Change 2025((1)) 2024 % Change
Operating results
Net interest income 230 203 13 457 401 14
Fee-based revenues 467 394 19 917 769 19
Transaction-based and other revenues 94 86 9 193 173 12
Total revenues 791 683 16 1,567 1,343 17
Non-interest expenses 476 400 19 917 790 16
Income before provisions for credit losses and income taxes 315 283 11 650 553 18
Provisions for credit losses (1) − 1 −
Income before income taxes 316 283 12 649 553 17
Income taxes 84 78 8 175 152 15
Net income 232 205 13 474 401 18
Less: Specified items after income taxes((2)) (3) − (3) −
Net income - Adjusted((2)) 235 205 15 477 401 19
Average assets((3)) 10,754 8,963 20 10,681 8,834 21
Average loans((3)(4)) 9,596 7,967 20 9,518 7,839 21
Net impaired loans((5)) 12 6 100 12 6 100
Average deposits((3)) 60,015 41,927 43 51,602 41,568 24
Assets under administration((5)) 825,523 691,554 19 825,523 691,554 19
Assets under management((5)) 170,469 138,848 23 170,469 138,848 23
Efficiency ratio((5)) 60.2 % 58.6 % 58.5 % 58.8 %
Efficiency ratio - Adjusted((6)) 59.7 % 58.6 % 58.3 % 58.8 %
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures. During the quarter
and six-month period ended April 30, 2025, the Bank recorded several items
related to the acquisition of CWB, including acquisition and integration
charges of $2 million net of income taxes and amortization of intangible
assets of $1 million net of income taxes.
(3) Represents an average of the daily balances for the period.
(4) Including customers' liability under acceptances for the
quarter and the six-month period ended April 30, 2024.
(5) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(6) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial ratios.
In the Wealth Management segment, net income totalled $232 million in the
second quarter of 2025, a 13% increase from $205 million in the corresponding
quarter in 2024. The segment's total revenues amounted to $791 million, up
$108 million or 16% from $683 million in the second quarter of 2024. The 13%
increase in net interest income compared to the corresponding quarter in 2024
was due to higher loan and deposit volumes, the favourable impact of a change
in the composition of deposits and the inclusion of CWB in the second quarter
of 2025. The 19% increase in fee-based revenues was due to the rise in stock
markets compared to the corresponding quarter in 2024, positive net inflows
for the various solutions and the inclusion of CWB. Transaction and other
revenues rose 9% compared to the second quarter of 2024 due to increased
client activity.
Non-interest expenses stood at $476 million in the second quarter of 2025, up
19% from $400 million in the second quarter of 2024, partly due to the
inclusion of CWB. This increase was also due to higher compensation and
employee benefits, due in particular to variable compensation in line with
revenue growth, external management fees, as well as higher technology
expenses related to the segment's initiatives. The deterioration of the
efficiency ratio, which stood at 60.2% in the second quarter of 2025, was due
to the inclusion of CWB during the second quarter of 2025. Adjusted
non-interest expenses stood at $472 million in the second quarter of 2025
compared to $400 million in the same quarter of 2024. The adjusted efficiency
ratio was 59.7% in the second quarter of 2025 compared to 58.6% in the
corresponding quarter in 2024. Recoveries of credit losses in an amount of $1
million were recorded in the second quarter of 2025, while negligible
provisions for credit losses were recorded in the second quarter of 2024.
In the Wealth Management segment, net income totalled $474 million in the
six-month period ended April 30, 2025 compared to $401 million in the same
period of 2024, for an increase of 18%. The segment's total revenue stood at
$1,567 million for the six-month period ended April 30, 2025, an increase of
17% compared to $1,343 million for the same period of 2024. Net interest
income increased by 14%, due to growth in loan and deposit volumes, the
favourable impact of the change in the composition of deposits and the
inclusion of CWB. Fee-based revenues increased by 19%, due to growth in assets
under administration and under management as a result of stronger equity
markets, positive net inflows into various solutions and the inclusion of CWB.
In addition, transaction and other income increased by 12% compared to the
same period in 2024 due to increased client activity. Non-interest expenses
stood at $917 million for the six-month period ended April 30, 2025, compared
to $790 million for the same period in 2024, an increase of 16% due to the
same reasons provided above for the quarter. The efficiency ratio for the
six-month period ended April 30, 2025 was 58.5%, an improvement from 58.8% for
the corresponding six-month period in 2024. Provisions for credit losses stood
at $1 million for the six-month period ended April 30, 2025, whereas they
were negligible in the six-month period ended April 30, 2024.
Financial Markets
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((1)) 2024((2)) % Change 2025((1)) 2024((2)) % Change
Operating results
Global markets
Equities 542 170 219 909 300 203
Interest rate and credit 180 143 26 350 285 23
Commodities and foreign exchange 62 56 11 120 127 (6)
784 369 112 1,379 712 94
Corporate and investment banking 317 312 2 629 616 2
Total revenues 1,101 681 62 2,008 1,328 51
Non-interest expenses 403 312 29 770 625 23
Income before provisions for credit losses and income taxes 698 369 89 1,238 703 76
Provisions for credit losses 64 11 100 28
Income before income taxes 634 358 77 1,138 675 69
Income taxes 133 36 220 45
Net income 501 322 56 918 630 46
Average assets((3)) 224,314 194,158 16 217,949 192,280 13
Average loans((3)(4)) (Corporate Banking only) 31,118 31,911 (2) 31,298 31,784 (2)
Net impaired loans((5)) 74 57 30 74 57 30
Net impaired loans as a % of total loans and acceptances((5)) 0.2 % 0.2 % 0.2 % 0.2 %
Average deposits((3)) 77,467 64,578 20 75,872 63,950 19
Efficiency ratio((5)) 36.6 % 45.8 % 38.3 % 47.1 %
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(3) Represents an average of the daily balances for the period.
(4) Including customers' liability under acceptances for the
quarter and the six-month period ended April 30, 2024.
(5) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
In the Financial Markets segment, net income totalled $501 million in the
second quarter of 2025, up 56% from $322 million in the corresponding quarter
in 2024. The impact of including CWB in this segment's results for the quarter
was not material. Total revenues amounted to $1,101 million, compared to
$681 million in the second quarter of 2024, a significant increase of $420
million or 62%. The growth in global markets revenues came from all types of
revenues but was mainly due to equities revenues. Corporate and investment
banking revenues for the second quarter of 2025 increased 2% compared to the
corresponding quarter in 2024 due to growth in banking service revenues,
partly offset by a decrease in revenues related to capital markets activities
and revenues from merger and acquisition activities.
Non-interest expenses stood at $403 million in the second quarter of 2025, a
29% increase compared to the second quarter of 2024, attributable to higher
compensation and employee benefits, notably caused by variable compensation
resulting from revenue growth, as well as the increase in technology
investment expenses and other expenses related to the segment's business
growth. The efficiency ratio was 36.6% in the second quarter of 2025, an
improvement of 9.2 percentage points from 45.8% in the second quarter of
2024, owing to a sharp increase in the segment's revenues. In the quarter
ended April 30, 2025, provisions for credit losses were up $53 million
compared to the second quarter of 2024. This increase was essentially due to
provisions for credit losses on impaired loans of $55 million recorded in the
second quarter of 2025, attributable to a file in the manufacturing sector.
For the six-month period ended April 30, 2025, the segment's net income
totalled $918 million, up 46% compared to the same period of 2024. The impact
of including CWB in this segment's results for the first six-month period of
2025 was not material. Total revenues amounted to $2,008 million for the
six-month period ended April 30, 2025, for strong growth of $680 million or
51% compared to the same period of 2024. Global markets revenues were up 94%,
driven by increases in equities revenues and interest rate and credit products
revenues, partly offset by the decrease in commodities and foreign exchange
revenues. In addition, corporate and investment banking revenues were up 2%
compared to the six-month period ended April 30, 2024, due to the same reasons
provided above for the quarter.
For the six-month period ended April 30, 2025, non-interest expenses rose 23%
compared to the same period of 2024, mainly due to higher variable
compensation, technology investment expenses and other expenses related to the
segment's business growth. The efficiency ratio for the six-month period ended
April 30, 2025 was 38.3%, an improvement of 8.8 percentage points from 47.1%
recorded for the corresponding period of 2024. This improvement was driven by
a significant increase in revenues. Financial Markets recorded provisions for
credit losses of $100 million in the first six months of 2025, compared to $28
million for the same period of 2024. This increase was mainly due to $73
million in provisions for credit losses on impaired loans recorded for the
first six months of 2025, compared to the $2 million of recoveries of credit
losses on impaired loans recorded for the corresponding period of 2024.
U.S. Specialty Finance and International (USSF&I)
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025 2024 % Change 2025 2024 % Change
Total revenues
Credigy 141 136 4 286 261 10
ABA Bank 250 209 20 498 403 24
International (1) 5 11 12
390 350 11 795 676 18
Non-interest expenses
Credigy 39 34 15 79 69 14
ABA Bank 77 73 5 160 138 16
International 1 1 1 1
117 108 8 240 208 15
Income before provisions for credit losses and income taxes 273 242 13 555 468 19
Provisions for credit losses
Credigy 30 26 15 60 51 18
ABA Bank 29 11 164 50 22 127
International − − − −
59 37 59 110 73 51
Income before income taxes 214 205 4 445 395 13
Income taxes
Credigy 15 15 − 31 29 7
ABA Bank 31 26 19 61 51 20
International (1) 1 1 2
45 42 7 93 82 13
Net income
Credigy 57 61 (7) 116 112 4
ABA Bank 113 99 14 227 192 18
International (1) 3 9 9
169 163 4 352 313 12
Average assets((1)) 33,101 27,402 21 32,134 26,706 20
Average loans and receivables((1)) 24,126 21,686 11 23,771 21,231 12
Purchased or originated credit-impaired (POCI) loans 309 429 (28) 309 429 (28)
Net impaired loans excluding Credigy's POCI loans((2)) 719 368 95 719 368 95
Average deposits((1)) 16,500 12,750 29 15,811 12,459 27
Efficiency ratio((2)) 30.0 % 30.9 % 30.2 % 30.8 %
(1) Represents an average of the daily balances for the period.
(2) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
In the USSF&I segment, net income totalled $169 million in the second
quarter of 2025, up 4% from $163 million in the corresponding quarter of 2024,
attributable to the ABA Bank subsidiary. The 11% growth in the segment's total
revenues was partly offset by the increase in non-interest expenses and
provisions for credit losses. For the six-month period ended April 30, 2025,
the segment recorded net income of $352 million, an increase of 12% compared
to $313 million recorded in the same period of 2024.
Credigy
For the second quarter of 2025, the Credigy subsidiary reported net income of
$57 million, down $4 million or 7% compared to the corresponding quarter in
2024. Total revenues amounted to $141 million in the second quarter of 2025
compared to $136 million in the second quarter of 2024, an increase that was
driven by growth in loan volumes, the remeasurement of the fair value of
certain portfolios in the second quarter of 2025, and the impact of exchange
rate fluctuations, items that were partly offset by a gain realized on the
disposal of a loan portfolio and revenues related to the under-utilization of
credit facilities recorded in the second quarter of 2024. Non-interest
expenses stood at $39 million in the second quarter of 2025, a $5 million
increase from the corresponding quarter in 2024 due to servicing fees and the
impact of exchange rate fluctuations. Provisions for credit losses rose
$4 million compared to the second quarter of 2024 due to higher provisions
for credit losses on impaired loans (excluding Credigy's POCI loans),
attributable to the normal maturation of loan portfolios, and provisions for
credit losses on POCI loans, partly offset by the decrease in provisions for
credit losses on non-impaired loans.
For the six-month period ended April 30, 2025, the Credigy subsidiary reported
net income of $116 million, up 4% from the corresponding period of 2024. Total
revenues amounted to $286 million for the first six months of 2025, up from
$261 million in the same period of 2024. This increase was due to the same
reasons provided above for the quarter. Non-interest expenses for the
six-month period ended April 30, 2025 were up $10 million from the
corresponding period of 2024, owing to compensation and employee benefits,
servicing fees, and the impact of exchange rate fluctuations. The subsidiary
reported a $9 million increase in provisions for credit losses compared to
the corresponding six-month period in 2024, due to the increase in provisions
for credit losses on impaired loans and POCI loans, partly offset by the
decrease in credit losses on non-impaired loans.
ABA Bank
For the second quarter of 2025, the ABA Bank subsidiary recorded net income
totalling $113 million, up $14 million or 14% from the corresponding quarter
in 2024. Total revenues rose 20%, mainly attributable to sustained growth in
assets, as well as the impact of exchange rate fluctuations. Non-interest
expenses for the second quarter of 2025 stood at $77 million, a $4 million or
5% increase compared to the second quarter of 2024 due to higher occupancy
expenses driven by the subsidiary's business growth and the opening of new
branches, as well as the impact of exchange rate fluctuations. The subsidiary
reported provisions for credit losses totalling $29 million in the second
quarter of 2025, up $18 million compared to the corresponding quarter of 2024.
This increase was due to higher provisions for credit losses on impaired loans
and non-impaired loans related to the uncertainties around the imposition of
new tariffs.
For the six-month period ended April 30, 2025, the ABA Bank subsidiary
recorded net income totalling $227 million, up $35 million or 18% from the
corresponding period of 2024. The 24% increase in total revenues compared to
the corresponding six-month period of 2024 stemmed from business expansion at
the subsidiary, driven mainly by sustained asset growth and the impact of
exchange rate fluctuations. ABA Bank reported non-interest expenses totalling
$160 million, up 16% year over year, due to the same reasons provided above
for the quarter as well as higher compensation and employee benefits. The
subsidiary reported provisions for credit losses totalling $50 million in the
six-month period ended April 30, 2025, up $28 million from the same period of
2024, owing to higher provisions for credit losses on impaired and
non-impaired loans.
Other
(millions of Canadian dollars) Quarter ended April 30 Six months ended April 30
2025((1)) 2024((2)) 2025((1)) 2024((2))
Operating results
Net interest income (22) (85) (82) (150)
Non-interest income (26) (10) (75) (22)
Total revenues (48) (95) (157) (172)
Non-interest expenses 142 40 216 71
Income before provisions for credit losses and income taxes (190) (135) (373) (243)
Provisions for credit losses (3) 1 − (3)
Income before income taxes (recovery) (187) (136) (373) (240)
Income taxes (recovery) (49) (41) (100) (74)
Net loss (138) (95) (273) (166)
Non-controlling interests − (1) − (1)
Net loss attributable to the Bank's shareholders and holders of (138) (94) (273) (165)
other equity instruments
Less: Specified items after income taxes((3)) (83) − (136) −
Net loss - Adjusted((3)) (55) (95) (137) (166)
Average assets((4)) 74,605 67,777 71,627 65,089
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) Certain amounts have been adjusted to reflect the
discontinuation of taxable equivalent basis reporting for revenues and income
taxes.
(3) See the Financial Reporting Method section on pages 6 to 12
for additional information on non-GAAP financial measures. During the quarter
and six-month period ended April 30, 2025, the Bank recorded several items
related to the acquisition of CWB, including acquisition and integration
charges of $83 million net of income taxes ($102 million net of income taxes
for the
six-month period ended April 30, 2025). In addition, during the six-month
period ended April 30, 2025, the Bank recorded the amortization of the
subscription receipt issuance costs of $20 million net of income taxes, a
gain of $3 million net of income taxes resulting from the remeasurement at
fair value of the CWB common shares already held by the Bank, and the impact
of managing fair value changes, representing a loss of $17 million net of
income taxes.
(4) Represents an average of the daily balances for the period.
For the Other heading of segment results, a net loss of $138 million was
posted in the second quarter of 2025 compared to a net loss of $95 million in
the corresponding quarter in 2024. The change in net loss was due to the
increase in non-interest expenses, stemming mainly from CWB acquisition and
integration charges, for an amount of $114 million recorded in the second
quarter of 2025, partly offset by a higher contribution from Treasury
activities and the inclusion of CWB income. The specified items recorded in
the second quarter of 2025, related to the acquisition of CWB, had an
unfavourable impact of $83 million on net loss. The adjusted net loss stood
at $55 million for the quarter ended April 30, 2025, compared to $95 million
for the corresponding quarter in 2024.
For the six-month period ended April 30, 2025, the segment's loss stood at
$273 million compared to a net loss of $166 million in the corresponding
period of 2024. The change in net loss was due to the increase in non-interest
expenses compared to the first six months of 2024, mainly attributable to
higher compensation and employee benefits as well as CWB acquisition and
integration charges recorded in the first six months of 2025 for an amount of
$140 million. In addition, the lower contribution from Treasury activities,
in particular due to a $17 million loss, net of taxes, due to the management
of fair value changes related to the acquisition of CWB, as well as the
amortization of subscription receipt issuance costs in an amount of $20
million, net of taxes, contributed to the change in net loss. The specified
items recorded during the six-month period ended April 30, 2025, related to
the CWB acquisition, had a $136 million unfavourable impact on the net loss.
The adjusted net loss stood at $137 million for the six-month period ended
April 30, 2025 compared to $166 million for the corresponding period of 2024.
Consolidated Balance Sheet
Consolidated Balance Sheet Summary
(millions of Canadian dollars) As at April 30, 2025((1)) As at October 31, 2024 % Change
Assets
Cash and deposits with financial institutions 31,422 31,549 −
Securities 168,643 145,165 16
Securities purchased under reverse repurchase agreements and securities 20,836 16,265 28
borrowed
Loans, net of allowances 285,728 243,032 18
Other 29,565 26,215 13
536,194 462,226 16
Liabilities and equity
Deposits 387,974 333,545 16
Other 112,493 101,873 10
Subordinated debt 2,822 1,258 124
Equity attributable to the Bank's shareholders and holders of other equity 32,904 25,550 29
instruments
Non-controlling interests 1 −
536,194 462,226 16
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
balances as at April 30, 2025. For additional information on the impact of the
CWB acquisition, see the Acquisition section and Note 19 to the Consolidated
Financial Statements.
Assets
As at April 30, 2025, the Bank had total assets of $536.2 billion, up $74.0
billion or 16% from $462.2 billion as at October 31, 2024. Cash and deposits
with financial institutions as at April 30, 2025, stood at $31.4 billion, down
$0.1 billion, owing primarily to a decrease in deposits with the Bank of
Canada, partly offset by an increase in deposits with regulated financial
institutions.
Securities have risen $23.4 billion since October 31, 2024, owing to a $17.2
billion or 15% increase in securities at fair value through profit or loss
driven mainly by equity securities. In addition, securities other than those
measured at fair value through profit or loss rose $6.4 billion. Securities
purchased under reverse repurchase agreements and securities borrowed
increased by $4.5 billion since October 31, 2024, driven primarily by the
Financial Markets segment and Treasury activities.
As at April 30, 2025, loans, net of allowances for credit losses, totalled
$285.7 billion, up $42.7 billion or 18% since October 31, 2024. The following
table provides a breakdown of the main loan portfolios.
(millions of Canadian dollars) As at April 30, 2025((1)) As at October 31, 2024 As at April 30, 2024
Loans
Residential mortgage and home equity lines of credit 138,497 124,431 119,548
Personal 17,543 17,461 17,253
Credit card 2,835 2,761 2,644
Business and government((2)) 128,791 99,720 96,536
287,666 244,373 235,981
Allowances for credit losses (1,938) (1,341) (1,211)
285,728 243,032 234,770
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
balances as at April 30, 2025. For additional information on the impact of the
CWB acquisition, see the Acquisition section and Note 19 to the Consolidated
Financial Statements.
(2) Including customers' liability under acceptances as at
April 30, 2024.
Since October 31, 2024, residential mortgages (including home equity lines of
credit) rose $14.1 billion or 11%, above all due to the inclusion of CWB and
growth in the business activities of the Personal and Commercial segment and
the Financial Markets segment. Also since October 31, 2024, personal loans
were up $0.1 billion, and credit card receivables were relatively stable.
Business and government loans rose $29.1 billion or 29% since October 31,
2024, mainly due to the inclusion of CWB and business growth in Commercial
Banking. These increases were partly offset by a decline in the activities of
the Financial Markets segment and the Credigy subsidiary.
Since April 30, 2024, loans, net of allowances for credit losses, grew $50.9
billion or 22%. Residential mortgages (including home equity lines of credit)
rose $19.0 billion or 15% due to the inclusion of CWB, sustained demand for
mortgage credit in the Personal and Commercial segment and business growth in
the Financial Markets segment. Also since April 30, 2024, personal loans rose
$0.2 billion due to the inclusion of CWB and business growth in Personal
Banking. Credit card receivables were up $0.2 billion. Business and
government loans grew $32.3 billion or 33% since April 30, 2024, owing
essentially to business growth in Commercial Banking, in the Financial Markets
and Wealth Management segments, and at the ABA Bank subsidiary.
Impaired loans include all loans classified in Stage 3 of the expected credit
loss model and POCI loans. As at April 30, 2025, gross impaired loans stood at
$3,114 million compared to $2,043 million as at October 31, 2024. As for net
impaired loans, they totalled $2,437 million as at April 30, 2025, compared to
$1,629 million as at October 31, 2024. This increase was mainly due to an
increase in net impaired loans in the loan portfolios of the Personal and
Commercial Banking segment following the inclusion of loans acquired from CWB
in the second quarter of 2025, and at the ABA Bank subsidiary, partly offset
by the decrease in net impaired loans at the Credigy subsidiary (including
POCI loans) due to the maturities of certain portfolios and to loan
repayments.
As at April 30, 2025, other assets totalled $29.6 billion, a $3.4 billion
increase since October 31, 2024 that resulted mainly from increases in
derivative financial instruments as well as in goodwill resulting from the CWB
acquisition.
Liabilities
As at April 30, 2025, the Bank had total liabilities of $503.3 billion
compared to $436.7 billion as at October 31, 2024.
The Bank's total deposits stood at $388.0 billion as at April 30, 2025, rising
$54.5 billion or 16% from $333.5 billion as at October 31, 2024. As at April
30, 2025, personal deposits stood at $122.0 billion, up $26.8 billion since
October 31, 2024. This increase was driven by the inclusion of CWB and
business growth in Personal Banking, in the Financial Markets and Wealth
Management segments, and at the ABA Bank subsidiary.
Business and government deposits stood at $258.1 billion as at April 30, 2025,
rising $25.4 billion since October 31, 2024. The increase is explained by the
inclusion of CWB, the activities of the Financial Markets and Wealth
Management segments and Treasury funding activities, despite a $0.1 billion
decrease in deposits subject to bank capitalization (bail-in) conversion
regulations. As at April 30, 2025, deposits from deposit-taking institutions
stood at $7.9 billion, an increase of $2.3 billion since October 31, 2024
arising from Treasury funding activities.
As at April 30, 2025, other liabilities stood at $112.5 billion, up $10.6
billion since October 31, 2024, essentially due a $2.3 billion increase in
derivative financial instruments, a $3.0 billion increase in obligations
related to securities sold short, a $2.8 billion increase in obligations
related to securities sold under repurchase agreements and securities loaned
and a $1.0 billion increase in liabilities related to transferred receivables.
Subordinated debt increased since October 31, 2024, as a result of the
issuance of $1.0 billion of medium-term notes on January 13, 2025 and
$0.5 billion in subordinated debt related to the acquisition of CWB.
Equity
As at April 30, 2025, equity attributable to the Bank's shareholders and
holders of other equity instruments was $32.9 billion, rising $7.3 billion
since October 31, 2024. This increase was primarily due to the issuances of
common shares related to the CWB acquisition for a total amount of $6.3
billion, as well as to net income net of dividends, remeasurements of pension
plans and other post-employment benefit plans, and the net fair value change
attributable to the credit risk on financial liabilities designated at fair
value through profit or loss. Moreover, the issuance of Series 47 and 49
preferred shares were more than offset by the redemption for cancellation of
Series 32 preferred shares.
Related Party Transactions
The Bank's policies and procedures regarding related party transactions have
not significantly changed since October 31, 2024. For additional information,
see Note 30 to the audited annual consolidated financial statements for the
year ended October 31, 2024.
Securitization and Off-Balance-Sheet Arrangements
In the normal course of business, the Bank is party to various financial
arrangements that, under IFRS, are not required to be recorded on the
Consolidated Balance Sheet or are recorded under amounts other than their
notional or contractual values. These arrangements include, among others,
transactions with structured entities, derivative financial instruments, the
issuance of guarantees, credit instruments, and financial assets received as
collateral. A complete analysis of these types of arrangements, including
their nature, business purpose, and importance, is provided on pages 53 and 54
of the 2024 Annual Report.
For additional information on financial assets transferred but not
derecognized, guarantees, commitments, and structured entities, see Notes 9,
28, and 29 to the audited annual consolidated financial statements for the
year ended October 31, 2024.
Income Taxes
Notice of Assessment
In April 2025, the Bank was reassessed by the Canada Revenue Agency (CRA) for
additional income tax and interest of approximately $125 million (including
estimated provincial tax and interest) in respect of certain Canadian
dividends received by the Bank during the 2020 taxation year.
In prior fiscal years, the Bank had been reassessed for additional income tax
and interest of approximately $1,075 million (including provincial tax and
interest) in respect of certain Canadian dividends received by the Bank during
the 2012-2019 taxation years.
In the reassessments, the CRA alleges that the dividends were received as part
of a "dividend rental arrangement."
In October 2023, the Bank filed a notice of appeal with the Tax Court of
Canada, and the matter is now in litigation. The CRA may issue reassessments
to the Bank for taxation years subsequent to 2020 in regard to certain
activities similar to those that were the subject of the above-mentioned
reassessments. The Bank remains confident that its tax position was
appropriate and intends to vigorously defend its position. As a result, no
amount has been recognized in the Consolidated Financial Statements as at
April 30, 2025.
Pillar 2 Rules
On June 20, 2024, Bill C-69 - An Act to implement certain provisions of the
budget tabled in Parliament on April 16, 2024 received royal assent. The bill
included the Pillar 2 rules (global minimum tax) published by the Organisation
for Economic Co-operation and Development (OECD) that are applicable to fiscal
years beginning on or after December 31, 2023 (November 1, 2024, for the
Bank). To date, the Pillar 2 rules have been included in a bill or enacted in
certain jurisdictions where the Bank operates. For the quarter and the
six-month period ended April 30, 2025, the Bank estimates that the application
of the Pillar 2 rules represents an increase in the effective tax rate of
1.9%. For the quarter ended April 30, 2025, the Bank continues to apply the
exception to the recognition and disclosure of information about deferred tax
assets and liabilities arising from the Pillar 2 rules in the jurisdictions
where they have been included in a bill or enacted.
Capital Management
Capital management has a dual role of ensuring a competitive return to the
Bank's shareholders while maintaining a solid capital foundation that covers
the risks inherent to the Bank's business activities, supports its business
segments, and protects its clients. The Bank's capital management policy
defines the guiding principles as well as the roles and responsibilities of
its internal capital adequacy assessment process. This process aims to
determine the capital that the Bank needs to maintain to pursue its business
activities and accommodate unexpected losses arising from extremely adverse
economic and operational conditions. For additional information on the capital
management framework, see the Capital Management section on pages 55 to 64 of
the Bank's 2024 Annual Report.
Basel Accord
The Bank and all other major Canadian banks have to maintain the following
minimum capital ratios established by OSFI: a CET1 capital ratio of at least
11.5%, a Tier 1 capital ratio of at least 13.0%, and a Total capital ratio of
at least 15.0%. For additional information on the ratio calculations, see
pages 56 to 58 of the 2024 Annual Report. All of these ratios include a
capital conservation buffer of 2.5% established by the BCBS and OSFI, a 1.0%
surcharge applicable solely to Domestic Systemically Important
Banks (D‑SIBs), and a 3.5% domestic stability buffer (DSB) established by
OSFI. The DSB, which can vary from 0% to 4.0% of risk-weighted assets (RWA),
consists exclusively of CET1 capital. A D-SIB that fails to meet this buffer
requirement will not be subject to automatic constraints to reduce capital
distributions but will have to provide a remediation plan to OSFI. The Bank
must also meet the requirements of the capital output floor that will ensure
that its total calculated RWA is not below 72.5% of the total RWA as
calculated under the Basel III Standardized Approaches. OSFI had planned a
phase-in of the floor factor, starting at 65.0% in the second quarter of 2023,
and rising to reach 72.5% in fiscal 2027. On February 12, 2025, OSFI deferred
any additional increases until further notice. As a result, the floor factor,
currently set at 67.5%, will remain at this level for an undetermined period.
If the capital requirement is less than the capital output floor requirement
after applying the floor factor, the difference is added to the total RWA.
Lastly, OSFI requires D-SIBs to maintain a Basel III leverage ratio of at
least 3.5%, which includes a Tier 1 capital buffer of 0.5% applicable only to
D-SIBs. For additional information on the leverage ratio calculation, see page
58 of the 2024 Annual Report.
In addition, OSFI requires that regulatory capital instruments other than
common equity must have a non-viability contingent capital (NVCC) clause to
ensure that investors bear losses before taxpayers should the government
determine that rescuing a non-viable financial institution is in the public
interest. The Bank's regulatory capital instruments, other than common shares,
all have an NVCC clause.
OSFI's Total Loss Absorbing Capacity (TLAC) Guideline, which applies to all
D-SIBs under the federal government's bail-in regulations, is intended to
ensure that a D-SIB has sufficient loss-absorbing capacity to support its
internal recapitalization in the unlikely event it becomes non-viable.
Available TLAC includes total capital as well as certain senior unsecured
debts that satisfy all of the eligibility criteria of OSFI's TLAC guideline.
OSFI requires D-SIBs to maintain a risk-based TLAC ratio of at least 25.0%
(including the DSB) of RWA and a TLAC leverage ratio of at least 7.25%. The
TLAC ratio is calculated by dividing available TLAC by RWA, and the TLAC
leverage ratio is calculated by dividing available TLAC by total exposure. As
at April 30, 2025, outstanding liabilities of $23.4 billion ($23.5 billion
as at October 31, 2024) were subject to conversion under the bail-in
regulations.
Requirements - Regulatory Capital((1)), Leverage((1)), and TLAC((2)) Ratios
Requirements as at April 30, 2025 Ratios as at April 30, 2025
Minimum Capital Minimum D-SIB surcharge Minimum Domestic Minimum set by OSFI, including the domestic stability buffer
conservation set by set by stability
buffer BCBS OSFI buffer((3))
Capital ratios
CET1 4.5 % 2.5 % 7.0 % 1.0 % 8.0 % 3.5 % 11.5 % 13.4 %
Tier 1 6.0 % 2.5 % 8.5 % 1.0 % 9.5 % 3.5 % 13.0 % 15.1 %
Total 8.0 % 2.5 % 10.5 % 1.0 % 11.5 % 3.5 % 15.0 % 16.9 %
Leverage ratio 3.0 % n.a. 3.0 % 0.5 % 3.5 % n.a. 3.5 % 4.7 %
TLAC ratio 21.5 % n.a. 21.5 % n.a. 21.5 % 3.5 % 25.0 % 28.2 %
TLAC leverage ratio 6.75 % n.a. 6.75 % 0.5 % 7.25 % n.a. 7.25 % 8.8 %
n.a. Not applicable
(1) The capital ratios and the leverage ratio are calculated in
accordance with the Basel III rules, as set out in OSFI's Capital Adequacy
Requirements Guideline and Leverage Requirements Guideline.
(2) The TLAC ratio and the TLAC leverage ratio are calculated in
accordance with OSFI's Total Loss Absorbing Capacity Guideline.
(3) On December 17, 2024, OSFI confirmed that the domestic
stability buffer was being maintained at 3.5%.
The Bank ensures that its capital levels are always above the minimum capital
requirements set by OSFI, including the DSB. By maintaining a strong capital
structure, the Bank can cover the risks inherent to its business activities,
support its business segments, and protect its clients.
Other disclosure requirements pursuant to Pillar 3 of the Basel Accord and a
set of recommendations defined by the Enhanced Disclosure Task Force (EDTF)
are presented in the Supplementary Regulatory Capital and Pillar 3 Disclosure
report published quarterly and available on the Bank's website at nbc.ca.
Furthermore, a complete list of capital instruments and their main features is
also available on the Bank's website.
Regulatory Developments
The Bank closely monitors regulatory developments and participates actively in
various consultative processes. For additional information about the
regulatory context as at October 31, 2024, refer to page 59 of the Capital
Management section in the 2024 Annual Report. Since November 1, 2024, there
have been no new regulatory developments to be considered.
Management Activities
On January 13, 2025, the Bank issued medium-term notes for a total amount of
$1.0 billion bearing interest at 4.260% and maturing on February 15, 2035.
Given that the medium-term notes satisfy the NVCC requirements, they qualify
for the purposes of calculating regulatory capital under the Basel III rules.
On February 3, 2025, at closing of the CWB acquisition, the Bank issued a
total of 50,272,878 common shares, for total proceeds of $6.3 billion.
On February 3, 2025, as part of the acquisition of CWB, the Bank acquired the
obligations related to the CWB subordinated debts for a total amount of
$525 million, which included a debenture of $125 million bearing interest at
4.840% and maturing on June 29, 2030 (on May 7, 2025, the Bank provided notice
to the holders of its intention to redeem on June 29, 2025, these debentures,
at a redemption price equal to the outstanding principal amount and all
accrued and unpaid interest), a debenture of $150 million bearing interest at
5.937% and maturing on December 22, 2032 and a debenture of $250 million
bearing interest at 5.949% and maturing on January 29, 2034. Given that the
debentures satisfy the NVCC requirements, they qualify for the purposes of
calculating regulatory capital under the Basel III rules.
On February 17, 2025, i.e. the first business day after the February 15, 2025
redemption date, the Bank redeemed all the issued and outstanding
Non-Cumulative 5-Year Rate-Reset Series 32 First Preferred Shares. Pursuant to
the share conditions, the redemption price was $25.00 per share plus the
periodic dividends declared and unpaid. The Bank redeemed 12,000,000 Series 32
First Preferred Shares for a total amount of $300 million.
On February 20, 2025, there was an exchange of all the issued and outstanding
First Preferred Shares, Series 5 and Series 9 of CWB for substantially
equivalent First Preferred Shares, Series 47 and Series 49 of National Bank,
which are non-cumulative 5-year rate-reset bearing interest at 6.371% and
7.651%. The Bank exchanged 10,000,000 preferred shares for a total amount of
$264 million. Given that the Series 47 and Series 49 preferred shares meet the
NVCC requirements, they qualify for the purposes of calculating regulatory
capital under the Basel III rules.
Dividends
On May 27, 2025, the Board of Directors declared regular dividends on the
various series of first preferred shares and a dividend of $1.18 per common
share, up 4 cents or 3.4%, payable on August 1, 2025 to shareholders of record
on June 30, 2025.
Shares, Other Equity Instruments, and Stock Options
As at April 30, 2025
Number of shares or $ million
LRCN((1))
First preferred shares
Series 30 14,000,000 350
Series 38 16,000,000 400
Series 40 12,000,000 300
Series 42 12,000,000 300
Series 47 5,000,000 128
Series 49 5,000,000 136
64,000,000 1,614
Other equity instruments
LRCN - Series 1 500,000 500
LRCN - Series 2 500,000 500
LRCN - Series 3 500,000 500
1,500,000 1,500
65,500,000 3,114
Common shares 391,321,704 9,805
Stock options 11,671,264
(1) Limited Recourse Capital Notes (LRCN).
As at May 23, 2025 there were 391,340,763 common shares and 11,619,774 stock
options outstanding. The number of common shares and options outstanding
reflects the closing of the CWB transaction. NVCC provisions require the
conversion of capital instruments into a variable number of common shares
should OSFI deem a bank to be non-viable or should the government publicly
announce that a bank has accepted or agreed to accept a capital injection. If
an NVCC trigger event were to occur, all of the Bank's preferred shares,
LRCNs, and medium-term notes and subordinated debentures which are NVCC
capital instruments, would be converted into common shares of the Bank
according to an automatic conversion formula at a conversion price
corresponding to the greater of the following amounts: (i) a $5.00 contractual
floor price; or (ii) the market price of the Bank's common shares on the date
of the trigger event (10-day weighted average price). Based on a $5.00 floor
price and including an estimate for accrued dividends and interest, these NVCC
capital instruments would be converted into a maximum of 1,472 million Bank
common shares, which would have a 79.0% dilutive effect based on the number of
Bank common shares outstanding as at April 30, 2025.
Movement in Regulatory Capital((1))
(millions of Canadian dollars) Six months ended
April 30, 2025
Common Equity Tier 1 (CET1) capital
Balance at beginning 19,321
Issuance of common shares (including Stock Option Plan) 30
Issuance of common shares related to the CWB acquisition 6,329
Impact of shares purchased or sold for trading (21)
Repurchase of common shares −
Replacement options related to the CWB acquisition 29
Other contributed surplus 3
Dividends on preferred and common shares and distributions on other equity (930)
instruments
Net income attributable to the Bank's shareholders and holders of other equity 1,893
instruments
Removal of own credit spread (net of income taxes) (124)
Other 217
Movements in accumulated other comprehensive income
Translation adjustments (63)
Debt securities at fair value through other comprehensive income (27)
Other −
Change in goodwill and intangible assets (net of related tax liability) (2,049)
Other, including regulatory adjustments
Change in defined benefit pension plan asset (net of related tax liability) (108)
Change in amount exceeding 15% threshold
Deferred tax assets −
Significant investment in common shares of financial institutions −
Deferred tax assets, unless they result from temporary differences (net of (5)
related tax liability)
Other deductions or regulatory adjustments to CET1 implemented by OSFI (2)
Change in other regulatory adjustments 21
Balance at end 24,514
Additional Tier 1 capital
Balance at beginning 3,149
New Tier 1 eligible capital issuances 250
Redeemed capital (300)
Other, including regulatory adjustments (10)
Balance at end 3,089
Total Tier 1 capital 27,603
Tier 2 capital
Balance at beginning 1,531
New Tier 2 eligible capital issuances 1,525
Redeemed capital −
Tier 2 instruments issued by subsidiaries and held by third parties −
Change in certain allowances for credit losses 365
Other, including regulatory adjustments (94)
Balance at end 3,327
Total regulatory capital 30,930
(1) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
Risk-Weighted Assets by Key Risk Drivers
Risk-weighted assets (RWA) amounted to $182.8 billion as at April 30, 2025
compared to $141.0 billion as at October 31, 2024, a $41.8 billion increase
resulting mainly from the inclusion of CWB, organic growth in RWA and a
deterioration in the credit quality of the loan portfolio. The changes in the
Bank's RWA by risk type are presented in the following table.
Movement of Risk-Weighted Assets by Key Drivers((1))
(millions of Canadian dollars) Quarter ended
April 30, January 31, October 31,
2025 2025 2024
Non-counterparty Counterparty Total Total Total
credit risk credit risk
Credit risk - Risk-weighted assets at beginning 117,453 6,990 124,443 118,450 116,684
Book size 2,412 (186) 2,226 3,447 1,067
Book quality 393 16 409 785 (70)
Model updates 108 − 108 − 439
Methodology and policy − − − − −
Acquisitions and disposals 30,699 9 30,708 − −
Foreign exchange movements (2,049) (187) (2,236) 1,761 330
Credit risk - Risk-weighted assets at end 149,016 6,642 155,658 124,443 118,450
Market risk - Risk-weighted assets at beginning 9,146 8,002 8,066
Movement in risk levels((2)) 1,004 1,144 (64)
Model updates − − −
Methodology and policy − − −
Acquisitions and disposals − − −
Market risk - Risk-weighted assets at end 10,150 9,146 8,002
Operational risk - Risk-weighted assets at beginning 14,875 14,523 14,168
Movement in risk levels 459 352 355
Methodology and policy − − −
Acquisitions and disposals((3)) 1,630 − −
Operational risk - Risk-weighted assets at end 16,964 14,875 14,523
Risk-weighted assets at end 182,772 148,464 140,975
(1) See the Financial Reporting Method section on pages 6 to
12 for additional information on capital management measures.
(2) Also includes foreign exchange rate movements that are not
considered material.
(3) During the second quarter of 2025, the operational risk
change is related to the inclusion of CWB which was calculated using the
Standardized approach in accordance with the approach used by the Bank.
The table above provides risk-weighted asset movements by the key drivers
underlying the different risk categories.
The Book size item reflects organic changes in book size and composition
(including new loans and maturing loans). RWA movements attributable to book
size include increases or decreases in exposures, measured by exposure at
default, assuming a stable risk profile.
The Book quality item is the Bank's best estimate of changes in book quality
related to experience, such as underlying customer behaviour or demographics,
including changes resulting from model recalibrations or realignments and also
including risk mitigation factors.
The Model updates item is used to reflect implementations of new models,
changes in model scope, or any other change applied to address model
malfunctions.
The Methodology and policy item presents the impact of changes in calculation
methods resulting from changes in regulatory policies or from new regulations.
Regulatory Capital Ratios, Leverage Ratio, and TLAC Ratios
As at April 30, 2025, the Bank's CET1, Tier 1, and Total capital ratios were,
respectively, 13.4%, 15.1%, and 16.9% compared to ratios of, respectively,
13.7%, 15.9%, and 17.0% as at October 31, 2024. All of the capital ratios
decreased since October 31, 2024. The growth in RWA, mainly due to the
inclusion of CWB, had an unfavourable impact on the ratios, partly offset by
the common shares issued as part of the acquisition of CWB and by net income,
net of dividends. In addition, the redemption of preferred shares on February
17, 2025, partly offset by the exchange of CWB's preferred shares for the
Bank's preferred shares on February 20, 2025 negatively affected the Tier 1
and Total capital ratios, while the $1.0 billion issuance of medium-term notes
on January 13, 2025 and the obligation related to CWB's subordinated debts for
an amount of $525 million positively impacted the Total capital ratio.
As at April 30, 2025, the leverage ratio was 4.7% compared to 4.4% as at
October 31, 2024. The increase in the leverage ratio was essentially due to
growth in Tier 1 capital related to the common shares issued as part of the
acquisition of CWB, partly offset by an increase in total exposure.
As at April 30, 2025, the Bank's TLAC ratio and TLAC leverage ratio were
28.2% and 8.8%, respectively, compared to 31.2% and 8.6%, respectively, as at
October 31, 2024. The TLAC leverage ratio increase is explained by the net
issuances of instruments that met all of the TLAC eligibility criteria during
the period. However, the growth in RWA, mainly attributable to the inclusion
of CWB, more than offset these issuances, resulting in a decrease in the TLAC
ratio.
During the quarter and six-month period ended April 30, 2025, the Bank was
compliant with all of OSFI's regulatory capital, leverage, and TLAC
requirements.
Regulatory Capital((1)), Leverage Ratio((1)) and TLAC((2))
(millions of Canadian dollars) As at April 30, 2025 As at October 31, 2024
Capital
CET1 24,514 19,321
Tier 1 27,603 22,470
Total capital 30,930 24,001
Risk-weighted assets 182,772 140,975
Total exposure 585,319 511,160
Capital ratios
CET1 13.4 % 13.7 %
Tier 1 15.1 % 15.9 %
Total 16.9 % 17.0 %
Leverage ratio 4.7 % 4.4 %
Available TLAC 51,508 44,040
TLAC ratio 28.2 % 31.2 %
TLAC leverage ratio 8.8 % 8.6 %
(1) Capital, risk-weighted assets, total exposure, the capital
ratios, and the leverage ratio are calculated in accordance with the Basel III
rules, as set out in OSFI's Capital Adequacy Requirements Guideline and
Leverage Requirements Guideline.
(2) Available TLAC, the TLAC ratio, and the TLAC leverage ratio
are calculated in accordance with OSFI's Total Loss Absorbing Capacity
Guideline.
Risk Management
Risk-taking is intrinsic to a financial institution's business. The Bank views
risk as an integral part of its development and the diversification of its
activities. It advocates a risk management approach that is consistent with
its business strategy. The Bank voluntarily exposes itself to certain risk
categories, particularly credit and market risk, in order to generate revenue.
It also assumes certain risks that are inherent to its activities-to which it
does not choose to expose itself-and that do not generate revenue, i.e.,
mainly operational risks.
Emerging risks - Increasing and uncertain trade tariffs and barriers
As a result of recent comprehensive changes to U.S. trade policy, tariffs and
retaliatory tariffs are being imposed by the U.S. administration and various
affected countries, including Canada, Mexico and China, which may affect the
Bank and its clients.The level of uncertainty related to such tariffs remains
elevated and persistent, as the U.S. administration recently imposed a
90‑day pause on most of the previously announced country-specific reciprocal
tariffs, reducing tariffs for most countries including China but excluding
Canada and Mexico. The potential enactment of recently proposed U.S. tax
legislation contributes to this climate of uncertainty. The heightened
economic uncertainty and unpredictability of the U.S. government's trade
policies continue to create volatility in the financial markets and weigh on
the economic and investment outlook, impacting current economic conditions,
including such issues as the inflation rate, foreign exchange rates,
recessionary risks, and the global supply chain. In addition, the U.S.
administration has stated its interest in renegotiating the U.S.-Mexico-Canada
Agreement (USMCA), which could result in higher tariffs. Aside from its impact
on the global economy, the tariff conflict should continue to have
repercussions on the Bank and its clients. The Bank is closely monitoring the
developments, as well as the impacts and potential consequences on its
financial position and that of its clients, in a macroeconomic environment
marked by elevated debt servicing costs, weakened consumer demand and higher
operating costs due in part to the reconfiguration of supply chains. Given
these circumstances, this conflict may impact many of the top and emerging
risks to which the Bank is exposed, including credit risk, market risk,
liquidity and funding risk, operational risk, strategic risk, and third-party
risk. The extent of the adverse effect on the operational and financial
situation of entities such as the Bank and its clients depends largely on the
nature and duration of uncertain and unpredictable events, such as the
duration or escalation of the tariffs, the evolution of retaliatory measures,
possible fiscal or monetary policy responses, and reactions to ongoing changes
by global financial markets.
Despite the exercise of stringent risk management and existing mitigation
measures, risk cannot be eliminated entirely, and residual risks may
occasionally cause losses. Certain risks are discussed hereafter. For
additional information, see the Risk Management section on pages 65 to 112 of
the 2024 Annual Report. Risk management information is also provided in Note
6 to the Consolidated Financial Statements, which covers loans.
Credit Risk
Credit risk is the risk of incurring a financial loss if an obligor does not
fully honour its contractual commitments to the Bank. Obligors may be
borrowers, issuers, guarantors or counterparties. General economic and market
conditions in Canada, the U.S. and other countries in which the Bank operates
are currently difficult to predict due in part to measures affecting trade
relations between Canada and its partners. The imposition of tariffs and the
measures taken in response, as well as the possible impacts on our customers,
could have an impact on a debtor's ability to repay. Credit risk is the most
significant risk facing the Bank in the normal course of its business.
Between March 2, 2022 and July 12, 2023, the Bank of Canada raised its policy
rate ten times; the rate has thus risen from 0.25% to 5%. This rapid increase
in rates, undertaken primarily to counter inflation in Canada, continues to
put pressure on the ability of borrowers, particularly those whose mortgages
came up for renewal in the last few months. Over the course of its last eight
announcements, from June 5, 2024 to April 16, 2025, the Bank of Canada lowered
its policy rate from 5% to 2.75%.
Regulatory Developments
The Bank closely monitors regulatory developments and is actively involved in
the various consultation processes. For additional information about the
regulatory context as at October 31, 2024, see page 81 of the Risk Management
section of the 2024 Annual Report. In addition, since November 1, 2024, there
have been no new regulatory developments to consider.
The amounts in the following tables represent the Bank's maximum exposure to
credit risk as at the financial reporting date without considering any
collateral held or any other credit enhancements. These amounts do not include
allowances for credit losses nor amounts pledged as collateral. The tables
also exclude equity securities.
Maximum Credit Risk Exposure Under the Basel Asset Categories((1))
(millions of Canadian dollars) As at April 30, 2025
Drawn((2)) Undrawn Repo-style Derivative Other Total Standardized Approach((5)) IRB
commitments transactions((3)) financial off-balance- Approach
instruments sheet items((4))
Retail
Residential mortgages 88,697 9,318 − − − 98,015 18 % 82 %
Qualifying revolving retail 4,292 12,906 − − − 17,198 − % 100 %
Other retail 22,552 2,858 − − 40 25,450 30 % 70 %
115,541 25,082 − − 40 140,663
Non-retail
Corporate 123,157 33,429 60,247 190 9,892 226,915 31 % 69 %
Sovereign 72,214 8,062 94,149 − 272 174,697 3 % 97 %
Financial institutions 10,756 1,109 151,458 4,492 1,877 169,692 24 % 76 %
206,127 42,600 305,854 4,682 12,041 571,304
Trading portfolio − − − 16,051 − 16,051 3 % 97 %
Securitization 3,054 − − − 6,511 9,565 100 % − %
Total - Gross credit risk 324,722 67,682 305,854 20,733 18,592 737,583 20 % 80 %
Standardized Approach((5)) 77,393 2,854 57,833 4,574 7,545 150,199
IRB Approach 247,329 64,828 248,021 16,159 11,047 587,384
Total - Gross credit risk 324,722 67,682 305,854 20,733 18,592 737,583 20 % 80 %
(millions of Canadian dollars) As at October 31, 2024
Drawn((2)) Undrawn Repo-style Derivative Other Total Standardized Approach((5)) IRB
commitments transactions((3)) financial off-balance- Approach
instruments sheet items((4))
Retail
Residential mortgages 80,861 8,905 − − − 89,766 13 % 87 %
Qualifying revolving retail 3,335 11,867 − − − 15,202 − % 100 %
Other retail 17,237 2,526 − − 37 19,800 13 % 87 %
101,433 23,298 − − 37 124,768
Non-retail
Corporate 96,023 31,921 42,395 234 8,813 179,386 21 % 79 %
Sovereign 65,758 5,982 79,859 − 283 151,882 3 % 97 %
Financial institutions 8,797 1,095 133,787 2,640 1,700 148,019 22 % 78 %
170,578 38,998 256,041 2,874 10,796 479,287
Trading portfolio − − − 17,507 − 17,507 3 % 97 %
Securitization 4,885 − − − 6,480 11,365 93 % 7 %
Total - Gross credit risk 276,896 62,296 256,041 20,381 17,313 632,927 16 % 84 %
Standardized Approach((5)) 39,868 1,209 47,241 2,870 7,015 98,203
IRB Approach 237,028 61,087 208,800 17,511 10,298 534,724
Total - Gross credit risk 276,896 62,296 256,041 20,381 17,313 632,927 16 % 84 %
(1) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
(2) Excludes equity securities and certain other assets such as
investments in deconsolidated subsidiaries and joint ventures, right-of-use
properties and assets, goodwill, deferred tax assets, and intangible assets.
(3) Securities purchased under reverse repurchase agreements and
sold under repurchase agreements as well as securities loaned and borrowed.
(4) Letters of guarantee, documentary letters of credit, and
securitized assets that represent the Bank's commitment to make payments in
the event that an obligor cannot meet its financial obligations to third
parties.
(5) Includes exposures to qualifying central counterparties
(QCCP).
To meet OSFI's mortgage loan disclosure requirements, additional information
has been provided in the documents Supplementary Financial Information -
Second Quarter 2025 and Supplementary Regulatory Capital and Pillar 3
Disclosure - Second Quarter 2025, which are available on the Bank's website at
nbc.ca.
Market Risk
Market risk is the risk of financial losses arising from movements in market
prices. The Bank is exposed to market risk through its participation in
trading, investment, and asset/liability management activities.
The following tables provide a breakdown of the Bank's Consolidated Balance
Sheet into financial assets and liabilities by those that carry market risk
and those that do not carry market risk, distinguishing between trading
positions whose main risk measures are Value-at-Risk (VaR) and non-trading
positions that use other risk measures.
Reconciliation of Market Risk With Consolidated Balance Sheet Items
(millions of Canadian dollars) As at April 30, 2025
Market risk measures
Balance Trading((1)) Non-trading((2)) Not subject to market risk Non-traded risk
sheet primary risk sensitivity
Assets
Cash and deposits with financial institutions 31,422 877 22,875 7,670 Interest rate((3))
Securities
At fair value through profit or loss 133,092 130,307 2,785 − Interest rate((3)) and equity
At fair value through other comprehensive income 20,101 − 20,101 − Interest rate((3)) and equity((4))
At amortized cost 15,450 − 15,450 − Interest rate((3))
Securities purchased under reverse repurchase
agreements and securities borrowed 20,836 − 20,836 − Interest rate((3)(5))
Loans, net of allowances 285,728 15,612 270,116 − Interest rate((3))
Derivative financial instruments 13,649 12,530 1,119 − Interest rate and exchange rate
Defined benefit asset 638 − 638 − Other
Other 15,278 469 − 14,809
536,194 159,795 353,920 22,479
Liabilities
Deposits 387,974 33,697 354,277 − Interest rate((3))
Obligations related to securities sold short 13,871 13,871 − −
Obligations related to securities sold under repurchase
agreements and securities loaned 40,984 − 40,984 − Interest rate((3)(5))
Derivative financial instruments 18,096 17,264 832 − Interest rate and exchange rate
Liabilities related to transferred receivables 29,403 11,627 17,776 − Interest rate((3))
Defined benefit liability 105 − 105 − Other
Other 10,034 − − 10,034 Interest rate((3))
Subordinated debt 2,822 − 2,822 − Interest rate((3))
503,289 76,459 416,796 10,034
(1) Trading positions whose risk measure is total VaR. For
additional information, see the table in the pages ahead and in the Market
Risk section of the 2024 Annual Report that shows the VaR distribution of the
trading portfolios by risk category and their diversification effect.
(2) Non-trading positions that use other risk measures.
(3) For additional information, see the table in the pages ahead
and in the Market Risk section of the 2024 Annual Report that shows the VaR
distribution of the trading portfolios by risk category and their
diversification effect, as well as the interest rate sensitivity table.
(4) The fair value of equity securities designated at fair value
through other comprehensive income is presented in Notes 3 and 5 to the
Consolidated Financial Statements.
(5) These instruments are recorded at amortized cost and are
subject to credit risk for capital management purposes. For trading-related
transactions with maturities of more than one day, interest rate risk is
included in the VaR measure.
(millions of Canadian dollars) As at October 31, 2024
Market risk measures
Balance Trading((1)) Non-trading((2)) Not subject to market risk Non-traded risk primary
sheet risk sensitivity
Assets
Cash and deposits with financial institutions 31,549 257 20,440 10,852 Interest rate((3))
Securities
At fair value through profit or loss 115,935 113,445 2,490 − Interest rate((3)) and equity((4))
At fair value through other comprehensive income 14,622 − 14,622 − Interest rate((3)) and equity((5))
At amortized cost 14,608 − 14,608 − Interest rate((3))
Securities purchased under reverse repurchase
agreements and securities borrowed 16,265 − 16,265 − Interest rate((3)(6))
Loans, net of allowances 243,032 14,572 228,460 − Interest rate((3))
Derivative financial instruments 12,309 11,686 623 − Interest rate((7)) and exchange rate((7))
Defined benefit asset 487 − 487 − Other((8))
Other 13,419 573 − 12,846
462,226 140,533 297,995 23,698
Liabilities
Deposits 333,545 30,429 303,116 − Interest rate((3))
Obligations related to securities sold short 10,873 10,873 − −
Obligations related to securities sold under repurchase
agreements and securities loaned 38,177 − 38,177 − Interest rate((3)(6))
Derivative financial instruments 15,760 15,240 520 − Interest rate((7)) and exchange rate((7))
Liabilities related to transferred receivables 28,377 10,564 17,813 − Interest rate((3))
Defined benefit liability 103 − 103 − Other((8))
Other 8,583 − 49 8,534 Interest rate((3))
Subordinated debt 1,258 − 1,258 − Interest rate((3))
436,676 67,106 361,036 8,534
(1) Trading positions whose risk measure is total VaR. For
additional information, see the table on the following page and in the Market
Risk section of the 2024 Annual Report that shows the VaR distribution of the
trading portfolios by risk category and their diversification effect.
(2) Non-trading positions that use other risk measures.
(3) For additional information, see the table in the pages ahead
and in the Market Risk section of the 2024 Annual Report that shows the VaR
distribution of the trading portfolios by risk category and their
diversification effect and the interest rate sensitivity table.
(4) For additional information, see Note 7 to the audited annual
consolidated financial statements for the year ended October 31, 2024.
(5) The fair value of equity securities designated at fair value
through other comprehensive income is presented in Notes 3 and 5 to the
Consolidated Financial Statements.
(6) These instruments are recorded at amortized cost and are
subject to credit risk for capital management purposes. For trading-related
transactions with maturities of more than one day, interest rate risk is
included in the VaR measure.
(7) For additional information, see Notes 18 and 19 to the audited
annual consolidated financial statements for the year ended October 31, 2024.
(8) For additional information, see Note 25 to the audited annual
consolidated financial statements for the year ended October 31, 2024.
Trading Activities
The table below shows the VaR distribution of trading portfolios by risk
category and their diversification effect.
VaR of Trading Portfolios((1)(2))
(millions of Canadian dollars) Quarter ended Six months ended
April 30, 2025 January 31, 2025 April 30, 2024 April 30, 2025 April 30, 2024
Low High Average Period end Average Period end Average Period end Average Average
Interest rate (5.7) (18.1) (12.4) (12.7) (12.8) (13.0) (10.2) (10.1) (12.6) (9.1)
Exchange rate (0.8) (3.6) (1.5) (1.7) (2.0) (0.9) (1.9) (1.5) (1.8) (2.2)
Equity (5.0) (8.9) (6.2) (5.6) (4.8) (6.5) (5.0) (4.5) (5.5) (5.6)
Commodity (1.0) (1.9) (1.3) (1.1) (1.6) (1.2) (1.4) (1.5) (1.4) (1.6)
Diversification effect((3)) n.m. n.m. 8.7 9.2 9.1 8.0 7.4 7.4 8.9 7.9
Total trading VaR (7.5) (16.6) (12.7) (11.9) (12.1) (13.6) (11.1) (10.2) (12.4) (10.6)
n.m. Computation of a diversification effect for the high and low is not
meaningful, as highs and lows may occur on different days and be attributable
to different types of risk.
(1) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
(2) Amounts are presented on a pre-tax basis and represent one-day
VaR using a 99% confidence level.
(3) The total trading VaR is less than the sum of the individual
risk factor VaR results due to the diversification effect.
The average total VaR of the trading portfolios remained stable from the first
quarter of 2025 to the second quarter of 2025.
Daily Trading and Underwriting Revenues
The following chart shows daily trading and underwriting revenues and VaR.
During the quarter ended April 30, 2025, daily trading and underwriting
revenues were positive on 98% of the days. In addition, one day was marked by
net daily trading and underwriting losses in excess of $1 million. None of
these losses exceeded VaR.
Quarter Ended April 30, 2025
(millions of Canadian dollars)
Interest Rate Sensitivity - Non-Trading Activities (Before Tax)
The following table presents the potential before-tax impact of an immediate
and sustained 100-basis-point increase or of an immediate and sustained
100‑basis-point decrease in interest rates on the economic value of equity
and on the net interest income of the Bank's non-trading portfolios for the
next 12 months, assuming no further hedging is undertaken.
(millions of Canadian dollars) As at April 30, 2025 As at October 31, 2024
Canadian dollar Other currencies Total Canadian dollar Other currencies Total
Impact on equity
100-basis-point increase in the interest rate (487) (76) (563) (378) (57) (435)
100-basis-point decrease in the interest rate 482 75 557 352 48 400
Impact on net interest income
100-basis-point increase in the interest rate 127 (16) 111 121 (22) 99
100-basis-point decrease in the interest rate (143) 18 (125) (161) 25 (136)
Liquidity and Funding Risk
Liquidity and funding risk is the risk that the Bank will be unable to honour
daily cash and financial obligations without resorting to costly and untimely
measures. Liquidity and funding risk arises when sources of funds become
insufficient to meet scheduled payments under the Bank's commitments.
Liquidity risk refers to the possibility that an institution may not be able
to meet its financial obligations as they fall due, due to a mismatch between
cash inflows and outflows, without incurring unacceptable losses.
Funding risk is defined as the risk to the Bank's ongoing ability to raise
sufficient funds to finance actual or proposed business activities on an
unsecured or secured basis at an acceptable price. The funding management
priority is to achieve an optimal balance between deposits, securitization,
secured funding, and unsecured funding. This brings optimal stability to the
funding and reduces vulnerability to unpredictable events.
Regulatory Developments
The Bank continues to closely monitor regulatory developments and participates
actively in various consultative processes. For additional information about
the regulatory context as at October 31, 2024, refer to pages 95 and 96 of
the Risk Management section in the 2024 Annual Report. Furthermore, since
November 1, 2024, the new regulatory development below is to be considered.
On November 21, 2024, OSFI published an amended version of the Liability
Adequacy Requirement (LAR) Guideline. The LAR Guideline incorporates two sets
of revisions related to intraday liquidity and the treatment of bankers'
acceptances. The revisions relating to intraday liquidity affect Chapters 1
and 7 of the LAR Guideline, while those relating to the processing of bankers'
acceptances affect Chapters 3 and 4. No changes were made to Chapters 2, 5 and
6. Implementation of the new intraday liquidity rules is scheduled for
November 2025, and is limited to the direct clearers of Lynx, Canada's
high-value payment system.
Liquidity Management
Liquid Assets
To protect depositors and creditors from unexpected crisis situations, the
Bank holds a portfolio of unencumbered liquid assets that can be readily
liquidated to meet financial obligations. The majority of the unencumbered
liquid assets are held in Canadian or U.S. dollars. Moreover, all assets that
can be quickly monetized are considered liquid assets. The Bank's liquidity
reserves do not factor in the availability of the emergency liquidity
facilities of central banks. The following tables provide information on the
Bank's encumbered and unencumbered assets.
Liquid Asset Portfolio((1))
(millions of Canadian dollars) As at April 30, As at October 31,
2025 2024
Bank-owned Liquid assets Total Encumbered Unencumbered Unencumbered
liquid assets((2))
liquid assets
received((3)) liquid assets liquid assets((4))
liquid assets
Cash and deposits with financial institutions 31,422 − 31,422 14,712 16,710 19,819
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments 45,111 67,533 112,644 65,045 47,599 41,541
Issued or guaranteed by Canadian provincial and
municipal governments 16,901 12,359 29,260 18,023 11,237 10,669
Other debt securities 6,114 6,183 12,297 4,445 7,852 7,305
Equity securities 100,517 53,402 153,919 98,650 55,269 40,972
Loans
Securities backed by insured residential mortgages 18,785 − 18,785 9,519 9,266 8,471
As at April 30, 2025 218,850 139,477 358,327 210,394 147,933
As at October 31, 2024 192,169 117,906 310,075 181,298 128,777
(millions of Canadian dollars) As at April 30, 2025 As at October 31, 2024
Unencumbered liquid assets by entity
National Bank (parent) 103,283 80,768
Domestic subsidiaries 10,615 12,023
Foreign subsidiaries and branches 34,035 35,986
147,933 128,777
(millions of Canadian dollars) As at April 30, 2025 As at October 31, 2024
Unencumbered liquid assets by currency
Canadian dollar 76,698 66,970
U.S. dollar 64,254 53,960
Other currencies 6,981 7,847
147,933 128,777
Liquid Asset Portfolio((1)) - Average((5))
(millions of Canadian dollars) Quarter ended
April 30, 2025 October 31, 2024
Bank-owned Liquid assets Total Encumbered Unencumbered Unencumbered
liquid
liquid assets((2)) received((3)) liquid assets liquid assets((4)) assets
liquid assets
Cash and deposits with financial institutions 31,414 − 31,414 14,390 17,024 20,762
Securities
Issued or guaranteed by the Canadian government, U.S.
Treasury, other U.S. agencies and other foreign governments 44,110 64,366 108,476 61,463 47,013 40,832
Issued or guaranteed by Canadian provincial and
municipal governments 17,377 12,060 29,437 19,180 10,257 9,063
Other debt securities 7,429 5,868 13,297 4,363 8,934 8,244
Equity securities 110,819 56,344 167,163 102,864 64,299 45,621
Loans
Securities backed by insured residential mortgages 18,398 − 18,398 9,218 9,180 8,486
229,547 138,638 368,185 211,478 156,707 133,008
(1) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
(2) Bank-owned liquid assets include assets for which there are no
legal or geographic restrictions.
(3) Securities received as collateral with respect to securities
financing and derivative transactions and securities purchased under reverse
repurchase agreements and securities borrowed.
(4) In the normal course of its funding activities, the Bank
pledges assets as collateral in accordance with standard terms. Encumbered
liquid assets include assets used to cover short sales, obligations related to
securities sold under repurchase agreements and securities loaned, guarantees
related to security-backed loans and borrowings, collateral related to
derivative financial instrument transactions, asset-backed securities, and
liquid assets legally restricted from transfers.
(5) The average is based on the sum of the end-of-period balances
of the three months of the quarter divided by three.
Summary of Encumbered and Unencumbered Assets((1))
(millions of Canadian dollars) As at April 30, 2025
Encumbered Unencumbered Total Encumbered
assets((2)) assets assets as a %
of total assets
Pledged as Other((3)) Available as Other((4))
collateral collateral
Cash and deposits with financial institutions 992 13,720 16,710 − 31,422 2.7
Securities 53,651 − 114,992 − 168,643 10.0
Securities purchased under reverse repurchase
agreements and securities borrowed − 13,871 6,965 − 20,836 2.6
Loans, net of allowances 39,944 − 9,266 236,518 285,728 7.5
Derivative financial instruments − − − 13,649 13,649 −
Premises and equipment − − − 2,127 2,127 −
Goodwill − − − 3,081 3,081 −
Intangible assets − − − 1,870 1,870 −
Other assets − − − 8,838 8,838 −
94,587 27,591 147,933 266,083 536,194 22.8
(millions of Canadian dollars) As at October 31, 2024
Encumbered Unencumbered Total Encumbered
assets((2)) assets assets as a %
of total assets
Pledged as Other((3)) Available as Other((4))
collateral collateral
Cash and deposits with financial institutions 697 11,033 19,819 − 31,549 2.5
Securities 50,071 − 95,094 − 145,165 10.8
Securities purchased under reverse repurchase
agreements and securities borrowed − 10,872 5,393 − 16,265 2.4
Loans, net of allowances 40,296 − 8,471 194,265 243,032 8.7
Derivative financial instruments − − − 12,309 12,309 −
Premises and equipment − − − 1,868 1,868 −
Goodwill − − − 1,522 1,522 −
Intangible assets − − − 1,233 1,233 −
Other assets − − − 9,283 9,283 −
91,064 21,905 128,777 220,480 462,226 24.4
(1) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
(2) In the normal course of its funding activities, the Bank
pledges assets as collateral in accordance with standard terms. Encumbered
assets include assets used to cover short sales, obligations related to
securities sold under repurchase agreements and securities loaned, guarantees
related to security-backed loans and borrowings, collateral related to
derivative financial instrument transactions, asset-backed securities,
residential mortgage loans securitized and transferred under the Canada
Mortgage Bond program, assets held in consolidated trusts supporting the
Bank's funding activities, and mortgage loans transferred under the covered
bond program.
(3) Other encumbered assets include assets for which there are
restrictions and that cannot therefore be used for collateral or funding
purposes as well as assets used to cover short sales.
(4) Other unencumbered assets are assets that cannot be used for
collateral or funding purposes in their current form. This category includes
assets that are potentially eligible as funding program collateral (e.g.,
mortgages insured by the Canada Mortgage and Housing Corporation that can be
securitized into mortgage-backed securities under the National Housing Act
(Canada)).
Liquidity Coverage Ratio
The liquidity coverage ratio (LCR) was introduced primarily to ensure that
banks could withstand periods of severe short-term stress. LCR is calculated
by dividing the total amount of high-quality liquid assets (HQLA) by the total
amount of net cash outflows. OSFI has been requiring Canadian banks to
maintain a minimum LCR of 100%. An LCR above 100% ensures that banks are
holding sufficient high-quality liquid assets to cover net cash outflows given
a severe, 30‑day liquidity crisis. The assumptions underlying the LCR
scenario are established by the BCBS and OSFI's Liquidity Adequacy
Requirements Guideline.
The table on the following page provides average LCR data calculated using the
daily figures in the quarter. For the quarter ended April 30, 2025, the
Bank's average LCR was 166%, well above the 100% regulatory requirement and
demonstrating the Bank's solid short-term liquidity position.
LCR Disclosure Requirements((1)(2))
(millions of Canadian dollars) Quarter ended
April 30, 2025 January 31, 2025
Total unweighted Total weighted Total weighted
value((3)) (average) value((4)) (average) value((4)) (average)
High-quality liquid assets (HQLA)
Total HQLA n.a. 98,206 89,902
Cash outflows
Retail deposits and deposits from small business customers, of which: 81,896 7,642 6,204
Stable deposits 30,447 914 856
Less stable deposits 51,449 6,728 5,348
Unsecured wholesale funding, of which: 128,420 70,748 66,110
Operational deposits (all counterparties) and deposits in networks of 37,508 9,156 9,057
cooperative banks
Non-operational deposits (all counterparties) 84,921 55,565 51,063
Unsecured debt 5,991 6,027 5,990
Secured wholesale funding n.a. 31,411 28,831
Additional requirements, of which: 82,269 21,718 21,391
Outflows related to derivative exposures and other collateral requirements 26,938 11,966 12,029
Outflows related to loss of funding on secured debt securities 2,303 2,269 1,977
Backstop liquidity and credit enhancement facilities and commitments to extend 53,028 7,483 7,385
credit
Other contractual commitments to extend credit 4,265 2,708 655
Other contingent commitments to extend credit 190,401 2,673 2,158
Total cash outflows n.a. 136,900 125,349
Cash inflows
Secured lending (e.g., reverse repos) 157,586 30,566 28,898
Inflows from fully performing exposures 17,121 12,145 9,630
Other cash inflows 32,647 32,259 27,537
Total cash inflows 207,354 74,970 66,065
Total adjusted Total adjusted
value((5)) value((5))
Total HQLA 98,206 89,902
Total net cash outflows 61,930 59,284
Liquidity coverage ratio (%)((6)) 166 % 154 %
n.a. Not applicable
(1) See the Financial Reporting Method section on pages 6 to 12 for
additional information on capital management measures.
(2) OSFI prescribed a table format in order to standardize
disclosure throughout the banking industry.
(3) Unweighted values are calculated as outstanding balances
maturing or callable within 30 days (for cash inflows and outflows).
(4) Weighted values are calculated after the application of
respective haircuts (for HQLA) or inflow and outflow rates.
(5) Total adjusted values are calculated after the application of
both haircuts and inflow and outflow rates and any applicable caps.
(6) The data in this table is calculated using averages of the
daily figures in the quarter.
As at April 30, 2025, Level 1 liquid assets represented 84% of the Bank's
HQLA, which includes cash, central bank deposits, and bonds issued or
guaranteed by the Canadian government and Canadian provincial governments.
Cash outflows arise from the application of OSFI-prescribed assumptions on
deposits, debt, secured funding, commitments and additional collateral
requirements. The cash outflows are partly offset by cash inflows, which come
mainly from secured loans and performing loans. The Bank expects some
quarter-over-quarter variation between reported LCRs without such variation
being necessarily indicative of a trend. The variation between the quarter
ended April 30, 2025 and the preceding quarter was a result of normal
business operations. The Bank's liquid asset buffer is well in excess of its
total net cash outflows.
The LCR assumptions differ from the assumptions used for the liquidity
disclosures presented in the tables on the previous pages or those used for
internal liquidity management rules. While the liquidity disclosure framework
is prescribed by the EDTF, the Bank's internal liquidity metrics use
assumptions that are calibrated according to its business model and
experience.
Net Stable Funding Ratio
The BCBS has developed the net stable funding ratio (NSFR) to promote a more
resilient banking sector. The NSFR requires institutions to maintain a stable
funding profile in relation to the composition of their assets and
off-balance-sheet activities. A viable funding structure is intended to reduce
the likelihood that disruptions to an institution's regular sources of funding
would erode its liquidity position in a way that would increase the risk of
its failure and potentially lead to broader systemic stress. The NSFR is
calculated by dividing available stable funding by required stable funding.
OSFI has been requiring Canadian banks to maintain a minimum NSFR of 100%.
The following table provides the available stable funding and required stable
funding in accordance with OSFI's Liquidity Adequacy Requirements Guideline.
As at April 30, 2025, the Bank's NSFR was 127%, well above the 100%
regulatory requirement and demonstrating the Bank's solid long-term liquidity
position.
NSFR Disclosure Requirements((1)(2))
(millions of Canadian dollars) As at April 30, As at January 31,
2025 2025
Unweighted value by residual maturity Weighted
value((3))
No 6 months Over Over Weighted
maturity or less 6 months 1 year value((3))
to 1 year
Available Stable Funding (ASF) Items
Capital: 33,160 − − 2,777 35,937 28,389
Regulatory capital 33,160 − − 2,777 35,937 28,389
Other capital instruments − − − − − −
Retail deposits and deposits from small business customers: 75,420 19,095 9,696 34,571 128,836 105,964
Stable deposits 28,935 6,575 4,005 9,527 47,066 42,381
Less stable deposits 46,485 12,520 5,691 25,044 81,770 63,583
Wholesale funding: 83,968 96,807 36,131 69,202 143,835 131,403
Operational deposits 37,141 − − − 18,570 18,294
Other wholesale funding 46,827 96,807 36,131 69,202 125,265 113,109
Liabilities with matching interdependent assets((4)) − 2,479 2,716 24,209 − −
Other liabilities((5)): 17,972 10,440 1,239 789
NSFR derivative liabilities((5)) n.a. 86 n.a. n.a.
All other liabilities and equity not included in the above categories 17,972 4,781 581 4,992 1,239 789
Total ASF n.a. n.a. n.a. n.a. 309,847 266,545
Required Stable Funding (RSF) Items
Total NSFR high-quality liquid assets (HQLA) n.a. n.a. n.a. n.a. 7,787 8,064
Deposits held at other financial institutions for operational purposes − − − − − −
Performing loans and securities: 66,784 118,223 38,489 121,390 200,025 174,271
Performing loans to financial institutions secured by Level 1 HQLA 255 6,590 − − 342 136
Performing loans to financial institutions secured by non-Level-1 6,739 63,936 2,219 7,202 17,104 16,526
HQLA and unsecured performing loans to financial institutions
Performing loans to non-financial corporate clients, loans to retail 33,044 34,736 23,085 51,057 103,474 84,068
and small business customers, and loans to sovereigns, central
banks and PSEs, of which:
With a risk weight of less than or equal to 35% under the Basel II 741 3,079 466 454 2,474 2,182
Standardized Approach for credit risk
Performing residential mortgages, of which: 9,056 11,961 12,461 61,562 61,858 56,697
With a risk weight of less than or equal to 35% under the Basel II 9,056 11,961 12,461 61,562 61,858 56,697
Standardized Approach for credit risk
Securities that are not in default and do not qualify as HQLA, including 17,690 1,000 724 1,569 17,247 16,844
exchange-traded equities
Assets with matching interdependent liabilities((4)) − 2,479 2,716 24,209 − −
Other assets((5)): 11,759 32,374 31,661 28,723
Physical traded commodities, including gold 992 n.a. n.a. n.a. 992 712
Assets posted as initial margin for derivative contracts and n.a. 12,761 10,847 10,503
contributions to default funds of CCPs((5))
NSFR derivative assets((5)) n.a. 3,351 3,266 3,851
NSFR derivative liabilities before deduction of the variation n.a. 10,019 501 550
margin posted((5))
All other assets not included in the above categories 10,767 3,195 343 2,705 16,055 13,107
Off-balance-sheet items((5)) n.a. 140,626 5,374 4,954
Total RSF n.a. n.a. n.a. n.a. 244,847 216,012
Net Stable Funding Ratio (%) n.a. n.a. n.a. n.a. 127 % 123 %
n.a. Not applicable
(1) See the Financial Reporting Method section on pages 6 to 12
for additional information on capital management measures.
(2) OSFI prescribed a table format in order to standardize
disclosure throughout the banking industry.
(3) Weighted values are calculated after application of the
weightings set out in OSFI's Liquidity Adequacy Requirements Guideline.
(4) As per OSFI's specifications, liabilities arising from
transactions involving the Canada Mortgage Bond program and their
corresponding encumbered mortgages are given ASF and RSF weights of 0%,
respectively.
(5) As per OSFI's specifications, there is no need to
differentiate by maturities.
The NSFR represents the amount of ASF relative to the amount of RSF. ASF is
defined as the portion of capital and liabilities expected to be reliable over
the time horizon considered by the NSFR, which extends to one year. The amount
of RSF of a specific institution is a function of the liquidity
characteristics and residual maturities of the various assets held by that
institution as well as those of its off-balance-sheet exposures. The ASF and
RSF amounts are calibrated to reflect the degree of stability of liabilities
and liquidity of assets. The Bank expects some quarter-over-quarter variation
between reported NSFRs without such variation being necessarily indicative of
a long-term trend.
The NSFR assumptions differ from the assumptions used for the liquidity
disclosures provided in the tables on the preceding pages or those used for
internal liquidity management rules. While the liquidity disclosure framework
is prescribed by the EDTF, the Bank's internal liquidity metrics use
assumptions that are calibrated according to its business model and
experience.
Funding
The Bank continuously monitors and analyzes market trends as well as
possibilities for accessing less expensive and more flexible funding,
considering both the risks and opportunities observed. The deposit strategy
remains a priority for the Bank, which continues to prefer deposits to
institutional funding.
The table below presents the residual contractual maturities of the Bank's
wholesale funding. The information has been presented in accordance with the
categories recommended by the EDTF working group for comparison purposes with
other banks.
Residual Contractual Maturities of Wholesale Funding
(millions of Canadian dollars) As at April 30, 2025
1 month or less Over 1 Over 3 Over 6 Subtotal Over 1 Over 2 Total
month to months to months to 1 year year to years
3 months 6 months 12 months or less 2 years
Deposits from banks((1)) 1,753 138 385 − 2,276 − − 2,276
Certificates of deposit and commercial paper((2)) 4,586 3,280 6,739 20,870 35,475 − − 35,475
Senior unsecured medium-term notes((3)) 275 2,745 2,637 10,395 16,052 6,118 13,502 35,672
Senior unsecured structured notes − − − 248 248 1,357 3,366 4,971
Covered bonds and asset-backed securities
Mortgage securitization − 2,107 176 1,493 3,776 4,145 21,482 29,403
Covered bonds − − − − − 5,775 3,978 9,753
Subordinated liabilities((4)) − − − − − − 2,822 2,822
6,614 8,270 9,937 33,006 57,827 17,395 45,150 120,372
Secured funding − 2,107 176 1,493 3,776 9,920 25,460 39,156
Unsecured funding 6,614 6,163 9,761 31,513 54,051 7,475 19,690 81,216
6,614 8,270 9,937 33,006 57,827 17,395 45,150 120,372
As at October 31, 2024 3,200 11,456 15,080 16,669 46,405 12,239 44,588 103,232
(1) Deposits from banks include all non-negotiable term deposits
from banks.
(2) Includes bearer deposit notes.
(3) Includes debts subject to bank recapitalization (bail-in)
conversion regulations.
(4) Subordinated debt is presented in this table, but the Bank
does not consider it as part of its wholesale funding.
As part of a comprehensive liquidity management framework, the Bank regularly
reviews its contracts that stipulate that additional collateral could be
required in the event of a downgrade of the Bank's credit rating. The Bank's
liquidity position management approach already incorporates additional
collateral requirements in the event of a one-notch to three-notch downgrade
in credit rating. The table below presents the additional collateral
requirements in the event of a one-, two-, or three-notch credit rating
downgrade.
(millions of Canadian dollars) As at April 30, 2025
One-notch Two-notch Three-notch
downgrade downgrade downgrade
Derivatives((1)) 37 75 140
(1) Contractual requirements related to agreements known as
initial margins and variation margins.
Residual Contractual Maturities of Balance Sheet Items and Off-Balance-Sheet
Commitments
The following tables present balance sheet items and off-balance-sheet
commitments by residual contractual maturity as at April 30, 2025 with
comparative figures as at October 31, 2024. The information gathered from
this maturity analysis is a component of liquidity and funding management.
However, this maturity profile does not represent how the Bank manages its
interest rate risk or its liquidity risk and funding needs. The Bank considers
factors other than contractual maturity when assessing liquid assets or
determining expected future cash flows.
In the normal course of business, the Bank enters into various
off-balance-sheet commitments. The credit instruments used to meet the
financing needs of its clients represent the maximum amount of additional
credit the Bank could be obligated to extend if the commitments were fully
drawn.
The Bank also has future minimum commitments under leases for premises as well
as under other contracts, mainly commitments to purchase loans and contracts
for outsourced information technology services. Most of the lease commitments
are related to operating leases.
(millions of Canadian dollars) As at April 30, 2025((1))
1 Over 1 Over 3 Over 6 Over 9 Over 1 Over 2 Over 5 years No Total
month
month to months to months to months to year to years to specified
3 months 6 months 9 months 12 months 2 years 5 years maturity
or less
Assets
Cash and deposits
with financial institutions 17,498 1,129 1,125 875 678 − − − 10,117 31,422
Securities
At fair value through
profit or loss 135 1,286 847 386 1,037 5,503 10,902 12,891 100,105 133,092
At fair value through
other comprehensive income 115 92 131 451 157 2,131 7,261 9,351 412 20,101
At amortized cost 15 676 418 955 146 2,753 7,174 3,313 − 15,450
265 2,054 1,396 1,792 1,340 10,387 25,337 25,555 100,517 168,643
Securities purchased under
reverse repurchase
agreements and
securities borrowed 11,932 1,772 2,675 − − 345 − − 4,112 20,836
Loans((2))
Residential mortgage 2,785 3,753 6,051 5,917 6,246 26,399 46,065 10,708 583 108,507
Personal 1,096 1,177 1,872 1,804 2,296 7,210 12,094 6,325 13,659 47,533
Credit card 2,835 2,835
Business and government 13,844 7,610 7,448 7,445 5,881 15,036 26,608 13,863 31,056 128,791
Allowances for credit losses (1,938) (1,938)
17,725 12,540 15,371 15,166 14,423 48,645 84,767 30,896 46,195 285,728
Other
Derivative financial instruments 2,106 2,040 1,236 1,268 844 1,649 2,026 2,480 − 13,649
Premises and equipment 2,127 2,127
Goodwill 3,081 3,081
Intangible assets 1,870 1,870
Other assets((2)) 1,554 1,416 226 71 272 1,012 194 289 3,804 8,838
3,660 3,456 1,462 1,339 1,116 2,661 2,220 2,769 10,882 29,565
51,080 20,951 22,029 19,172 17,557 62,038 112,324 59,220 171,823 536,194
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
balances as at April 30, 2025. For additional information on the impact of the
CWB acquisition, see the Acquisition section.
(2) Amounts collectible on demand are considered to have no
specified maturity.
(millions of Canadian dollars) As at April 30, 2025((1))
1 Over 1 Over 3 Over 6 Over 9 Over 1 Over 2 Over No Total
month
5
or month to months to months to months to year to years to specified
less
3 months 6 months 9 months 12 months 2 years 5 years maturity
years
Liabilities and equity
Deposits((2)(3))
Personal 3,199 5,095 6,725 5,702 4,065 10,663 17,062 10,084 59,413 122,008
Business and government 43,199 11,067 13,373 21,708 13,200 14,725 36,693 6,209 97,915 258,089
Deposit-taking institutions 2,768 1,390 580 503 161 − 9 3 2,463 7,877
49,166 17,552 20,678 27,913 17,426 25,388 53,764 16,296 159,791 387,974
Other
Obligations related
to securities sold short((4)) 41 838 1,212 242 317 588 2,857 6,055 1,721 13,871
Obligations related to
securities sold under
repurchase agreements and
securities loaned 22,942 2,942 1,037 − 3,446 1,127 − − 9,490 40,984
Derivative financial
instruments 2,834 2,376 1,261 1,513 2,068 1,927 2,071 4,046 − 18,096
Liabilities related to transferred
receivables((5)) − 2,107 176 1,285 208 4,145 9,470 12,012 − 29,403
Lease liabilities((6)) 1 7 18 21 22 83 198 270 − 620
Other liabilities - Other items((2)(6)) 2,115 457 274 152 386 112 109 176 5,738 9,519
27,933 8,727 3,978 3,213 6,447 7,982 14,705 22,559 16,949 112,493
Subordinated debt − − − − − − − 2,822 − 2,822
Equity 32,905 32,905
77,099 26,279 24,656 31,126 23,873 33,370 68,469 41,677 209,645 536,194
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit 91 976 1,525 4,376 1,803 1,637 239 20 − 10,667
Credit card receivables((7)) 10,986 10,986
Backstop liquidity and credit
enhancement facilities((8)) 15 − − 15 − 5,552 − − 5,515 11,097
Commitments to extend credit((9)) 2,983 14,567 9,639 7,431 6,505 6,611 8,276 648 56,064 112,724
Obligations related to:
Lease commitments((10)) 1 1 2 2 2 6 7 17 − 38
Other contracts 4 8 12 12 12 49 241 6 156 500
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
balances as at April 30, 2025. For additional information on the impact of the
CWB acquisition, see the Acquisition section.
(2) Amounts payable upon demand or notice are considered to have
no specified maturity.
(3) The Deposits item is presented in greater detail than it is on
the Consolidated Balance Sheet.
(4) Amounts are disclosed according to the remaining contractual
maturity of the underlying security.
(5) These amounts mainly include liabilities related to the
securitization of mortgage loans.
(6) The Other liabilities item is presented in greater detail than
it is on the Consolidated Balance Sheet.
(7) These amounts are unconditionally revocable at the Bank's
discretion at any time.
(8) In the event of payment on one of the backstop liquidity
facilities, the Bank will receive as collateral government bonds in an amount
up to $5.6 billion.
(9) These amounts include $58.5 billion that is unconditionally
revocable at the Bank's discretion at any time.
(10) These amounts include leases for which the underlying asset is of
low value and leases other than for real estate of less than one year.
(millions of Canadian dollars) As at October 31, 2024
1 Over 1 Over 3 Over 6 Over 9 Over 1 Over 2 Over 5 years No Total
month
or less month to months to months to months to year to years to
3 months 3 months 6 months 9 months 12 months 2 years 5 years
specified
maturit
y
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 Over 1 Over 3 Over 6 Over 9 Over 1 Over 2 Over No Total
month
5
or less month to months to months to months to year to years to years
3 months 6 months 9 months 12 months 2 years 5 years
specified
maturi
ty
Liabilities and equity
Deposits((1)(2))
Personal 4,022 3,808 4,840 5,342 4,810 6,856 13,857 7,170 44,476 95,181
Business and government 34,782 14,521 18,716 10,445 6,927 9,649 37,905 6,273 93,512 232,730
Deposit-taking institutions 803 101 364 1,188 401 11 2 26 2,738 5,634
39,607 18,430 23,920 16,975 12,138 16,516 51,764 13,469 140,726 333,545
Other
Obligations related
to securities sold short((3)) 124 260 396 113 64 1,141 2,323 4,354 2,098 10,873
Obligations related to
securities sold under
repurchase agreements and
securities loaned 19,554 2,510 3,915 3,481 − 1,073 − − 7,644 38,177
Derivative financial
instruments 1,875 3,134 2,183 509 372 1,844 1,886 3,957 − 15,760
Liabilities related to transferred
receivables((4)) − 1,897 1,216 1,543 197 4,169 8,872 10,483 − 28,377
Securitization - Credit card((5)) 49 − − − − − − − − 49
Lease liabilities((5)) 6 13 19 19 18 72 176 149 − 472
Other liabilities - Other items((1)(5)) 1,674 199 238 10 51 65 79 170 5,679 8,165
23,282 8,013 7,967 5,675 702 8,364 13,336 19,113 15,421 101,873
Subordinated debt − − − − − − − 1,258 − 1,258
Equity 25,550 25,550
62,889 26,443 31,887 22,650 12,840 24,880 65,100 33,840 181,697 462,226
Off-balance-sheet commitments
Letters of guarantee and
documentary letters of credit 80 1,861 1,914 1,420 1,456 2,506 203 20 − 9,460
Credit card receivables((6)) 10,515 10,515
Backstop liquidity and credit
enhancement facilities((7)) − 15 5,552 15 − − − − 5,483 11,065
Commitments to extend credit((8)) 3,243 12,896 9,811 8,121 4,600 5,248 3,635 114 52,612 100,280
Obligations related to:
Lease commitments((9)) 1 1 2 1 1 5 4 2 − 17
Other contracts((10)) 5 10 14 12 12 48 244 9 161 515
(1) Amounts payable upon demand or notice are considered to have
no specified maturity.
(2) The Deposits item is presented in greater detail than it is on
the Consolidated Balance Sheet.
(3) Amounts are disclosed according to the remaining contractual
maturity of the underlying security.
(4) These amounts mainly include liabilities related to the
securitization of mortgage loans.
(5) The Other liabilities item is presented in greater detail than
it is on the Consolidated Balance Sheet.
(6) These amounts are unconditionally revocable at the Bank's
discretion at any time.
(7) In the event of payment on one of the backstop liquidity
facilities, the Bank will receive as collateral government bonds in an amount
up to $5.6 billion.
(8) These amounts include $48.6 billion that is unconditionally
revocable at the Bank's discretion at any time.
(9) These amounts include leases for which the underlying asset is
of low value and leases other than for real estate of less than one year.
(10) These amounts include $5 million in contractual commitments
related to the head office building.
Environmental and Social Risk
Environmental and social risk is the possibility that environmental and social
matters would result in a financial loss for the Bank or affect its business
activities. For additional information on the ways the Bank addresses and
mitigates this risk, see the Environmental and Social Risk section on pages
110 to 112 of the Bank's 2024 Annual Report.
Regulatory Developments
The Bank continues to closely monitor regulatory developments and participates
actively in various consultative processes. Since November 1, 2024, the new
regulatory development below is to be considered.
On December 18, 2024, the Canadian Sustainability Standards Board (CSSB)
published its first Canadian Sustainability Disclosure Standards (CSDS).
CSDS 1 - General Requirements for Disclosure of Sustainability-related
Financial Information, and CSDS 2 - Climate-related Disclosures, which are
aligned with IFRS S1 - General Requirements for Disclosure of
Sustainability-related financial Information and IFRS S2 - Climate-related
Disclosures, retain the proposals included in the exposure drafts published on
March 13, 2024, and include additional transition relief measures for certain
disclosure requirements. CSDS will be applicable to D-SIBs at the end of
fiscal 2026, and transitional relief measures will postpone certain disclosure
requirements until the end of fiscal 2029. Disclosure under CSDS will be
voluntary until mandated by the CSA. On April 23, 2025, the CSA announced that
it was pausing its work on projects related to mandatory climate-related
disclosure and amendments to existing diversity disclosure requirements. The
CSA will monitor regulatory developments and revisit these two projects in the
coming years.
On March 7, 2025, OSFI released an update to Guideline B-15, Climate Risk
Management. Key changes include the deferral of the Scope 3 greenhouse gas
(GHG) emissions disclosure requirement and clarification of expectations
regarding asset management activities.
Risk Disclosures
One of the purposes of the 2024 Annual Report, the Report to Shareholders -
Second Quarter 2025, and the related supplementary information documents is to
provide transparent, high-quality risk disclosures in accordance with the
recommendations made by the Financial Stability Board's EDTF group. The
following table lists the references where users can find information that
responds to the EDTF's 32 recommendations.
Pages
2024 Report to Supplementary
Annual Report Shareholders((1)) Regulatory Capital
and Pillar 3 Disclosure((1))
General
1 Location of risk disclosures 12 47
Management's Discussion and Analysis 55 to 112, 125 and 127 to 129 25 to 46
Consolidated Financial Statements Notes 1, 8, 18, 25 and 31 Notes 6 and 13
Supplementary Financial Information 23 to 33((2))
Supplementary Regulatory Capital and Pillar 3 Disclosure 5 to 62
2 Risk terminology and risk measures 65 to 112
3 Top and emerging risks 24 and 70 to 77 5 and 31 to 46
4 New key regulatory ratios 56 to 59, 95, 96 and 99 to 102 25, 26, 36 and 38 to 41
Risk governance and risk management
5 Risk management organization, processes and key functions 65 to 89, 95 to 97 and 102
6 Risk management culture 65 and 66
7 Key risks by business segment, risk management 64 to 66 and 70
and risk appetite
8 Stress testing 55, 66, 83, 93, 94 and 97
Capital adequacy and risk-weighted assets (RWA)
9 Minimum Pillar 1 capital requirements 56 to 59 25 and 26
10 Reconciliation of the accounting balance sheet to
the regulatory balance sheet 11 to 17, 20 and 21
11 Movements in regulatory capital 62 28
12 Capital planning 55 to 64
13 RWA by business segment and by risk type 64 7
14 Capital requirements by risk and the RWA calculation method 78 to 82 7
15 Banking book credit risk 7
16 Movements in RWA by risk type 63 29 7
17 Assessment of credit risk model performance 69, 79 to 82 and 88 41
Liquidity
18 Liquidity management and components of the liquidity buffer 95 to 102 36 to 41
Funding
19 Summary of encumbered and unencumbered assets 98 and 99 38
20 Residual contractual maturities of balance sheet items and
off-balance-sheet commitments 230 to 234 42 to 45
21 Funding strategy and funding sources 102 to 104 41
Market risk
22 Linkage of market risk measures to balance sheet 90 and 91 33 and 34
23 Market risk factors 88 to 94, 218 and 219 33 to 36
24 VaR: Assumptions, limitations and validation procedures 92
25 Stress tests and backtesting 88 to 94
Credit risk
26 Credit risk exposures 87 and 179 to 191 32 and 71 to 83 22 to 50 and 23 to 31((2))
27 Policies for identifying impaired loans 84, 85, 152 and 153
28 Movements in impaired loans and allowances for credit losses 125, 128, 129 and 179 to 191 71 to 83 28 to 31((2))
29 Counterparty credit risk relating to derivative transactions 83 to 86 and 198 to 201 42 to 50, 32((2)) and 33((2))
30 Credit risk mitigation 81 to 86, 176 and 184 24, 28, 29 and 48 to 58
Other risks
31 Other risks: Governance, measurement and management 76, 77 and 104 to 112
32 Publicly known risk events 24, 104 and 105 5, 31 and 46
(1) Second quarter 2025.
(2) These pages are included in the document entitled
Supplementary Financial Information - Second Quarter 2025.
Accounting Policies and Financial Disclosure
Material Accounting Policies and Accounting Estimates
The unaudited interim condensed consolidated financial statements for the
quarter and six-month period ended April 30, 2025 were prepared in accordance
with IAS 34 - Interim Financial Reporting as issued by the International
Accounting Standards Board (IASB) and use the same accounting policies as
those described in Note 1 to the audited annual consolidated financial
statements for the year ended October 31, 2024, except for the addition of
finance lease accounting described below as a result of the acquisition of the
Canadian Western Bank (CWB). The financial results of CWB have been
consolidated in the Bank's financial statements as of February 3, 2025 and
results have been recorded in Personal and Commercial, Wealth Management, and
Financial Markets segments and in the Other heading segment of results.
Leases
Bank as the lessor
When the Bank is the lessor, the contracts are classified as finance leases if
they transfer substantially all of the risks and rewards of ownership of the
underlying asset to the lessee, otherwise they are classified as operating
leases. For finance leases, a receivable is recorded in Loans on the
Consolidated Balance Sheet for an amount equal to the net investment in the
lease, which represents the minimum payments receivable from the lessee plus
any unguaranteed residual value expected to be recovered at the end of the
lease, discounted at the interest rate implicit in the lease. Finance lease
receivables are subsequently recorded at an amount equal to the net investment
in the lease, net of allowances for expected credit losses. Interest income is
recognized over the term of the lease in Interest income in the Consolidated
Statement of Income. For operating leases, the leased assets remain on the
Consolidated Balance Sheet and are reported in Premises and equipment, and the
rental income is recognized in Non-interest income in the Consolidated
Statement of Income.
Judgment, Estimates and Assumptions
In preparing consolidated financial statements in accordance with IFRS,
management must exercise judgment and make estimates and assumptions that
affect the reporting date carrying values of assets and liabilities, net
income, and related information. Some accounting policies are considered
critical given their importance to the presentation of the Bank's financial
position and operating results and require subjective and complex judgments
and estimates on matters that are inherently uncertain. Any change in these
judgments and estimates could have a significant impact on the Bank's
consolidated financial statements. The material accounting policies and
accounting estimates are the same as those described on pages 113 to 118 of
the 2024 Annual Report, except for the addition mentioned above.
The geopolitical landscape, notably the measures affecting trade relations
between Canada and its partners, including the imposition of tariffs and any
measures taken in response to such tariffs, the Russia-Ukraine war and clashes
between Israel and Hamas, inflation, climate change, and previously high
interest rates continue to create uncertainty. As a result, establishing
reliable estimates and applying judgment continue to be substantially complex.
See Note 1 to the audited annual consolidated financial statements for the
year ended October 31, 2024 for a summary of the most significant estimation
processes used to prepare the Consolidated Financial Statements and for the
valuation techniques used to determine the carrying values and fair values of
assets and liabilities. In addition, valuation techniques used for assets and
liabilities resulting from the CWB acquisition are described below. The
uncertainty surrounding certain key inputs used in measuring ECLs is described
in Note 6 to the Consolidated Financial Statements.
CWB acquisition - Valuation of Assets and Liabilities
The Bank used significant judgment and assumptions to determine the fair value
of the CWB assets acquired and liabilities assumed, including the loan
portfolio, core-deposit and customer relationship intangible assets and
deposits.
For loans, fair value was determined by discounting the estimated cash flows
expected to be received on all purchased loans back to their present value.
Management's best estimate of current key assumptions such as default rates,
loss severity, timing of prepayments options and collateral was used to
estimate expected cash flows. In determining the discount rate, various inputs
were considered, including the risk-free interest rates in the current market,
the risk premium associated with the loans and the cost to service the
portfolios.
For core-deposit intangible assets, fair value was determined using a
discounted cash flow approach, comparing the present value of the cost to
maintain the acquired core deposits to the cost of alternative funding. The
present value of the cost to maintain the acquired core deposits includes an
estimate of future interest costs and operating expenses for these deposits
acquired. Core deposits are those that are considered to be stable,
below-market sources of funding, whereas the present value of the cost of
alternative funding includes an estimate of future interest costs that would
be incurred if the funds were borrowed from the public market. Deposit run-off
was estimated using historical attrition data, comparing this to market
sources at the date of acquisition.
The fair value of customer relationships acquired was determined based on the
excess of estimated future cash inflows based on revenue from the acquired
relationships over the related estimated cash outflows over the estimated
useful life of the customer base.
For the deposits, fair value was determined by discounting the estimated cash
flows to be repaid, back to their present value. The timing and amount of cash
flows involve significant management judgment regarding the likelihood of
early redemption and the timing of withdrawal by the customer. Discount rates
were based on the prevailing rates that were paid on similar deposits at the
date of acquisition.
The fair value of all other assets and liabilities was calculated using market
data where possible, as well as management judgment to determine the price
that would be obtained in an arms-length transaction between knowledgeable,
willing parties.
For additional information, see Note 19 to the Consolidated Financial
Statements.
Future Accounting Policy Changes
The Bank closely monitors both new accounting standards and amendments to
existing accounting standards issued by the IASB. There have been no
significant updates to the future accounting policy changes disclosed in Note
3 to the audited annual consolidated financial statements for the year ended
October 31, 2024. The Bank is currently assessing the impact of applying these
standards on the consolidated financial statements.
Financial Disclosure
During the second quarter of 2025, no changes were made to the policies,
procedures, and other processes that comprise the Bank's internal control over
financial reporting that had or could reasonably have a significant impact on
the internal control over financial reporting.
Following the acquisition of CWB on February 3, 2025, the Bank implemented and
amended certain processes related to internal control over financial
reporting. These amendments did not have a material impact on internal control
over financial reporting.
Quarterly Financial Information
(millions of Canadian dollars,
except per share amounts) 2025 2024 2023 2024 2023
Q2((1)) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Total Total
Total revenues 3,650 3,183 2,944 2,996 2,750 2,710 2,560 2,490 11,400 10,058
Net income 896 997 955 1,033 906 922 751 830 3,816 3,289
Earnings per share ($)
Basic 2.19 2.81 2.69 2.92 2.56 2.61 2.11 2.35 10.78 9.33
Diluted 2.17 2.78 2.66 2.89 2.54 2.59 2.09 2.33 10.68 9.24
Dividends per common share ($) 1.14 1.14 1.10 1.10 1.06 1.06 1.02 1.02 4.32 3.98
Return on common
shareholders' equity (%)((2)) 11.9 16.7 16.4 18.4 16.9 17.1 14.1 16.1 17.2 16.3
Total assets 536,194 483,833 462,226 453,933 441,690 433,927 423,477 425,936
Net impaired loans((2)) 2,437 1,836 1,629 1,482 1,426 1,276 1,276 1,156
Per common share ($)
Book value((2)) 76.13 68.15 65.74 64.64 62.28 61.18 60.40 58.53
Share price
High 127.44 140.76 134.23 118.17 114.68 103.38 103.58 103.28
Low 107.01 128.79 111.98 106.21 101.24 86.50 84.97 94.62
(1) On February 3, 2025, the Bank completed the acquisition of
CWB. CWB's results were consolidated from the closing date, which impacted the
results, balances and ratios for the quarter and the six-month period ended
April 30, 2025. For additional information on the impact of the CWB
acquisition, see the Acquisition section.
(2) See the Glossary section on pages 51 to 54 for details on the
composition of these measures.
Glossary
Acceptances
Acceptances and the customers' liability under acceptances constitute a
guarantee of payment by a bank and can be traded in the money market. The Bank
earns a "stamping fee" for providing this guarantee.
Allowances for credit losses
Allowances for credit losses represent management's unbiased estimate of
expected credit losses as at the balance sheet date. These allowances are
primarily related to loans and off-balance-sheet items such as loan
commitments and financial guarantees.
Assets under administration
Assets in respect of which a financial institution provides administrative
services on behalf of the clients who own the assets. Such services include
custodial services, collection of investment income, settlement of purchase
and sale transactions, and record-keeping. Assets under administration are not
reported on the balance sheet of the institution offering such services.
Assets under management
Assets managed by a financial institution and that are beneficially owned by
clients. Management services are more comprehensive than administrative
services and include selecting investments or offering investment advice.
Assets under management, which may also be administered by the financial
institution, are not reported on the balance sheet of the institution offering
such services.
Available TLAC
Available TLAC includes total capital as well as certain senior unsecured debt
subject to the federal government's bail-in regulations that satisfy all of
the eligibility criteria in OSFI's Total Loss Absorbing Capacity (TLAC)
Guideline.
Average interest-bearing assets
Average interest-bearing assets include interest-bearing deposits with
financial institutions and certain cash items, securities, securities
purchased under reverse repurchase agreements and securities borrowed, and
loans, while excluding customers' liability under acceptances and other
assets. The average is calculated based on the daily balances for the period.
Average interest-bearing assets, non-trading
Average interest-bearing assets, non-trading, include interest-bearing
deposits with financial institutions and certain cash items, securities
purchased under reverse repurchase agreements and securities borrowed, and
loans, while excluding other assets and assets related to trading activities.
The average is calculated based on the daily balances for the period.
Average volumes
Average volumes represent the average of the daily balances for the period of
the consolidated balance sheet items.
Basic earnings per share
Basic earnings per share is calculated by dividing net income attributable to
common shareholders by the weighted average basic number of common shares
outstanding.
Basis point (bps)
Unit of measure equal to one one-hundredth of a percentage point (0.01%).
Book value of a common share
The book value of a common share is calculated by dividing common
shareholders' equity by the number of common shares on a given date.
Common Equity Tier 1 (CET1) capital ratio
CET1 capital consists of common shareholders' equity less goodwill, intangible
assets, and other capital deductions. The CET1 capital ratio is calculated by
dividing total CET1 capital by the corresponding risk-weighted assets.
Compound annual growth rate (CAGR)
CAGR is a rate of growth that shows, for a period exceeding one year, the
annual change as though the growth had been constant throughout the period.
Derivative financial instruments
Derivative financial instruments are financial contracts whose value is
derived from an underlying interest rate, exchange rate, equity price,
commodity price, credit instrument or index. Examples of derivatives include
swaps, options, forward rate agreements, and futures. The notional amount of
the derivative is the contract amount used as a reference point to calculate
the payments to be exchanged between the two parties, and the notional amount
itself is generally not exchanged by the parties.
Diluted earnings per share
Diluted earnings per share is calculated by dividing net income attributable
to common shareholders by the weighted average number of common shares
outstanding after taking into account the dilution effect of stock options
using the treasury stock method and any gain (loss) on the redemption of
preferred shares.
Dividend payout ratio
The dividend payout ratio represents the dividends of common shares (per share
amount) expressed as a percentage of basic earnings per share.
Economic capital
Economic capital is the internal measure used by the Bank to determine the
capital required for its solvency and to pursue its business operations.
Economic capital takes into consideration the credit, market, operational,
business and other risks to which the Bank is exposed as well as the risk
diversification effect among them and among the business segments. Economic
capital thus helps the Bank to determine the capital required to protect
itself against such risks and ensure its long-term viability.
Efficiency ratio
The efficiency ratio represents non-interest expenses expressed as a
percentage of total revenues. It measures the efficiency of the Bank's
operations.
Fair value
The fair value of a financial instrument is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction in
the principal market at the measurement date under current market conditions
(i.e., an exit price).
Gross impaired loans as a percentage of total loans and acceptances
This measure represents gross impaired loans expressed as a percentage of the
balance of loans and acceptances.
Gross impaired loans excluding Credigy's POCI loans
Gross impaired loans excluding Credigy subsidiary's POCI loans are all loans
classified in Stage 3 and POCI loans of the expected credit loss model
excluding Credigy subsidiary's POCI loans.
Gross impaired loans excluding Credigy's POCI loans as a percentage of total
loans and acceptances
This measure represents gross impaired loans excluding Credigy subsidiary's
POCI loans expressed as a percentage of the balance of loans and acceptances.
Hedging
The purpose of a hedging transaction is to modify the Bank's exposure to one
or more risks by creating an offset between changes in the fair value of, or
the cash flows attributable to, the hedged item and the hedging instrument.
Impaired loans
The Bank considers a financial asset, other than a credit card receivable, to
be credit-impaired when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred or when
contractual payments are 90 days past due. Credit card receivables are
considered credit-impaired and are fully written off at the earlier of the
following dates: when a notice of bankruptcy is received, a settlement
proposal is made, or contractual payments are 180 days past due.
Leverage ratio
The leverage ratio is calculated by dividing Tier 1 capital by total exposure.
Total exposure is defined as the sum of on-balance-sheet assets (including
derivative financial instrument exposures and securities financing transaction
exposures) and off-balance-sheet items.
Liquidity coverage ratio (LCR)
The LCR is a measure designed to ensure that the Bank has sufficient
high-quality liquid assets to cover net cash outflows given a severe, 30‑day
liquidity crisis.
Loans and acceptances
Loans and acceptances represent the sum of loans and of the customers'
liability under acceptances.
Loan-to-value ratio
The loan-to-value ratio is calculated according to the total facility amount
for residential mortgages and home equity lines of credit divided by the value
of the related residential property.
Master netting agreement
Legal agreement between two parties that have multiple derivative contracts
with each other that provides for the net settlement of all contracts through
a single payment, in the event of default, insolvency or bankruptcy.
Net impaired loans
Net impaired loans are gross impaired loans presented net of allowances for
credit losses on Stage 3 loan amounts drawn.
Net impaired loans as a percentage of total loans and acceptances
This measure represents net impaired loans as a percentage of the balance of
loans and acceptances.
Net impaired loans excluding Credigy's POCI loans
Net impaired loans excluding Credigy subsidiary's POCI loans are gross
impaired loans excluding the Credigy subsidiary's POCI loans presented net of
allowances for credit losses on amounts drawn on Stage 3 loans granted by the
Bank and the POCI loans excluding the Credigy subsidiary's POCI loans.
Net interest income from trading activities
Net interest income from trading activities comprises dividends related to
financial assets and liabilities associated with trading activities, net of
interest expenses and interest income related to the financing of these
financial assets and liabilities.
Net interest income, non-trading
Net interest income, non-trading, comprises revenues related to financial
assets and liabilities associated with non-trading activities, net of interest
expenses and interest income related to the financing of these financial
assets and liabilities.
Net interest margin
Net interest margin is calculated by dividing net interest income by average
interest-bearing assets.
Net stable funding ratio (NSFR)
The NSFR ratio is a measure that helps guarantee that the Bank is maintaining
a stable funding profile to reduce the risk of funding stress.
Net write-offs as a percentage of average loans and acceptances
This measure represents the net write-offs (net of recoveries) expressed as a
percentage of average loans and acceptances.
Non-interest income related to trading activities
Non-interest income related to trading activities consists of realized and
unrealized gains and losses as well as interest income on securities measured
at fair value through profit or loss, income from held-for-trading derivative
financial instruments, changes in the fair value of loans at fair value
through profit or loss, changes in the fair value of financial instruments
designated at fair value through profit or loss, certain commission income,
other trading activity revenues, and any applicable transaction costs.
Office of the Superintendent of Financial Institutions (Canada) (OSFI)
The mandate of OSFI is to regulate and supervise financial institutions and
private pension plans subject to federal oversight, to help minimize undue
losses to depositors and policyholders and, thereby, to contribute to public
confidence in the Canadian financial system.
Operating leverage
Operating leverage is the difference between the growth rate for total
revenues and the growth rate for non-interest expenses.
Provisioning rate
This measure represents the allowances for credit losses on impaired loans
expressed as a percentage of gross impaired loans.
Provisioning rate excluding Credigy's POCI loans
This measure represents the allowances for credit losses on impaired loans
excluding Credigy subsidiary's POCI loans expressed as a percentage of gross
impaired loans excluding Credigy subsidiary's POCI loans.
Provisions for credit losses
Amount charged to income necessary to bring the allowances for credit losses
to a level deemed appropriate by management and is comprised of provisions for
credit losses on impaired and non-impaired financial assets.
Provisions for credit losses as a percentage of average loans and acceptances
This measure represents the provisions for credit losses expressed as a
percentage of average loans and acceptances.
Provisions for credit losses on impaired loans as a percentage of average
loans and acceptances
This measure represents the provisions for credit losses on impaired loans
expressed as a percentage of average loans and acceptances.
Provisions for credit losses on impaired loans excluding Credigy's POCI loans
Amount charged to income necessary to bring the allowances for credit losses
to a level deemed appropriate by management and is comprised of provisions for
credit losses on impaired financial assets excluding Credigy subsidiary's POCI
loans.
Provisions for credit losses on impaired loans excluding Credigy's POCI loans
as a percentage of average loans and acceptances or provisions for credit
losses on impaired loans excluding Credigy's POCI loans ratio
This measure represents the provisions for credit losses on impaired loans
excluding Credigy subsidiary's POCI loans expressed as a percentage of average
loans and acceptances.
Return on average assets
Return on average assets represents net income expressed as a percentage of
average assets.
Return on common shareholders' equity (ROE)
ROE represents net income attributable to common shareholders expressed as a
percentage of average equity attributable to common shareholders. It is a
general measure of the Bank's efficiency in using equity.
Risk-weighted assets
Assets are risk weighted according to the guidelines established by OSFI. In
the Standardized calculation approach, risk factors are applied directly to
the face value of certain assets in order to reflect comparable risk levels.
In the Advanced Internal Ratings-Based (AIRB) Approach, risk-weighted assets
are derived from the Bank's internal models, which represent the Bank's own
assessment of the risks it incurs. In the Foundation Internal Ratings-Based
(FIRB) Approach, the Bank can use its own estimate of probability of default
but must rely on OSFI estimates for the loss given default and exposure at
default risk parameters. Off-balance-sheet instruments are converted to
balance sheet (or credit) equivalents by adjusting the notional values before
applying the appropriate risk-weighting factors.
Securities purchased under reverse repurchase agreements
Securities purchased by the Bank from a client pursuant to an agreement under
which the securities will be resold to the same client on a specified date and
at a specified price. Such an agreement is a form of short-term collateralized
lending.
Securities sold under repurchase agreements
Financial obligations related to securities sold pursuant to an agreement
under which the securities will be repurchased on a specified date and at a
specified price. Such an agreement is a form of short-term funding.
Structured entity
A structured entity is an entity created to accomplish a narrow and
well-defined objective and is designed so that voting or similar rights are
not the dominant factor in deciding who controls the entity, such as when any
voting rights relate solely to administrative tasks and the relevant
activities are directed by means of contractual arrangements.
Taxable equivalent basis
Taxable equivalent basis is a calculation method that consists of grossing up
certain revenues taxed at lower rates (notably dividends) by the income tax to
a level that would make it comparable to revenues from taxable sources in
Canada, and an equivalent amount is recognized in the income taxes.
Tier 1 capital ratio
Tier 1 capital ratio consists of Common Equity Tier 1 capital and Additional
Tier 1 instruments, namely, qualifying non-cumulative preferred shares and the
eligible amount of innovative instruments. The Tier 1 capital ratio is
calculated by dividing Tier 1 capital, less regulatory adjustments, by the
corresponding risk-weighted assets.
TLAC leverage ratio
The TLAC leverage ratio is an independent risk measure that is calculated by
dividing available TLAC by total exposure, as set out in OSFI's Total Loss
Absorbing Capacity (TLAC) Guideline.
TLAC ratio
The TLAC ratio is a measure used to assess whether a non-viable Domestic
Systemically Important Bank (D-SIB) has sufficient loss-absorbing capacity to
support its recapitalization. It is calculated by dividing available TLAC by
risk weighted assets, as set out in OSFI's Total Loss Absorbing Capacity
(TLAC) Guideline.
Total capital ratio
Total capital is the sum of Tier 1 and Tier 2 capital. Tier 2 capital consists
of the eligible portion of subordinated debt and certain allowances for credit
losses. The Total capital ratio is calculated by dividing Total capital, less
regulatory adjustments, by the corresponding risk-weighted assets.
Total shareholder return (TSR)
TSR represents the average total return on an investment in the Bank's common
shares. The return includes changes in share price and assumes that the
dividends received were reinvested in additional common shares of the Bank.
Trading activity revenues
Trading activity revenues consist of the net interest income and the
non-interest income related to trading activities. Net interest income
comprises dividends related to financial assets and liabilities associated
with trading activities, and some interest income related to the financing of
these financial assets and liabilities net of interest expenses and interest
income related to the financing of these financial assets and liabilities.
Non-interest income consists of realized and unrealized gains and losses as
well as interest income on securities measured at fair value through profit or
loss, income from held-for-trading derivative financial instruments, changes
in the fair value of loans at fair value through profit or loss, changes in
the fair value of financial instruments designated at fair value through
profit or loss, realized and unrealized gains and losses as well as interest
expense on obligations related to securities sold short, certain commission
income, other trading activity revenues, and any applicable transaction costs.
Value-at-Risk (VaR)
VaR is a statistical measure of risk that is used to quantify market risks
across products, per types of risks, and aggregate risk on a portfolio basis.
VaR is defined as the maximum loss at a specific confidence level over a
certain horizon under normal market conditions. The VaR method has the
advantage of providing a uniform measurement of financial instrument-related
market risks based on a single statistical confidence level and time horizon.
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